Creates a Leading Data and Analytics-Driven
Healthcare Solutions Provider with Increased Scale
Cotiviti Holdings, Inc. (NYSE: COTV) (“Cotiviti”), a leading
provider of payment accuracy and analytics-driven solutions focused
primarily on the healthcare industry, and Verscend Technologies,
Inc. (“Verscend”), a portfolio company of Veritas Capital
(“Veritas”) and a leader in data-driven healthcare solutions,
announced today 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.
About Cotiviti
Cotiviti is a leading provider of payment accuracy and
analytics-driven solutions that helps payers, other risk-bearing
healthcare organizations and retailers achieve their business
objectives. Through a combination of analytics, technology and deep
industry expertise, Cotiviti’s solutions create insights that
unlock value from the complex interactions between clients and
their stakeholders. Cotiviti serves a majority of the top 25 U.S.
healthcare payers and a majority of the top 10 U.S. retailers.
Cotiviti’s passion for creating unique client value drives
Cotiviti’s focus – Analytics. Insight. Value.
About Verscend Technologies, Inc.
Verscend drives better healthcare outcomes through data
analytics, supporting payers' financial performance and quality
improvement initiatives. Verscend’s Payment Accuracy, Risk
Adjustment, and Quality and Performance solutions help
organizations utilize their data so they can efficiently and
cost-effectively succeed in the new era of healthcare. Learn more
at www.verscend.com.
About Veritas Capital
Veritas is a leading private equity firm that invests in
companies that provide critical products and services, primarily
technology and technology-enabled solutions, to government and
commercial customers worldwide, including those operating in the
aerospace & defense, healthcare, technology, national security,
communications, energy, and education industries. Veritas seeks to
create value by strategically transforming the companies in which
it invests through organic and inorganic means. For more
information on Veritas Capital and its current and past
investments, visit www.veritascapital.com.
Additional Information and Where to Find It
In connection with the proposed merger, Cotiviti plans to file
with the Securities and Exchange Commission (“SEC”) and mail or otherwise provide to its
stockholders a proxy statement regarding the proposed transaction.
Cotiviti may also file other documents with the SEC regarding the
proposed transaction. This document is not a substitute for the
proxy statement or any other document that may be filed by Cotiviti
with the SEC. BEFORE MAKING ANY VOTING DECISION, COTIVITI’S
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY
WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED BY COTIVITI
WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR
INCORPORATED BY REFERENCE THEREIN BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE
PROPOSED TRANSACTION. Investors and stockholders may obtain a
free copy of the proxy statement and other documents Cotiviti files
with the SEC (when available) through the website maintained by the
SEC at www.sec.gov. Cotiviti makes available free of charge at
www.Cotiviti.com (in the “Investors” section), copies of materials
it files with, or furnishes to, the SEC.
Participants in the Solicitation
This document does not constitute a solicitation of proxy, an
offer to purchase or a solicitation of an offer to sell any
securities. Cotiviti and its directors, executive officers and
certain employees and other persons may be deemed to be
participants in the solicitation of proxies from Cotiviti’s
stockholders in connection with the proposed merger. Security
holders may obtain information regarding the names, affiliations
and interests of Cotiviti’s directors and officers in Cotiviti’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2017, which was filed with the SEC on February 22, 2018 and its
definitive proxy statement for the 2018 annual meeting of
stockholders, which was filed with the SEC on April 12, 2018. To
the extent the holdings of Cotiviti securities by Cotiviti’s
directors and executive officers have changed since the amounts set
forth in Cotiviti’s proxy statement for its 2018 annual meeting of
stockholders, such changes have been or will be reflected on
Statements of Change in Ownership on Form 4 filed with the SEC.
Additional information regarding the interests of such individuals
in the proposed merger will be included in the proxy statement
relating to the proposed merger when it is filed with the SEC.
These documents (when available) may be obtained free of charge
from the SEC’s website at www.sec.gov and Cotiviti’s website at
www.Cotiviti.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties. All statements other than
statements of historical fact or relating to present facts or
current conditions included in this press release are
forward-looking statements. Forward-looking statements give
Cotiviti’s current expectations and projections relating to its
financial condition, results of operations, plans, objectives,
future performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as “anticipate,” “estimate,” “expect,” “project,” “seek,”
“plan,” “intend,” “believe,” “will,” “may,” “could,” “continue,”
“likely,” “should,” and other words.
