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Carlyle Group portfolio company CNSI has agreed to merge with Apax-backed Kepro, Carlyle and CNSI tell Axios exclusively.

Why it matters: The merger of equals creates a powerful platform for Carlyle within the under-modernized space of Medicaid and Medicare management.

By the numbers: The combined entity is “approaching $500 million of revenue,” says Carlyle managing director Dayne Baird.

The new company has contracts in 45 states, along with federal agencies.

Details: CNSI’s CEO Todd Stottlemyer will lead the new company, while Kepro CEO Susan Weaver will serve as president. 

How it works: CNSI provides IT systems that states and federal programs use to administer their Medicaid programs, via the Medicaid Management Information Systems (MMIS) market. 

Kepro partners with government entities and private health care companies to help historically underserved populations receive care in-home or in their chosen community. 

Together, they’re better able to compete for contracts with a fuller offering of program management capabilities, such as claims payment or call center operations.

What’s next: After the ink dries on this latest transaction, analytics acquisitions may be on the docket, says Stottlemyer.

Both CNSI and Kepro bring mountains of administrative and clinical data, respectively, he says.

“Our clients want an organization that can look at all sources of data,” he says. “The more we can provide that longitudinal look, the more beneficial we are.”

The company could acquire in niche areas of claims management, like third-party liability capabilities (determining whether a third party is liable for payment of service for a covered member), Baird says. 

Flashback: Carlyle had Kepro on its wishlist of possible acquisition candidates since spring, Baird says. 

The deal was made on direct approach, without an auction.

Gainwell Technologies’ $3.4 billion acquisition of HMS Holdings and Veritas Capital-backed Guidehouse’s acquisition of Dovel in 2021 were looked at as potential comps, Baird said

Similar to its 2021 acquisition of CNSI, Carlyle's internal deal team combined its government services, tech and health sector groups.

Exclusive: CNSI and Kepro to merge

CNSI and Kepro, backed by Carlyle and Apax, will merge.

Illustration of a doctor's bag with stethoscope featuring a computer mouse at the end

Health tech deals

Carlyle Group portfolio company CNSI has agreed to merge with Apax-backed Kepro, Carlyle and CNSI tell Axios exclusively.Why it matters: The merger of equals creates a powerful platform for Carlyle within the under-modernized space of Medicaid and Medicare management.

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Exclusive: CNSI and Kepro to merge

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