Nordic Capital, Insight Partners take Inovalon private in $7.3B acquisition

Handshake business deal executives
Health data software provider Inovalon's acquisition is expected to close in late 2021 or early 2022 and will net shareholders $41 per share in cash. The company’s founder and CEO, Keith Dunleavy, M.D., will stay in his role as the company’s head and will remain a “substantial shareholder” in Inovalon, according to the announcement. (Pixabay)

Health data software provider Inovalon is set to be acquired by Nordic Capital, Insight Partners and other investors in a deal valuing the company at roughly $7.3 billion.

Announced Aug. 18, the deal will take the tech company private and pay out $41 per share in cash to its stockholders—a roughly 25% bump over its value in late July, according to the announcement. Reuters and other sources peg the all-cash deal at $6.41 billion.

The acquisition is expected to close near the end of 2021 or the beginning of 2022 and is subject to regulatory and stockholder approval.

“Today’s announcement is the culmination of a thorough process of evaluating strategic alternatives and represents a compelling opportunity to deliver immediate and more certain cash value to stockholders at a significant premium,” said William J. Teuber Jr., lead independent director of the board and chair of the special committee. “During our evaluation, it became clear that not only is the consortium led by Nordic Capital offering our shareholders compelling value, they also have a deep appreciation for Inovalon’s cloud-based platforms and data capabilities, as well as an appreciation for the people, mission and the value impact of the company.”

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Joining Nordic and Insight as new owners will be 22C Capital and some of the company’s Class B stockholders.

The company’s founder and CEO, Keith Dunleavy, M.D., will stay in his role as the company’s head and will remain a “substantial shareholder” in Inovalon, according to the announcement. The company will also hold on to its headquarters in Bowie, Maryland.

Dunleavy said in the announcement that Inovalon’s new ownership is well versed in data software and healthcare.

“This, together with their longer-term focus, operational experience and international perspective, is an exciting combination for what we see in front of us,” he said. “We look forward to continuing our mission, together with our greatly appreciated customers, to empower data-driven healthcare.”

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Inovalon was founded in 1998 and went public in 2015. The company offers cloud-based platforms that help payers, providers, pharmaceutical companies and other life sciences companies aggregate and analyze healthcare data.

Inovalon says its customers include all of the top 25 U.S. health plans and global pharma companies as well as 24 of the top U.S. healthcare provider systems. It staffs roughly 1,800 employees and reported $667.5 million in total revenue for fiscal year 2020 ending Dec. 31.

The company noted in its announcement that the transition to private ownership would bring “greater flexibility to focus on strategies that drive innovation and global market development.” Its new owners highlighted the growing role data analytics is taking on within the industry.

“As data-driven insights become even more important in improving healthcare, Nordic Capital and its co-investors are committed to supporting Inovalon in continuing to deliver high-value solutions to customers and look forward to partnering with Keith and the Inovalon team in this next phase of the company’s growth journey,” Fredrik Näslund, partner at Nordic Capital Advisors, said in a statement.