WEX to buy health care payment company for $532.5M
WEX Inc., an international fleet card and corporate payment services company based in South Portland, has entered into an agreement to purchase Evolution1, a cloud-based technology and health care payment services company, for $532.5 million.
The acquisition will be funded through cash on hand and WEX’s existing credit facility, according to a press release announcing the purchase late Monday afternoon. The transaction is subject to regulatory approvals and is expected to close in the third quarter of this year. It was unanimously approved by the boards of directors of both companies and is expected to generate approximately $42 million in present value of tax benefits to WEX and is expected to add to the company’s adjusted net income in the first 12 months after the closing.
Evolution1, headquartered in Fargo, North Dakota, processed more than 65 million transactions and $5 billion in payments in 2013 and serves 90,000 employers and 10 million consumers in the United States and Canada.
It was named one of the health care industry’s 40 fastest-growing companies in Modern Healthcare’s second annual recognition program last August. It also has been included in Deloitte's Technology Fast 500 for eight consecutive years.
“The acquisition of Evolution1 advances WEX’s long-term strategy to extend our scalable business model into high-growth, high-value markets with complex payment systems,” Melissa Smith, WEX’s president and CEO, said in the release. “As a leading provider of technology-based solutions that simplify health care payments, Evolution1 will enable WEX to address multiple aspects of the health care payment system, expanding our addressable market while building on our growth in the fleet and travel space.”
Smith characterized the acquisition as something that would enhance WEX’s vertical integration of its health payment services as well as “serve as the cornerstone of WEX’s health care solutions strategy.”
Evolution1’s portfolio of payment services includes consumer-directed payments for health savings accounts, health reimbursement arrangements, flexible spending accounts, voluntary employee beneficiary associations and defined contribution and wellness programs. It has 300 employees and will retain its offices in Fargo, Hartford, Minneapolis and St. Louis, according to a report in Prairie Business Magazine.
The press release noted that WEX will use Evolution1’s technology and services to expand into consumer-to-provider payments and begin to provide “payment services to intermediaries such as exchanges and third-party administrators that have direct contact with consumers.” The company has been focused primarily on payer-to-provider payments, a market that accounts for almost $1 trillion in annual spending in the health care industry.
WEX (NYSE: WEX), has 1,400 employees worldwide. In its first-quarter earnings statement for 2014, the company posted a 10.1% gain in total revenue, increasing to $182.1 million from $165.4 million for the first quarter of 2013. In late-morning trading Tuesday, shares were up 2.69%, to $101.36.
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