EQT-Backed Waystar Buys Patientco in Payments Software Deal

Health-care payments software provider Waystar has agreed to buy Patientco in a deal that bolsters its ability to collect payments from patients who have become responsible for an increasing share of health-care bills in the U.S.

The deal, which could be announced as soon as Thursday, is valued at more than $450 million, said people familiar with the matter who asked not to be identified because it was private.

Waystar, backed by private equity firm EQT and Canada Pension Plan Investment Board, is a so-called revenue cycle management company that helps health-care providers including doctors and hospitals collect money from health insurers and the government for the services they provide. Supporting more than 500,000 providers, 1,000 hospitals and health systems and 5,000 payers and health plans, the company annually processes claims for about 40% of the U.S. population.

Patientco is a consumer-focused payment technology company that helps patients understand their health-care costs upfront. It provides a platform for communicating with them through non-traditional means such as texts and emails and for collecting payments.

“We think we have the opportunity with the combination of Waystar and Patientco to dramatically change the status quo and begin to help patients have a more consumer-like experience,” Matt Hawkins, Waystar’s chief executive officer, said in an interview. “Leveraging Patientco’s technology we believe can be really empowering to patients as they have an increasing financial responsibility. We can ultimately help providers improve their relationships with patients and dramatically reduce the cost to collect from patients.”

Collection Pressure

The deal comes as U.S. hospitals face more pressure to watch their bottom lines after the coronavirus pandemic caused many potential patients to delay procedures, wiping out billions of dollars of revenue. That increased demand for services from companies such as Waystar.

“Patients represent about 30% of hospital revenue and they now bear much more responsibility for health-care costs than they did a decade ago,” Hawkins said. “It’s about four times more difficult to collect from a patient than it is from an insurance company. Leveraging Patientco’s technology we believe we can be the market leader in helping to bring clarity for patients for the financial responsibility prior to care.”

Seventh Acquisition

EQT and CPPIB bought Waystar from Bain Capital in 2019, with the latter retaining a minority interest in the company. Patientco is Waystar’s seventh acquisition in the past three years, Hawkins said.

Patientco’s communications and payments business is used by 30 million patients. The company is backed by Accel-KKR and Blue Venture Fund. It was valued at $82.5 million in a 2018 funding round, according to data provider PitchBook.

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