A BlackRock-owned private-credit manager is taking out Welsh Carson's roughly $2.8 billion position in Humana's senior clinics. The new venture has no put option, which Humana says will significantly cut balance-sheet liabilities.
A private-equity firm is exiting one of the largest primary-care platforms in the country. A private-credit firm owned by the world's largest asset manager is taking its place, on different terms.
Under an agreement Humana announced Tuesday, money managed by BlackRock's HPS Investment Partners will take out Welsh, Carson, Anderson & Stowe, which co-owns close to 150 CenterWell senior-care clinics with the insurer. Welsh Carson's holding is put at about $2.8 billion. After the deal, BlackRock will control the clinics through a fresh partnership, with Humana's CenterWell unit as the junior owner.
Day-to-day operations stay with CenterWell. Over the next two years the partnership plans to put in more money to support current sites, open new ones and buy others. Closing is targeted for the fourth quarter, pending state and federal sign-off.
The $2.8 billion figure
The value belongs to Welsh Carson's stake. It is not cash paid to Humana, as analysts at Evercore ISI pointed out. What Humana gets is a different contract.
From a put to a call
The existing joint ventures included put arrangements, which could require Humana to buy out its partner. Those obligations sit on Humana's balance sheet as liabilities. The new venture has no put option, and Humana said it expects a significant reduction in balance-sheet liabilities and a significantly lower cost of capital.
In place of the put, Humana gets a call. From 2028, CenterWell may purchase clinics out of the partnership on its own schedule. Any still unpurchased at the close of 2033 can be put up for sale by BlackRock, though CenterWell would get the first chance to bid. BlackRock will receive "certain protections," which Humana's regulatory filing describes as minimum-return protections recorded on its balance sheet as a derivative. Their size was not disclosed.
The capital provider
The buyer is not a traditional buyout fund. HPS is a private-credit manager, and its capital is taking an equity-like position with protections attached in a business with a defined path to exit. It is the second transaction this year involving Humana and BlackRock. In June, Humana agreed to sell its minority stake in hospice operator Gentiva to an investor group that includes BlackRock.
Welsh Carson has been Humana's partner in the clinics for seven years, a period in which CenterWell grew into the biggest U.S. operator of primary care for seniors paid on a value basis, by the insurer's description. What the firm earned on the investment was not disclosed.
Humana said the deal will not have a material impact on its 2026 adjusted earnings guidance.
Market implications
One reading is that Humana has turned a contingent obligation into an option. It removes liabilities, lowers its cost of capital, keeps operating control and can buy back clinics on its own timetable starting in 2028.
A second reading is that the protections given to BlackRock are the price of that flexibility, and their size has not been disclosed. If CenterWell does not buy the clinics by 2033, a sale process run by its partner could force its hand, and the cost of the capital has not been made public.
What to watch
Humana's filings after closing should quantify the liability reduction and describe BlackRock's protections. Regulatory approval and the fourth-quarter close are the next steps.