US private equity fund, TA Associates, will acquire the Bengaluru- and US-based revenue cycle management (RCM) services provider Vee Healthtek for $250 million (about Rs 2100 crore), said sources aware of the development.
TA will own a significant majority stake, while the promoter – Chennai based Valliappa family – will retain a minority stake, added sources.
Vee Healthtek, owned by South India-based Sona Group, provides a range of services, including revenue cycle management, professional billing, and IT services to hospitals, health systems, pharmaceutical companies, and physician groups globally. The company boasts a workforce of 5,000 employees worldwide and is expected to post $100 million in revenue in FY25.
The 100-year old Chennai based Sona Group has presence in textiles, plantation, agriculture, construction, IT, logistics and real estate businesses.
This acquisition marks TA Associates’ first foray into the Revenue Cycle Management space in India and its second investment in the Indian healthcare IT sector, following its $250 million investment in Chennai-based Zifo RnD Solutions, a global provider of informatics Solutions for research-based organizations in 2022.
RCM refers to the process of identifying, collecting, and managing the incoming payments.
When contacted, Chocko Valliappa, Founder & CEO of Vee Healthtek, said, “We are steadfast looking at growing the business organically. And we are excited to be crossing $100 million revenue soon. Will let you know if there is any change.” Mail sent to TA Associates did not elicit any responses.
The acquisition underscores the growing interest in healthcare IT among private equity investors. The global healthcare business process outsourcing market is estimated to grow from $151.9 billion in 2022 to $259.5 billion by 2028, at a compound annual growth rate of 9.7%, according to a BCC Research study.
Last year, TA Associates had acquired a minority stake in Alpha II, the Florida-based leading provider of revenue cycle management technology solutions to healthcare providers across the care continuum. TA also owns a stake in another Florida-based RCM solutions provider -Aptarro.
The Vee Healthtek deal follows a string of significant investments in the healthcare IT space, including EQT’s acquisition of RCM leader GeBBS from ChrysCapital for $860 million and KKR’s investment in Infinx Healthcare for $150 million.
Other healthcare BPM firms such as AGS Health, Access Health are also up for sale and in talks with PE funds.
Healthcare IT attracts investment due to its ability to drive innovation and offset macro factors such as inflation, labor shortages, and reimbursement headwinds, said a recent report from Bain & Company. Providers use IT to focus on revenue cycle management, clinical workflow optimization, and patient engagement; biopharma on clinical trial digitalization, analytics, and real-world evidence; and payers on member engagement and value-based care, it said.
Since its India operations started in 2009, TA Associates has been actively investing across five industries – technology, healthcare, financial services, consumer, and business services. TA’s major portfolios in India include Atria Convergence Technologies, NSE, OmniActive, NSE, Fincare, Billdesk, TCNS Clothing, Dr Lal Pathlabs, Indira IVF, Idea and Fractal Analytics.
In July, TA Associates had made a strategic growth investment in Vastu Housing Finance, a pan-India diversified lending institution. According to reports, TA Associates bought the stake for about Rs 3,340 crore ($400 mn) and it valued Vastu at Rs 10,000 crore.
Source: Economic Times