Humana Inc. (NYSE: HUM) today announced it has signed a
definitive agreement to acquire privately held Enclara Healthcare
(Enclara), one of the nation’s largest hospice pharmacy and benefit
management providers, from Consonance Capital Partners and Enclara
management. Enclara is a leading pharmacy solutions provider
focused on simplifying care delivery in complex care populations to
improve patient experience, quality and cost.
The Enclara acquisition provides Humana with the opportunity to
extend its comprehensive care continuum strategy to cover the
pharmacy-related needs associated with hospice care, simplify the
mail order pharmacy experience, and advance its technology stack
for in-home pharmacy through areas such as enhanced mobile
medication management and improved electronic medical record (EMR)
connectivity.
“Enclara represents a logical extension of Humana Pharmacy’s
strategy given the company’s unique ability to play a role in
advanced illness care and supplement our existing care delivery
system,” said Scott Greenwell, PharmD, President, Humana Pharmacy
Solutions. “We look forward to leveraging and expanding the
capabilities of Enclara to further advance our clinical management
expertise.”
Enclara has cultivated trusted relationships with its customers,
serving over 450 hospice providers and 97,000 hospice patients per
day through multiple, scalable models designed to fit unique
customer needs.
“I am excited about the opportunity to work closely with Humana
to carry on Enclara’s mission of serving as an invaluable resource
to hospice providers,” said Andrew Horowitz, Founder and Chief
Executive Officer, Enclara Healthcare. “This combination will allow
Enclara to accelerate innovation aimed at delivering timely and
cost effective pharmacy solutions.”
The Enclara transaction, which includes acquisition of Enclara
Pharmacia, GuidantRx and Avanti Health Care Services, is
anticipated to close during the first half of 2020 and is subject
to customary state and federal regulatory approvals as well as
other customary closing conditions. Financial terms of the
transaction were not disclosed. The transaction is expected to have
an immaterial impact to earnings in 2020.
Centerview Partners LLC is acting as financial advisor to
Humana. Crowell & Moring LLP is acting as legal advisor to
Humana. Evercore Inc. is acting as financial advisor to Enclara and
Consonance Capital Partners. Latham & Watkins LLP is acting as
legal advisor to Enclara and Consonance Capital Partners.
Cautionary Statement
This news release includes forward-looking statements regarding
Humana within the meaning of the Private Securities Litigation
Reform Act of 1995. When used in investor presentations, press
releases, Securities and Exchange Commission (SEC) filings, and in
oral statements made by or with the approval of one of Humana’s
executive officers, the words or phrases like “expects,”
“believes,” “anticipates,” “intends,” “likely will result,”
“estimates,” “projects” or variations of such words and similar
expressions are intended to identify such forward-looking
statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to
cover the cost of healthcare services delivered to its members, if
the company is unable to implement clinical initiatives to provide
a better healthcare experience for its members, lower costs and
appropriately document the risk profile of its members, or if its
estimates of benefits expense are inadequate, Humana’s
profitability could be materially adversely affected. Humana
estimates the costs of its benefit expense payments, and designs
and prices its products accordingly, using actuarial methods and
assumptions based upon, among other relevant factors, claim payment
patterns, medical cost inflation, and historical developments such
as claim inventory levels and claim receipt patterns. The company
continually reviews estimates of future payments relating to
benefit expenses for services incurred in the current and prior
periods and makes necessary adjustments to its reserves, including
premium deficiency reserves, where appropriate. These estimates,
however, involve extensive judgment, and have considerable inherent
variability because they are extremely sensitive to changes in
claim payment patterns and medical cost trends, so any reserves the
company may establish, including premium deficiency reserves, may
be insufficient.
- If Humana fails to effectively implement its operational and
strategic initiatives, particularly its Medicare initiatives and
state-based contract strategy, the company’s business may be
materially adversely affected, which is of particular importance
given the concentration of the company’s revenues in these
products. In addition, there can be no assurances that the company
will be successful in maintaining or improving its Star ratings in
future years.
- If Humana fails to properly maintain the integrity of its data,
to strategically implement new information systems, to protect
Humana’s proprietary rights to its systems, or to defend against
cyber-security attacks, the company’s business may be materially
adversely affected.
- Humana is involved in various legal actions, or disputes that
could lead to legal actions (such as, among other things, provider
contract disputes and qui tam litigation brought by individuals on
behalf of the government), governmental and internal
investigations, and routine internal review of business processes
any of which, if resolved unfavorably to the company, could result
in substantial monetary damages or changes in its business
practices. Increased litigation and negative publicity could also
increase the company’s cost of doing business.
