Healthcare data solutions company Verscend has acquired Atlanta-based healthcare payments company Cotiviti (NYSE: COTV) for $4.9 billion in cash. According to the company, the acquisition is an opportunity to combine their tools create a more robust solution that addresses the estimated $900 billion in healthcare wasted costs.
“We are excited to be combining with Verscend and believe that together we will create an organization with robust data assets, expanded offerings and innovative technologies that will allow us to bring a broader portfolio of new and existing payment accuracy analytical solutions to our valued customers,” Cotiviti CEO Doug Williams said a statement.
Founded in 2014, Cotiviti provides payment accuracy audits and data analytics services to health companies and insurers so they can achieve improved payment outcomes. The company went public on the New York Stock Exchange in May 2016, under the “COTV” symbol, with an initial public offering of 12,500,000 common stock shares at a price of $19 per share.
Since then they have continued to grow, growing net income to $132 million in 2017, a 183 percent increase when compared to the previous year.
Currently they serve the majority of the top 25 U.S. healthcare payers and a majority of the top 10 U.S. retailers. In 2017, they claim to have generated almost $4 billion in savings for their clients.
Verscend Technologies offers risk adjustment data to organizations. It is a Veritas Capital portfolio company, a firm with a healthcare-focused R&D and innovation mission.
Following the acquisition, the merged companies will operate as a private business.
“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 Emad Rizk, M.D., President and CEO of Verscend, in a statement. “Financial data coupled with clinical data from our Risk Adjustment, Quality, and Population Health lines of business offer increased value to commercial payers, government entities, and providers.”
Veritas will assume Cotiviti’s outstanding debt — $744 million as of March 31. The offer price represents a 32 percent premium to Cotiviti’s unaffected share price as of June 4, 2018 and a 136 percent premium to the initial public offering price of Cotiviti’s common stock.
“We expect today’s transaction to deliver compelling value for Cotiviti shareholders and allow us to continue to execute our strategic growth plan,” says Williams.
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