Navicure Inc. and Bain Capital entered into a definitive agreement to acquire provider of claims management solutions ZirMed Inc.


  • SaaS-based medical claims management and patient payment solutions provider Navicure Inc. and Bain Capital entered into a definitive agreement to acquire provider of claims management solutions ZirMed Inc.
  • The transaction will be financed with a $50 million revolver due 2022 (undrawn at close), a $435 million first lien term loan due 2024, a $185 million second lien term loan due 2025 and an equity infusion from Bain Capital.
  • We expect pro forma leverage will be high and above 8x in 2018.


The rating on Navicure reflects its high leverage, which we expect to be over 
8x over the next year.  Navicure plans to acquire ZirMed as part of the 
transaction, doubling its size.  We believe there are integration risks 
associated with the transaction and the company will incur restructuring costs 
and that free cash flow generation to be less than $20 million in 2018. 
Navicure is a technology company that provides SaaS-based revenue cycle 
management (RCM) services to health care providers. The rating also reflects 
the company's small scale (about $95 million of revenue in 2016; about $240 
pro forma for the ZirMed acquisition), a narrow business focus in providing 
network solutions serving the health care industry, and the presence of 
competitors with substantially greater size and financial strength. These 
characteristics are partially offset by strong customer diversity, high 
customer retention rates of about 95%, and good revenue visibility due to its 
subscription based business model, and our expectation that the company will 
grow organically at a high-single digit rate.

Our stable outlook on Navicure reflects our expectations that Navicure's 
revenue will grow at a high rate. It also reflects our expectation that the 
company will integrate Zirmed with restructuring costs totaling $8 million or 
less over the next 18 months and achieve some synergies, but that leverage 
will remain above 8x over the next year. We also expect the company to 
generate free cash flow, but less than $20 million in 2018.