As a provider of software to health insurers, HealthEdge is a fast-growing firm that successfully leverages a niche need for specialized services for those in benefits administration and care management. Just last month, the Burlington-based firm reported that its revenue increased by over 30 percent in 2019, and it expanded its customer base by 25 percent. Its numbers like this that drew the attention of Blackstone Growth’s senior managing director Ram Jagannath.
Blackstone Group is a leading investment firm with over $571 billion in assets under management. The growth equity investing platform was launched in January 2019 and is a new venture for the investment firm. Its second acquisition is a majority stake in HealthEdge, and while the financial details were not disclosed, it's estimated the deal is worth $700 million, including debt. Interestingly, most of Blackstone's investment will come in the form of equity as the firm rolls with market uncertainty in the face of COVID-19.
“It is a great company with a differentiated product that we think could also serve as a platform for healthcare payer technology,” said Ram Jagannath, senior managing director with Blackstone. “We see an opportunity to add other software that sells to these health plans.”
HealthEdge was co-founded in 2004 by Rob Gillette and Albert Waxman, founder of venture capital firm Psilos. During that time, the firm held a majority stake in HealthEdge until Gilette moved on from the company, and Stephen Krupa stepped up as CEO while he also served as chief executive of Psilos. The software provider successfully raised over $95 million over six rounds from 2007 to 2017. Past investors include Oaktree Specialty Lending, Medica, and its original funder Psilos.
In 2005, the company attained over $125 million in intellectual property and other assets. It was this software that built the foundation for the firm’s current offerings. HealthEdge acquired Click4Care in 2012 to augment its clinical software products with new care management and utilization management software offerings. The company offers a suite of solutions under the banner HealthRules which can integrate financial, administrative, and clinical functionality or operate as individual components.
Rick Jelinek, a board member for HealthEdge and EVP of CVS Health, stated: “On behalf of the company we are pleased to be partnering with Blackstone, which has the capital and resources to help HealthEdge further scale. The company has a leading technology offering, and this partnership with Blackstone will help it continue to expand, benefiting the entire healthcare ecosystem."
HealthEdge is the first healthcare acquisition for the private equity firm's growth unit, and Jagannath oversaw the transaction. Blackstone president Jonathan Grey identified investing in fast-growing companies as one of his critical strategies for negotiating today’s competitive venture market. In addition to the health tech deal, the firm also bought into MagicLab, the makers of dating app Bumble back in November.