Cotiviti preps launch of $550M add-on term loan to back HMS acquisition

Cotiviti Corp. is preparing to launch a $550 million add-on term loan that is part of the financing supporting the acquisition of HMS, according to sources. The J.P. Morgan-led deal will launch with a lender call that is scheduled for 2 p.m. ET on Feb. 2, and commitments are due at noon ET on Feb. 11.

The add-on will be fungible with the existing $3.143 billion term loan B due August 2025 that is priced at L+450, with a 0% Libor floor. Guidance on the issue price is not yet announced.

Alongside a separate financing transaction that is being launched by Gainwell Technologies, proceeds from the deal will be used for the acquisition of HMS Holdings Corp. in a deal valued at roughly $3.4 billion. Gainwell will acquire the HMS capabilities focused on the Medicaid market, including for states and managed care organizations, while Cotiviti acquires capabilities focused on the commercial, Medicare and federal markets. Both companies are controlled by Veritas Capital.

The company's existing TLB was put in place in August 2018, alongside a $1.1 billion issue of 9.75% senior unsecured notes due August 2026, to finance Verscend Technologies' acquisition of Cotiviti Holdings. The combined company has since operated under the Cotiviti name.

Current facility ratings are B+/B3 and corporate ratings are B/B3, with stable outlooks.

Cotiviti provides payment accuracy solutions for retailers and healthcare payers in the U.S. and internationally.