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Veritas-backed Verscend closes $4.9 billion deal for Cotiviti

by Thomas Dworetzky, Contributing Reporter | August 30, 2018
Business Affairs Health IT
Verscend, a data-driven healthcare solutions provider and portfolio company of Veritas Capital, has closed its $4.9 billion cash deal for healthcare industry payment accuracy and analytics provider, Cotiviti.

“We believe Cotiviti is a perfect fit with both our investment strategy and with Verscend, and we look forward to taking the platform to the next level through this exciting combination,” said Ramzi Musallam, CEO and Managing Partner of Veritas Capital, in a statement when the deal was announced.

Veritas aims to invest in such “transformational impact,” noted Musallam on the closing of the deal. “We see the combination of Cotiviti and Verscend as bringing much needed precision and insight to the healthcare system,” he stated. “We expect that the two companies’ complementary data sets, analytical capabilities, and industry expertise will accelerate forward momentum for the new Cotiviti through smarter, faster solutions that address rising costs, eliminate waste, and speed quality improvement for the healthcare industry overall.”

The deal delivered $44.75 in cash for each Cotiviti common stock, plus the assumption of all outstanding debt by Verscend.

The two will run as a combined private company under the name of Cotiviti and Dr. Emad Rizk, Verscend president and CEO, will retain his titles in the new firm.

“We are thrilled to partner with Cotiviti, which has become an important player in the growing and increasingly important and complex healthcare payment accuracy space,” said Rizk when the deal was announced in June.

The combined company is aiming at one of the greatest challenges in healthcare financial performance – getting the payments right and catching fraud, waste and abuse. Having both financial and clinical data with which to work, Cotiviti “will have unique insight” into healthcare finances in a rapidly changing landscape.

“Both companies are customer-driven innovators that share a similar mission: to help our clients improve healthcare affordability, reduce waste, and identify the best path to better outcomes,” said Rizk. “With our new capabilities across payment, quality, risk, and the combination of clinical and financial data, Cotitivi will be unmatched in its ability to create differentiated value for its clients.”

Veritas Capital was in the news lately with its GE Healthcare’s Value-Based Care Division acquisition, which closed in July.

When it closed the billion-dollar deal, Musallam called it “an exciting chapter.”

The deal followed the “corporate carve-out” pattern of prior Veritas investments in healthcare tech – including those in Truven Health Analytics and Verscend.

IBM acquired Truven Health Analytics, a provider of cloud-based health care data, analytics and insights, for $2.6 billion in 2016 from Veritas.

The Truven purchase showed “we’re serious, and spending serious money to move fast in a whole new industry for IBM,” John E. Kelly, IBM senior vice president, said at the time.

Veritas Capital had bought Truven from Thomson Reuters for $1.25 billion in 2012, according to Reuters.

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