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Experian to Acquire Passport Health Communication Inc for $850m

ExperianLogoExperian announced that it has signed a definitive agreement to acquire Passport Health Communications, Inc. (“Passport Health”), a leading provider of data, analytics and software in the US healthcare payments market, subject to Hart-Scott-Rodino regulatory approval in the US and other customary closing conditions. The purchase price is US$850m, payable in full at closing, which will be funded from Experian’s existing committed bank facilities.

Don Robert, Chief Executive Officer of Experian, commented: “Since entering the US healthcare payments market five years ago, we have steadily expanded our position through both organic investment and acquisition, and our business is growing strongly. We are now taking the next step and the acquisition of Passport Health will make us a clear leader in this high growth and attractive market. With our newly combined product range, we will offer our clients in the US healthcare industry a competitive one-stop-shop to manage risk and to satisfy their payments requirements. We are excited about the growth opportunities created by this combination and we greatly look forward to welcoming our new Passport Health colleagues to Experian once the transaction completes.”

About Passport Health:  Founded in the United States in 1996, Passport Health provides services to healthcare providers across all 50 US states, helping them manage the administrative tasks associated with obtaining payment for healthcare services.

Passport Health is a data and software provider, with sales to over 2,500 hospitals in the US and more than 9,000 other healthcare providers. Its products are used by healthcare providers to manage payments between patients, commercial payers (such as insurance companies) and government programmes. Its services include verifying a patient’s identity and ability to pay, estimating a patient’s bill and establishing a patient’s eligibility for financial and charitable aid. Passport Health provides its services through a modular suite which allows its customers to access all its products on one common user interface, integrated into the healthcare provider’s own systems. It also has access to considerable sources of healthcare payments and claims data, spanning a ten year period.

Source: Experian Press Release

BIIA Comment by Phil Cotter, BIIA’s deputy managing director and principal of Cotter Consulting:  According to Experian the acquisition of Passport will make them the leading provider in the US of revenue cycle management solutions for Healthcare providers in the US. Just as in the credit sector, the complex nature of payment for Healthcare in the US, has led Healthcare providers to adopt systems that help them to automate the process of patient qualification, billing and revenue collection, where the patient, insurer and even the government can often be responsible for payment of part of the fees to the provider.
Experian moved into this market in 2008 with the acquisition of Search America and extended their position with the acquisition of Medical Present Value in 2011. According to today’s presentation to investors, Experian’s current Healthcare business in the US is $75m, growing at mid-teens. The acquisition of Passport is expected to take revenues to $220m in the next financial year and increase EBIT margins from the sector.
The acquisition not only provides Experian with a comprehensive suite of solutions, delivered through a SAAS platform but provides opportunities to generate synergies from its existing analytics, data management, fraud prevention and credit services businesses.  Don Robert, cited Passport as an acquisition that illustrated the strength of their strategy to expand into new markets which have the characteristics of creating & consuming data, a need for analytics and platforms to automate workflow processes.  The acquisition would also increase the number of records Experian have in the US Healthcare sector from 1bn to 4bn. This will position Experian as No 1 in the sector, competing with TU, Lexis Nexis and MD-on line.
Elsewhere Don Robert presented a slide that showed that today 70% of Experian’s revenues come from outside Financial Services and that growth is being fuelled by investments in Telecomms, Government and Automotive sectors in addition to the Healthcare sector.  With the recent acquisition of 41st Parameter, the provider of Device ID fraud prevention services, Experian have invested over $1bn in two strategic acquisitions in the last month.  It was always going to take some bold moves to keep the Experian supertanker steaming along, these seem to be the kind of moves that where needed.

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