Humana forms CenterWell clinic joint venture with BlackRock

Humana Inc. (HUM) said in a filing it has entered a new joint venture with funds managed by HPS Investment Partners, a BlackRock subsidiary, to run nearly 150 CenterWell Senior Primary Care clinics.

The new joint venture replaces the existing CenterWell joint ventures with Welsh, Carson, Anderson & Stowe, known as WCAS. The company said those earlier ventures were instrumental in scaling CenterWell over the last seven years.

Under the arrangement, BlackRock will acquire WCAS's current equity ownership, which is valued at approximately $2.8 billion. The company said the terms have been modified to reflect the maturity of the business.

The new venture is majority owned by BlackRock and minority owned by CenterWell. CenterWell will continue to manage and operate all clinics owned through the joint venture.

The filing says the new venture does not include a put option exercisable by BlackRock. Humana expects a reduction in liabilities on its balance sheet compared with the put arrangements in the existing joint ventures.

The arrangement will give rise to a derivative instrument that will be recorded on Humana's balance sheet at fair value, the company said. CenterWell has also agreed to minimum return protections for BlackRock.

CenterWell can begin buying clinics from the joint venture at its election starting in 2028. If CenterWell has not acquired all of the joint venture's clinics by the end of 2033, BlackRock will have the right to exit through a sale process.

Any exit is subject to CenterWell's right to submit the first offer to acquire the remaining clinics.

Over the next two years, the joint venture is expected to deploy additional capital to fund existing clinical operations, establish new clinics and expand the network through strategic acquisitions. The filing does not give the amount of that capital.

Humana anticipates a lower cost of capital under the new joint venture, reflecting the maturity of the business, the company said.

"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," said President of CenterWell Dr. Sanjay Shetty.

The transaction is expected to close in the fourth quarter of 2026. Closing is subject to customary conditions and state and federal regulatory approval.

Humana said the transaction is not expected to have a material impact on its 2026 adjusted earnings guidance.

This is Humana's second strategic transaction with BlackRock this year. The company earlier signed a definitive agreement to divest all or substantially all of its minority interest in Gentiva to a consortium of investors, including BlackRock.

In a separate section of the filing, Humana affirmed its guidance of at least $9.00 in adjusted earnings per share for the year ending Dec. 31, 2026. Adjusted EPS is a non-GAAP measure, meaning it is not calculated under generally accepted accounting principles, or GAAP.

The guidance is consistent with the outlook issued in a July 29, 2026 press release and affirmed in Form 8-K filings on Sept. 1 and Oct. 9.

The company does not expect changes to its 2026 adjusted EPS guidance. It does expect potential changes to its 2026 GAAP EPS guidance, tied to its value creation and strategic initiatives, including the removal of the put option on the WCAS joint ventures.

Humana said it cannot yet reconcile its adjusted EPS guidance to GAAP diluted EPS because it is completing the financial close for the three- and nine-month periods ended Sept. 30.