Experian acquires Passport Health Communications for $850M

Experian, the global information services company, is acquiring Passport Health Communications, a  provider of data, analytics and software in the US healthcare payments market. The purchase price is $850 million. 

Founded in 1996, 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.

Passport Health’s revenues  are largely subscription based. The business has renewal rates of c. 95% and average contract duration of 3 to 5 years. In the year ending 31 December 2013, Passport Health is expected to generate revenue of US$121m, representing organic growth of 23%, and EBIT of US$30m. In the year ending 31 December 2014, Experian expects Passport Health revenue to reach approximately US$145m (of which 84% is already booked and contracted), with EBIT margins in the high twenties.

Don Robert, Chief Executive Officer of Experian, said, “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.”

Experian entered the healthcare payments market in 2008, with the acquisition of SearchAmerica, which focused on helping hospitals to manage their billings and cash flows. Experian further consolidated its position in 2011 with the acquisition of Medical Present Value, which extended its client footprint into physician practices and clinics and added new capabilities in insurance claims. Subsequently, Experian merged the two businesses to create Experian Healthcare, which in the year ending 31 March 2014 is expected to generate revenue of US$75m, with organic revenue growth in the mid-teens.

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