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Behind Bain's CitiusTech buy

Oct 24, 2022
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Illustration: Gabriella Turrisi/Axios

Bain Capital will join BPEA EQT as an investor in CitiusTech, an outsourced provider of sophisticated technology solutions and consulting services.

Why it matters: Health care companies — spanning the medtech, payer, provider and life sciences ecosystems — have big digital transformation and technology-related to-do lists but lack the resources to prioritize such initiatives. That's where CitiusTech comes in.

What they're saying: Bain Capital managing director Devin O'Reilly tells Axios his team recognized this large unmet need through its experiences serving on the boards of various health care companies.

  • "There's just a huge shortage of product development talent," O'Reilly says, noting the challenges of competing given the tech landscape.
  • "The things they [CitiusTech] are working on with clients are their most pressing issues." CitiusTech has an integral role in helping drive revenue growth and efficiencies, for example.

Details: Bain, whose India team led the charge, and BPEA EQT, join hands for a co-control position in Princeton, New Jersey-based CitiusTech. The firms assumed equal ownership from an economic and governance perspective, O'Reilly says.

  • Bain declined to comment on valuation, but O'Reilly says CitiusTech generates "hundreds of millions" of revenue with a growth rate above 20%.
  • CitiusTech works with over 130 health care and life sciences organizations.
  • Its solutions span interoperability, secure data management, quality and performance analytics, value-based care, patient experience, among other things.

Context: COVID-related challenges, inflation and labor issues in the U.S. are contributing to accelerated spend on software investments by providers, a new report by Bain & Co and KLAS Research shows.

Between the lines: "There’s this huge mismatch between health care being 20% of GDP and only 5% of tech spend," O'Reilly says. "If you take a 20-year view, it takes a long time to catch up."

Flashback: O'Reilly says this is Bain's second run at CitiusTech, having looked at the company before BPEA EQT bought a majority stake in CitiusTech from General Atlantic for about $750 million in 2019.

  • CitusTech this year scrapped SPAC plans, pivoting to explore both a traditional IPO and sale that Bloomberg said could value the health tech firm at more than $2 billion.

What's next: Bain sees a big growth opportunity to both expand CitiusTech's capabilities and customer set, which could include collaboration with some of Bain's other health care portfolio companies.

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