Kindred Healthcare Inc (KND.N) is exploring a sale, according to people familiar with the matter, as the largest home health, hospice and community care provider in the United States faces pressure to reduce its exposure to Medicare patients.
Kindred's shares have dropped by more than a third in the last 12 months, as investors fret over its reliance on the Medicare federal health insurance program for revenue, as well as changes to how post-acute care services will be reimbursed in any reform of the healthcare system under U.S. President Donald Trump.
Kindred is working with investment banks on the sale process, which is still in the early stages, the people said on Thursday. The company could attract interest from major health insurers such as Humana Inc (HUM.N) as well as private equity firms such as Apollo Global Management (APO.N) and Blackstone Group LP (BX.N), the people added.
The sources cautioned, however, there was no certainty of a deal and asked not to be identified because the deliberations are confidential.
Kindred, Humana and Blackstone all declined to comment, while Apollo did not respond to a request for comment.
Shares of Kindred ended Thursday trading up 8.5 percent at $8.95, after Dealreporter reported the company has seen interest from suitors looking to acquire it and that talks have not materialized.
Kindred, which has a market capitalization of $766 million and long-term debt of $3.2 billion, announced in November it would explore a sale of its skilled nursing facility business, seeking to focus on the home care and hospital-based rehabilitation markets. That process is ongoing.
Earlier this year, Kindred announced plans to coordinate skilled nursing operations with Genesis HealthCare Inc (GEN.N), one of the largest operators of skilled nursing facilities in the United States.
In 2015, Kindred acquired Gentiva Health Services Inc for $1.8 billion, turning it into the biggest provider of home health and hospice care in the United States, but also saddling it with debt.
Meanwhile, health insurance companies are exploring new ways to diversify their revenues with acquisitions in acute care, after federal regulators blocked two major mergers in the sector, and insurance exchanges set up under the Affordable Care Act, popularly known as Obamacare, came under pressure from Republicans.
Humana has already been investing significantly in its home health capabilities, Humana At Home, which the insurer touts as a compliment to its Medicare Advantage franchise.
Humana earlier this year said it plans to intensify its focus on its Medicare Advantage business and add to its healthcare services platform.
(Reporting by Carl O'Donnell, additional reporting by Lauren Hirsch, editing by G Crosse)