Acquisition Further Expands REPAY’s Footprint and Provider-of-Choice Positioning in Healthcare, Credit Unions, and Accounts Receivable Management
Repay Holdings Corporation, a leading provider of vertically-integrated payment solutions, today announced it has signed a definitive agreement to acquire BillingTree for approximately $503 million. The acquisition will be financed with approximately $275 million in cash from REPAY’s balance sheet and $228 million in newly issued shares of REPAY Class A common stock to be issued to the seller. The transaction is subject to certain customary closing conditions and is expected to close by the end of the second quarter of 2021.
“We are thrilled to announce this acquisition, our largest to date, and look forward to further expanding our position in Healthcare, Credit Unions, and Accounts Receivable Management with the help of BillingTree’s team and strong platform capabilities”
BillingTree, founded in 2003 and headquartered in Scottsdale, AZ, is a leading provider of omni-channel, integrated payments solutions to the Healthcare, Credit Union, Accounts Receivable Management (ARM), and Energy industries. Through its technology-enabled suite of products and services, including a variety of payment channels and reporting capabilities, BillingTree helps organizations get paid faster and more efficiently.
“We are thrilled to announce this acquisition, our largest to date, and look forward to further expanding our position in Healthcare, Credit Unions, and Accounts Receivable Management with the help of BillingTree’s team and strong platform capabilities,” said John Morris, CEO of REPAY. “BillingTree satisfies all of our acquisition investment criteria, including a large addressable market opportunity that is amid a shift away from legacy payment methods and towards the technology-first, industry-specific payment mediums in which BillingTree specializes. Additionally, BillingTree has strong recurring revenue streams, high customer retention, approximately 50 unique ISV integrations, an attractive financial profile, and numerous opportunities for synergy realization. We are looking forward to welcoming BillingTree into the REPAY family and together pursuing many amazing growth opportunities ahead.”
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“BillingTree’s unique approach has always been to develop strategic alliances with service, software, and billing providers resulting in full integrations that create seamless, compliant, and innovative payment solutions. We believe that we are an ideal strategic partner for BillingTree, as we also go to market with a highly integrated, omni-channel approach. Together, we can capture more of the massive addressable market in payments and combine our incredible team members and technology to create simplified experiences for merchants across our collective, ever-expanding verticals,” continued Morris.
Transaction Details
- REPAY will acquire BillingTree for approximately $503 million, inclusive of a tax asset
- $275 million in cash from REPAY’s balance sheet
- $228 million in newly issued shares of REPAY Class A common stock
- The effective purchase price is approximately $483 million, net of the tax asset
- Parthenon Capital, BillingTree’s majority owner, will own approximately 10% of REPAY’s outstanding shares of common stock following the closing of the transaction
- Net leverage is expected to approximate 2.9x1 on a post-transaction basis
- In 2021, BillingTree is expected to generate $4.4 billion in card payment volume, $48 million in gross profit, and $26 million in adjusted EBITDA, excluding cost synergies and pro forma adjustments
- Through processing cost reductions and operating expense rationalization, REPAY expects to realize $5 million in annualized synergies
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Strategic Rationale
- Further expands REPAY’s position in Healthcare, Credit Unions, and Accounts Receivable Management
- This acquisition is expected to strengthen REPAY’s existing product suite of deeply integrated, custom-tailored payment and software solutions for enterprise customers in the Healthcare, Credit Union, and ARM industries
- CareView, BillingTree’s Healthcare payments and software platform, streamlines patient communication, promotes patient engagement, and allows customers to accept all forms of payment
- BillingTree’s Payrazr solution offers an omni-channel platform that allows customers to accept and reconcile payments using the medium of their choice
- Enhances REPAY’s scale and client diversification
- BillingTree serves 1,650+ clients across multiple, attractive end markets with industry leading retention metrics
- BillingTree’s solutions are tightly integrated with over 50 software platforms
- The acquisition is expected to increase REPAY’s total card payment volume to over $20 billion on an annualized basis2 and expand REPAY’s software partner integrations to over 175
- Large and Growing Addressable Markets
- BillingTree’s existing Healthcare, Credit Union, ARM, and Energy verticals provide BillingTree with access to an estimated annual payment volume opportunity of over $700 billion
- Addressable payment volume in BillingTree’s core end markets has experienced favorable tailwinds as a result of the COVID-19 pandemic, accelerating the paper-to-digital payment shift within BillingTree’s biller direct verticals
- Attractive Synergy Opportunities
- The scale, capabilities, and infrastructure of the combined platform presents significant opportunities for cost savings and increased efficiencies
- As a result of processing costs enhancements and operating expense rationalization, REPAY expects to realize annualized synergies of approximately $5 million by 2022
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