An affiliate of global alternative investment firm H.I.G. Capital has signed a binding agreement to invest $225m in eHealth, which owns and operates a private online health insurance exchange.
Under the agreement, the H.I.G. affiliate will make the investment by buying convertible preferred stock.
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By GlobalDataThe company plans to use the new capital to fuel its organic growth and capitalise on inorganic growth opportunities, as well as deliver meaningful returns to shareholders.
With the fresh infusion, the company also intends to expedite the rollout of its strategic initiatives. These include plans to drive scale through online enrolment growth, investing in the in-house telesales team, expansion of its strategic partner channel, and increasing member engagement and retention.
eHealth CEO Scott Flanders said: “With this investment, we will take immediate steps to build on our strong foundation and fast-track our strategic plans. We are operating with focus and urgency to leverage the new capabilities we introduced in 2020 and create a more profitable and scalable model, while continuing to transition our member acquisition and engagement strategy towards improved retention and lifetime value.”
As part of the investment, H.I.G. managing director Aaron Tolson will be nominated for appointment as a director to the eHealth board of Directors.
Tolson said: “The work Scott, the eHealth Board and its management team are doing has never been more important. Strategically, eHealth is making great strides in its efforts to move customers online and enhance retention while lowering acquisition costs.
“We believe eHealth is ready to win and capture the significant upside as the shift to online intensifies – and we are excited to partner with the Company to help drive that user and revenue growth.”
The transaction is expected to be finalised in the first quarter of this year. Upon completion, the convertible preferred stock issued to H.I.G. will represent around 8% of eHealth’s common stock on an as-converted basis.
In July 2019, eHealth established a new office in Indiana, to act as the company’s Eastern Time Zone operations and technology headquarters.
In 2018, the company agreed to acquire Health, Wealth, and Life Advisors, more commonly known as GoMedigap, in a cash and stock deal worth $20m.
