Marlin Equity readies $2 bln–plus sale of VirginPulse

The upcoming process comes less than a year into Marlin's investment in the health tech company.

By Milana Vinn and Sarah Pringle

Marlin Equity is preparing to sell VirginPulse in a deal that could ultimately value the employee wellness firm north of $2 billion, five sources familiar with the process told PE Hub.

Marlin, which held bake-offs for an advisory role around the November-December time-frame, has selected Morgan Stanley to advise on an upcoming process, the sources said. The sales process is expected to kickoff in the next month, they said.

Both financial sponsors and strategics are expected to be in the mix, the people said. Strategic buyers could include health plans or insurance carriers, two of the sources suggested.

VirginPulse, based in Providence, Rhode Island, is a healthcare IT company that offers personalized apps supported by mobile and wearable devices to encourage healthier lifestyles for employees and ultimately create more productive workforces. Its apps track health and fitness metrics for employee-members, offering incentives to fuel behavior.

The company generates approximately $80 million in Ebitda, three of the sources said. A potential sale could ultimately be valued at more than $2 billion, three of the people said, while a fourth cautioned that such a price-tag would be a big equity check for a sponsor.

VirginPulse is set to be a short hold for Marlin, which in May 2018 simultaneously bought and merged the company with its recently acquired peer, RedBrick Health. The Los Angeles-based firm acquired VirginPulse following a broadly run auction for the company.

The company’s former backers include Insight Partners and Richard Branson’s Virgin Group, which led a $92 million financing round in May 2015.

For Marlin, a $2 billion-plus value is likely required to ensure a decent return, based on the level of capital laid out less than a year ago, one of the sources said.

Ahead of the 2018 deal, VirginPulse initially opted to test the market after receiving significant inbound interest, CEO David Osborne told PE Hub in a May 2018 interview. The company went out to both strategics and sponsors, holding “fireside chats” with some 35 to 40 PE firms, Osborne said at the time.

VirginPulse in addition to RedBrick has grown through several other acquisitions over the past few years, snapping up companies including Blue Mesa Health, SimplyWell and Preventure.

Morgan Stanley declined to comment. Marlin Equity and VirginPulse did not return PE Hub’s request for comment.

Action Item: Check out Marlin Equity’s recent form ADV here.