Strategy

Veritas Capital to Buy Cotiviti

PE firm pays $4.9 billion for the provider of payment accuracy and analytics services to health care businesses and insurers.
William SprouseJune 19, 2018
Veritas Capital to Buy Cotiviti

Veritas Capital has agreed to acquire Cotiviti Holdings, the provider of payment accuracy and analytics services to health insurers and other healthcare companies, in a deal worth $4.9 billion.

Under the deal, Verscend Technologies, a portfolio company of Veritas, will acquire Cotiviti. Cotiviti shareholders will get $44.75 in cash per share of common stock, and Verscend will assume Cotiviti’s outstanding debt. Cotiviti had long-term debt of $744 million as of March 31.

The companies said the offer price represents a 32% premium to Cotiviti’s unaffected share price as of June 4, 2018, and a 136% premium to the initial public offering price of Cotiviti’s common stock. (Cotiviti listed in May 2016.)

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In a note, Leerink analyst Ana Gupte said Verscend was a natural strategic buyer and the anti-trust issues seemed manageable at first-glance.

The deal is expected to close in the fourth quarter.

“Together, Verscend and Cotiviti will offer our clients a comprehensive, integrated end-to-end solution to address the estimated $900 billion in healthcare waste and abuse across the claims payment and care continuum,” Verscend Chief Executive and President Emad Rizk said.

Doug Williams, CEO of Cotiviti, stated, “We are excited to be combining with Verscend, and believe that together we will create an organization with robust data assets, expanded offerings, and innovative technologies that will allow us to bring a broader portfolio of new and existing payment accuracy analytical solutions to our valued customers.”

Advent International, which represents about 44% of Cotiviti’s voting power, has reportedly indicated it will vote in favor of the deal.

Private equity firms have been snapping up public companies at a faster rate than at any time since the financial crisis. Earlier this month, KKR & Co. announced it was buying Envision Healthcare in a deal valued at $5.57 billion.

Cotiviti’s board of directors unanimously approved the transaction.