Investors in Profitable, Growing Service Businesses
Spectrum Equity Investors and Great Hill Partners lead $232 Million Investment in Passport Health; Primus Capital Funds to Roll Equity, Invest Additional Capital
Franklin, TN, 7/31/08
Two leading private
equity firms have made a significant growth investment
in Passport Health Communications, Inc., a Franklin,
Tenn.-based health care technology company. Passport
offers health care providers and payers a comprehensive
suite of solutions to manage the revenue cycle, enhancing
the amount and timeliness of reimbursement and increasing
administrative and financial productivity.
Following the recapitalization, Spectrum Equity
Investors and Great Hill Partners will own a majority
interest in Passport. Primus Capital Funds, which led a
recapitalization of the company in 2006, has rolled a
majority of its existing stake and has contributed
additional equity alongside Spectrum Equity and Great
Hill. The senior management team, led by Chairman and
CEO Jim Lackey, will continue to retain a significant
equity position in the company.
“Passport is pleased to complete this
recapitalization to help launch our next
phase of growth,” said Lackey. “We are fortunate to be
able to work with this group of quality investors. Their
collective experience and resources will allow us to
carry out our long-term business plan by making
continued investments in our products and services and
by supporting acquisition opportunities.”
Mark Taber, a Partner at Great Hill, commented,
“Passport represents an exciting opportunity to
capitalize on the favorable trends in the revenue cycle
management sector. We are excited to partner with
management and to provide the additional capital and
resources to help Passport expand its product line and
to support further strategic opportunities.”
The transaction provided liquidity to long-term
venture capital and angel investors, as well as provided
access to additional capital for investment in new
products and future acquisitions. Existing lenders
Goldman Sachs Specialty Lending Group and Ares Capital
Corporation also participated in the equity financing.
The debt financing provided to Passport in May from
Goldman, Ares and Wells Fargo Foothill remains in place.
“Passport is a highly profitable, rapidly growing provider of health care information technology services,” said Jim Quagliaroli, Principal at Spectrum Equity Investors. “Given our focus on information service businesses and specific investment experience in data communications and online services, Passport is a terrific fit for us.”
In May Passport completed the acquisition of Nebo Systems, Inc., an Oakbrook Terrace, Ill.-based provider of claims management technology and insurance eligibility verification services. Nebo represented the company’s fourth acquisition in the revenue cycle management sector.
As part of the recapitalization transaction, William Collatos and Jim Quagliaroli of Spectrum Equity and Matthew Vettel and Mark Taber of Great Hill will join Passport’s board of directors. Phillip Molner of Primus and Lackey will remain directors of the company.
Brentwood Capital Advisors acted as Passport’s exclusive financial advisor in the transaction. Latham & Watkins served as legal counsel for Spectrum Equity, Goodwin Procter served as legal counsel for Great Hill Partners, and Waller Lansden served as legal counsel for Passport.
