| 3 Strategic Rationale for Transaction Humana to acquire the remaining 60% interest in Kindred at Home (“KAH”) from its sponsor partners, TPG Capital (“TPG”) and Welsh, Carson, Anderson & Stowe (“WCAS”). • Largest Home Health and Hospice Operator - Acquisition makes Humana the sole owner of the nation’s largest home health and hospice operator, providing a nationally scaled platform of clinicians on which to innovate, and reflects Humana’s continued commitment to investing in home-based care delivery solutions that are intended to work together to deliver improved patient outcomes, increased satisfaction for patients and providers and value for health plan partners • KAH supports over 550,000 patients each year across 40 states and employs approximately 43,000 caregivers, providing Humana with a nationwide network of clinicians, a critical distribution channel for delivering care in the home Growing Need – The
home health industry is among the fastest growing healthcare industries in the U.S. as a result of an aging population, the prevalence of chronic disease and growing physician acceptance of care in the home. This need has only been punctuated and accelerated by COVID-19 and is reflected in Kindred’s strong historical EBITDA growth Improved Clinical Outcomes- Humana’s successful partnership with the Kindred management team and private equity partners has proven that enhanced care models and clinical interventions can be deployed and lead to fewer avoidable hospitalization events for patients and savings for health plans. The success demonstrated since 2018, including the ability to leverage additional parts of the home based care delivery capabilities Humana has assembled to care for higher acuity patients, and the ability to drive increased referrals to Kindred at Home, gives Humana confidence it can implement a value-based model at scale Maintain Minority Stake
in Hospice Business - The hospice and community care businesses serve some of the most vulnerable patients and their caregivers. However, Humana believes it can continue to deliver on these needs through partnership models, and does not believe a long term majority ownership position is necessary. Humana intends to evaluate options to divest its majority position but maintain a minority interest longer term. This allows Humana to continue to have influence on further program and product advancements through a continued strong partnership with the hospice/community care entity • Transaction Acceleration – Humana has confidence in its vision of integrating KAH into its holistic approach to care; achieves a compelling valuation for the asset; leverages low cost financing mechanisms; and intends to take advantage of the robust market for hospice assets, resulting in rapid deleveraging to target leverage levels in 2022 while reducing the home health only EBITDA acquisition
multiple to mid-to-high single digits
| 5 Terms Of Acquisition Of Remaining ~60% Interest in Kindred at Home n Humana acquiring remaining ~60% interest in KAH from TPG and WCAS with Enterprise Value of approximately ~$8.1B • Purchase price of ~$5.7B, net of Humana’s existing equity stake valued at ~$2.4B (Humana invested ~$1.1B in 2018 for existing 40% equity stake) • Humana expects to fund the transaction with a mix of parent company cash and debt financing • Humana intends to divest its majority stake in the Hospice and Community Care operations, maintaining a strategic minority interest in the asset longer term • Debt to Capital ratio anticipated to be in the low 40’s immediately following transaction, with significant deleveraging to target leverage levels expected during 2022 • Expected close in the third quarter of 2021, subject to customary state and federal regulatory approvals n Post-Acquisition, KAH will adopt Humana’s new payer-agnostic healthcare services brand
– CenterWell, as CenterWell Home Health
| 6 Key Transaction Statistics 1Reflects value of Humana’s existing ~40% interest in Kindred at transaction valuation. 2Reflects value of Humana’s ~$1.1B initial 2018 investment in Kindred grown at an illustrative 8% annual cost of capital. 3Reflects normalized view of 2021E EBITDA excluding expected home care and hospice investments in clinical capabilities and value-based care models, one-time integration costs and any potential synergies. 4Net multiple assuming a divestiture of majority stake in Hospice & Community Care assets at range of current market multiples for similar assets. Figure is inclusive of initial investment of ~$1.4B investment in transaction for original ~40% stake. ~50/50 Estimated 2021 KAH Revenue Mid-to-High Single Digits Implied Home Health Net Acquisition EBITDA Multiple4 Total Transaction Enterprise Value ~$ 8.1 (-) Value Of Humana Existing Equity Stake1 ~(2.4) Humana Purchase Price For ~60% Interest
in Kindred at Home ~$ 5.7 (+) Initial 2018 Humana Investment2 ~1.4 Humana Total Kindred Purchase Price ~$ 7.1 Humana Total Purchase Price/ 2021E Normalized EBITDA Kindred Acquisition Multiple3 ~11x (in billions) EBITDA Split for Home Health and Hospice $3.2B
