Huntsworth plc, the healthcare and communications group, today announces it has entered into a conditional agreement to acquire 80% of Navience Healthcare Solutions LLC (“Navience”), an independent payer advisory and marketing agency, for an initial cash consideration of $24m (the “Initial Consideration”). It is intended that the Initial Consideration will be funded by a placing of new ordinary shares in the capital of the Company (the “Placing”), to raise approximately £18m, with any proceeds in excess of the Initial Consideration to be used to pay expenses relating to the acquisition and the Placing.
Transaction highlights:
Navience is a payer advisory and marketing agency, based in Princeton, New Jersey, in the US. Navience operates in the fast-growing payer marketing segment by helping its clients develop and execute a market access and pricing strategy for their products. Its client base is predominantly big-cap pharmaceutical companies.
Navience is wholly owned by its founder, John Shamsey, who will remain with the business.
The consideration for 80% of the equity of Navience consists of an initial cash consideration on closing of $24m, subject to adjustment for working capital, together with deferred consideration based on a multiple of earnings for the two years ending 31 December 2019, which is subject to a cap of $40m. The remaining 20% of Navience’s equity will be subject to put and call rights that are exercisable in May of each calendar year commencing in 2022 (the “Put and Call”). The value of the 20% of Navience’s equity that is subject to the Put and Call will be determined based on a multiple of Navience’s earnings over the two calendar years that precede the exercise of the Put and Call. Huntsworth is entitled to settle any deferred consideration and any consideration due under the Put and Call either in cash, by the issue of ordinary shares in the Company (“Shares”) or by a mixture of cash and the issue of Shares. The maximum aggregate consideration (excluding any adjustment to the initial consideration for working capital) payable by Huntsworth for 100% of the equity of Navience will be capped at $94m.
In 2017, Navience delivered revenues of $6.4m (2016: $3.0m) and adjusted EBITDA (before vendor remuneration) of $3.8m (2016: $0.9m). The strong margins are a result of its consulting-type work, combined with fixed fees that allow for efficiencies within the fee structure. The Directors believe the combined offering will allow the Marketing group to access larger, broader and more international assignments.
The Group expects the acquisition to be accretive to the Group’s earnings in the next financial year. Navience’s gross assets were $2.5m as at 31 December 2017.