Change Healthcare kicks off process for Connected Analytics unit

Change Healthcare is evaluating strategic options for its Connected Analytics business—which includes staff scheduling software ANSOS—as the healthcare tech giant focuses on growing its core operations, according to three sources familiar with the matter.

William Blair is providing financial advice on the process, the people said. Conversations with potential buyers recently began but are in their early stages, they said.

Company executives initially noted plans to weigh options for the Connected Analytics arm during its IPO roadshow this summer, RetailRoadshow revealed.

The process not expected to be a broadly run auction, but rather, tailored to a targeted group of PE-backed companies such as Clearlake Capital Group’s Symplr, which earlier this year bought API Healthcare, or Francisco PartnersQGenda.

The unit could also draw interest from a range of larger pure-play healthcare technology businesses, sources said. This could include large emergency medical record companies like Cerner, whose Clairvia unit makes workforce management software for healthcare providers. Other strategics like Workday or PE-backed Kronos, whose human capital management software serves various industries, could also be interested in certain components of the division, sources suggested.

Change’s Connected Analytics unit generates approximately $90 million to $100 million of revenue and approximately $25 million to $30 million of Ebitda, sources said. ANSOS, sitting within that division, generates Ebitda in the high teens, they said.

Assuming a sale of the assets to a single buyer, a potential transaction could be valued north of 10x or 11x, one of the people said. That suggests a deal could value the business unit anywhere from $250 million to upward of $330 million.

ANSOS, for its part, provides enterprise software that helps healthcare providers manage and schedule nurse staffing and reduce labor costs. ANSOS was originally acquired by McKesson, whose healthcare technology unit merged with Blackstone– and Hellman & Friedman-backed Change in 2017 to create Change Healthcare.

The healthcare revenue-cycle-management and analytics firm went public in July.

Blackstone and Hellman & Friedman were set to own approximately 48 percent and 12 percent of Change Healthcare after the public offering, according to the company’s prospectus.

McKesson, which held approximately 70 percent of the joint venture prior to the offering, is no longer an investor.

Representatives of Change Healthcare and William Blair didn’t return requests for comment. Blackstone declined to comment.

Action Item: For more on Change Healthcare, read the company’s June prospectus: