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Humana sells clinic unit to investment fund for $1 billion

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(Bloomberg) — Health insurer Humana Inc. (NYSE:HUM) will sell its Concentra clinics unit for $1.06 billion in cash, less than five years after buying the business to expand into occupational health and physical therapy services.

Concentra is being acquired in a joint venture by Select Medical Holdings Corp., which runs hospitals, and the private equity firm Welsh, Carson, Anderson & Stowe, Louisville, Kentucky-based Humana said in a statement Monday. Welsh Carson sold the business to Humana in 2010 for about $800 million.

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Concentra had about $1 billion in revenue last year. The unit runs about 300 clinics offering primary care, physical therapy and wellness services in 38 states, as well as about 250 workplace health clinics.

Concentra was a way for Humana to “expand convenient, affordable high-quality health care for its membership base,” the health insurer said in the statement. Since then, Humana has decided to focus on primary care services, instead of workplace injury care, which was Concentra’s focus.

“Concentra’s operations did not ultimately align with Humana’s strategy as well as we had originally anticipated,” Humana Chief Executive Officer Bruce Broussard said in the statement. “We expect Humana will continue to invest in other primary care assets.”

Concentra was founded in 1979, and pitches itself to employers as a way to lower their health care costs by delivering basic services on site. It has about 6,000 workers, according to its website.

Hospital clinics

Select Medical, which operates more than 100 hospitals and 1,000 outpatient rehabilitation clinics, advanced 7 percent to $15.65 at the close in New York. Humana fell less than 1 percent to $182.10.

The deal is expected to close in the second quarter of this year. Goldman Sachs Group Inc. was Humana’s financial adviser and Fried, Frank, Harris, Shriver & Jacobson LLP provided legal counsel.

Welsh Carson also today made a deal to form a joint venture between an outpatient surgery company that it owns, United Surgical Partners International Inc., and hospital company Tenet Healthcare Corp. (NYSE:THC). Tenet, the third-biggest publicly traded hospital chain, will pay about $425 million in cash to Welsh Carson, and will own 50.1 percent percent of the venture and have an option to buy Welsh Carson’s remaining stake over five years.