Case management/bill review/utilization review/independent medical exam company Genex has been re-purchased by Stone Point Capital. Stone Point sold the business to Apax in 2014.

Joe Paduda

The takeaways are: Stone Point really understands workers' comp and the WC services business. The company is currently pursuing insurer AmTrust and owns or has owned a number of companies involved in workers’ comp, including Cunningham Lindsey, Oasis Outsourcing, StoneRiver and Sedgwick.

Apax’ divestiture is likely not a signal that the firm is going to break up or sell off OneCall Care Management. OCCM is deep into a systems conversion intended to tie together the disparate businesses it owns, and the company just moved most of its home office people into a single location.

Perhaps most importantly, OCCM’s debt is still trading well below par, an indication that the investment is underwater.

CEO Peter Madeja and the core of the senior management team will stay on. Peter is one of the finest people I know, universally liked and respected in the work comp community, and he and his team have performed well, keeping Genex growing in a declining market.

My guess is Genex will likely keep acquiring related businesses. These could include firms in the IME and Medicare set-aside space as well as the occasional case management company. Mature markets require participants to grow via acquisition, a strategy Madeja, et al, have mastered.

I’d also expect some much bigger acquisitions. I don’t think Stone Point bought Genex to get into the case management and bill review business; these folks have bigger plans.

A couple of side notes: Stone Point’s initial investment in Genex back in 2007 was reportedly about $56 million. 

One report indicated that a source said that this time around, Genex sold for three times the original equity investment (note that Apax paid for Genex with a combination of debt and equity).

Without any detail or ability to dig into that, I have no idea if that is accurate or even likely.

Joe Paduda is co-owner of CompPharma, a consortium of pharmacy benefit managers. This column is republished with his permission from his Managed Care Matters blog.