Humana has signed an agreement for the sale of a majority stake in the Hospice and Personal Care divisions of its Kindred at Home subsidiary (KAH Hospice) to private investment firm Clayton, Dubilier & Rice (CD&R).

Earleir, the company indicated its intent to sell a majority interest in these non-core businesses when it acquired the remaining stake in Kindred at Home last April.

Under the terms of the definitive agreement, Humana will sell a 60% stake in the business for nearly $2.8bn, reflecting an enterprise valuation of $3.4bn.

Humana chief financial officer Susan Diamond said: “While palliative and hospice services are important components in the continuum of care that Humana offers patients, we are confident that we can deliver desired patient outcomes and improved customer experiences through partnership models rather than fully owning KAH Hospice.

“With CD&R’s established physician relationships, value-based care expertise, and record of providing strategic capital to a wide range of businesses, we are certain that these divisions are well-positioned for success under the joint ownership of Humana and CD&R.”

Subject to customary state and federal regulatory approvals, the transaction is expected to close in the third quarter of this year.

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Once the deal concludes, the Hospice and Personal Care divisions will be restructured into a standalone operation.

KAH Hospice and Personal Care divisions current president and CEO David Causby will continue to lead these businesses under the new structure.

Causby said: “We are excited by the new strategic partnership structure with Humana and look forward to working closely with CD&R to pursue growth that is centered on improved access, equity and quality of care across an expanded group of patients.”

Proceeds from the transaction will be used by Humana to repay debt and for share repurchases.