The forward-looking statements contained in this press release,
including without limitation statements regarding anticipated
benefits and effects of the anticipated merger of Cotiviti and
Verscend, delivering compelling value for shareholders, proposed
end-to-end solutions of the combined company, and opportunities for
expansion, are based on assumptions that Cotiviti has made in light
of its industry experience and its perceptions of historical
trends, current conditions, expected future developments and other
factors that Cotiviti believes are appropriate under the
circumstances. These statements are not guarantees of performance
or results. These assumptions and Cotiviti’s future performance or
results involve risks and uncertainties (many of which are beyond
our control). Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include the risk that the transaction will not close in the
timeframe expected, or at all, the risk that the expected benefits
and effects of the transaction will not be achieved, effects of
regional, national or global political, economic, business,
competitive, market and regulatory conditions and the following:
system interruptions or failures, including cyber-security
breaches, identity theft or other disruptions that could compromise
Cotiviti’s information; Cotiviti’s inability to successfully
leverage its existing client base by expanding the volume of claims
reviewed and cross-selling additional solutions; Cotiviti’s clients
declining to renew their agreements with Cotiviti or renewing at
lower performance fee levels; Cotiviti’s failure to innovate and
develop new solutions for its clients; delays in implementing
solutions; Cotiviti’s failure to maintain or upgrade its
operational platforms; inability to develop new clients;
improvements to healthcare claims and retail billing processes
reducing the demand for Cotiviti’s solutions or rendering its
solutions unnecessary; loss of a large client; early termination
provisions in Cotiviti’s contracts; Cotiviti’s failure to
accurately estimate the factors upon which it bases its contract
pricing; Cotiviti’s inability to manage its relationships with
information suppliers, software vendors or utility providers;
Cotiviti’s inability to protect its intellectual property rights,
proprietary technology, information, processes and know-how;
Cotiviti’s inability to execute its business plans including its
inability to manage its growth; Cotiviti’s inability to
successfully integrate and realize synergies from any future
acquisitions or strategic partnerships; Cotiviti’s inability to
realize the book value of intangible assets; Cotiviti’s being
required to pay significant refunds to CMS under its Medicare RAC
contracts or significant changes to the Medicare RAC program;
declines in contracts awarded through competitive bidding or
Cotiviti’s inability to re-procure contracts through the
competitive bidding process; Cotiviti’s success in attracting and
retaining qualified employees and key personnel; Cotiviti’s
inability to expand its retail business; fluctuations in Cotiviti’s
results of operations; Cotiviti’s failure to maintain effective
internal controls; litigation, regulatory or dispute resolution
proceedings, including claims or proceedings related to
intellectual property infringements or claims not covered by
insurance; healthcare spending fluctuations; consolidation among
healthcare payers or retailers; slow development of the healthcare
payment accuracy market; negative publicity concerning the
healthcare payment industry or patient confidentiality and privacy;
significant competition for Cotiviti’s solutions; risks associated
with international operations; general economic, political and
market forces and dislocations beyond Cotiviti’s control;
variations in Cotiviti’s revenue between reporting periods due to
timing issues; Cotiviti’s failure to comply with applicable
federal, state, local and international privacy, security and data
laws, regulations and standards; changes in regulations governing
healthcare administration and policies, including governmental
restrictions on the outsourcing of functions such as those that
Cotiviti provides; changes in tax laws and rules or in their
interpretation or enforcement; the timing and magnitude of shares
purchased under Cotiviti’s share repurchase program; risks related
to Cotiviti’s substantial indebtedness and holding company
structure; volatility in bank and capital markets; provisions in
Cotiviti’s amended and restated certificate of incorporation, and
the other important factors discussed under the caption “Risk
Factors” in Cotiviti’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2017, which was filed with the SEC on
February 22, 2018, along with its other reports filed with the SEC.
Additional factors or events that could cause Cotiviti’s actual
performance to differ from these forward-looking statements may
emerge from time to time, and it is not possible for Cotiviti to
predict all of them. Should one or more of these risks or
uncertainties materialize, or should any of its assumptions prove
incorrect, Cotiviti’s actual financial condition, results of
operations, future performance and business may vary in material
respects from the performance projected in these forward-looking
statements.
Any forward-looking statement made in this press release speaks
only as of the date on which it is made. Cotiviti undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20180619005755/en/
Cotiviti Holdings, Inc.Jennifer DiBerardino,
203-642-0718Vice President, Investor
RelationsInvestor.Relations@Cotiviti.comMedia@Cotiviti.comorVerscend
TechnologiesSandy Cummings,
781-472-0145Sandy.Cummings@Verscend.comorVeritas CapitalSard
Verbinnen & CoAndrew Cole/David Millar/Julie
Rudnick212-687-8080VeritasCapital-SVC@sardverb.com
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