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Blackstone's HealthEdge in play

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Oct 31, 2022
Illustration of price tag stickers in the shape of a health plus.

Illustration: Aïda Amer/Axios

Blackstone is exploring a sale of HealthEdge Software, a maker of SaaS solutions for health insurers, as first reported by Bloomberg and confirmed by Axios.

Why it matters: This is one of few — if not the only — big health tech assets available for private equity investment right now. Presumably, that bodes well for HealthEdge's sellers.

Driving the news: Four sources tell Axios that BAML is advising on the sell side. Two of the people say Barclays is co-advising, adding that a small group of mega funds is participating with bids coming up next week.

By the numbers: Blackstone is said to be exploring a 50% stake sale that could value the Burlington, Massachusetts-based company at about $3 billion.

  • That's based upon $400 million and $60 million of revenue and EBITDA projected next year, per Bloomberg.

Flashback: Blackstone Growth purchased a majority stake in HealthEdge in March 2020 following a Morgan Stanley-led process, valuing the business at approximately $730 million.

  • Blackstone's equity check equated to more than $600 million, they said.
  • The platform has completed a number of add-ons since the original investment — which has brought in additional co-investors — so there’s more equity now.

Catch up quick: HealthEdge under Blackstone has been quietly growing and diversifying via M&A.

  • It scooped up The Burgess Group, Altruista Health and Wellframe — the latter through which Coatue, HLM Venture Partners, and BlueCross BlueShield Venture Fund joined the company as investors.

How it works: HealthEdge aims to help health plans increase membership and embrace new business models, control administrative costs, stay compliant, and improve clinical outcomes.

  • Its software solutions span administrative processing, payment integrity, care management, and digital health management and consumer engagement.

What they said: In a 2020 interview, HealthEdge CEO Stephen Krupa spoke to the company's vision following its deal for The Burgess Group, a payment integrity company:

  • “From really the first time we started talking, our visions were the same: Totally automating the transactional system for health plans. And there are numerous challenges to doing that."
  • He added: "The vision is not to grow to add businesses for the sake of adding businesses. The vision is [to build] a business that closes automation gaps [and creates] an end-to-end system.”

Of note: HealthEdge marked the first health care-focused deal executed by Blackstone's new Jon Korngold-led growth-equity team, whose health care efforts are steered by Ram Jagannath.

Blackstone declined to comment. HealthEdge, BAML and Barclays did not immediately return requests for comment.

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