WindRose’s myNexus goes to Anthem for $800m-plus

Having already made close to 15x its money on myNexus as of June 2019, WindRose looks poised to generate a handsome return.

WindRose Health Investors’ pending sale of myNexus, which helps manage the costs of healthcare in the home, is valued north of $800 million, according to sources familiar with the matter. 

Anthem’s agreement to buy myNexus, announced Wednesday, preempted an anticipated sale process from getting underway this spring, sources said. 

The deal comes amid the continued demand for more healthcare services in the home setting, which is both the preferred setting of care for aging seniors with complex conditions and more cost-effective. 

Based in Brentwood, Tennessee, myNexus offers benefit management services for post-acute care in the home- and community-based settings – ultimately helping to reduce hospital re-admissions. The company delivers integrated clinical support services for approximately 1.7 million Medicare Advantage members across 20 states.

Its customers are health plans – including Anthem – and other risk-bearing organizations. According to myNexus’s website, other customers are Humana and Aetna. On the provider side, partnerships include hospice giant Amedisys and Aspire Health, a community-based palliative care provider.  

The manager of home healthcare benefits has expanded into other home-based offerings including hospice care, IV therapy and durable medical equipment. 

For WindRose, the transaction suggests a handsome outcome. The New York-headquartered firm, then known as MTS Health Investors, completed its majority investment in myNexus in October 2014, investing out of MTS Health Investors III LP. 

In June 2019, WindRose completed a dividend recapitalization of the business, through which myNexus was set to distribute more than $200 million to investors as part of the deal, a source told PE Hub at that time. For WindRose, the recap implied it had so far made close to 15x its money on myNexus, the source said.

The company’s run-rate EBITDA sat at approximately $75 million at that time. 

The dividend recapitalization came after WindRose opted to call off a 2018 sale process commanding interest from PE, as initially reported by PE Hub in September of that year.

For Anthem, the deal comes after CareCentrix, another home- and post-acute care benefits manager, scrapped potential sale plans after deal talks with potential buyers – including Anthem – fell apart, PE Hub wrote.

Customer-concentration concerns following the loss of its Cigna contract ultimately weighed on the process, sources previously said, contributing to conflicting views on where the company should be valued. Summit Partners backed CareCentrix in 2011. 

Other healthcare payers that have looked to beef up their home health offerings include UnitedHealthcare’s Optum. Optum in May 2020 bought Clayton, Dubilier & Rice‘s naviHealth, which uses technology to reduce the cost of healthcare and improve care for patients after they are discharged from the hospital. The deal commanded a $2.5 billion enterprise value. Less than two years into its investment, CD&R generated a 2.5x multiple of invested capital on naviHealth, people familiar with the deal said at the time. 

WindRose and Anthem declined to comment.