TA-backed RLDatix buys iContracts in $200 mln-plus deal

  • Company led by former Connecture exec, Jeff Surges
  • Recurring revenue of combined company exceeds $100 mln
  • iContracts offers contract, compliance management for healthcare providers, revenue management for life sciences market

Private equity-backed RLDatix agreed to acquire iContracts, extending its reach in the broader governance risk and compliance sector beyond patient-safety software.

The acquisition assigns iContracts an enterprise value north of $200 million, according to a person familiar with the matter.

For RLDatix, whose investor base includes TA Associates and Five Arrows Principal Investments, the transaction brings the global company’s total combined recurring revenue to more than $100 million, the person said.

The transaction follows a Harris Williams-conducted sales process for iContracts, a provider of cloud-based contract-management services for health systems, among other things. IContracts, backed by Susquehanna Growth Equity, generates Ebitda in the mid-teens, the person said.

From a strategic perspective, the acquisition reflects RLDatix’s intentions to build a broader enterprise platform in the governance, risk and compliance sector. Prior to the transaction, the company focused exclusively on patient safety and healthcare risk management, representing the largest player in the segment globally.

RLDatix declined to comment on terms of the transaction, however CEO Jeff Surges told Buyouts: “Serving our customers with a broader GRC platform built upon our 30-plus year heritage as a leading patient safety solution provider is a core part of our strategy.”

“GRC is a massive space,” added Sachin Agrawal, President of RLDatix. “It’s an $8 billion-plus global market, and patient safety is $1.3 billion of that.”

Surges, who as the former chief of Connecture joined RLDatix in April, will continue to head RLDatix as CEO. IContracts’ management team including CEO Leigh Powell will remain in place.

Not unlike the evolution of the electronic medical record or revenue cycle management segments, the acquisition is consistent with an emerging theme occurring across GRC, Agrawal said: “I think we’ll end up over time with multiple, [well-capitalized] sponsor-backed platforms doing different but very complementary things within GRC.”

IContracts, Bridgewater, New Jersey, offers contract management software for health systems and providers, as well as software that keeps providers informed and updated on healthcare policies and procedures.

While RLDatix does a good job of capturing patient risks and safety concerns for healthcare providers, iContracts offers a means to close that loop, Agrawal said. Simply put, the policy management software creates an element of actionability through which policy intervention and management can be implemented once patient incidents are identified and root-caused, he explained.

RLDatix via iContracts will also inherit software to help life sciences organizations manage contracting and revenue management processes.

“One, this represents a potential life sciences platform for us to build on,” Agrawal said. “Two, this is the sell-side of drugs. The buy-side represents an interesting set of challenges and opportunities

TA Associates, a global growth firm, invested in the company then called Datix in May 2018. Existing shareholder Five Arrows, the European private equity arm of Rothschild Merchant Banking, maintained a significant equity stake.

The company subsequently merged with RL Solutions, another incident reporting software provider, to become RLDatix in July. The company also bought Australia’s RiskMan International.

RLDatix, excluding iContracts, serves more than 3,000 customers across 19 countries. The company has headquarters in London and Toronto.

In other recent activity in the broader GRC universe, Symplr, a healthcare-credentialing company, has struck two acquisitions since being acquired by Clearlake Capital in October 2018 for about $550 million, sources told Buyouts at the time.

Symplr in February agreed to buy API Healthcare from Veritas Capital, expanding into workforce-management software via a deal valued close to $300 million, Buyouts reported. In April, Symplr added complementary credentialing software through its purchase of IntelliSoft Group.

A TA spokesperson declined to comment.

Action Item: Check out TA’s latest Form ADV: https://bit.ly/2E2lW8G