$7B Health IT Merger Aims to Improve Nationwide Interoperability

Datavant and Ciox Health have signed a definitive agreement to merge the two health IT companies in a transaction valued at $7.0 billion set to improve interoperability across the healthcare continuum.

The combined entity, to be named Datavant, will form the nation’s largest health data ecosystem comprised of more than 2,000 US hospitals, 15,000 clinics, 120 health plans, 100 health data analytics companies, 30 life science companies, 70 academic institutions and non-profits, and 75 government agencies.

This bevy of healthcare stakeholders will be able to securely exchange patient-level data for use cases spanning from better patient outcomes and value-based payments to health analytics and medical research, the organizations said.

The company aims to address the industry’s issue of health data fragmentation by providing the infrastructure for widespread interoperability.

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

Travis May, CEO of Datavant, echoed McCabe, noting the importance of connectivity in the healthcare ecosystem.

“Every decision made in healthcare should be informed by data,” said May. “Our goal is to create a ubiquitous, trusted, and neutral data ecosystem where parties across the healthcare system can seamlessly and securely exchange data – unlocking better outcomes, faster research, and healthcare at a lower cost.

The health IT merger is subject to regulatory approvals and is expected to close in the third quarter of 2021. Upon closing, McCabe will become the CEO and May will take the role of President and join the Board of Directors.

The $7.0 billion transaction is supported by an existing investor group of venture capital, private equity, and strategic investors headed by New Mountain Capital, Roivant Sciences, Transformation Capital, Merck Global Health Innovation Fund, Labcorp, Cigna Ventures, Johnson & Johnson Innovation – JJDC, Inc., & Flex Capital.

“The merger of Ciox Health and Datavant creates a privacy-centric, neutral network facilitating the trusted and compliant exchange of patients’ health data across all stakeholders, unlocking exceptional growth opportunities and the capability to enable thousands of use cases across the entire health ecosystem,” said Matt Holt, managing Director & President, Private Equity at New Mountain.

The transaction also includes a new investment by Sixth Street with involvement from Goldman Sachs Asset Management’s West Street Strategic Solutions fund. Sixth Street will join the new company’s Board of Directors upon the transaction’s completion.

“Datavant’s groundbreaking tokenization technology and the strength of Ciox’s expanded network across providers, payers, health application developers, and life sciences markets makes this combination compelling,” said R. Martin Chavez, vice chairman and partner at Sixth Street.

“We are believers in healthcare technology investment that drives improvement in patient outcomes and attempts to solve our most pressing healthcare challenges,” Chavez continued. “This combination has the potential to enable the US healthcare system to become more patient-centric and data-driven through its breakthrough capability for secure collaboration across all industry stakeholders.”