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2021-06-10| M&A

Datavant, Ciox Health’s $7B Merger to Create the Largest Health Data Exchange Company

by Daniel Ojeda
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On June 9th, Datavant, a company specializing in facilitating data sharing by de-identifying patient records across data sets, announced it would merge with Ciox Health, a leader on clinical data exchange, in a deal valued at $7 billion. The merger would create the nation’s largest health data ecosystem. The deal will also consolidate part of the fragmented healthcare system. 

Based in San Francisco, Datavant protects patient data by de-identifying patients’ records and assigning it a “token”. A token is an encrypted, cryptographic one-way hash, aka a unique identifier. This unique identifier allows Datavant’s clients to securely exchange data. 

Ciox Health was created in 2016 after the merger of ECS, HealthPort, Care Communications, and IOD. Backed by New Mountain Capital, Ciox provides a platform for medical record and health data exchange between different players in the healthcare sector including providers, health plans, governments, and of course patients. 

 

Synergy Post Merger

After the deal is finalized, the new company will be named Datavant, and it is expected to generate $700 million in revenue. Combing Datavant’s ability to de-identify data, and the large amount of health data already managed by Ciox, the company can enhance efficiency in the healthcare system. This can result in improved patient outcomes and reduced costs.

Datavant will be the nation’s largest health data exchange company, and it will include thousands of hospitals, over 120 health plans, more than 100 health data analytics companies, tens of life science companies, and state, local, and federal agencies. 

Datavant will be led by Ciox’s current CEO Pete McCabe. Datavant’s current CEO, Travis May, will become President and join the Board of directors of the new company.

“The fragmentation of health data is one of the single greatest challenges facing the healthcare system today,” said Pete McCabe, CEO of Ciox Health.

“Each of us has many dozens of interactions with the healthcare system over the course of our lives, and that information is retained in siloed databases across disparate institutions. Every informed patient decision and every major analytical question in healthcare requires the ability to pull that information from across the health data ecosystem while protecting patient privacy. We are thrilled to join forces with the Datavant team to connect health data to improve patient outcomes. Together we are well positioned to navigate the technical, operational, legal, and regulatory challenges to doing so, and are committed to acting as a neutral connectivity solution for our many customers and partners.”

The transaction will be supported by existing investors New Mountain Capital, Roivant Sciences, Transformation Capital, Merck Global Health Innovation Fund, Labcorp, Cigna Ventures, Johnson & Johnson Innovation, and Flex Capital. 

Additionally, Sixth Street is leading a structured investment together with Goldman Sachs Asset Management’s West Street Strategic Solutions fund. Sixth Street will join the new company’s board of directors. 

The deal is expected to close in the third quarter of 2021.

Related Article: MorphoSys Partners with Royalty Pharma to Fund $1.7B Constellation Pharmaceuticals Buyout

 

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