Cotiviti Holdings, Inc., a leading provider of payment accuracy and analytics-driven solutions focused primarily on the healthcare industry, and Verscend Technologies, Inc., a portfolio company of Veritas Capital and a leader in data-driven healthcare solutions, announced that they have entered into a definitive agreement whereby Verscend has agreed to acquire Cotiviti for $4.9 billion in cash.

Under the terms of the agreement, Cotiviti shareholders will receive $44.75 in cash per share of Cotiviti common stock, and Verscend will assume all of Cotiviti’s outstanding debt, resulting in an enterprise value of approximately $4.9 billion. The offer price represents a 32% premium to Cotiviti’s unaffected share price as of June 4, 2018 and a 136% premium to the initial public offering price of Cotiviti’s common stock.

The combined business will operate as a private healthcare information technology company with unique, data-driven capabilities. Together, the companies are expected to have greater impact in the healthcare IT market by increasing affordability, reducing waste and improving outcomes and quality as well as offer new opportunities to create substantial value for clients, including complementary solutions across multiple intervention points in the payment process.

“We are thrilled to partner with Cotiviti, which has become an important player in the growing and increasingly important and complex healthcare payment accuracy space,” said Emad Rizk, M.D., President and CEO of Verscend. “Together, Verscend and Cotiviti will offer our clients a comprehensive, integrated end-to-end solution to address the estimated $900 billion in healthcare waste and abuse across the claims payment and care continuum. Financial data coupled with clinical data from our Risk Adjustment, Quality, and Population Health lines of business offer increased value to commercial payers, government entities, and providers.”

Doug Williams, CEO of Cotiviti said, “We expect today’s transaction to deliver compelling value for Cotiviti shareholders and allow us to continue to execute our strategic growth plan. We are excited to be combining with Verscend, and believe that together we will create an organization with robust data assets, expanded offerings and innovative technologies that will allow us to bring a broader portfolio of new and existing payment accuracy analytical solutions to our valued customers.”

“We believe Cotiviti is a perfect fit with both our investment strategy and with Verscend, and we look forward to taking the platform to the next level through this exciting combination,” said Ramzi Musallam, CEO and Managing Partner of Veritas Capital. “The aggregation of Cotiviti and Verscend’s complementary data sets and analytical capabilities, coupled with the unrelenting focus and commitment to support our customers, is expected to further drive value-added solutions and differentiated product development.”

Veritas Capital has a proven track record of driving growth for companies within the Healthcare Technology IT space, as illustrated by the firm’s recent acquisition of GE Healthcare’s Value-Based Care Division and investments in Truven Health Analytics and Verscend Technologies. Veritas has a deep understanding of the urgent need to digitalize our healthcare system and brings a culture of intense customer focus and a drive for growth through focused R&D and product innovation.

Transaction Details

The transaction, which was unanimously approved by Cotiviti’s Board of Directors, is expected to close during the fourth quarter of 2018. Closing of the transaction is subject to the approval of Cotiviti shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

Advent International has entered into a voting agreement whereby it has agreed to vote shares representing approximately 44% of the Company’s voting power in favor of the transaction.

Advisors

Goldman Sachs and William Blair are acting as financial advisors to Cotiviti, and Latham & Watkins LLP is serving as legal advisor to Cotiviti.

Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Veritas.