Illustration: Sarah Grillo/Axios
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.