Gainwell Technologies outlines financing commitment for HMS acquisition

Veritas Capital-backed Gainwell Technologies announced Dec. 21 that it entered into a definitive agreement to acquire HMS Holdings Corp. at an enterprise value of roughly $3.4 billion. J.P. Morgan is providing a debt financing commitment of up to $2.486 billion to support the deal.

In addition, Gainwell Intermediate Holding Corp. and Gainwell Holding Corp. received a preferred equity/payment-in-kind (PIK) debt commitment of up to $1.068 billion, according to a Dec. 26 regulatory filing by HMS.

Under the terms of the deal, HMS shareholders will receive $37 per share in cash. The transaction is expected to close in the first half of 2021 subject to closing conditions, including HMS shareholder approval and regulatory approvals.

Gainwell will acquire the HMS capabilities focused on the Medicaid market, including for states and managed care organizations, while Cotiviti, another Veritas portfolio company, will acquire capabilities focused on the commercial, Medicare, and federal markets.

Gainwell was formed through the carve-out acquisition by Veritas of DXC Technology’s U.S. State & Local Health and Human Services business, which closed in October. The $5 billion buyout was backed by a $2.4 billion covenant-lite term loan B due 2027 (L+400, 0.75% Libor floor) that was issued by Milano Acquisition Corp. as well as an $800 million second-lien term loan due 2028 that was privately placed.

Current corporate ratings are B/B3, with stable outlooks from both.

Gainwell Technologies is a provider of Medicaid Management Information Systems (MMIS), fiscal agent services, program integrity, care management, immunization registry and eligibility services.