Going private again
Blackstone to buy Emdeon for $3 billion
Emdeon announced plans last week for the publicly traded healthcare billing and finance company to return to private ownership. The Blackstone Group, the private-equity firm with the largest stake in hospital operator Vanguard Health Systems, agreed to pay $19 a share to become Emdeon’s majority owner, the companies said. The deal is valued at about $3 billion.
At $19 a share, the total value of Emdeon’s shares as of March 31 would total about $2.2 billion. Emdeon has roughly $947.5 million in debt, the company’s most recent quarterly report shows.
Emdeon and Blackstone declined interview requests, according to spokeswomen with both companies.
Should shareholders and antitrust regulators approve the deal, Emdeon would abandon the stock markets for private equity a little more than two years after its initial public offering.
During the Nashville-based company’s stint trading on the New York Stock Exchange, it made more than a half-dozen acquisitions, including the May deal for EquiClaim, an audit and recovery services company, and the October 2010 deal for Chamberlin Edmonds & Associates. The deal for Chamberlin Edmonds, which screens and enrolls patients in government health plans, followed deals for healthcare technology revenue cycle, data conversion and pharmacy companies; a healthcare insurer IT consulting company; and a fraud and abuse management company.
Emdeon’s board of directors approved the possible Blackstone deal, and two privateequity firms holding 70% of the company’s shares, General Atlantic and Hellman & Friedman, endorsed the deal. Hellman & Friedman will continue to hold a minority stake after the deal closes, the companies said as they announced the deal.
Emdeon CEO George Lazenby noted in a written release that the company’s prospective buyer had knowledge of the business and industry. Blackstone remains the largest owner in Vanguard, a Nashville-based health system with 26 acute-care and specialty hospitals, following Vanguard’s IPO (June 27, p. 14).
Neil Simpkins, senior managing director of Blackstone, said little in the release about the investors’ interest in Emdeon but described the acquisition target as high quality and said Blackstone looked forward to providing the company and its executives with support.
Emdeon reported $117.5 million in operating income on revenue of $1 billion in 2010. That’s compared with operating income of $101 million on revenue of $918 million the prior year.