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Buyout firm Centerbridge makes major investment in GoHealth

Aug 19 (Reuters) - Private equity firm Centerbridge Partners LP has made a significant investment in GoHealth LLC, giving the online health insurance marketplace a major new financial backer at a time when the insurance industry is bracing for change.

Reuters reported on Sunday that Centerbridge was nearing a deal to acquire a majority stake in the business that will value it at around $1.5 billion, according to sources.

GoHealth and Centerbridge declined to comment on the exact stake size or valuation.

“Centerbridge’s significant investment, and extensive expertise in the healthcare and financial services sectors, will position GoHealth to improve its balance sheet, further invest in technology and innovation, and deepen market penetration for the benefit of our customers and the consumers they serve,” Clint Jones, co-founder and chief executive officer of GoHealth, said in a statement.

GoHealth provides an online marketplace for health insurance that uses proprietary algorithms to help connect consumers and small businesses with health plans. It also has a team of sales staff and outside insurance agencies that help customers decide on plans.

Its co-founders, Clint Jones and Brandon Cruz, will continue to lead the company and will retain an ownership stake, the statement said.

Founded in 2001, it grew rapidly after the passage of the 2010 Affordable Care Act, popularly known as Obamacare, which significantly increased demand for individual health plans.

GoHealth has since expanded into other areas of health coverage, such as the federal Medicare program for senior citizens and the disabled and small group health plans.

As one of the larger brokerages handling Medicare Advantage plans, GoHealth is poised to benefit from an enrollment uptick in such plans, driven by an aging population.

The individual healthcare marketplace has faced challenges, however, partly because of policies put into effect by the Republican Trump administration, such as removing penalties for Americans who do not enroll in insurance.

In addition, a court case challenging Obamacare’s legality could undo its subsidies for individual health insurance.

At the same time, some Democratic presidential candidates are discussing expanding Americans’ access to Medicare, which could transform the U.S. market for health insurance.

Based in Chicago, GoHealth received an investment from Norwest Equity Partners in 2012.

Founded in 2005, Centerbridge is a New York-based private investment firm that invests in asset classes ranging from private equity to fixed income and real estate. It had about $28 billion in capital under management as of December 2018.

The GoHealth deal would mark Centerbridge’s second major investment in healthcare this year.

In March, it completed its $1.4 billion acquisition of Civitas Solutions Inc, a provider of home- and community-based healthcare for people with disabilities or other special needs. (Reporting by Carl O’Donnell; editing by Jonathan Oatis)