Gainwell Technologies, a portfolio company of Veritas Capital, has announced it acquired HMS (NASDAQ: HMSY). HMS provides a broad range of payment accuracy and population health management solutions, as well as analytics and engagement solutions. Under the terms of the agreement, Gainwell will buy HMS for $3.4 billion, or $37 per share in cash, a 52% premium to HMS’ unaffected share price as of October 2, 2020, the last trading day prior to when reports of a possible transaction were published. The purchase price comes out to 5.13x HMS’ 2020 annualized revenue and 22.60x HMS’ annualized EBITDA. 

Gainwell Technologies supports clients across the United States and territories with offerings including Medicaid Management Information Systems (MMIS), fiscal agent services, program integrity, care management, immunization registry and eligibility services. 

Veritas expects to optimize the HMS solution set across Gainwell and Cotiviti, Inc., which Veritas took private in June 2018 for approximately $4.9 billion. Gainwell will acquire the HMS capabilities focused on the Medicaid market, including solutions delivered to states and managed care organizations, and Cotiviti will acquire the HMS capabilities focused on the commercial, Medicare, and federal markets. The deal is expected to close in the first half of 2021. 

Gainwell Technologies is the former U.S. State and Local Health and Human Services business of DXC Technology (NYSE: DXC), a strategic step in DXC’s plan to divest a trio of non-core business units. DXC sold the business to Veritas on March 10, 2020, for $5 billion in cash, according to search results in our Healthcare Deal Database. The sale represented a transaction value of approximately 3.5x trailing 12-month sales of $1.4 billion.