The retail health chain that could have helped reprise Humana's historic roots turned out to be a good lesson in the evolving convenient healthcare space, plus it brought a tidy profit.
Humana has sold the occupational and urgent care chain Concentra for $1.05 billion in cash to MJ Acquisition Corporation, a joint venture between rehabilitation hospital operator Select Medical Holdings and the private equity firm Welsh, Carson, Anderson & Stowe.
In 2010, Humana bought Concentra for $790 million--taking the majority stake from the same Welsh, Carson, Anderson & Stowe--as part of a strategy to "expand convenient, affordable high-quality healthcare for its membership base." In 2012, Humana also acquired Metropolitan Health Networks, a primary care and speciality clinic network based in greater Boca Raton, home to many of the company's Medicare Advantage members.
In some ways, the strategy has been a new small iteration on Humana's early history in the 1960s and 1970s as a provider, operating one of country's largest hospital and nursing home networks. Instead of the hospital, the modern pursuit is affordable primary care, as a service to pair well with health insurance.
Under Humana, Concentra grew to $1 billion revenue last year, with a network of 300 urgent care and physical therapy centers and 245 worksite clinics in 38 states.
But as Humana refined its convenient care strategy over the past few years, "the primary care platform has proven to better advance the company's integrated care delivery model than Concentra's focus on occupational injuries," the company said in a media release.
"Though Concentra's operations did not ultimately align with Humana's strategy as well as we had originally anticipated, we believe Humana and Concentra have gained valuable insights into consumer behavior over the past several years that will serve us both well moving forward," said Humana CEO Bruce Broussard. "We expect Humana will continue to invest in other primary care assets, including MSOs, as we continue to expand our integrated care delivery model."
Humana promised investors a portfolio review, and Concentra may have been ripe for a sale, given the huge interest in retail health. Walk-in and urgent care clinics are expected to be an $18 billion market by 2017.
Humana also said it will continue "performing its review of the alignment and return potential of businesses across the organization to ensure each supports the company's integrated care delivery strategy and earns the appropriate return on invested capital."
Meanwhile, some Wall Street observers think Humana could be a takeover target if or when another round of managed care M&A arises.
Ana Gupte, an analyst with Leerink Partners, predicts that Humana, Centene or WellCare may be eyed for acquisition by a giant insurer like Aetna or Anthem seeking more scale as the pressure to control healthcare costs intensifies. Then there is the hypothesis that Walmart, of all companies, could "cut to the chase" and acquire Humana.
Humana, the nation's sixth largest insurer by membership, would be a huge buy, with a value of $27 billion. But its Medicare Advantage membership of 3 million seniors makes it well-positioned, with a major foothold in one of the few growing insurance segments, along with Medicaid and subsidized individual plans.