BlackRock to take over $2.8B private equity stake in CenterWell senior primary care centers
Multinational investment firm BlackRock is being tapped to operate the CenterWell chain of senior primary care centers, having entered into a management agreement with majority owner Humana.
According to an announcement released on Tuesday, once finalized, the agreement will see BlackRock buying out the stake in CenterWell currently owned by Welsh, Carson, Anderson & Stowe (WCAS), a private equity firm. The company currently owns a $2.8 billion position in the chain of clinics, Humana revealed.
Once the transaction is complete, the insurance giant said CenterWell will continue to operate independently, though BlackRock will be the majority owner of a chain of 150 clinics, developed and operated by WCAS as part of a 2022 agreement with Humana, designed to expand the reach of CenterWell.
In total, the CenterWell brand is associated with more than 350 senior primary care centers in 12 states.
As part of the deal, BlackRock has agreed to make new investments into the clinics, aimed at promoting growth for the division, including opening new centers and looking into the possible buyout of competitors, Humana said.
The insurer added that it expects a “significant reduction in the liabilities” on its balance sheet as it effectively exits the joint venture agreement over time, albeit by guaranteeing certain protections to BlackRock.
Per the terms of the agreement, CenterWell—which operates as an independent subsidiary of Humana—may purchase back the clinics from BlackRock over time, beginning in 2028, but the investment firm cannot force Humana to do so.
The previous agreement with WCAS contained a “put” provision, whereby Humana and CenterWell could be forced to buy out its partner's stake. That caveat is not present in the deal with BlackRock, reducing any associated financial risk, Humana confirmed.
“We look forward to this new venture with BlackRock as our partner, while our growing network of CenterWell clinics remains dedicated to serving patients with our unique model of senior-focused, value-based care,” Sanjay Shetty, MD, President of CenterWell, said in a statement. “We are grateful to the WCAS team for their strong partnership and meaningful contribution over the past seven years and look forward to continued success for CenterWell Senior Primary Care with the support of BlackRock.”
CenterWell and Humana added that there will not be any patient care disruptions as a result of the change in ownership.
The deal is expected to close by the end of the year.
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