Emdeon, a Nashville-based revenue cycle management and health IT solutions company, will purchase Brentwood-based Change Healthcare for $135 million, the companies announced today.
The deal, expected to close later this month, also includes additional contingent payments of up to $50 million based upon Change's attainment of financial performance objectives by the end of 2017, according to a news release.
Change Healthcare, founded in 2007, offers cost transparency and consumer engagement tools that employers and health plans can use to reduce health care spending.
"Our customers are prioritizing information, insights and capabilities that enable individuals to be better healthcare consumers," Neil de Crescenzo, Emdeon president and CEO, said in the release. "While Emdeon has assisted payers, providers, pharmacies and our partner network with cost management, efficiency and maximizing revenues for many years, the addition of Change Healthcare's innovative, proven capabilities will further accelerate our customers' success. By combining our connectivity and scale with Change Healthcare's transparency and personalization capabilities, we can help our customers further increase member and patient engagement and add even more value to the services they provide their customers."
According to the release, the "rapidly growing team at Change Healthcare will join Emdeon and form the core of the company's health care consumer engagement business." Doug Ghertner, Change's president and CEO, will continue to lead the business and report directly to de Crescenzo.
"This transaction reinforces our commitment to transparency and consumer engagement and will enable us to deliver even more comprehensive, accurate and timely information to our users," Ghertner said in the release. "By joining the Emdeon team, we will have access to the resources necessary to accelerate our growth and to become the premier platform for consumer engagement in health care."
This is Emdeon's second major acquisition this year, following its $115 million purchase of California-based Capario in June. de Crescenzo was named CEO last September, replacing former CEO George Lazenby.
Emdeon is the fourth-largest private company in Nashville, with $1.2 billion in 2013 revenue and 880 local employees, according to Nashville Business Journal research.
Emdeon and Change are also two of the largest health care IT companies in Nashville, according to Nashville Business Journal research, with Emdeon ranking second with 305 IT employees and Change ranking eighth 45 IT employees (out of a total local workforce of 70).
