Payment processor Fidelity National Information Services, Inc. (FIS: Quote) Monday said it has reached a definitive agreement to sell its Healthcare Benefit Solutions business to private equity firm Lightyear Capital LLC in an all-cash transaction valued at $335 million. The deal is expected to close by the end of the third quarter of 2012.
Frank Martire, chairman and chief executive officer of FIS stated, "The divestiture is consistent with our primary focus to serve financial institutions, as well as our strategy to maintain leadership positions in markets where we have meaningful scale."
The sale comprises FIS' Consumer Driven Healthcare Solutions and Health and Financial Network Solutions. These businesses provide benefits administration, multi-purse debit card and benefit account processing and payment fulfillment services to consumers, healthcare providers and payers.
In the year 2011, the business generated about $120 million in revenue, $34 million in earnings before interest, taxes, depreciation and amortization or EBITDA, and $0.05 in adjusted earnings per share.
FIS said it will retain its state and federal government-sponsored electronic benefits transfer or EBT, businesses and programs which serve clients in over 25 states.
The company noted that the Healthcare Benefit Solutions business will be classified as a discontinued operation for all periods presented effective in the second quarter of 2012. The company expects to receive after-tax proceeds of nearly $220 million in conjunction with the deal.
FIS expects the sale and related reclassification to reduce adjusted earnings per share from continuing operations by about $0.02 in the second quarter.
Upon completion of the sale in the third quarter, the company expects to incur a loss of nearly $55 million, or $0.19 per share, which will also be included in discontinued operations.
For full year 2012, the sale is anticipated to reduce earnings from continuing operations by up to $0.07 per share. The company expects no material impact to adjusted earnings per share in 2013.
Separately, Lightyear said that following the closing of the deal, Robert Natt will join the new company, referred to herein as 'Benefit Solutions', as its full time executive chairman. Thomas Torre, currently senior vice president and general manager of Benefit Solutions, who has been with the business since 2005, will become chief executive officer.
Natt served as CEO of MBI Benefits, a predecessor to Benefit Solutions, prior to its sale to Metavante in 2005. Natt was most recently the CEO of PayFlex, a third party administrator.
FIS is currently trading at $32.82, down 1.38 percent on the NYSE.
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by RTT Staff Writer
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