PE-backed Alorica looks to divest healthcare arm

Private-equity-backed call-center giant Alorica Inc is exploring the sale of its healthcare-revenue-cycle- management business, according to three sources familiar with the matter.

The subsidiary, HCFC, is projecting 2017 pre-corporate EBITDA of about $20 million alongside about $49 million of revenue, marketing materials for the business show. Pre-corporate EBITDA doesn’t account for corporate expenses.

Duff & Phelps has the mandate to sell the unit, two of the sources said.

Alorica is backed by JP Morgan spinout One Equity Partners.

The subsidiary encompasses various revenue-cycle-management services concentrated on acute-care hospitals and large physician practices. Its front-end piece helps consumers find coverage through patient-access services, eligibility-verification services and patient financial services. The unit also provides third-party debt collections.

The subsidiary employs more than 750 throughout nine call centers in the U.S. and one in the Philippines.

While some service lines haven’t been well integrated and may need some cleaning up, strategic buyers are likely to view HCFC as a means to acquiring customer relationships, one source said. The asset is also being marketed to sponsors, according to the two other sources.

The unit is a part of call-center giant Alorica, whose customer-engagement outsourcing services are tailored to several end markets including communications, media and entertainment, financial services, retail and consumer goods and transportation and logistics, among others.

Alorica in June 2016 agreed to acquire One Equity-backed Expert Global Solutions, creating the third largest U.S.-based business-process-outsourcing firm. The newly created entity accounted for about $2.3 billion in revenue in 2015, an announcement at the time said.

At closing, Alorica shareholders were poised to own about 63 percent of the pro-forma equity of the new entity, while One Equity and its affiliate shareholders would retain 37 percent, Moody’s Investors Service wrote in a report at the time.

One Equity’s investment in EGS dates to 2006, when it took the company, then called NCO Group, private in a $1.26 billion LBO.

One Equity, New York, closed its sixth fund at $1.65 billion in February. The fund is the first raised with outside capital following the firm’s spinout from JP Morgan in 2015.

Representatives of Alorica, One Equity and Duff & Phelps declined comment.

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