Dec 7, 2021 - Health

Scoop: Stone Point seeks buyer for Enlyte

infrastructure workers
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Stone Point Capital is exploring a sale of Enlyte, which provides cost containment technology and claims software to the workers’ compensation, auto and disability insurance markets, three sources familiar with the firm’s plans tell Axios.

Why it matters: This is a big one, folks. Sources placed EBITDA at approximately $450 million, which means we’re talking a multi-billion-dollar deal.

  • The likely valuation is TBD at this stage. A mid-teens EBITDA multiple "seems high" given this is a low-growth business, one source speculated.
  • This will probably “require at least two [investors] coming in" for an equity check of this size, another person speculated.
  • Centerview Partners is providing financial advice to the San Diego-based company and the process is poised to launch imminently, sources say.

Flashback: Enlyte was formed in October as the new parent company of Mitchell, Genex and Coventry.

  • Stone Point, a financial services specialist, bought Mitchell from KKR and Elliott Management in 2018. Separately, the firm snapped up Genex from Apax Partners that year and merged the two.
  • The platform followed in 2020 with the acquisition of Coventry, the workers’ comp division of CVS Health’s Aetna.
  • This summer, Enlyte strengthened its provider network, buying East Coast managed care organization QualCare Alliance Networks from Cigna.

Context: Enlyte over time has increased its exposure to workers' compensation insurance.

  • The industry is experiencing a slowdown in claims in the wake of the pandemic, weighing on the company, one person said.
  • But with infrastructure ripe for major investment in the coming years - creating the types of jobs that cause injuries - Enlyte could emerge as a direct beneficiary.
  • Also of note: Enlyte's well-regarded C-suite, one person said.

What's next? Who will bite? The sources say logical investors include Carlyle Group and CVC Capital, two buyout funds already well versed in workers' comp.

  • Carlyle and Stone Point jointly own Sedgwick, investing in the global claims management company through a $6.7 billion transaction in 2018.
  • CVC earlier this year joined Carlyle as an investor in the fast-growing MedRisk, which helps coordinate care and manage the claims process for injured workers receiving physical therapy.
  • Ahead of that deal, people familiar with the process cited $180 million in projected 2021 EBITDA, close to double the approximately $85 million in 2017 EBITDA that sources previously placed on MedRisk.
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