MultiPlan. Hellman & Friedman''s repeated buy-sell of a healthcare data platform
A network-services company sold to PE three times. And what each owner extracted
The deal. MultiPlan provides medical claims data and pricing services to U.S. Health insurers. Analyzing whether out-of-network claims are reasonable and helping insurers reduce payments. Hellman & Friedman bought MultiPlan for $7.5 billion in May 2016 from Starr Investment Holdings (which had bought it from BC Partners; previously owned by Silver Lake; before that Carlyle). Each previous owner had executed dividend recaps and modest operational improvements.
The thesis. MultiPlan sat in a defensible position in healthcare claims processing. Its data network and analytics were genuinely difficult to replicate. Hellman & Friedman believed continued operational improvement, modest M&A, and either re-IPO or sale could generate strong returns even at the high entry valuation.
What they did. Hellman & Friedman invested in technology platform modernization and expanded analytics capabilities. They executed dividend recapitalizations during the hold period. They eventually exited via SPAC merger (with Churchill Capital Corp III) in October 2020 at an $11 billion enterprise value. Controversial at the time because of the heavy use of SPAC structures during 2020-2021.
The outcome. Total returns to Hellman & Friedman approximated 1.5-2x equity over 4-5 years. Solid but modest given the high entry price. MultiPlan as a public company has subsequently struggled. Facing regulatory scrutiny over its alignment between insurers and patient-protection considerations, and the underlying business model has been challenged in court cases. The stock has traded down significantly since the SPAC merger.
Best practices for VantageOS users. First, repeated PE ownership of an asset is informative. It often means the business is good for cash extraction but has reached the point where multiple expansion is unlikely. Recognize when an asset has "PE-fatigue" and the diminishing-returns curve is bending. Second, SPAC exits during 2020-2021 produced strong PE returns but transferred significant downside to public-market investors; the MultiPlan post-SPAC trajectory has been representative. Be honest about whether you're creating value or transferring risk. Third, healthcare data and analytics businesses face evolving regulatory scrutiny over their alignment with patient interests; business models that depend on insurer-favoring information asymmetries face long-term structural risk.