Mega Merger? Behind Bain’s 30x EBIDTA Price Tag on HealthEdge
Plus: We outline portco M&A and exits from last week.
Overly Assured?
Bain Capital is buying US healthcare software company HealthEdge from Blackstone, valuing the company at about $2.6bn including debt. Blackstone has held the asset, which provides modernization software for healthcare insurers, since 2020. Minority shareholders such as Coatue Management will also offload their stakes.
It’s a hefty EBITDA multiple, at 30x HealthEdge’s $86 million in earnings before interest, tax, depreciation, and amortization last year. Blackstone has doubled its money on its investment — a win for the firm, which has been struggling to sell the asset since 2022 for more than the $700 million price it had paid in 2020.
So, why the high price tag? And why now?
AI excitement.
Bain partners Devin O’Reilly and Paul Moskowitz hope that HealthEdge “can be a driving force for GenAI enablement at health plans.”
In addition to riding the AI boom, Bain plans to buy HealthProof and merge it with HealthEdge, according to reporting from Axios. Financial details of said transaction are not yet public.
A long-time partner of HealthEdge, HealthProof is a UST-owned health insurance tech provider which generates $100 million of EBITDA. The company acquired Advantasure, a government health program-focused technology firm, in 2022.
HealthEdge has already undergone M&A, with the company acquiring Wellframe, a digital health management platform, and Altruista Health, a care management and population health management solutions provider, while under Blackstone’s management.
Feel the Bain.
This won’t be Bain’s first foray into healthcare tech. Alongside Parthenon Capital, the firm acquired Zelis, a healthcare payments administrator, in 2019 and immediately merged with its peer RedCard Systems to create a new company with $5.7 billion. The company was reportedly worth about $17 billion in September of last year. Alongside the merger, Bain replaced portco leadership with internal partners as a part of the value creation process, installing Amanda Eisel as the company’s CEO and Brian Gladden as its CFO, respectively.
Bain Capital did not respond to request for comment.
PE portcos also saw some full and partial exits last week, as well as some exits-to-be:
Ontario Teachers' Pension Plan finalized the sale of its remaining stake in New Gold's New Afton Mine to New Gold Inc. for $300 million. OTPP had already sold back its stake to New Gold Inc., reducing it from 46 percent to 19.9 percent last year for $255 million.
Corsair Capital completed its divestiture from eurochange, a travel money retailer, to The Western Union Company. It had previously partially divested from the company in October 2022. Financial details were not disclosed.
EQT announced the sale of Karo Healthcare, a European consumer healthcare company, to KKR at a €2 billion ($2.3 billion) valuation, or 5x the company’s €200 million EBITDA. EQT acquired Karo in 2019 and has been exploring an exit since mid-2024.
SK Capital Partners sold Florachem Corporation, a Florida-based food manufacturer it acquired in April 2022, to Tradebe Life Sciences. Financial terms were not disclosed.
Sandbrook Capital and PSP Investments agreed to sell their majority stake in Havfram, a Norwegian offshore wind company, to DEME Group, a Belgian engineering firm for an undisclosed sum. Sandbrook initially acquired a majority stake in the company in November 2022 for $250 million, investing another $250 million (alongside PSP) the following month.
EQT and TA Associates offloaded stakes in IFS, a Swedish enterprise software company, to Hg and other investors, including the Abu Dhabi Investment Authority and the Canada Pension Plan Investment Board, for €3 billion ($3.3 billion). The deal values IFS at over €15 billion and marks Hg becoming a co-controlling shareholder alongside EQT, with TA Associates retaining a minority stake alongside ADIA and CPP.
Meanwhile, portco M&A was in full swing:
GTCR-backed Senske acquired Huron Pest Control for an unknown amount. Following the acquisition, Huron Pest Control will operate under Mosquito Buzz, Senske’s Canadian brand specializing in mosquito and tick control services.
CDPQ-backed Verene Energia bought the Brazilian transmission platform Equatorial Transmissão at a valuation of C$1.26 billion ($910 million).
Bain-backed Frontline Road Safety acquired Soundcore Capital Partners' Infrastripe, a fellow provider of line striping and pavement marking services, for an unknown sum.
And there were some key people moves:
CD&R appointed Michael Harrington as risk director, a new position designed to oversee risk management strategies at both the portfolio and enterprise levels. Harrington most recently served as the vice president of risk management at Lockheed Martin and previously held positions at Eli Lilly and Citadel.
Martyn Curragh joined Warburg Pincus as a senior advisor to the firm's technology and services business. Previously, Curragh served as CFO and head of portfolio strategy at PwC.
See you next week!
