Illustration: Shoshana Gordon/Axios
CVS is seeking a buyer for BSwift, the benefits technology business it acquired eight years ago, sources tell Axios.
What's happening: A Goldman Sachs-run divestiture process is well into its second round, sources say.
- Deal books were distributed in early July, with bids submitted at least a few weeks ago, one of the sources says.
- The process originally targeted a broad range of potential strategic and private equity buyers, sources say.
By the numbers: BSwift is projecting about $230 million and $50 million of 2022 revenue and EBITDA, respectively, sources say.
- BSwift serves 65,000 employer groups, boasting that it drives 25% cheaper premiums among users and 98% client retention.
What they're saying: Growth has been slow sitting under the umbrella of CVS-owned Aetna, but sources say BSwift is good at what it does — providing necessary technology for employee benefits shopping, enrollment and administration.
- "It's still a strong asset" but, one source says, "could use more TLC."
Context: The planned divestiture isn't all that surprising considering how public CVS has been about its intentions to move closer to the patient and care delivery. (Primary care, in particular.)
- CVS was the runner-up for One Medical and is a reported bidder for Signify Health.
- Meanwhile, BSwift — like PayFlex, CVS' recently sold HSA business — is a non-core asset that doesn't advance the company in that direction.
💠Our thought bubble: Sources say the BSwift process started out "very broad," which signals to us that there isn't an obvious set of buyers for the asset.
- Strategics could buy the company and cross-sell BSwift's technology, or a sponsor might see a larger opportunity to roll up other benefits software assets or double down on patient engagement.
State of play: Businessolver, another solutions provider for benefits administration and engagement, was acquired by Stone Point Capital in December — perhaps setting the stage for CVS to put out feelers for renewed interest in BSwift.
Flashback: In late 2014, Aetna bought BSwift from Boston-based PE firm Great Hill Partners for approximately $400 million. (CVS then bought Aetna in late 2018.)
- Great Hill had invested in BSwift only seven months earlier — suggesting quick and sizable return for the PE firm targeting investments of $25 million to $150 million at that time (it has since gone up in size).
- It also suggests that Aetna was gung-ho on the technology platform and presumably bought BSwift on direct approach.
The bottom line: Whoever buys BSwift — and at what price — is not immediately clear. Beauty is in the eye of the beholder. CVS and Goldman declined to comment.