Experian has signed an agreement to acquire Passport Health Communications, a portfolio company of Spectrum Equity and Great Hill Partners, for $850 million, payable in cash at closing. Spectrum and Great Hill first invested in Passport in July 2008.
Passport Health is a data and software provider, with sales to over 2,500 hospitals in the US and more than 9,000 other healthcare providers. The company’s products are used by healthcare providers to manage payments between patients, commercial payers (such as insurance companies) and government programs. Passport Health’s revenues are largely subscription based with renewal rates of 95% and average contract duration of 3 to 5 years. Passport Health was founded in 1996 and is based in Franklin, TN (www.passporthealth.com).
In the year ending December 31, 2013, Passport Health is expected to generate revenue of $121 million, representing organic growth of 23%, and EBIT of $30 million. In 2014, Experian expects Passport Health revenue to reach approximately $145 million (of which 84% is already booked and contracted), with EBIT margins in the high twenties.
The administrative tasks associated with obtaining payment for healthcare services have become increasingly costly for healthcare providers, while healthcare payment regulations have increased in complexity. Patients are becoming responsible for a larger portion of their healthcare bill and reimbursement rates covered by insurance policies often fluctuate. This is leading healthcare providers to make improvements in the way they gather information from patients, how they determine patient eligibility for insurance and charitable aid, and how the final bill gets presented.
To reduce costs, hospitals are increasingly relying on data and analytics in order to automate the billings cycle and to make it more efficient. This is driving a period of accelerated growth in the US healthcare payments market with spending by hospitals of $1.9 billion in 2012, forecast to reach over $3 billion by 2017.
Experian is a global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft. Experian is listed on the London Stock Exchange (EXPN). Total revenue for the year ended March 31, 2013 was $4.7 billion. Experian employs approximately 17,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil (www.experianplc.com).
Spectrum Equity invests in growth companies in the information industry with particular interest in internet and digital media; communications, media and entertainment; and software and information. Spectrum Equity has raised $4.7 billion in capital across six funds. The firm was founded in 1994 and has offices in Boston and Menlo Park (www.spectrumequity.com).
Great Hill Partners manages over $2.5 billion in capital to finance the expansion, recapitalization or acquisition of growth companies in a range of sectors within the media/communications, Internet, business services, consumer services, financial technology, healthcare technology, software, and transaction processing sectors. The firm targets investments of $25 million to $150 million. Great Hill Partners is based in Boston (www.greathillpartners.com).
© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13
