Carlyle to acquire worker’s-comp firm MedRisk from TA at $1 bln-plus valuation

  • MedRisk commands >14x EBITDA multiple
  • Carlyle evaluated previous worker’s-comp opportunities
  • Carlyle also won Spectrum’s Net Health this week

Less than two years into its investment, TA Associates is exiting MedRisk via a sale to Carlyle Group, a deal that values the specialized managed-care company north of $1 billion, Buyouts has learned.

Through its $13 billion Fund VI, Carlyle will take a majority stake in MedRisk, which provides worker’s-compensation cost-containment services in the physical and occupational therapy areas.

Terms weren’t disclosed, but the price tag equates to an EBITDA multiple above 14x, a source with knowledge of the matter said.

Based on the about $85 million in EBITDA that two other sources previously said MedRisk posts, that suggests the target commanded an enterprise value in the ballpark of $1.2 billion. Leverage on the deal was about 7.25x, the source added.

The deal concludes a Centerview Partners-run sales process that Buyouts previously reported on in November.

MedRisk is a logical fit for Carlyle, as the firm’s healthcare team has been actively involved in worker’s-comp opportunities for years, another source said.

That includes diligence on One Call Care Management, which Odyssey Investment Partners sold to Apax Partners in 2013; Sedgwick Claims Management Services, which investors including Hellman & Friedman sold to KKR in 2014; and Helios, which UnitedHealth Group’s OptumRX unit acquired in 2016, the source said.

Carlyle also has roots in the broader managed-care-services arena. Prior investments include MultiPlan, which offers healthcare cost-management services, and Qualicorp SA, a Brazilian provider of health-benefits-management services.

MedRisk, for its part, helps coordinate care and manage claims processes for injured workers receiving physical and occupational rehabilitation treatment, as well as chiropractic care and telerehabilitation services.

The company contracts with worker’s-compensation insurance carriers, third-party administrators, self-insured employers, state funds and case-management companies.

Moody’s in a January credit report said MedRisk posts about $419 million in sales.

Other deals

TA Associates invested in the King of Prussia, Pennsylvania, company in early 2016. The associated investment team included TA’s Mark Carter, Angela Jong, Ethan Lieberman and Jennifer Mulloy.

Certain members of the MedRisk management team, including Founder Shelley Boyce and CEO Mike Ryan, will retain a minority equity stake in connection with the transaction.

For Carlyle, the transaction is one of two healthcare deals announced this week.

The PE giant alongside Level Equity is also buying Spectrum Equity’s Net Health Systems, concluding Aeris Partners’ auction for the software company.

The deal was also announced on Monday, confirming a previous Buyouts report that said Carlyle — through its U.S. Equity Opportunity Fund — was close to acquiring the provider of software for specialized outpatient care.

Terms weren’t disclosed, but the company posts EBITDA and revenue of about $16 million and $60 million, sources previously said. The asset likely traded for an EBITDA multiple south of 12x, one source estimated.

It’s also been a busy week for Boston’s TA Associates. The global growth-oriented private equity firm announced three new investments this week, kicking off Monday with a new bet in healthcare.

TA said it had completed a strategic growth investment in Healix, which provides infusion therapy management services on an outsourced basis.

The firm followed with a pair of deals on Tuesday, announcing an investment in Flexera, a software developer backed by Ontario Teachers’ Pension Plan. Separately, Old Mutual Wealth said it would sell its single strategy asset management business to TA for 600 million pounds ($802.5 million).

Representatives of TA and Carlyle declined to comment.

Action Item: Reach out to TA’s Mark Carter at mcarter@ta.com

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