Cotiviti Holdings, a provider of payment accuracy and analytics solutions for payers and other risk-bearing healthcare organizations, is being acquired by Verscend Technologies for $4.9 billion in cash.

Verscend is a company owned by Veritas Capital, a large private equity firm that invests in a large number of companies across several industries, including healthcare.

The acquisition of Cotiviti by Verscend, which offers solutions to help payers achieve better healthcare outcomes through data analytics, was announced Tuesday.

Under the terms of the agreement, Cotiviti shareholders will receive $44.75 in cash per share of Cotiviti common stock, and Verscend will assume all of Cotiviti’s outstanding debt, resulting in an total purchase price of about $4.9 billion. An announcement of the acquisition noted that the offer price represents a 32 percent premium to Cotiviti’s share price as of June 4 and a 136 percent premium to the initial public offering price of Cotiviti’s common stock.

Emad Rizk, MD
Emad Rizk, MD

The transaction, which was unanimously approved by Cotiviti’s board of directors, is expected to close during the last three months of 2018. The completion of the transaction is subject to the approval of Cotiviti shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

However, at least four law firms announced they were beginning inquiries into the deal to examine potential breaches of fiduciary duty and violations of law by Cotiviti’s board of directors. For example, WeissLaw said it is studying whether Cotiviti’s board acted to maximize shareholder value, noting that the per share price offered for the stock is $1.25 less than analysts’ target price. Bragar, Eagel & Squire said it is studying whether Cotiviti’s board “failed to adequately shop the company and obtain the best possible value for its stockholders.” The firms’ announcements of these inquiries seek responses from shareholders who might want to pursue class-action lawsuits.

If the deal proceeds, Cotiviti and Verscend will operate as a private healthcare information technology company that will use its tools to optimize value for payments and reduce waste, as well as “offer new opportunities to create substantial value for clients, including complementary solutions across multiple intervention points in the payment process.”

“We are thrilled to partner with Cotiviti, which has become an important player in the growing and increasingly important and complex healthcare payment accuracy space,” said Emad Rizk, MD, president and CEO of Verscend. “Together, Verscend and Cotiviti will offer our clients a comprehensive, integrated end-to-end solution to address the estimated $900 billion in healthcare waste and abuse across the claims payment and care continuum. Financial data coupled with clinical data from our Risk Adjustment, Quality, and Population Health lines of business offer increased value to commercial payers, government entities, and providers.”

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