ArroHealth’s sale to New Mountain Capital’s CIOX Health commanded a $125 million to $130 million valuation, Buyouts has learned.
New Mountain and CIOX Health on April 18 announced the acquisition of the provider of risk-adjustment services to health plans and providers, confirming an April 10 report by Buyouts. Terms weren’t disclosed.
The deal follows a highly targeted process conducted by SunTrust Robinson Humphrey that got underway in late 2016. Talks were held with strategic buyers and PE-backed strategics the likes of CIOX, the Alpharetta, Georgia, clinical-data-exchange platform.
New Mountain and CIOX turned to Leerink Partners for financial advice on the transaction.
With ArroHealth’s close to $10 million of EBITDA, as previously reported, the price indicates a multiple in the ballpark of 12.5x to 13x.
ArroHealth, Hauppauge, New York, provides technology-enabled risk-adjustment services and HEDIS (healthcare effectiveness data and information set) services, which include medical-record retrieval, coding and in-office evaluations. Clients include health plans and providers participating in Medicare Advantage, managed Medicaid and Commercial Health plans, as well as the Health Insurance Exchange marketplace.
ArroHealth, formerly MedSave USA, was previously backed by growth equity firm Trident Capital and healthcare technology VC firm HLM Venture Partners. Trident and HLM inherited their majority stake in October 2013 for an undisclosed sum.
ArroHealth’s website also lists Sandbox Industries and BlueCross BlueShield Venture Partners, a fund that Sandbox manages, as an investor.
ArroHealth is the first add-on deal for CIOX since its formation. New York’s New Mountain created the platform through the 2016 merger of HealthPort, IOD, Care Communications and ECS.
Action Item: For more details on New Mountain’s CIOX Health: http://www.newmountaincapital.com/new-mountain-private-equity/portfolio-companies/portfolio-investments/ciox-health?sid=4&pid=1132
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