=Kindred Healthcare (KND) to be bought by Humana (HUM), PE firms in $4.1 billion deal

Kindred Healthcare confirms to be acquired by a consortium of three cos: TPG Capital, Welsh, Carson, Anderson & Stowe and Humana (HUM) for approximately $4.1 billion in cash or $9.00/share



(Reuters) - Kindred Healthcare Inc said on Tuesday it will be bought by health insurer Humana Inc and two private equity firms in a deal valued at $4.1 billion.

The home healthcare provider and hospice operator said its shareholders will receive $9 per share in cash for each share they own, representing a 4.7 percent premium over the stock’s Friday close.

TPG and Welsh, Carson, Anderson & Stowe are the private equity firms in the deal.

=Kindred Healthcare (KND) reported earnings on Mon 6 Nov 2017 (a/h)

Kindred Healthcare misses by $0.01, beats on revs; guides FY18 EPS in-line, revs above consensus

• Reports Q3 (Sep) adjusted loss of $0.20 per share, $0.01 worse than the Capital IQ Consensus of ($0.19); revenues fell 5.5% year/year to $1.48 bln vs the $1.44 bln Capital IQ Consensus.
• Core operating cash flows were $29.8 million compared to $29.5 million for the same period a year ago.
• Co issues guidance for FY18, sees EPS of $0.65-$0.85 vs. $0.66 Capital IQ Consensus Estimate; sees FY18 revs of $6.1-$6.3 vs. $6.09 bln Capital IQ Consensus Estimate. Sees Core EBITDAR of $815 million, with a range of $800 million to $830 million. 

Great trade : KND +28% (4/17)

• 4/19:  #1, 15, 37  (vol. 1.6 M)
• 1, 3, 9, 15, 37, 52, 72)

* bot the stock and not calls because of the large spread (see below)

 

* Large spread on KND May 19 $10 calls

On 4/19, only May 19 $10 calls were available, i.e. no weeklys.
The $10 calls were .10 / .15  (.05 spread)
Two days later, on Fri 4/21 the spread was .25 / .50  (.25 spread)

Trade

Details

1,308

57

0.05

0.35

0.25

0.50

10.00

The stock dropped on the 4th day:

  

KND — is it a buy?

(Day before - Fri 3/24 - was #1, 3, 15, 37, 75)

• 3/27/17:

• 3 weeks later:  NO

Kindred Healthcare (KND) reported earnings on Mon 27 Feb 17 (a/h)

** charts before earnings **

  

** charts after earnings **

• 3 days later

• 1 month later:

Kindred Healthcare beats by $0.11, reports revs in-line; guides FY17 EPS in-line, revs above consensus; Will discontinue quarterly cash dividend:

• Reports Q4 (Dec) earnings of $0.18 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus of $0.07; revenues fell 2.0% year/year to $1.75 bln vs the $1.73 bln Capital IQ Consensus.
• Co issues guidance for FY17, sees EPS of $0.40-0.70, excluding non-recurring items, vs. $0.61 Capital IQ Consensus Estimate; sees FY17 revs of $7.1-7.3 bln vs. $6.89 bln Capital IQ Consensus Estimate.
  • Core EBITDAR of $930 million, with a range of $910 million to $950 million
• Annual revenues of approximately $6.3 billion. Core EBITDAR of approximately $840 million. Core diluted EPS from continuing operations of approximately $0.80
• Change to dividend policy
  • The Kindred Board of Directors declared a cash dividend of $0.12 per share on the Company's common stock payable on March 31, 2017 to shareholders of record as of the close of business on March 13, 2017. The Kindred Board of Directors has determined that trading levels of the Company's common stock do not sufficiently reflect the value of the Company's quarterly cash dividend. Following the payment of the quarterly cash dividend mentioned above, the Kindred Board of Directors has determined to discontinue the Company's quarterly cash dividend on its common stock and redirect the funds to repay debt and invest in growth.