Vesey Street’s HealthChannels buys medical-scribe unit from Blackstone’s TeamHealth

  • $160 mln deal largest to date for HealthChannels
  • HealthChannels parent to ScribeAmerica, largest U.S. medical-scribe company
  • TeamHealth bought PhysAssist in October 2014

Vesey Street Capital Partners-backed HealthChannels has agreed to acquire the medical-scribe business of Blackstone Group‘s TeamHealth, according to a person familiar with the situation.

In a deal valued at $160 million, HealthChannels is buying PhysAssist Scribes. The deal comes about four years after physician-staffing firm TeamHealth, then public, acquired the business.

The acquisition is the fifth and largest tuck-in for HealthChannels since it received backing from Vesey Street. HealthChannels is parent to the nation’s largest medical-scribe company, ScribeAmerica.

Growth in the medical-scribe business has been fueled by underlying industry drivers, including hospitals’ efforts to improve physician workflow and productivity.

Simply put, medical scribes work alongside physicians to enter patient information in real time, so doctors can focus on patient care and not on documentation of electronic health records.

The demand for medical scribes is growing as providers seek to relieve clerical overload and prevent physicians from burning out.

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

Vesey Street, which invests in middle-market healthcare-services companies, recapitalized HealthChannels in October 2016. By refinancing HealthChannels in March, the medical-scribe company paid out a $100 million dividend to investors.

Based in Fort Lauderdale, Florida, HealthChannels posted pro-forma revenue of $365 million for the past 12 months, according to an October Moody’s report.

The acquisition of PhysAssist, Fort Worth, Texas, will be funded primarily with $135 million from the company’s newly upsized senior secured term loan and $16 million of cash, according to Moody’s.

Jefferies is underwriting the syndicated loan, the source said.

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

Other executives of the PE shop include General Partners Larry Marsh, Dan Sollof and Joe Kuhns, all of whom previously worked alongside Feinstein at Barclays Capital/Lehman Brothers.

Vesey Street’s other investments include PathGroup and HRGi.

The firm made its first exit a little more than a year ago, commanding a more than 10x return by selling Imedex, which offers medical education for oncologists.

TeamHealth, for its part, was taken private by Blackstone in a $6.1 billion deal that closed in early 2017.

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