DXC Technology (NYSE: DXC) yesterday announced that it has entered into a definitive agreement to sell its US State and Local Health and Human Services (State & Local HHS) business to Veritas Capital, an investor in government and healthcare technology businesses, for $5.0 billion in cash. The sale is the initial outcome of a process announced by DXC in November 2019 to explore strategic alternatives for three of its non-core assets.
The transaction is expected to close no later than December 2020, subject to the satisfaction of customary closing conditions, including the receipt of certain third-party consents and regulatory approvals. The sale is not subject to any financing condition or shareholder approval.
The sale represents a transaction value of approximately 3.5 times trailing twelve-month sales of $1.4 billion, reflecting the volume of DXC’s state health business. The after-tax proceeds from this transaction are expected to be used to pay down debt, consistent with DXC’s stated goal of maintaining a strong balance sheet and an investment grade credit profile.
DXC Technology’s US State and Local Health and Human Services business is a provider of technology enabled, mission critical solutions that are fundamental to the administration and operations of health programs throughout the United States. Known for its delivery of highly complex systems for public sector clients, the business facilitates performance efficiencies and improved outcomes for a wide range of stakeholders in the healthcare ecosystem.
“I’m pleased that we were able to identify such an outstanding home for our US State and Local Health and Human Services business,” said Mike Salvino, DXC’s president and chief executive officer. “DXC has built a unique capability that currently serves 42 states and territories with an incredibly experienced and dedicated workforce.
“Throughout this process, we will continue to closely engage with all of our stakeholders to ensure that we meet our commitments and provide a seamless transition for our customers and our people,” Salvino concluded.
“DXC’s US State and Local Health and Human Services business is a leading player in a highly complex market that continues to benefit from technological innovation,” said Ramzi Musallam, CEO and Managing Partner of Veritas Capital. “The intersection of government, technology and healthcare is a key focus area for Veritas. By combining the business’ talented employees with our extensive industry experience, we plan to build on the business’ unwavering commitment to its customers and leadership in mission critical healthcare technology to drive continued improvement in the quality of healthcare for citizens nationwide. We look forward to welcoming the business and its employees into the Veritas portfolio.”