KKR buys stake in health tech firm Cotiviti in a deal valued at $11B

Private equity firm KKR & Co. has agreed to buy a stake in health tech firm Cotiviti from Veritas Capital, the company announced Wednesday.

Under the agreement, KKR and Veritas will become co-sponsors with equal ownership stakes in Cotiviti. The firms will also allocate significant capital to accelerate innovation and fund growth investments related to commercial expansion, new product development, and technology-related opportunities, the company said in a press release.

The Wall Street Journal reported in December that the firms were in discussions.

No financial details were disclosed.

The deal, which will strengthen KKR's portfolio of healthcare analytics investments, is expected to close in the second quarter of 2024. KKR is making its investment in Cotiviti primarily through its North America Fund XIII. Veritas is making its new investment in Cotiviti through Veritas Fund VIII. 

Cotiviti, an analytics company that focuses on payment accuracy solutions, was absorbed by Veritas-owned Verscend Technology for $4.16 billion in cash in 2018. Cotiviti provides payment accuracy and analytics services to health insurers and other healthcare companies.

The deal values Cotiviti at around $11 billion and ranks among the largest recent private equity transactions, according to the WSJ.

"Since initially partnering with Veritas in 2016, we have dramatically expanded our scale and enhanced our value proposition to our customers. I look forward to collaborating with both KKR and Veritas to leverage our highly differentiated solutions to improve the cost and quality within the healthcare system,"  Emad Rizk, M.D., chairman, president and CEO of Cotiviti, said in a statement.

"Both KKR and Veritas believe [Cotiviti] will play an increasingly vital role in improving the healthcare system through proprietary data, technology, and analytics," Ramzi Musallam, CEO and managing partner of Veritas, said in a statement.

“We are delighted to be backing Cotiviti in its mission to improve the healthcare experience through advanced data analytics and technology,” said Max Lin, partner at KKR. “Cotiviti has developed an innovative portfolio of best-in-class solutions used by nearly two hundred healthcare payers to ensure accurate and efficient healthcare delivery. We look forward to working together with the Cotiviti management team and Veritas to support the company in accelerating growth through continued investment in its people and technology.”

Wednesday, December 13

Private equity firm KKR & Co. is exploring a potential deal to buy a stake in healthcare analytics company Cotiviti from Veritas Capital, The Wall Street Journal reported Monday.

Cotiviti, an analytics company that focuses on payment accuracy solutions, was absorbed by Veritas-owned Verscend Technology for $4.16 billion in cash in 2018.

If the firms reach an agreement, the transaction’s potential valuation would rank it among the largest U.S. private equity deals announced in the past year.

KKR is in discussions to buy a 50% stake in Cotiviti that would value the healthcare technology company at between $10 billion and $11 billion, WSJ reported, citing people with knowledge of the matter.

The potential deal marks Veritas' second attempt to sell a part of Cotiviti after a similar deal to Carlyle fell apart in April.

KKR and Veritas are seeking a private loan with a payment-in-kind structure that would allow the company to pay interest with more debt on the entire financing, Bloomberg reported.

Cotiviti developed data and analytics solutions focused on cost reduction, costs, quality improvement and regulatory compliance for providers and payers. The company works with more than 180 healthcare payers, including all of the top 25 plans in the United States, according to its website.