New Mountain’s Convey Health seeks buyer

  • Company projects ~$50 mln 2019 Ebitda
  • First-round bids next week
  • Florida company merged with HealthScape, Pareto in November

New Mountain Capital is evaluating the sale of healthcare payer services company Convey Health Solutions, according to five people familiar with the matter.

The New York PE firm has engaged Barclays Capital and Goldman Sachs for sell-side financial advice, the people said.

First-round bids for Convey are due next week, three of the people said.

Convey is projecting about $50 million in 2019 Ebitda, some the people said. The company has grown from about $10 million in Ebitda at the time of New Mountain’s initial 2016 investment, another of the sources added.

The most likely outcome, some of the people said, is a sale to PE. Indian BPOs such as Cognizant are likely to look at Convey, one person said, But another indicated the process is not targeting this market.

How much the company is seeking is unclear. Price expectations likely range in the mid-teens multiple of Ebitda, some of the people speculated. The services versus tech nature of the business will likely help determine valuation, two people noted.

Convey, based in Fort Lauderdale, Florida, and led by CEO Stephen Farrell, provides outsourced benefits and compliance administration services to health insurance plans and pharmacy benefit management firms.

More specifically, the company simplifies processes for Medicare Part D and Medicare Advantage programs. It manages processes ranging from eligibility and enrollment processing to premium billing and payment processing.

Convey has achieved scale partly through M&A. The sales process comes just months after its November merger with HealthScape Advisors, a management consulting firm, and Pareto Intelligence, a healthcare data analytics firm. Churchill Asset Management supported the acquisition of the pair of Chicago companies with a $143 million credit facility, a January news release said.

Convey following the merger said it would serve more than 200 customers, including many of the nation’s leading commercial and government-sponsored health plans.

Convey in 2017 bought Gorman Health Group, a consulting and software services firm specializing in government-sponsored health plans.

New Mountain acquired Convey in October 2016, providing an exit for West Palm Beach, Florida’s Comvest Partners.

Comvest’s initial investment dated to July 2009. The firm acquired the company, then called NationsHealth, through a going-private transaction.

New Mountain has made other bets in healthcare payer services, including its December 2015 acquisition of payment integrity company Equian. The company was acquired from Great Point Partners for $225 million in cash and simultaneously combined with Trover Solutions.

The investor in December 2018 recapitalized Remedy Partners, which works with health systems, payers and providers to manage bundled payment programs.

In December 2017, New Mountain simultaneously acquired and merged CenseoHealth and Advance Health, creating the largest provider of in-home health risk assessments to seniors with Medicare Advantage health plans.

New Mountain’s healthcare technology-related investments include clinical-data-exchange company CIOX Health and revenue integrity firm Revint Solutions.

Representatives of NMC and Barclays declined comment, while those with Goldman Sachs did not return a request for comment. Convey executives couldn’t immediately be reached.

Action Item: Check out New Mountain’s latest Form ADV: https://bit.ly/2uWS608