Blackstone, JPMorgan, Marlin, and New Mountain Back $3bn Merger of Virgin Pulse & HealthComp

Private equity-owned companies HealthComp and Virgin Pulse are planning to merge in a $3bn transaction in a bid to create a comprehensive employer health benefits platform.

The combination between Marlin Equity Partners-backed Virgin Pulse, a digital health wellness company, and New Mountain Capital-backed benefits administrator HealthComp, will serve more than 20 million members and 1,000 self-insured employers, according to a release.

New Mountain will maintain majority ownership of the combined company, while Marlin will retain a minority position. Blackstone and JP Morgan Chase’s healthcare investment arm Morgan Health will take minority stakes.

The HealthComp and Virgin Pulse merger comes as private equity deals have decreased from pandemic-fueled highs. Healthcare PE deals dropped to years-low levels in the second quarter this year, although deal volumes were still higher than average deal counts before the pandemic, according to PitchBook.

Virgin Pulse CEO Chris Michalak will serve as CEO of the combined company. The deal is expected to close in the fourth quarter this year, subject to regulatory approvals. Both companies will keep their respective names for now, according to the Wall Street Journal, which first reported on the deal.

The merger aims to create an integrated platform for employer-sponsored health benefits with hopes of lowering health costs for both members and employers.

Dan Mendelson, CEO of Morgan Health, said in an interview with Healthcare Dive that the merger’s goal of creating a scaled third-party administrator with a more substantive focus in areas like like wellness and analytics is an opportunity that Morgan Health has been eyeing for some time.

“You can only get so far with benefits administration. You have to have a more meaningful type of engagement with wellness and care navigation and primary care, and the other things that we know are associated with good healthcare,” Mendelson said.

The combined company will serve more than 1,000 self-insured employers initially, but Mendelson said he expects the platform will grow “rapidly.”

Providence, R.I.-based Virgin Pulse’s tech platform includes digital health integrations like wearables in a bid to help health plan sponsors control costs. Marlin originally acquired Virgin Pulse in 2018 and merged the business with another benefits platform, RedBrick.

Get the week’s top news delivered directly to your inbox – Sign up for our newsletter

Virgin Pulse has since made several acquisitions in the sector, including acquiring patient engagement company Welltok in 2021.

Fresno, Calif.-based HealthComp operates a benefits and analytics platform, and was first backed by New Mountain in 2020.

Marlin and New Mountain are both active investors in healthcare. New Mountain’s healthcare portfolio includes more than 20 companies in the industry, and the firm previously backed home healthcare provider Signify Health, which CVS acquired for $8bn earlier this year.

Blackstone and Morgan Health also have several active investments in employer-sponsored care.

Morgan Health’s employer-sponsored care portfolio includes companies like plan administrator Centivo, value-based care company Vera, fertility startup Kindbody and analytics company Embold Health. JP Morgan launched the unit in 2021 to find new avenues to control costs for its own employees and other employers.

Source: HealthCare Dive

Can’t stop reading? Read more