Yesterday Reuters reported that Louisville-based Humana Inc. could be selling its urgent and primary-care subsidiary, Concentra.
I reached out to Humana about this development but haven't heard back yet. If I do hear anything new, this story could be updated. In the meantime, I thought it would be helpful to have a little context on what could be a billion dollar deal for the health insurance giant.
So I reached out to Brian Wright, a New York-based managing director with Sterne Agee, a privately owned brokerage firm.
"I don't think it's that surprising" that Humana is considering this sale, Wright said.
He said the company has been undergoing a strategic review of its operations since new CFO Brian Kane started in June. Even before he joined, Wright said, there was a debate about what to do with Concentra, considering it was not core to the company's business.
Humana's ownership of a large urgent-care business is somewhat unusual among publicly traded health insurance companies, Wright said. It could be that the company is not getting the kind of return it had expected.
Selling the business now could generate some liquidity for Humana, freeing money up for an acquisition, according to Wright.
The Reuters story says Concentra could sell for about $1 billion.
But Wright said he's heard from investors who think it could go for multiple-billions. He said there are buyers for a business like Concentra, particularly among private equity firms.
Humana paid $790 million for the company in 2010. After Humana bought the company, there was a slew of practice acquisitions in Portland, Ore.; Guilderland, N.Y.; Frisco, Texas; Chicago and elsewhere.
Concentra offers urgent-care, primary-care and occupational health and other services, according to its website. It has more than 300 medical centers in 38 states, and it operates more than 245 work site medical facilities.
When Humana purchased the company in 2010, then-chairman and CEO Michael B. McCallister told Business First that the company was putting greater focus on lifelong well-being.
"The concept that led to the acquisition of Concentra is that there are a lot of things we can do for people outside of the traditional health care setting," McCallister said at the time. "We need an arm of the company that wakes up every day trying to figure out how to do that better."