CareCentrix, backed by Summit, shelves sale process

The home- and post-acute care benefits manager was in deal talks with health insurance giant Anthem in late September.

CareCentrix, the Summit Partners-backed home- and post-acute care benefits manager, has scrapped potential sale plans after talks with Anthem fell apart, sources with knowledge of the situation said. 

The parties were in late-stage discussions in late September, with the company having engaged with one or two other potential acquirers, PE Hub previously wroteMorgan Stanley was enlisted earlier this year to evaluate options in response to inbound interest from strategic buyers.  

Customer-concentration concerns ultimately weighed on the process, sources said, contributing to conflicting views on where the company should be valued. CareCentrix previously evaluated a sale in late 2017 via UBS and Allen & Co.

This time around, CareCentrix originally hoped to command a $1 billion value in a potential transaction, but price talk came down to the $600 million to $700 million range, some of the sources told PE Hub in September. One person disagreed, commenting that if CareCentrix would transact at all, it would be at a significantly higher range.

CareCentrix produces normalized EBITDA of approximately $80 million, accounting for the loss of its Cigna contract (effective January 2021) plus new business, sources told PE Hub. Cigna, its largest client, contributed more than 50 percent of the company’s earnings and cash flow, according to Moody’s.

Led by John Driscoll, CareCentrix manages care for 26 million members through over 8,000 provider locations.

The company uses analytics to determine the appropriate site for post-acute care, providing support and coordination for patients and their families throughout care transitions, including to and from skilled nursing facilities (SNFs) and through home health, home durable medical equipment, home infusion and sleep services.

Summit, a Boston growth equity firm, completed its investment in CareCentrix in 2011. 

Interest in CareCentrix from the payer universe was in part influenced by Optum’s May acquisition of CD&R’s naviHealth, which commanded a $2.5 billion enterprise value. Less than two years into its investment, CD&R generated a 2.5x multiple of invested capital on naviHealth, people familiar with the deal said at the time. 

CareCentrix declined to comment. Anthem and Summit Partners did not return requests for comment.