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TPG seals $2.2B deal for ClaimsXten

Oct 4, 2022
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Illustration: Aïda Amer/Axios

TPG this morning closed its $2.2 billion deal for Change Healthcare's claims-editing business, ClaimsXten, the private equity firm confirmed exclusively with Axios.

Why it matters: The ClaimsXten divestiture was considered a pivotal step in clearing the way for Optum's $13 billion deal for Change Healthcare, which closed Monday — 21 months after the two shook hands.

Flashback: A federal judge on Sept. 19 denied the Justice Department's efforts to block the deal on antitrust grounds.

What they're saying: TPG declined to be interviewed, but a spokesperson commented via email that they "look forward to working with the team to grow and expand the newly established company.”

What's next: Specific plans for the newly independent company are not clear, but per an unsealed court document filed Sept. 7:

  • TPG within four years plans to more than double ClaimsXten’s most recent annual R&D budget, which was $14 million in FY2022.
  • TPG concluded, according to the document, that it could accelerate growth and help it deliver better products by investing more in "innovative seeds that the [ClaimsXten] team had planted, but maybe hadn't invested as thoroughly behind as they could have."

Catch up fast: Carolyn Wukitch, who has been leading ClaimsXten since 2000, will serve as CEO post-divestiture, per the document.

Behind the scenes: Barclays was engaged early this year to run a sale process for ClaimsXten, and per court documents approached 20 potential buyers — 14 financial and six strategic.

  • Six potential buyers, including Advent International in partnership with New Mountain Capital and TPG, submitted second-round bids.
  • The bids ranged from $1.7 billion to $2.2 billion, with TPG's winning $2.2 billion bid tying for the highest offer, the document discloses.

Details: TPG funded the transaction with $1.2 billion in equity and $1 billion in fully committed debt financing.

  • Four claims-editing products are included in the divestiture package: ClaimCheck, ClaimsXten, ClaimsXten Select and ClaimsXten Cloud.

🔮 What we're watching: Now that Change successfully exited ClaimsXten, we expect eyes are shifting to another big industry giant: Zelis Healthcare, which recently bought Payer Compass for roughly $180 million.

  • Parthenon in 2019 merged two portfolio companies — Zelis Healthcare and RedCard — bringing in Bain Capital as a significant new shareholder. The combination was valued at $5.7 billion at the time, Sarah wrote then.
  • The IPO markets remain closed for business, but should they reopen, we suspect Zelis backers will run a dual-track IPO and sale process.
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