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Private equity firms back Ensemble Health Partners in $5B+ deal

Sarah Pringle
Mar 28, 2022
Illustration: Aïda Amer/Axios

Berkshire Partners and Warburg Pincus are making a significant investment in Ensemble Health Partners that sources tell Sarah values the revenue cycle management company north of $5 billion.

Why it matters: From a valuation perspective, Ensemble, which one source adds is generating roughly $300 million of EBITDA, emerges as one of the year's largest health tech deals so far.

  • Ensemble has quickly proved to be a very successful investment for Golden Gate Capital, which has only made a few health care investments.
  • Intriguingly, all the partners leading this investment recently departed from the San Francisco-based firm.
  • The Cincinnati-based company now has the backing of two very experienced health investors, and that should put it in a stronger position for growth.

Catch up quick: Ensemble pivoted to a narrow private equity-focused sale process earlier this year, having previously considered going public.

  • This reflects a broader trend of investors switching gears amid a volatile public market environment, prioritizing a sale (and in other cases consolidation) as opposed to an IPO in the near term.

Details: Ensemble provides revenue cycle management services to nearly 300 hospital partners across the U.S. It will use the funds to support continued growth and investment in new technology and people.

  • Financial terms and the deal’s structure were not disclosed today, but Berkshire and Warburg, as equal shareholders, will own an around 46% combined stake in Ensemble, Axios has learned.
  • Catholic health system Bon Secours, an existing large minority owner, will retain a close to 44% stake. Management and Golden Gate will hold roughly 10%, the latter being the smallest equity owner, sources say.
  • Guggenheim Securities advised Ensemble, while Goldman Sachs, TripleTree and William Blair advised Berkshire and Warburg. BofA Securities advised Golden Gate.

Flashback: When Golden Gate bought a slight majority stake in Ensemble in May 2019, sources told Sarah the deal assigned the business an enterprise value of $1.8 billion-plus.

  • Bon Secours received approximately $1.2 billion in proceeds at that time, sources said.
  • Mercy Health in 2016 bought Ensemble for $60 million upfront, plus contingent consideration of up to an additional $50 million, the Cincinnati health system said at the time.

Also of note: Rishi Chandna and Doug Ceto, who led the Ensemble investment for Golden Gate, are among recent departures from the San Francisco-based private equity firm.

  • The firm's only other health care-related deal in recent years includes its 2019 investment in Invo Healthcare, a provider of autism and childhood behavioral health services.
  • That same year it sold back life sciences tools company Cole-Parmer to GTCR.

Golden Gate and Warburg declined to comment, while Berkshire and Ensemble representatives could not immediately be reached.

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