Veritas seeks buyer for API Healthcare, former GE workforce management unit

Veritas Capital is evaluating the sale of API Healthcare, one of three healthcare-technology businesses purchased from General Electric in 2018, according to three people with knowledge of the situation.

The process to divest API, which helps hospitals and medical clinics manage their workforces and track patients, kicked off in December, two of the people said.

Conversations have taken place with a handful of private equity-backed strategics and pure-play strategic buyers, they said.

The two most likely suitors, they added, are Symplr, the healthcare-credentialing software company purchased by Clearlake Capital Group in October, and Allocate Software, a U.K.-based healthcare workforce management software company owned by Vista Equity Partners and minority investor Hg, they said.

Veritas in July completed its acquisition of a collection of GE healthcare IT assets. In addition to API, the sale included two other divisions: the conglomerate’s enterprise financial management and ambulatory care management businesses.

The $1.05 billion deal with New York-based Veritas followed a Morgan Stanley-run auction launched in fall 2017.

The API process comes amid Veritas’s finalization of its $5.7 billion take-private for athenahealth, alongside Elliott Management’s Evergreen Coast Capital.

Excluding API, the former GE healthcare assets acquired in 2018 — recently rebranded as Virence Health — will combine with athenahealth under its name and brand, Veritas said in a Feb. 11 news release.

In connection with the transaction, the workforce management business becomes a separate Veritas portfolio company under the API Healthcare brand, the firm said.

While Veritas initially planned to keep and build API, the firm after buying athenahealth decided it would concentrate on athenahealth and the remaining GE businesses, two of the people said.

The combined platform offers everything from revenue-cycle management to emergency medical records to care coordination services.

GE during the 2018 process favored selling the hodgepodge of healthcare IT assets in a single deal. But the tremendous interest that API fielded ultimately led it to consider a piecemeal sale, sources previously told Buyouts.

The API division at the time was marketed off revenue and adjusted pro-forma Ebitda just north of $90 million and $25 million, respectively, two of the people said. Carveout bids for the API division were around the low $300 million range, one of the people added.

With Veritas having since distributed updated information with the unit’s latest numbers, two of the people suggested price expectations are likely around a multiple of Ebitda in the high teens range.

It’s possible Veritas opts not to sell API if bids fall short of expectations, one of the people said.

API, which GE purchased from Francisco Partners in January 2014, was perceived as the crown jewel amid the group of assets up for sale in 2018. The division’s performance has languished under the conglomerate, two of the people and a third familiar with the previous process said.

Still, API is the No. 2 player in the workforce management market and has a good customer base, one of these people noted. The segment of healthcare IT in which API operates isn’t very crowded, which is likely to add further appeal, the fourth person familiar with the company said.

API in 2011 nearly combined with the largest player, Kronos, but the Department of Justice shot down the deal over antitrust concerns.

While the landscape has changed, Kronos, owned by Hellman & Friedman, is unlikely to come back around for API, three of the people said.

Newly independent API is led by Bill Christy, interim president and CEO.

Representatives of Veritas and API did not return requests for comment.

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