Investment firm Spectrum Equity has acquired a majority stake in healthcare benefits software company VBA through a $156 million deal that was announced Tuesday.

Spectrum, which previously invested in publicly traded digital health companies GoodRx and Definitive Healthcare, is making its next big bet on interoperability and data. VBA has developed claims and benefits administration software for health plans and third-party administrators.

Michael Radonich, principal at Spectrum, said the investment company made the deal based on macroeconomic and company-specific factors. Radonich said Spectrum noticed the increase in patients covered by self-funded plans. He said the increase is bringing complexity to the payer ecosystem and has faith in VBA’s solution to provide clarity.

“It is bringing a much more flexible and configurable software solution to space that has primarily been served with legacy and outdated technology,” Radonich said. “It has some really compelling attributes. It’s incredibly sticky once the customers get implemented.”

Michael Clayton, president and CEO of VBA, said the company will use the funding for product development and to grow its headcount. The company employs around 150 people and began seeking a significant equity raise late last year, according to Clayton.

Radonich declined to specify what portions of the deal were debt and equity financed. The majority was equity, according to a news release. Arthur Ventures, an existing investor in the company, also participated in the round.

VBA has previously raised less than $10 million, according to a Spectrum spokesperson. With the investment, Radonich and Spectrum Equity managing director Jeff Haywood will join VBA’s board of directors.

The deal comes amid a well-documented slowdown in funding throughout digital health. Date from research and venture fund Rock Health found the average deal size in the first half of the year dropped to $24.8 million, a $1.7 million decrease from the 2022 average, according to data from Rock Health, a research and digital health venture firm.

Article written by Brock E.W. Turner, Digital Health Reporter, Modern Healthcare.