Cotiviti Announces Agreement to Purchase RowdMap, Inc.
Adds Complementary Value-Based Payer Solution to Broaden Focus on Eliminating Waste in Healthcare Expenditures
Atlanta, GA, July 10, 2017. (BUSINESS WIRE) - Cotiviti Holdings Inc. (NYSE:COTV) (“Cotiviti”), a leading provider of analytics-driven payment accuracy solutions primarily focused on the healthcare industry, today announced that it has entered into a definitive agreement to acquire RowdMap, Inc. (“RowdMap”). Based in Louisville, Kentucky, privately-held RowdMap is a payer-provider, value-based analytics company. The acquisition broadens Cotiviti’s data analytics capabilities and provides adjacent solutions to address the overall healthcare market shift from volume to value.
“The trend toward value-based care increases the complexity associated with payment and creates a greater need for Cotiviti’s payment accuracy services,” said Doug Williams, Cotiviti’s Chief Executive Officer. “With the addition of RowdMap, we will be able to offer adjacent solutions to payment accuracy that together target over $600 billion of the estimated $900+ billion in waste and abuse in healthcare expenditures. Cotiviti can now offer our health plan clients an even more comprehensive portfolio of solutions to address medical and payment policies, provider network and contract management, and value-based care and reimbursement models. Together, we will be able to provide differentiated value to our clients through enhanced capabilities and expanded solutions.”
RowdMap was founded in 2011 and helps health plans and providers identify and reduce low-value care from inefficient and unnecessary services. Their Risk-Readiness® Platform develops benchmarks for nearly every physician, hospital and zip code in the United States by applying a proprietary analysis against data sources including comprehensive CMS information, clinical policies, health guidelines and value-based analytics to evaluate provider performance across multiple dimensions. Based on these benchmarks, RowdMap develops a Risk-Readiness® Network Efficiency Score to measure the efficiency of a provider network. Payer clients can then use a series of analytic solutions to develop specific action plans to improve their Risk-Readiness® Network Efficiency Score, which can drive quantifiable medical cost savings through higher performing provider networks, improved member adherence and value-based contracting strategies.
Williams continued, “We believe we are well positioned to help RowdMap achieve its full potential by leveraging our broad data set and established client relationships. In addition, the RowdMap technology platform and analytics are highly complementary with Cotiviti’s, creating an opportunity for our teams to collaborate and share mutual insights to enhance existing solutions and develop a new set of innovative solutions.”
“RowdMap is very excited to join with Cotiviti,” said Melanie Rosenthal, RowdMap’s Chief Executive Officer. “Together we offer complementary solutions that provide tangible medical cost improvements. In addition to a shared commitment and focus on delivering results to our clients, our common values and missions unite us as we collaboratively work to improve the healthcare system by reducing unnecessary costs and supporting the transition from volume to value.”
“We are very enthusiastic about the opportunities that Cotiviti’s combination with RowdMap presents, both strategically and financially,” concluded Williams.
Pursuant to the definitive agreement, Cotiviti will pay $70 million in cash, subject to certain adjustments. The transaction is not subject to a financing condition and Cotiviti intends to fund the entire purchase price with available liquidity. Cotiviti also intends to issue an aggregate of approximately 800,000 shares of restricted Common Stock to certain employees of RowdMap as a material inducement to their employment with Cotiviti, and in reliance on New York Stock Exchange Rule 303A.08. Half of these shares are subject to performance-based vesting requirements. The other half are subject to continued employment with Cotiviti, with one-third vesting on each of the first three anniversaries of the closing of the acquisition. The transaction is expected to close by the end of July 2017.
Due to the equity incentives and impact of purchase accounting, on a GAAP net income basis the acquisition is not expected to be accretive in 2017 or 2018. On a non-GAAP adjusted net income basis, the acquisition is expected to be neutral to full year 2017 results and accretive in 2018.
Legal counsel to Cotiviti was provided by Weil, Gotshal & Manges LLP. RowdMap was advised by Leerink Partners, and legal counsel was provided by Wyatt, Tarrant & Combs.
Cotiviti is a leading provider of payment accuracy and insight driven solutions that helps healthcare payers and retailers achieve their business objectives by unlocking value from the incongruities the company discovers in the complex interactions customers have with stakeholders. Cotiviti helps clients capture over $3.7 billion annually through improved payment accuracy. Cotiviti provides services to over twenty of the top twenty-five U.S. healthcare payers and eight of the top ten U.S. retailers. To learn more, http://www.cotiviti.com.
RowdMap is a payer-provider, value-based analytics company employing Risk-Readiness® Benchmarks to assist health plans, physician groups, and hospital systems identify, quantify, and reduce low-value care. Payers and physicians use RowdMap’s physician and population health benchmarks to create strategies that put the highest performing physicians at the center of networks and then design products, organize clinical programs, and coordinate sales and marketing around them. To learn more, http://www.rowdmap.com.
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