Water Street’s New Century Health seeks buyer

Water Street Healthcare Partners is exploring the sale of New Century Health, a provider of value-based care management programs for the oncology and cardiology specialties, Buyouts has learned.

Healthcare investment bank Leerink Partners is providing financial advice to the benefit management company, two of four sources familiar with the matter said.

New Century, Wellesley, Massachusetts, generates EBITDA in the $20 million to $25 million range, three of the sources said. The asset ought to command a double-digit multiple of EBITDA, they said.

Water Street acquired its majority stake in New Century Health in 2010 for an undisclosed price, subsequently bringing in Atul Dhir to serve as CEO. Dhir, a physician, previously held the CEO post at BiPar Sciences, a subsidiary of French drugmaker Sanofi-Aventis, and is a former exec of US Oncology (now McKesson Specialty Health).

A sale to another sponsor is viewed as the most likely outcome of the process, sources said. As cancer is increasingly thought of as a chronic disease, managing risk and streamlining care in a cost-effective manner is increasingly important.

New Century Health could also fit the bill for a managed-care company the likes of Magellan Health or benefits manager eviCore, one source speculated. Pharmacy-benefit manager Express Scripts last week announced plans to fork out $3.6 billion for eviCore, marking an exit for backers General Atlantic Partners, TA Associates and Ridgemont Equity Partners.

New Century helps health plans, physicians and patients coordinate care, automate processes, optimize risk and reduce administrative burdens.

Chicago’s Water Street is also a minority investor in home-health-benefits manager CareCentrix, which is working with UBS and Allen & Co on a sales process. News of the auction was initially reported by Reuters in September.

Water Street sold its majority stake in CareCentrix to Summit Partners in 2011.

An active investor in outsourced payer services, Water Street earlier this month invested in Employee Benefit Management Services, a third-party administrator for self-funded health care plans.

The sponsor on Sunday announced the closing of its fourth fund, with more than $860 million of investor commitments. The firm targets investments ranging from $50 million to $500 million in value.

A Water Street spokeswoman declined comment, while a Leerink representative could not be reached on Monday.

Action Item: Water Street’s portfolio: https://waterstreet.com/our-companies/

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