- As a government contractor, Humana is exposed to risks that may
materially adversely affect its business or its willingness or
ability to participate in government healthcare programs including,
among other things, loss of material government contracts,
governmental audits and investigations, potential inadequacy of
government determined payment rates, potential restrictions on
profitability, including by comparison of profitability of the
company’s Medicare Advantage business to non-Medicare Advantage
business, or other changes in the governmental programs in which
Humana participates. Changes to the risk-adjustment model utilized
by CMS to adjust premiums paid to Medicare Advantage, or MA, plans
according to the health status of covered members, including
proposed changes to the methodology used by CMS for risk adjustment
data validation audits that fail to address adequately the
statutory requirement of actuarial equivalence, if implemented,
could have a material adverse effect on our operating results,
financial position and cash flows.
- The Healthcare Reform Law, including The Patient Protection and
Affordable Care Act and The Healthcare and Education Reconciliation
Act of 2010, could have a material adverse effect on Humana’s
results of operations, including restricting revenue, enrollment
and premium growth in certain products and market segments,
restricting the company’s ability to expand into new markets,
increasing the company’s medical and operating costs by, among
other things, requiring a minimum benefit ratio on insured
products, lowering the company’s Medicare payment rates and
increasing the company’s expenses associated with a non-deductible
health insurance industry fee and other assessments; the company’s
financial position, including the company’s ability to maintain the
value of its goodwill; and the company’s cash flows. Additionally,
potential legislative or judicial changes, including activities to
invalidate, repeal or replace, in whole or in part, the Health Care
Reform Law, creates uncertainty for Humana’s business, and when, or
in what form, such legislative or judicial changes may occur cannot
be predicted with certainty.
- Humana’s business activities are subject to substantial
government regulation. New laws or regulations, or changes in
existing laws or regulations or their manner of application could
increase the company’s cost of doing business and may adversely
affect the company’s business, profitability and cash flows.
- Humana’s failure to manage acquisitions, divestitures and other
significant transactions successfully may have a material adverse
effect on the company’s results of operations, financial position,
and cash flows.
- If Humana fails to develop and maintain satisfactory
relationships with the providers of care to its members, the
company’s business may be adversely affected.
- Humana’s pharmacy business is highly competitive and subjects
it to regulations in addition to those the company faces with its
core health benefits businesses.
- Changes in the prescription drug industry pricing benchmarks
may adversely affect Humana’s financial performance.
- If Humana does not continue to earn and retain purchase
discounts and volume rebates from pharmaceutical manufacturers at
current levels, Humana’s gross margins may decline.
- Humana’s ability to obtain funds from certain of its licensed
subsidiaries is restricted by state insurance regulations.
- Downgrades in Humana’s debt ratings, should they occur, may
adversely affect its business, results of operations, and financial
condition.
- The securities and credit markets may experience volatility and
disruption, which may adversely affect Humana’s business.
In making forward-looking statements, Humana is not undertaking
to address or update them in future filings or communications
regarding its business or results. In light of these risks,
uncertainties, and assumptions, the forward-looking events
discussed herein may or may not occur. There also may be other
risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ
materially from the results discussed in the forward-looking
statements.
Humana advises investors to read the following documents as
filed by the company with the SEC for further discussion both of
the risks it faces and its historical performance:
- Form 10-K for the year ended December 31, 2018;
- Form 10-Q for the quarters ended March 31, 2019; June 30, 2019;
September 30, 2019 and
- Form 8-Ks filed during 2019.
About Humana
Humana Inc. (NYSE: HUM) is committed to helping our millions of
medical and specialty members achieve their best health. Our
successful history in care delivery and health plan administration
is helping us create a new kind of integrated care with the power
to improve health and well-being and lower costs. Our efforts are
leading to a better quality of life for people with Medicare,
families, individuals, military service personnel, and communities
at large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools – such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions – combine to produce a simplified experience that makes
health care easier to navigate and more effective.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s website at humana.com,
including copies of:
- Annual reports to stockholders
- Securities and Exchange Commission filings
- Most recent investor conference presentations
- Quarterly earnings news releases and conference calls
- Calendar of events
- Corporate Governance information
About Enclara Healthcare
Enclara Healthcare is a leading solutions provider focused on
simplifying care delivery in chronic and complex care patient
populations to improve patient experience, quality, and cost. We
collaborate with healthcare organizations to drive value-based care
through expertise, process, and technology. To learn more about our
services visit enclarahealthcare.com.
About Consonance Capital
Partners
Consonance Capital Partners invests in private companies in the
lower middle market of the U.S. healthcare industry with an
emphasis on businesses driving efficiency, cost containment and
high quality clinical care to patients. Consonance Capital Partners
participates in growth equity, leveraged buyout, and
recapitalization transactions. For more information, visit
www.consonancecapital.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20191216005158/en/
FOR MORE INFORMATION:
Humana Amy Smith Humana Investor Relations (502) 580-2811
Amysmith@humana.com
Marina Renneke Humana Corporate Communications (602) 760-1758
Mrenneke@humana.com
Enclara Healthcare Anthony Dameika Senior Director,
Marketing (267) 514-6564 ADameika@enclarapharmacia.com
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