Clinical Transformation meets Digital Transformation with huge contingent payout potential

On March 6, 2017, it was announced that Tech Mahindra (America), Inc. signed a definitive agreement to acquire CJS Solutions Group LLC, d/b/a ‘The HCI Group’ for a total price of approximately USD 220 million. The deal consists of 84.7% interest of HCI Group to be acquired for present enterprise value of USD 110 million, out of which USD 89.5 million is paid upfront in cash, and a contingent consideration of maximum USD 130.5 million payable over next three years for acquiring the remaining 15.3% interest based on milestones for revenue and operating profit.

With headquarters in Florida and United Kingdom, HCI Group offers a broad scope of healthcare information technology solutions, including enterprise-wide advisory services with a focus on IT system implementation and training, as well as specialty service lines in integration, testing, go-live, clinical adoption, optimization, HIMSS EMRAM consulting and cyber security. HCI Group has a large pool of Epic and Center (healthcare software) certified professionals and has presence in Europe, Middle East, and Asia Pacific.

Tech Mahindra, a global software services firm with specialization in digital transformation, consulting and business reengineering, has acquired over 10 companies since 2012. The acquisition of HCI Group will further consolidate Tech Mahindra’s position in the healthcare and life sciences industries and provide opportunity to go deeper in this space via EMR implementation and surrounding services route.

According to Atul Kumar, President and Chief Technology Officer at Tech Mahindra, the acquisition of HCI Group aligns well with their DAVID (digital, automation, verticalization, innovation and disruption) strategy and their new philosophy ‘Connected world. Connected experiences’.

Recognized as the fastest growing private companies in the USA by the INC and Consulting Magazine, HCI Group has over 500 employees and had revenues of USD 114 million, USD 75.6 million, and USD 69.6 million for the period twelve-month ended September 2016, CY 2015 and CY 2014, respectively. The price of approximately USD 220 million is a revenue multiple of 1.93, if the HCI Group achieves all of its milestones during the three-year period.

The transaction is expected to close in April 2017, and is subject to Hart-Scott-Rodino antitrust approval and regulatory approvals.

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Sources:

http://www.techmahindra.com/media/press_releases/TechMahindra-acquire-US-based-healthcare-ITservices-consultingfirm.aspx

https://blog.thehcigroup.com/about/in-the-news/the-hci-group-to-expand-its-technology-offerings

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/4a3056af-379a-419d-9980-565f67148ed6.pdf