Private equity firms New Mountain Capital and Marlin Equity Partners are merging employer health tech companies Virgin Pulse and HealthComp in a $3 billion deal announced Wednesday.
Virgin Pulse, a digital health navigation company for employers, is backed by Marlin Equity Partners while HealthComp, a third-party health plan administrator, is funded by New Mountain Capital. New Mountain Capital will be the majority owner of the combined entity.
Morgan Health, a JPMorgan Chase company focused on employer-sponsored healthcare, and Blackstone, an alternative asset manager, are also financially backing the combined entity. Morgan Health will take a minority equity stake while Blackstone's credit arm helped support the deal with an undisclosed amount of strategic financing.
The deal was first reported by The Wall Street Journal on Tuesday.
The two companies will create a platform for self-insured employers to help their employees navigate and use their health benefits. The combined company will attempt to alter the ways employers can reduce costs and improve member outcomes. Together, the companies say they serve 20 million people and more than 1,000 self-insured employers.
The company anticipates the platform will allow self-insured employers to select benefits that employees want, while driving down costs with concierge-level claims administration, medical cost management and clinical navigation. Virgin Pulse said it currently has the ability to predict health risks and needs as well as a patient's receptivity to interventions.
“We have work to do to integrate these two assets, and that work will occur rapidly,” said Morgan Health CEO Dan Mendelson. “Patients will engage through that platform. Employers will be able to leverage that platform into the benefits administration back end.”
Chris Michalak, CEO at Virgin Pulse, will serve as the top executive of the combined entity. He said in a statement the deal came together over the past several months.
The merger is expected to close in the fourth quarter of 2023 and is subject to regulatory approval.