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Francisco Partners carves out Bswift from CVS

Sarah Pringle
Oct 3, 2022
Illustration of a cash register with glowing red health pluses displayed on the screen.

Illustration: Aïda Amer/Axios

Francisco Partners agreed to acquire Bswift, a provider of benefits technology and services, from CVS Health.

Why it's the BFD: Bswift provides necessary technology for employee benefits shopping, enrollment and administration, but growth under CVS has arguably been limited. Francisco Partners can give Bswift the shot in the arm needed to invigorate business potential as an independent company.

What they're saying: Accelerated by COVID and the proliferation of employer-facing startups, "the definition of employer benefits is greatly expanding" beyond just insurance — and Bswift is strongly positioned to leverage that trend, Justin Chen of Francisco Partners says.

  • Bswift provides a critical piece of the equation and has a sticky customer base through which it can be a holistic platform that sells additional products and technology.
  • Top line has more than tripled under CVS, but Chen sees an opportunity to accelerate that growth, including via acquisitions of companies that look similar to Bswift or those that are a natural product extension.

Yes, and: Now that Bswift is no longer under the CVS/Aetna umbrella, the business can benefit by working with more carriers and plans.

State of play: Francisco Partners is a seasoned corporate carve-0ut investor, executing more than 40 such transactions of this vein. That includes another high-profile deal earlier this year:

  • The acquisition of a collection of data and analytics assets from IBM's Watson Health arm, now called Merative.
  • For Chen, it's his third in the last few years, his first being the 2019 carve-out of Qualcomm Life from Qualcomm.

Details: Financial terms weren't disclosed, but Bswift is projecting about $230 million and $50 million of 2022 revenue and EBITDA, respectively, sources told Sarah in August.

  • Bswift will continue to partner with CVS and Aetna to provide benefits technology to its employees and clients.
  • Bswift serves 65,000 employer groups, boasting that it drives 25% cheaper premiums among users and 98% client retention.

Context: As evidenced by CVS' $8 billion bet on Signify Health, the industry giant is eager to move closer to the patient and care delivery — with its ambitions spanning home health, primary care and physician enablement.

  • Bswift — like PayFlex, CVS' recently sold HSA business — is a non-core asset that doesn't advance the company in that direction.

Catch up fast: CVS this summer kicked off a divestiture process for Bswift via Goldman Sachs, Axios wrote, with the process originally targeting a broad range of potential strategic and private equity buyers.

  • Wells Fargo advised Francisco Partners.
  • Aetna in late 2014 bought Bswift from Boston-based PE firm Great Hill Partners for approximately $400 million. (CVS then bought Aetna in late 2018.)
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