CD&R’s Agilon Health considers IPO

  • Company generates around $1 bln in revenue
  • New York’s CD&R formed Agilon in 2016 alongside former Aetna exec Ronald A. Williams
  • Agilon peer VillageMD is seeking capital raise

Clayton, Dubilier & Rice is considering a potential initial public offering for Agilon Health, the healthcare technology company focused on supporting physicians’ shift away from fixed fees to a pay-for-performance model, according to people familiar with the matter.

Long Beach, California-based Agilon could be worth somewhere between $3 billion and $4 billion in equity in an IPO, some of the people said.

While the timing of a potential IPO is unclear, banks including JPMorgan Chase & Co, Goldman Sachs and Deutsche Bank were engaged in the spring to prepare for an offering, they said.

With operations across California, Ohio, Texas and Hawaii, Agilon helps equip physicians with tools to transform their practices to a reimbursement system based on patient quality and health outcomes. Doctor groups are increasingly transitioning to this model — typically referred to as value-based care — as an alternative to the traditional fee-for-service payment model that encourages quantity over quality.

Agilon partners with primary-care physician organizations serving the Medicare Advantage and Medicaid populations, but doesn’t actually own physical medical groups.

The company generates revenue of around $1 billion, two of the people said.

Agilon’s roots date to October 2016, when New York’s CD&R formed the company together with Ronald Williams, an operating adviser to the fund and a former Aetna executive.

Williams serves as chairman of Agilon, while Ron Kuerbitz, former CEO of dialysis services company Fresenius Medical Care, was appointed CEO in February 2017.

Agilon peers include the likes of Privia Health, whose investor base includes Pamplona Capital and a Goldman Sachs’ affiliate.

In related activity, Oak HC/FT-backed VillageMD, the Chicago primary-care group that helps its doctors transition to a value-based reimbursement system, is seeking $150 million in a capital raise.

CD&R, meanwhile, also backs naviHealth, whose technology aims to reduce the cost of healthcare and improve care for patients after they are discharged from the hospital. The firm in August 2018 purchased a 55 percent stake in the company, while Cardinal Health retained its remaining stake.

NaviHealth commanded a value of about $1.2 billion, sources told Buyouts at the time.

CD&R earlier this year sold Tranzact, a provider of direct-to-consumer digital marketing and data science to health insurers, for at least $1.2 billion. The buyout shop expected to produce a gross MOIC of at least 2.8x, a document circulated to investors showed.

Representatives of CD&R, JPMorgan and Deutsche Bank declined to comment. Agilon executives could not be reached, while a Goldman Sachs representative did not respond to requests for comments.

Action Item: Check out CD&R’s latest Form ADV: