(Reuters) - Investment firms Spectrum Equity and Cressey & Co will acquire a significant stake in Verisys Corporation, a U.S. provider of data and software that help healthcare providers with regulatory compliance, the company said on Tuesday.
Reuters previously reported that the parties were nearing a deal.
The roughly $75 million investment, which will provide the investment firms with majority ownership of Verisys, will help the company accelerate its expansion plans by building out its sales and marketing division, according to people familiar with the deal.
Verisys’ chief executive officer, John Benson, is also investing alongside Spectrum and Cressey, the company said.
Verisys operates a database called the Fraud and Abuse Control Information System (FACIS), which helps healthcare providers, payers, and pharmacies avoid compliance mishaps by providing detailed background screenings for suppliers and employers.
FACIS aggregates data from more than 3,500 sources dating back to 1992.
Verisys also offers several software programs aimed at helping healthcare providers and pharmacies.
“Fraud and the unauthorized practice of medicine are extremely costly and a danger to patient safety,” Benson said. “Healthcare systems can use our expertise and data to avoid employees and entities that could present compliance or reputational risks.”
About 10 percent of Medicare and Medicaid spending is wasted on fraud and abuse, according to a 2015 report by the U.S. Government Accountability Office.
This is Verysis’ first major outside investment. The company has previously been wholly self-funded.
For Spectrum, the investment allows it to build on its existing portfolio in healthcare technology and regulatory compliance. Its holdings include Ancestry.com, GoodRx and Definitive Healthcare.
Reporting by Carl O'Donnell; Editing by Bernard Orr