PE-backed medical-scribe giant, HealthChannels, explores sale

  • Company produces Ebitda of about $110 mln
  • Sale could command multiple in high teens to 20x
  • Advisers: Jefferies, Centerview Partners

Vesey Street Capital is evaluating the sale of HealthChannels nearly five years into its investment in what is now the nation’s largest medical scribe company, five sources familiar with the situation told Buyouts.

Jefferies and Centerview Partners are advising on the sales process, the sources said.

Sources characterized the process as tightly run and sponsor-driven, though some of the people cautioned that HealthChannels could field interest from a small handful of strategics. The process is in its mid stages, with management meetings having already taken place, they said.

HealthChannels produces revenue of about $540 million and Ebitda of about $110 million, some of the people said. The company is expected to command a multiple of Ebitda in the high teens to 20x range, they said.

HealthChannels, based in Fort Lauderdale, Florida, ought to benefit from scarcity value as large buyout funds remain eager to invest in healthcare companies of significant scale. HealthChannels is also considered an attractive target for private equity due to its strong management team, growth profile, high revenue visibility, high customer retention rate and lack of reimbursement risk, sources said.

Led by CEO Michael Murphy, HealthChannels is parent to the nation’s largest medical scribe company, ScribeAmerica. Medical scribes work alongside physicians to enter patient information in real time. Medical scribes allow doctors to focus on patient care as opposed to electronic health record documentation, helping relieve clinical overload.

HealthChannels also operates CareThrough, a care-management business, and QueueLogix, which provides back-office medical coding and billing software and services.

HealthChannels has achieved scale partly via M&A. Its fifth and largest acquisition under Vesey’s backing came in October, when it agreed to purchase PhysAssist Scribes, the medical-scribe unit of Blackstone’s TeamHealth, in a deal valued at $160 million, Buyouts reported.

Vesey was formed in 2014 by Managing Partner Adam Feinstein, who most recently served as senior vice president of corporate development and strategic planning at LabCorp.

The New York firm made out well in its first full exit. Through the September 2017 sale of Imedex, Vesey was poised to make more than 10x its money, Buyouts previously reported.

Representatives of Vesey and Jefferies declined to comment, while those with Centerview and HealthChannels could not be immediately reached.

Action Item: See Vesey’s latest Form ADV here: https://bit.ly/2Ipilmf