Medicare Advantage programs and ancillaries are bringing in big bucks and new buyers. On August 19, Centerbridge Partners, L.P. announced its acquisition of GoHealth, LLC for a reported $1.4 billion from Norwest Equity Partners, the second-largest managed care deal in 2019, so far. The company is a leading provider of Medical Advantage products in the direct-to-consumer channel. Its platform combines technology, data science, and proprietary algorithms to match consumers with the best healthcare policy and carriers in the Medicare, Individual & Family and Small Group markets.
Centerbridge and GoHealth broke off negotiations earlier in August over price, according to reports in Buyouts.com, but the renegotiated terms comprise a smaller upfront consideration and larger earnout component. The investment will accelerate growth and scale the business, especially in the Medicare Advantage market. This deal is expected to close in the fourth quarter of 2019.
The largest Managed Care deal of the year is Centene Corporation’s (NYSE: CNC) takeover of WellCare Health Plans, Inc. (NYSE: WCG) for nearly $17.4 billion, which we reported on here.
WellCare brings a high-quality Medicare platform and extends Centene’s Medicaid offerings. The combined company will have approximately 22 million members across all 50 states. However, there are a few smaller deals worth highlighting in the typically quiet sector.
In early June, Health Insurance Innovations, Inc. (NASDAQ: HIIQ) acquired TogetherHealth, a consumer platform connecting individuals with U.S. insurance carriers through consumer acquisition and engagement, primarily serving the over-65 market. That deal cost HIIQ $68.07 million, but the company expects the transaction to add $10 million adjusted EBITDA during the remainder of the fiscal year 2019.
In May Evolent Health, Inc. (NYSE: EVH) bought Passport Health Plan for $70 million, adding approximately 300,000 more members to its network. This deal also expands Evolent’s existing Management Services Agreement with Passport, taking on additional responsibilities for the day-to-day management including administrative, clinical and financial operations. Evolent will also enhance its clinical scope with additional clinical program support, network optimization, and specialty care management, specifically in oncology and cardiovascular services. The amended MSA has a 10-year term.
Private equity firms are not dominant buyers in this sector, accounting for only 16% of the deals in 2018, according to our Deal Search Online database. However, this year PE firms reported a few significant deals, showing their increased interest. In addition to Centerbridge’s acquisition of GoHealth, LLR Partners bought CareATC Inc. in March for an undisclosed price.
CareATC provides an employer-sponsored healthcare marketplace and clinic network. It manages more than 150 clients in 35 states and cares for more than 250,000 patients. The partnership with LLR will support the continued growth of its employer-sponsored clinic network and its proprietary population health technology platform.
Across the Atlantic, AnaCap Financial Partners bought a majority stake in SundhedsGruppen A/S, also in May. SundhedsGruppen provides health insurance and claims management services to clients’ employees. The business currently provides insurance coverage for approximately 250,000 individuals in Denmark. SundhedsGruppen consists of Dansk Sundhedssikring A/S, a leading independent Danish private health insurance provider, and PrimaCasre A/S, a provider of healthcare networks. Its proprietary platform facilitates accurate identification of optimal healthcare access as well as reporting, feedback and claims management respectively.
