Mumbai: Global buyout funds Blackstone, Hillhouse Investment, TPG Capital, and General Atlantic have submitted non-binding bids to acquire AGS Health, valuing the healthcare IT services firm at around $1 billion, said multiple people aware of the development.
EQT Partners, the Swedish fund that owns AGS Health, has hired JP Morgan and Bank of America to manage the sale process which will be launched by early next year, ET first reported in September 2024. EQT acquired AGS Health in 2019 for $320 million.
Spokespeople at EQT, Blackstone, and General Atlantic declined to comment. Hillhouse and TPG Capital did not respond to email queries.
Bloomberg was the first to report last year about EQT’s plans to sell AGS Health.
AGS Health is expected to post $60 million in Ebitda this fiscal year, and annualised revenue of about $150 million. The company provides revenue cycle management (RCM) services to healthcare providers and vendors in the US, with 12,000 employees across multiple offices in India, Manila, and the US. AGS Health serves over 150 customers, including prominent US hospitals and health systems.
Its clients include laboratory testing services company Aegis Sciences Corporation, American Addiction Centers, ApolloMD, Auburn Community Hospital, DocuCare LLC, OhioHealth, Richmond University Medical Center and Vanderbilt University Medical Center.
EQT has a wide portfolio of IT/ITES companies with a strong presence in India. Last year, it acquired GeBBS, a competitor of AGS Healthcare, from ChrysCapital for $860 million. With this acquisition, EQT currently owns four healthcare IT services companies in India – CitiusTech, AGS Health, Sagility and GeBBS.
TPG Capital has been an aggressive investor in the healthcare IT space globally. Its current portfolio includes Nextech, Lyric, WellSky, and IQVIA.
Blackstone has a presence in the healthcare IT space through its acquisition of HealthEdge.
The sale process of AGS Health comes amid growing interest in healthcare BPOs from private equity firms.
In a similar deal, half-a-dozen buyout funds including Hillhouse Investment, Blackstone and TPG were engaged in a race to acquire Texas-headquartered healthcare BPO Access Healthcare last year.
Eventually, US-based investment firm New Mountain Capital, LLC, trumped its rivals to acquire a significant majority stake in Anurag Jain-owned Access Healthcare at a valuation of about $2 billion two months ago.
Other deals include Ontario Teachers’ Pension Plan’s acquisition of a 45 per cent stake in US-based healthcare BPO Omega Healthcare, valuing it at $1.8 billion, TA Associates’ buyout of a significant majority stake in Bengaluru and US-based RCM services provider Vee Healthtek for $250 million.
According to a BCC Research study, the global healthcare business process outsourcing market is estimated to grow to $259.5 billion by 2028 from $151.9 billion in 2022, at a compound annual growth rate of 9.7 per cent.
Continuous rise in healthcare costs has fuelled the urgency to find effective cost-reduction strategies. Organisations are increasingly turning to BPO to streamline processes, cut expenses, and navigate the complex landscape of healthcare expenditures, it said.
