Two major employer health platforms merge

Digital wellbeing company Virgin Pulse announced its intent to merge with HealthComp, a next-generation benefits and analytics platform, to improve health outcomes and lower costs for members and employers. The deal is reportedly valued at $3 billion.

The combined organization will deploy innovative and flexible health plan designs that drive improved member health outcomes, engagement, and awareness across the most important aspects of a person's healthcare journey.

It will also create a set of assets that will integrate plan design, plan management, payment integrity, health navigation, preventative care, and digital therapeutics through the Homebase for Health user-centric platform.

The process

Upon closing of the transaction, Chris Michalak will serve as CEO of the combined entity, where he will continue building upon the Homebase for Health vision and expanding the value proposition for clients and the market at large. The combined entity will serve more than 20 million members and address costs for more than 1,000 self-insured employers.

HealthComp's powerful analytics will also benefit Virgin Pulse's health plan and health system clients by providing closed-loop data on health outcomes and the true ROI of investing in member experience and well-being programs.

The merger is expected to close in Q4 2023, subject to regulatory approvals and satisfaction of all closing conditions under the definitive agreement. Financial details of the transaction have not been disclosed. HealthComp is backed by New Mountain Capital and Virgin Pulse is backed by Marlin Equity Partners. New Mountain Capital will be the majority owner of the combined entity. Blackstone Credit has committed to support the deal with strategic financing.

J.P. Morgan Securities LLC acted as financial advisor to HealthComp. HealthComp's legal counsel was Ropes & Gray LLP. Evercore acted as financial advisor to Virgin Pulse, with Kirkland & Ellis LLP and McDermott Will & Emery LLP serving as legal advisors.

On the record

"This combination with HealthComp creates a new category in the health space that will change the way employers address the two-fold challenge of reducing costs and improving member outcomes. Our two companies have a shared mission to improve individual outcomes by engaging users early and often, and making health and wellbeing more accessible, affordable, and personal for all," said Chris Michalak, Virgin Pulse CEO. "Together, we are addressing a problem that has plagued the industry for years - a misaligned, complex benefit structure that results in unmet needs and escalating costs. We are eliminating waste, friction, and preventable risks by putting members and their needs at the center of the ecosystem."

"Self-insured employers pay for almost half of the nation's healthcare expenditures and now require more innovative and affordable solutions," said Chad Harris, HealthComp CEO. "With concierge-level service, rich analytics, and expert medical cost management, HealthComp ensures that employers can make informed benefits decisions that align with the needs of their employees and businesses. Powered by Virgin Pulse's daily wellbeing engagement and data-driven personalization, this transaction creates an end-to-end platform that will radically lower costs and improve member outcomes."

The impact

As the healthcare industry evolves, the desire for an integrated experience in the employer-sponsored benefits ecosystem has grown exponentially. The combination of Virgin Pulse and HealthComp delivers on that front, creating the first value-based care platform company focused on employee health and outcomes in the U.S.

The employer-employee health landscape is ripe for change and consolidation. In the coming months and years, we expect further consolidation and expansion to international markets.

Right now, there are a few similar platforms in MENA, where market consolidation will undoubtedly take place, as well. It will be an interesting area to watch to see whether that will happen through local mergers or we'll see a global player scooping up local rivals to gain market share. We'll be watching this space carefully, so stay tuned.