Bain-backed ‘episodes of care’ firm Remedy Partners explores sale

The continued transition toward value-based care bodes well for Remedy Partners, the VC-backed company currently exploring a sale, four people familiar with the matter said.

The Bain Capital Ventures-backed “episodes of care” company has turned to JPMorgan Securities for financial advice, said three of the sources.

The Darien, Connecticut, company could be either a sponsor or strategic play, sources said. Remedy could fit the bill for corporate buyers ranging from UnitedHealth Group’s information and tech-enabled health-services business Optum to home-health provider LHC Group, one of the people suggested. Optum has established itself as a prolific acquirer, while LHC has emerged as an outspoken supporter of value-based care.

Founded in 2011, Remedy Partners creates and manages more than 2,200 bundled payment programs in partnership with health systems, commercial health insurers and accountable care organizations. The company employs more than 300 and is led by CEO Carolyn Magill, a former exec at Evolent Health and UnitedHealth Group’s Medicare and Medicaid businesses

Remedy to date has raised $96.2 million through three funding rounds, according to CrunchBase. Bain Capital Ventures invested $60 million in Remedy in its latest Series B round in November 2015. In connection with the Bain financing, the firm’s Managing Director Mike Krupka joined Remedy’s board. Previous investors include Triple Tree Capital Partners.

Remedy Partners is the largest provider of software, analytics, training and other services tailored to the Bundled Payments for Care Improvement initiative, and thus is likely to benefit from a first-to-market standpoint as the move to value-based care remains in its early innings, one source noted.

At the same time, one potential consideration for buyers may be the extent to which Remedy can maintain that advantage once value-based care becomes commonplace, this person added.

BPCI encompasses the value-based care model, which links payments for the multiple services patients receive during episodes of care. Supported by the Center for Medicare & Medicaid Services, the coordinated-care model is designed to produce a lower combined cost to Medicare as a means to transition away from the traditional fee-for-service model.

To be sure, one potential risk is the opposition of Health and Human Services Secretary Tom Price to bundled-payment initiatives.

The implementation of certain mandatory initiatives have already slowed under the new administration. In March, CMS disclosed an interim final rule delaying the implementation of cardiac-care bundled-payment initiatives and the expansion of the Comprehensive Care for Joint Replacement model.

Other providers of bundled care services include naviHealth. Cardinal Health in August 2015 bought a majority stake in the company, while its existing backer, Welsh, Carson, Anderson & Stowe, retained an equity stake.

Representatives of Remedy, Bain and JPM did not return requests for comment on Thursday.

Action Item: Learn more about Remedy here: https://www.remedypartners.com/what-we-do/episode-connect/

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