Zelis Healthcare, backed by Parthenon Capital and Bain Capital, has agreed to acquire Payer Compass for approximately $180 million, sources familiar with the matter tell Axios.
Why is this important: Zelis aims to remove friction from transactions and simplify payment processes to drive more affordable and transparent healthcare, and the acquisition of Payer Compass continues this mission.
Offer details: Zelis CEO Amanda Eisel confirmed the transaction to Axios, but declined to comment on the financials.
- The deal is valued at around 18 times the company’s $10 million EBITDA, concluding a sale process managed by Triple Tree, sources told Axios.
- Exiting Payer Compass investors include Spectrum Equity and Health Enterprise Partners (HEP), which recapitalized the reimbursement and price transparency technology company in January 2019.
What they say : Many other players touch on different aspects of what Zelis does, but Eisel thinks doing it all under one house is best.
- “We are very deliberately expanding into payment processing, [claims] communications and payment integrity,” she says.
Yes and: It’s not just about role-playing — it’s about nurturing continued growth, Jay Deady, who leads Zelis’ claims cost management solutions business, told Axios.
- Zelis’ strategy is centered on a “Price, Pay and Explain” framework that covers three key stakeholders: payers, providers and members. (Zelis entered the latter end market through its acquisition of Sapphire Digital in 2021.)
Enlarge: Adding Plano, Texas-based Payer Compass, Deady says Zelis earns the following:
- Contract management pricing capabilities that can be leveraged as a new, separately licensed product.
- Underwriting capabilities for 23 Medicaid states, where it does not currently play.
- Support services that will “grow exponentially” on digital member engagement tools and technologies inherited from the Sapphire acquisition.
- Capabilities provided by SaaS that will open new doors among blues health plans and national plans.
Catch up fast: In 2019, Parthenon merged two holding companies – Zelis Healthcare and RedCard – bringing in another Boston investor, Bain Capital, as a significant new shareholder.
- The deal valued the new entity at around $5.7 billion, with Parthenon remaining the largest shareholder and Bain taking around a 35-40% stake, sources told Sarah at the time.
- The marriage of the two companies represented pro forma EBITDA of approximately $300 million, including synergies, sources said at the time. Today, sources estimate that Zelis generates an EBITDA in the ZIP code of $450 million.
💭 Our thought bubble: If and when Change Healthcare successfully offloads its ClaimsXten payments integrity business to TPG (which remains contingent on closing its combination with UNH), the sale could have a domino effect on peers like Zelis.
- If IPO markets reopen, we expect to see Zelis backers continuing a dual-track IPO and sell-off process. Either way, the company, characterized by sources as both a high-margin and high-growth asset – and operating at the crossroads of healthcare, technology and payments – should attract strong interest. .