Sponsors vie for Cardinal Health’s naviHealth

  • Cardinal bought 71 percent from WCAS in 2015 for $290 mln
  • Led by CEO Clay Richards, ex-Healthways exec
  • naviHealth is nation’s largest BPCI convener

Cardinal Health is exploring the sale of naviHealth, its post-acute-care coordination business, according to four people with knowledge of the matter.

Allen & Co is providing financial advice on what has been a sponsor-focused process for the unit, the people said.

The process is in its second round and has narrowed to three or four private equity groups, three sources said.

Dublin, Ohio-based Cardinal Health, whose core operations are focused on drug and medical-supply distribution, would like to maintain a minority stake in naviHealth, they said.

First-round indications of interest for naviHealth came in well north of $1 billion, the people said. One of the sources added that Ebitda is in the ballpark of $75 million.

NaviHealth, Brentwood, Tennessee, provides clinical services and technology that help health plans, health systems and post-acute providers transition to a value-based care reimbursement model, from the traditional fee-for-service reimbursement.

The company works with about 3.7 million Medicare Advantage or ACO members for post-acute care and about 1,000 acute hospitals, its website states.

NaviHealth is also the largest participant in the Centers for Medicare & Medicaid Services’ Bundled Payments for Care Improvement, or BPCI, program, which was launched in October 2013 to support the healthcare industry’s transition to value-based care.

As a convener for healthcare bundled payments, naviHealth says on its website that it serves more than 50 hospitals nationwide and manages about 40,000 episodes of care each year.

Cardinal has owned naviHealth since 2015, having initially acquired a 71 percent stake from Welsh, Carson, Anderson & Stowe for $290 million cash.

WCAS initially retained a minority stake, though the transaction was structured such that Cardinal would buy the remaining equity over the subsequent four years.

NaviHealth CEO Clay Richards, a former Healthways executive, has been with the company since its January 2012 inception, initially serving as the company’s president.

NaviHealth since its last change of ownership has expanded partly through its own M&A efforts.

The company in late 2015 bought RightCare Solutions, which provides hospital-discharge-planning software, and in 2016 it struck a deal for Curaspan Health Group, which offers workflow tools for hospitals and post-acute care providers.

A Cardinal Health representative declined to comment, while those with Allen & Co could not immediately be reached.

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