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Life Health > Health Insurance > Health Insurance

Inovalon agrees to acquire Avalere

By Allison Bell

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A big health care data analysis firm has bought a smaller but higher-profile competitor.

Inovalon (Nasdaq:INOV) says it has agreed to acquire Avalere Health for $135 million in cash and $5 million in restricted stock.

The companies hope to complete the deal Sept. 1.

See also: Sequoia-backed Health Catalyst swaps stake for hospital’s data

Inovalon, a Bowie, Md.-based company started in 1998, has data on 769,000 physicians, 261,000 clinical facilities, and 123 million Americans. The company ended 2014 with about 1,600 full-time employees and 9,000 part-time employees, according to the company’s 2014 financial report.

Inovalon reported $26 million in net income for the second quarter on $118 million in revenue. In 2014, relationships with Independence Blue Cross and Anthem Inc. (NYSE:ANTM) accounted for about 23 percent of the company’s revenue.

Dan Mendelson, a former director for health at the White House Office of Management and Budget (OMB), founded Avalere in 2000, after leaving OMB.

Dan Mendelson

See also: Medicare Pays For Some Long Term Care: Report

The privately held firm has focused on selling data analysis services to companies in the pharmaceutical and life sciences industries, including 13 of the 15 biggest pharmaceutical companies. 

Avalere generated $47 million in 2014 and employs about 200 health policy specialists, according to Inovalon.

Even though Avalere is smaller than Inovalon, it has made news in recent years by publishing a series of high-profile reports about the effects of the Patient Protection and Affordable Care Act (PPACA) and other government health policies and programs.

See also: Specialty drugs: What will sick people do?

Inovalon said it wants to run Avalere as a stand-alone business in its current location, with Mendelson continuing to manage day-to-day operations.

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