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Inovalon contemplated deal with ABILITY for a year, CEO says

Inovalon Holdings Inc. had been contemplating a deal with peer ABILITY Network Inc. for some time, amid what the company sees as a "massive transformation" happening in the healthcare space.

Inovalon Chairman and CEO Keith Dunleavy said on a conference call to discuss the transaction that he had been hoping to strike a deal with software-as-a-service technology company ABILITY for more than a year. Dunleavy said the deal will create a vertically integrated cloud-based platform, which health providers, insurers and pharmaceutical companies can use to improve patient care.

This is the second large deal in as many weeks in the healthcare technology space. R1 RCM Inc. on Feb. 26 agreed to acquire Intermedix Corp. for about $460 million.

Dunleavy touted the two companies' cloud-based data, which they plan to combine. Inovalon has data on more than 240 million patients and 37 billion medical events, and ABILITY's software applications are used at more than 44,000 healthcare sites. Inovalon said that will give the company a "massive distribution channel" for the overall platform.

Regarding synergies from the deal, the CEO said the company expects to achieve cost efficiencies of around $11.1 million within 18 months on an annualized basis.