An auction process for Parthenon Capital-backed healthcare-engagement company Eliza Corp is underway, according to five sources familiar with the matter.
Middle-market-focused Parthenon retained William Blair to explore a potential sale of Eliza in the fall and a process was formally launched this year, sources said. Management presentations were expected to take place in February, one source said.
Update: FT Partners is co-advising alongside William Blair, according to a separate source.
Danvers, Massachusetts-based Eliza generates revenue and EBITDA of $60 million and $12 million, respectively, three sources said. The company should command a low double-digit multiple of close to 12x EBITDA, one source estimated, suggesting a deal valued at roughly $144 million.
Led by President and Chief Executive John Shagoury, Eliza provides patient engagement services to Medicaid, Medicare and commercial health plans, as well as pharmacy benefit managers, and durable-medical-equipment providers and device makers that serve home-health needs.
Its services include automated voice messaging, and through its analysis of billions of patient interactions, it seeks to provide insights that ultimately improve care, drive behavioral change and reduce costs for its clients.
Some parties have backed out of the process due to uncertainty about how well the company has transitioned to a subscription revenue base as opposed to a transaction revenue base, one source noted.
The company’s closest competitor is Silverlink Communications, which Georgian Partners-backed healthcare-IT company WellTok bought for an undisclosed sum in December 2015.
WellTok raised $45 million in new venture funding to back the deal for Burlington, Massachusetts-based Silverlink. Prior to Silverlink, WellTok scooped up patient- engagement companies Zamzee, Predilytics and Mindbloom.
Eliza could be either a sponsor or strategic play, the sources said. One source described the most logical buyer as one with a strong footprint in the payer landscape, given the target’s sophisticated technology for managing outreach on behalf of this group. One such company could be Cognizant Technology’s healthcare IT unit TriZetto, which among other things helps streamline processes for more than 250 payers, this person suggested.
The buyer pool could also include players like Cerner and GE Healthcare, another of the sources added.
Parthenon, with offices in Boston and San Francisco, initially invested in Eliza in June 2011 for an undisclosed amount. The company’s founders and management team retained a majority of the company post-transaction, a statement at the time said.
A Form D filing with the SEC on June 30, 2011, showed that Eliza had raised about $106 million.
Healthcare IT landscape
Among the most high-profile healthcare-IT assets currently weighing a sale is Summit Partners’ Ability Network, which held preliminary meetings throughout the week of the JPMorgan Healthcare Conference in San Francisco in January, as initially reported by The Deal in early February.
Sources familiar with the matter previously said the $70-million-plus EBITDA company, which has retained JPMorgan as its financial adviser, ought to produce a deal valued north of $1 billion. The provider of web-based connectivity and workflow software for healthcare providers has already attracted significant private equity interest, three sources previously said.
William Blair, for its part, also has the mandate to sell Warburg Pincus portfolio company A Place for Mom, a provider of senior living referral services that is anticipated to go to PE, as first reported by The Deal in January.
Representatives of Parthenon, Eliza and William Blair did not return requests for comment on Tuesday, nor did those with Cognizant, Cerner and GE Healthcare.
Update: This story has been updated to include additional information about financial advisers on the process.
Luisa Beltran contributed to this report.
Action Item: Contact David Ament, managing partner of Parthenon: +1 617-960-4088
Doctor scans patient’s brain using technology. Photo courtesy ©iStock/HASLOO