Illustration: Sarah Grillo/Axios
Veritas Capital has combined Coronis Health and MiraMed Global Services — creating a new multi-specialty revenue cycle management platform for health care providers, the tech-focused firm tells Axios.
Why it matters: The expansion and consolidation of managed care is making the the billing and collection function increasingly difficult for health care providers. That pressure is fueling demand for outsourced RCM providers, which private equity has been rolling up like gangbusters.
Catch up quick: Axios scooped last month that Veritas, following a Guggenheim Securities-run process, had acquired Coronis from investors including 424 Capital, and was considering combining the company with another privately held peer.
- The newly combined company is expected to produce approximately $80 million to $90 million of pro forma EBITDA in the calendar year 2022, sources familiar with the matter say.
- Per July's report, sources told Axios that Coronis — which marketed about $50 million of adjusted EBITDA — commanded a double-digit multiple. Veritas declined to comment on financials.
Details: Coronis CEO Stephen Grubbs will lead the combined company, with MiraMed chief Tony Mira stepping in as vice chairman of the board of directors.
- Coronis provides end-to-end RCM solutions — patient eligibility verification, medical coding review, AR management, and other functions — to a range of outpatient and inpatient care settings.
- Jackson, Mississippi's MiraMed, whose founder family will retain a minority stake, plays in business process outsourcing, health information management coding, risk adjustment, AR management, among other things. It focuses on anesthesia-focused practices and commercial health care clients.
- Both are hybrid onshore-offshore models, with Coronis maintaining a sizable captive offshore infrastructure.
💭 Our thought bubble: This is just the beginning for Veritas, which is known for business transformation. (Recall Athenahealth.)
Between the lines: A scale RCM company with a comprehensive set of offerings appears to be precisely what Veritas is after.
- The combined company will pursue M&A to strengthen its footprint in existing markets and diversify through entry into new specialities and capabilities, sources say. Organic revenue growth will be fueled by strategic R&D investments to drive product innovation.
- RCM players like Varsity Healthcare Partners' Ventra, Carlyle Group's CorroHealth or Goldman Sachs Merchant Banking-backed Omega Healthcare, could be optimal M&A targets for the Veritas platform, one source speculates.
State of play: Veritas' strategy appears akin to that of freshly-capitalized Ensemble Health Partners or R1, though both are building end-to-end platforms that focus on hospitals. Concurrently, many sponsors are investing into specialized but high-growth pockets of RCM, like complex claims.
- Linden Capital Partners, joined by Varsity, just completed its $650-700 million deal for Aspirion, which collects complex claims revenue from payors that is otherwise lost by hospitals.
- Competitors include Revecore, which GrowthCurve Capital recently bought in a $500m-plus deal, and Enablecomp, acquired by WCAS's Argos in December.
What they're saying: Both models are poised for growth, but there's an argument to be made for an end-to-end RCM playbook, one source says.
- Players like R1 or Ensemble would argue that "in order to have the best process — get paid in full in a short period of time — you need to do everything," the source says. "If you don't, you have to seamlessly integrate."
The bottom line: Outsourced RCM solutions are still in the early days of consolidation.
- While many providers are still trying to do everything on their own, the headaches triggered by an increasingly complex payor landscape — combined with cost pressures and labor shortages — may encourage more organizations to turn outward for help.
Editors note: This story has been corrected to note the company's name as Ensemble Health Partners, not Ensemble Healthcare.