Jersey City-based Verisk Analytics, Inc., a data analytics provider, and Veritas Capital, a private equity firm, today announced the signing of a definitive agreement under which an affiliate of Veritas Capital has agreed to acquire Verisk’s healthcare services business, Verisk Health, for $820 million. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close by June 30, 2016.
Verisk Health empowers a sustainable, value-based healthcare delivery and payment system with the data services, analytics, and advanced technologies that inform smarter business decisions and reduce risk. The business’s population health, revenue, payment, and quality solutions help health plans, providers, employers, and other risk-bearing entities improve the quality of healthcare delivery, contain costs, ensure appropriate revenue, and support compliance initiatives. The business, based in Waltham, Massachusetts, has more than 350 clients across the United States.
“We are pleased to announce this transaction, which both represents value creation for our shareholders and will allow us to focus on businesses more closely aligned with our strategy, distinctives, and global ambitions. We are glad to have found strong ownership for our healthcare services business. The sale will enhance our focus on proprietary data analytics in our key vertical markets,” said Scott Stephenson, chairman, president, and CEO of Verisk Analytics.
“Every private and public enterprise in healthcare is under pressure to improve performance and lower costs,” said Ramzi Musallam, Managing Partner at Veritas Capital. “Verisk Health’s sophisticated data services, analytics, and technologies are increasingly critical tools to help achieve those goals. We look forward to partnering with the talented Verisk Health team and applying our capital and deep experience to help the business grow and meet this rapidly expanding demand.”
Veritas Capital has extensive experience in the healthcare analytics sector, having just recently exited its investment in Truven Health Analytics. Under Veritas’s ownership, Truven was successfully repositioned from a data provider with limited analytics offerings to a leading provider of cloud-based technology solutions, allowing key customers and constituents across the healthcare system to make more informed healthcare decisions and improve health outcomes.
The total purchase price is subject to typical adjustments for, among other things, the working capital of the business at closing. The purchase price consists of $720 million of cash consideration, a $100 million long-term subordinated promissory note with interest paid in kind, and other contingent consideration. Verisk Analytics estimates after-tax proceeds of approximately $675 million, of which about $600 million will be received at closing.
In the near term, Verisk Analytics intends to use a portion of the cash proceeds to repay its revolver drawings. Verisk remains committed to reaching its stated leverage target by the end of 2016. Over time, Verisk anticipates that the majority of the proceeds will be applied to its long-standing capital allocation priorities, including acquisitions and share repurchases.
The healthcare business will be reported as discontinued operations in Verisk’s first-quarter 10Q filing. Verisk Analytics will provide transitional services to the healthcare services business in the short term as the company manages the transition to new ownership. Upon closing, Verisk Health will be renamed and will operate as an independent company at its current headquarters in Waltham, Massachusetts.
Morgan Stanley and SunTrust Robinson Humphrey are acting as financial advisors and McCarter & English, LLP and Davis Polk & Wardwell as legal advisors to Verisk Analytics in connection with the transaction. Skadden, Arps, Slate, Meagher & Flom is acting as legal advisor to Veritas.Related Articles: