Private equity firm Pamplona Capital Management announced that they have entered an agreement to acquire Alpharetta, GA-based MedAssets for $2.7 billion in cash. The MedAssets-Pamplona transaction is expected to close in the first quarter of 2016, pending receipt of customary approvals, including certain regulatory approvals and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction also is subject to customary closing conditions, including the approval of the merger agreement by MedAssets stockholders.
Pamplona’s Plans to Combine its Precyse Business with MedAssets RCM Segment
Following completion of Pamplona’s acquisition of MedAssets, Pamplona will move to complete the sale of MedAssets SCM segment to VHA-UHC Alliance and combine its Precyse business with MedAssets RCM segment. Pamplona and VHA-UHC Alliance have also agreed to work together in select service offerings to serve their mutual members and customers, representing further strategic growth opportunities for both businesses.
The combined MedAssets-Precyse revenue cycle businesses will offer hospitals an independent, highly complementary value proposition as healthcare organizations require sustainable revenue performance in preparation for the transition to a value- or risk-based reimbursement environment. MedAssets’ RCM segment services and technologies currently touches more than $450 billion in gross patient revenue annually and helps more than 2,700 providers optimize reimbursement by improving patient payment estimation, claims coding accuracy, contract modeling, defensible pricing and regulatory compliance strategies, and billing and collection services, among other capabilities.
Precyse offers fully outsourced health information management (HIM) services along with medical coding, clinical documentation improvement (CDI) and other technologies and intelligence to equip healthcare organizations to achieve enhanced, sustainable operational performance.
Combined MedAssets and VHA-UHC Alliance
The combined expertise of VHA-UHC Alliance and MedAssets SCM business is expected to help acute hospitals, academic medical centers and non-acute healthcare providers significantly improve their financial, clinical and operational performance through enhanced supply chain procurement, cost management, analytics and advisory services. Members and customers also will have the power of Sg2 market analytics at their fingertips as one of the leading providers of health care market intelligence, strategic analytics and service line-based insight.
Today, VHA-UHC Alliance serves more than 5,200 health system and hospital members and affiliates, including virtually all the academic medical centers and health systems, as well as more than 118,000 non-acute health care customers representing more than $50 billion in annual purchasing volume. The MedAssets SCM business serves approximately 3,300 hospitals and 123,000 non-acute healthcare providers, and manages approximately $59 billion in total spend on behalf of its customers.
MedAssets Third Quarter Financial Results
MedAssets reported total net revenue for the third quarter of 2015 increased 8.1% to $190.0 million from $175.7 million for the third quarter of 2014. Net loss for the third quarter of 2015 was $(2.2) million, or a loss of $(0.04) per share, compared with net income of $7.7 million, or $0.13 per share, for the third quarter of 2014. The net loss in the third quarter of 2015 was due to $5.0 million of restructuring charges related to the company’s expense reduction program announced in late September 2015 and $10.3 million of non-cash capitalized software impairments related to certain Revenue Cycle Management products.
“Since February, our executive leadership team has been developing and implementing our business transformation and value creation plan to prepare MedAssets for a growth-oriented future within a value-based healthcare world. We have been making substantial progress, and our third quarter 2015 financial performance is a testament to our employees’ commitment, dedication and hard work to execute our plan,” said R. Halsey Wise, chairman and chief executive officer, MedAssets in an official statement. “Over the last year, our progress captured the attention of outside parties, and we received a number of unsolicited inquiries expressing interest in acquiring MedAssets. Our board of directors and executive leadership team conducted a thorough review of strategic alternatives and, after careful consideration, we determined an acquisition by Pamplona is the best course of action for our shareholders, customers and employees.”
Goldman, Sachs & Co. and Deutsche Bank Securities Inc. are acting as MedAssets’ financial advisors, and Willkie Farr & Gallagher LLP is acting as its legal advisor. Morgan Stanley and Barclays are serving as Pamplona’s financial advisors, and Simpson Thacher & Bartlett LLP is serving as its legal advisor. Pamplona has received committed financing from Morgan Stanley, Barclays, Macquarie Group and GCI for the transaction.
