Healthcare payments business Waystar has agreed to acquire eSolutions in a deal that values the revenue cycle management provider at around $1.3bn, according to people familiar with the matter.

The amount Waystar agreed to pay couldn’t be determined, but it represents a multiple of roughly 10 times eSolutions’s projected 2020 revenue and 20 times its projected earnings before interest, taxes, depreciation and amortisation, one of the people said.

Waystar is backed primarily by Stockholm-based EQT Partners, which bought the company from Bain Capital last year. The Canada Pension Plan Investment Board invested alongside EQT, and Bain Capital remains an investor as well.

ESolutions is backed by technology-focused firm Francisco Partners, which bought the company in 2015. The person said Francisco is still in discussions about retaining a small stake in the company after the completion of the deal.

The transaction marks the first time that commercial and government payers will be on the same payments platform, said Waystar chief executive Matthew Hawkins, who confirmed the companies have agreed to a deal. He added that both companies provide services through cloud-based technology.

US-based eSolutions has more than 6,000 payer connections, serving hospitals and ambulatory care providers as well as businesses like skilled nursing, hospice and medical equipment companies.

Hawkins said his company acquired eSolutions partly because they are focused on Medicare — a program that is growing with the aging of baby boomers — along with the company’s strength in nonacute sectors of healthcare.

“We think it benefits every major participant in healthcare, including patients,” he said.

The deal will eliminate the need for multiple billing and payment processing systems for hospitals and other healthcare providers, which often use different programs for commercial and government payers, Hawkins said. The combination also will make it easier for patients to determine how much insurers and government payers can be expected to cover procedures.

The deal is expected to close later this year.

Source: Wall Street Journal

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