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Buyout firm Centerbridge nears US$1.5b deal for GoHealth -sources
[NEW YORK] Private equity firm Centerbridge Partners LP is nearing a deal to acquire a majority stake in GoHealth LLC that could value the US online health insurance marketplace at about US$1.5 billion, people familiar with the matter said on Sunday.
A deal could be announced as early as Monday, the sources said, asking not to be named because the discussions are confidential.
GoHealth and Centerbridge declined to comment.
GoHealth provides an online marketplace for health insurance that uses proprietary algorithms to help connect consumers and small businesses with health plans. It also has a team of sales staff and outside insurance agencies that help customers decide on plans.
Founded in 2001, it grew rapidly after the passage of the 2010 Affordable Care Act, popularly known as Obamacare, which significantly increased demand for individual health plans.
GoHealth has since expanded into other areas of health coverage, such as Medicare and small group health plans.
GoHealth's founders, Clint Jones and Brandon Cruz, will continue to run the company and own a substantial equity stake, the sources said.
As one of the larger brokerages in the Medicare Advantage space, GoHealth is poised to benefit from an enrollment uptick in Medicare Advantage plans, driven by an aging population.
The individual healthcare marketplace has faced challenges, however, partly because of policies by President Donald Trump's administration, such as removing penalties for Americans who do not enroll in insurance.
A court case challenging the legality of Obamacare could also potentially undo its subsidies for individual health insurance.
At the same time, some Democratic presidential candidates are discussing greatly increasing Americans' access to the federal government's Medicare program for seniors, which could transform the US market for health insurance.
Based in Chicago, GoHealth received an investment from Norwest Equity Partners in 2012.
It competes with eHealth Inc, a Mountainview, California-based company that also helps connect customers with individual, Medicare and small group health plans.
Founded in 2005, Centerbridge is a New York-based private investment firm that invests in asset classes ranging from private equity to fixed income and real estate. It had about US$28 billion in capital under management as of December 2018.
The GoHealth deal would mark Centerbridge's second major investment in the healthcare sector this year.
In March, it completed its US$1.4 billion acquisition of Civitas Solutions Inc, a provider of home- and community-based healthcare for people with disabilities or other special needs.