1 Big Thing: Blackstone’s HealthEdge In-Game
Blackstone is considering a sale of HealthEdge Software, publisher of SaaS solutions for health insurers, as the first reported by Bloomberg and confirmed by Axios.
Why is this important: It is one of the few, if not the only, big health technology asset available for private equity investment today. Presumably, this bodes well for HealthEdge vendors, Sarah writes.
Driving the news: Four sources tell Sarah that BAML advises on the sell side. Two of the people say Barclays is co-advisor, adding that a small group of mega funds are participating with deals coming next week.
By the numbers: Blackstone is reportedly exploring a 50% stake sale that could value the Burlington, Mass.-based company at around $3 billion.
- That’s based on $400 million and $60 million in projected revenue and EBITDA next year, according to Bloomberg.
Rollback: Blackstone Growth bought a majority stake in HealthEdge in March 2020 following a process led by Morgan Stanley, valuing the company at around $730 million, sources told Sarah at the time.
- Blackstone’s equity check was worth more than $600 million, they said.
- The platform has completed a number of add-ons since the initial investment – which brought in additional co-investors – so there is more equity now.
Catch up fast: HealthEdge under Blackstone has quietly grown and diversified through mergers and acquisitions.
- It picked up The Burgess Group, Altruista Health and Wellframe – the latter through which Coatue, HLM Venture Partners and BlueCross BlueShield Venture Fund joined the company as investors.
How it works: HealthEdge aims to help health plans increase enrollment and adopt new business models, control administrative costs, stay compliant, and improve clinical outcomes.
- Its software solutions cover administrative processing, payment integrity, care management, digital health management and consumer engagement.
What they said: In a 2020 interview, HealthEdge CEO Stephen Krupa spoke about the company’s vision following its deal for The Burgess Group, a payment integrity company:
- “From the time we first started talking, our visions were the same: To fully automate the transactional system for health plans. And there are many challenges to get there.”
- He added: “The vision is not to grow to add business for the sake of adding business. The vision is [to build] a company that fills the gap in automation [and creates] an end-to-end system.
To note : HealthEdge marked the first healthcare-focused deal executed by Blackstone’s new growth capital team led by Jon Korngold, whose healthcare efforts are led by Ram Jagannath.
Blackstone and Barclays declined to comment. HealthEdge and BAML did not immediately return requests for comment.