Louisville-based MedAssist is one of the largest revenue management service providers to the US healthcare industry. It caters to about 1,000 clients, including hospitals, physician groups and alternate site providers. It handles billing and patient screening for their eligibility to government medical schemes. Nearly $700 million is spent in the US in this domain annually.
MedAssist has revenues of $99 million, and is growing at 8-10 per cent per annum with operating margins of 22-24 per cent. These margins are higher than Firstsource’s (20 per cent), but MedAssist also has to bear a 40 per cent tax burden.
The acquisition values MedAssist at 12.5 times its EBIDTA and more than 3.3 times its revenues.
...To fund the acquisition, Firstsource will be raising a debt of $270 million. It already has cash reserves of around $80 million, which will be used to part-pay the deal. “The debt is in various tranches and the interest rate on it varies from LIBOR plus 250 to 350 points,” says Mukherji.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.