Arsenal Capital is exploring the sale of TractManager, whose software and services help healthcare systems make better decisions, according to four sources familiar with the matter.
Harris Williams has been engaged for financial advice, they said. The process remains in its early stages.
Sources placed TractManager’s EBITDA at approximately $30 million and said the Dallas-based company encompasses low- to mid-single-digit growth rates.
While still early, one source suggested valuation could pan out to around $400 million, while another anticipated an outcome in the upper $300 million range.
TractManger, which says it serves 40 percent of US hospitals, encompasses three business units: strategic sourcing, contract lifecycle management and provider management – the latter two of which fit squarely into the governance, risk and compliance (GRC) arena. Under strategic sourcing, TractManager helps healthcare providers analyze and better manage spending.
Potential strategic suitors are likely to be interested in different pieces of the company, with the three businesses accounting for an about equal financial contribution, some of the people said.
The most likely buyer is a PE-backed strategic player that has the operational power to uncork growth rate, sources said, versus a pure play sponsor with less ability to turbocharge growth.
Sources cited logical buyers including RLDatix, a portfolio company of TA and Five Arrows Principal Investments, Clearlake Capital Group’s Symplr, and finally, Temasek- and GTCR-backed GHX.
GHX, for example, is already very clearly in the business of strategic sourcing, but not in contract management and provider management. RLDatix and Symplr, on the other hand, play within the GRC lines of business.
Symplr, for its part, is in the midst of its own partial sale process. PE Hub wrote in July that the GRC software company was working with William Blair and Goldman Sachs, exploring a minority stake sale or 50-50 joint ownership transaction that brings in another private equity group.
As buyers assess a potential transaction, they’re likely to examine “what a cohesive GRC portfolio looks like or doesn’t look like,” one source noted.
“Hospitals are really struggling with their economics and all this stuff becomes more valuable,” another source added.
For the interested strategic players, TractManager is “viewed as a value play,” said a third source.
Other strategics in GRC have been building out their offerings. For example, today Symplr’s Software-as-a-Service platform spans credentialing, data management, payer enrollment services, patient safety, workforce management and vendor management.
RLDatix has also been active on the M&A front, expanding beyond patient-safety software with its acquisition of iContracts in 2019, through which it added contract and compliance management for healthcare providers as well as revenue management for the life sciences market. More recently, RLDatix in mid-September bought OneSource.
TractManager’s origins date to 2012, when Arsenal acquired MediTract. The company has completed five acquisitions in the period since, adding MD Buyline, MedApproved, Hayes, EMTS and Newport Credentialing System.
Representitives of Arsenal, TractManager and Harris Williams didn’t return PE Hub‘s requests for comment.
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