Private Equity Firms Eye $1 Bn Buyout of AGS Health

Swedish investment firm EQT Partners, which acquired AGS Health in 2019 for $320 million, is overseeing the sale.

Leading private equity firms Blackstone, Hillhouse Investment, TPG Capital, and General Atlantic have submitted non-binding bids to acquire AGS Health, a healthcare IT services firm, in a deal valued at approximately $1 billion.

According to sources familiar with the matter, JP Morgan and Bank of America are managing the sale process, which is expected to be finalized early next year.

Swedish investment firm EQT Partners, which acquired AGS Health in 2019 for $320 million, is overseeing the sale.

The potential acquisition underscores growing investor interest in the healthcare business process outsourcing (BPO) sector. Bloomberg first reported EQT's plans to divest AGS Health in 2023.

AGS Health's Market Position

AGS Health, a prominent provider of revenue cycle management (RCM) services, is projected to generate an EBITDA of $60 million and annual revenue of around $150 million this fiscal year.

The company employs approximately 12,000 people across offices in India, Manila, and the US and serves over 150 healthcare clients, including major US hospitals and health systems.

Its client base includes Aegis Sciences Corporation, American Addiction Centers, ApolloMD, Auburn Community Hospital, DocuCare LLC, OhioHealth, Richmond University Medical Center, and Vanderbilt University Medical Center.

EQT has built a strong healthcare IT portfolio in India. In 2023, it acquired GeBBS Healthcare Solutions, a competitor of AGS Health, from ChrysCapital for $860 million. EQT's current healthcare IT holdings in India include CitiusTech, AGS Health, Sagility, and GeBBS.

Rising Interest in Healthcare BPOs

The proposed sale comes amid increased private equity interest in healthcare BPOs. Last year, Hillhouse Investment, Blackstone, and TPG Capital were among the firms competing to acquire Texas-based Access Healthcare.

Ultimately, New Mountain Capital acquired a majority stake in Access Healthcare at a valuation of approximately $2 billion.

Other significant deals in the sector include Ontario Teachers' Pension Plan's acquisition of a 45% stake in Omega Healthcare for $1.8 billion and TA Associates' buyout of RCM services provider Vee Healthtek for $250 million.

TPG Capital has been expanding its presence in healthcare IT with investments in companies like Nextech, Lyric, WellSky, and IQVIA. Blackstone also holds a stake in the sector through its acquisition of HealthEdge.

Hillhouse Investment and General Atlantic have also demonstrated strategic interest in healthcare BPO and technology services.

Market Growth Outlook

According to a BCC Research report, the global healthcare BPO market is expected to grow from $151.9 billion in 2022 to $259.5 billion by 2028 at a compound annual growth rate (CAGR) of 9.7%.

The rise in healthcare costs has intensified the need for cost-efficient solutions, driving demand for outsourcing services to streamline operations and reduce expenses.

AGS Health's strong financial performance, established client base, and operational scale make it a valuable target for private equity firms seeking to capitalize on the expanding healthcare BPO market.

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