HMS’s $36M Deal to Buy VitreosHealth Combines Complementary Firms
One Texas-based healthcare software business has acquired another in an all-cash deal worth $36.5 million, the companies announced late Monday.
Irving, TX-based HMS Holdings (NASDAQ: HMSY) acquired VitreosHealth, which is located in neighboring Plano, TX. Both cities are suburbs of Dallas. The companies worked together previously, and analysts that track the digital health sector said the company’s products and services are highly complementary.
“In our view, VitreosHealth’s predictive analytics and prescriptive intervention platforms should enhance [HMS’s] existing capabilities,” Matthew Gillmor and Connor Oleferchik, two analysts at Robert W. Baird & Co., wrote in a research note.
HMS’s software is designed to help users identify and assess risks. Health insurers use the company’s digital tools to identify high-risk patients seeking to enroll in their coverage plans. HMS’s products also allow insurers to assign case managers to their members and complete related documentation.
Meanwhile, VitreosHealth focuses on predictive analytics in healthcare, and its software is used by clinicians and health plan administrators. The company’s products belong to a category known as population health management; such tools are aimed at having users define a specific population, such as patients with Type 2 diabetes, and having the organization work to keep the entire population healthy. VitreosHealth’s software pulls in data from a variety of sources—including patients’ electronic health records, claims sent to insurers, and socioeconomic data—to help users identify care gaps within their member and patient populations, the company says.
The two companies had worked closely together prior to announcing the acquisition this week. VitreosHealth had “served as a key strategic partner for HMS” previously, the companies said in a news release. Specifically, VitreosHealth served as “the predictive analytics engine” for HMS’s Elli risk-assessment product, which is part of the company’s population health management portfolio.
Launched in 2009, VitreosHealth had raised more than $6.2 million in outside funding, according to company materials.
The Baird analysts wrote that VitreosHealth’s revenues have not been substantial enough to have a significant effect on the financial results and outlook of HMS, which has been in business since 1974 and says it has more than 2,500 employees.
“Financially, the near-term implications for [HMS] seem limited, as VitreosHealth currently generates immaterial revenue and the $36.5M purchase price is not needle-moving” for HMS, the analysts wrote.