Health Care Deal News: Spotlight on E-Health- July 2012

The e-health market continues to be very active, with 10 transactions announced in June alone and well over 50 for the first six months of 2012.  In the largest announced acquisition in June, Lightyear Capital, a private equity firm with approximately $3 billion of committed capital under management, is purchasing the Healthcare Benefits Solutions business from Fidelity National Information Services (NYSE: FIS) for $335 million.

The company will now be referred to as “Benefit Solutions,” and it provides benefits administration software-as-a-service, multi-purse debit cards and transaction processing solutions for consumer directed health care (CDH) accounts. It serves more than 500 clients including third party administrators and health insurance plans with technology solutions that administer and process about 11 million CDH accounts for their plan members and employee groups.  Revenues in 2011 were approximately $120 million.  The seller will incur an after-tax loss of about $55 million on the sale.  Simpson Thacher & Bartlett acted as legal counsel to Lightyear.

In another transaction, GE Healthcare (NYSE: GE) sold its nurse call business to Switzerland-based Ascom (SWX: ASCN) for $22 million, with a possible earn-out up to $6 million. GE’s nurse call business generated $20 million in revenues with margins similar to Ascom’s Wireless Solutions Division. The acquisition will strengthen Ascom’s nurse call business and allows Ascom to provide its customers with the best features and functionality from the combined offerings with its mobility systems.

In the final transaction with a price, Sweden-based Sectra AB (STO: SECTB) purchased UK-based Burnbank Systems Limited, a provider of IT services to the health care sector in the United Kingdom.  It specializes in transferring medical images and reports between providers. Burnbank has 290 hospital customers, virtually all the hospitals in the UK’s National Health System.  The upfront payment was approximately $7.8 million, with a contingent payment up to $4.6 million.  Burnbank’s revenues were just $3.74 million with a 25% operating margin in 2011. Now that the uncertainty over the Affordabe Care Act is mostly gone, we expect that e-health transactions will continue with a heavy volume close to what we have seen so far in 2012.............Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today