AGS Health, PE-backed offshore RCM provider, weighs sale

  • 1st round bids submitted this week
  • Atlaris recapped AGS in ’17 alongside WindRose and CEO Devendra Saharia
  • Off-shore RCM company has > 5,000 billing and coding specialists, processes $35 bln in A/R annually

Private equity-backed AGS Health, an offshore provider of healthcare revenue-cycle management to the U.S. healthcare market, is evaluating a sale, according to four sources.

The company’s investors, WindRose Health Investors and Altaris Capital Partners, have enlisted Houlihan Lokey to advise on the AGS process, the sources said.

First-round bids were due this week, two of the sources said.

The sellers are marketing AGS off more than $30 million of Ebitda, some of the sources said. One source said projected Ebitda is just north of $25 million for the 12 months ending March 2019.

The auction comes about a year after New York’s Altaris recapitalized AGS in partnership with Founder and CEO Devendra Saharia, as well as existing shareholder WindRose.

WindRose rebranded from MTS Health Investors earlier this year.

The level of sponsor interest AGS has garnered is unclear, but one source suggested the company would fit well with strategics like NTT Data, Cognizant or Equian Health.

While its U.S. headquarters is in Newark, New Jersey, AGS operations are principally in India.

Founded in 2011, AGS provides RCM services including medical coding, transaction processing and accounts receivable management, as well as business analytics and data integration offerings.

The company says it has a blue-chip client base, serving large health systems and hospitals, physician groups, academic medical centers, billing companies, RCM companies, coding companies, among other healthcare providers across the U.S.

With a global workforce of more than 5,000 billing and coding specialists, AGS processes $35 billion in accounts receivable and codes 23 million charts annually, the website says.

Sources cited GeBBS Healthcare Solutions as a comparable player in the medical-billing-outsourcing market.

New York’s Windrose, which invests exclusively in healthcare-services companies, has been an active dealmaker in recent months.

On Nov. 14 the firm said it invested in Traditions Behavioral Health, a Napa, California, provider of outsourced psychiatric services to institutional and community-based programs.

The deal followed another bet in behavioral health: The firm  a month earlier recapitalized addiction-treatment company Kolmac Clinic.

WindRose in July recapitalized Basys, a provider of benefits administration technology for the Taft-Hartley market.

On the sell side, WindRose in late summer retained UBS to provide financial advice on a sponsor-focused auction for MyNEXUS, a provider of care management services, Buyouts reported.

WindRose Managing Partner Oliver Moses serves on AGS’s board.

Representatives of WindRose and Houlihan declined comment, while those with Altaris and AGS couldn’t immediately be reached.

Action Item: Reach WindRose at +1 212-887-2105

Update: Story has been updated to reflect additional information regarding Ebitda.