Dive Brief:

• Humana expects to pay between $450 million and $550 million to acquire the first group of senior-focused primary care centers that it developed through a joint venture with Welsh, Carson, Anderson & Stowe, Chief Financial Officer Susan Diamond said Friday during the insurer’s investor day.
• The agreement inked with Welsh Carson in 2020 included options for Humana to acquire the private equity firm’s interest in the joint venture in stages over the next five to 10 years. The venture was expected to open 67 clinics by early 2023. “We are planning for the full acquisition of centers built in partnership with Welsh Carson through our put and call options beginning in 2025,” Diamond said.
• In mid-May, Humana and Welsh Carson announced a second joint venture that will spend up to $1.2 billion to open about 100 new value-based primary care clinics for Medicare patients between 2023 and 2025 under the CenterWell Senior Primary Care brand.

Dive Insight:

Humana is accelerating into primary care by expanding its chain of clinics serving Medicare patients into more markets.

The payer in May said it expected to operate about 250 clinics, under the CenterWell and Conviva Care Solutions brands, by the end of 2022. The total is up from 214 as of March, including 37 through its partnership with Welsh Carson and 177 wholly owned centers.

Humana expects to boost its total number of clinics by 30 to 50 per year through 2025, with up to 15 to 25 being added through acquisitions, Diamond said. The remaining about 30 per year will be added through joint ventures with Welsh Carson.

“We will continue to be focused and strategic in considering M&A opportunities as we look to extend our CenterWell capabilities with a particular focus on growing our primary care and home businesses,” Diamond said.

Longer term, Humana plans to spend a total of $2.5 billion to $3.5 billion from 2026 to 2030 on clinic expansion as it accelerates its level of annual builds, she said.

Humana currently has CenterWell clinics in Georgia, South Carolina, Florida, North Carolina, Texas, Kansas, Missouri, Nevada and Louisiana, according to the company’s website.

Like the first joint venture, Humana’s second collaboration with Welsh Carson includes a series of put and call options through which Humana may acquire the PE firm’s interest in the partnership. Under the agreement, Humana could acquire Welsh Carson’s stake in the second joint venture beginning in 2028, or five years after the opening of each set of clinics, or the firm could require Humana to buy its interest beginning in 2030, or seven years after each group of clinics opens.

In addition to the primary care centers, the CenterWell brand includes Humana’s home health and pharmacy businesses.