Healthcare Management recapitalizes with Primus Capital

UPDATED: Stephenson now CEO. ESOP remains and owner, as Nashville's HMS follows a path charted in earlier Passport Health deal

Email | Print By Milt Capps

Tom Stephenson

UPDATED 10:58 a.m. Oct. 12 - HMS President Tom Stephenson told NashvillePost.com he now holds title as HMS CEO. Earlier today, a spokesman for Brentwood Capital confirmed Brentwood's involvement in the HMS transaction and said the HMS-Primus equity and debt transaction generated more than $50 million for the employee stock-ownership plan and other purposes. Participating with Primus are National City Equity Partners of Cleveland and London-based LMS Capital. The HMS ESOP remains a minority owner.

As originally reported Oct. 11, 2:26 p.m.:

NashvillePost.com has learned Healthcare Management Systems recently completed an equity and recapitalization transaction with Primus Capital. Terms of the transaction have not yet been disclosed.

But if an earlier Primus deal is any indication, there may be other actors who have yet to be revealed:

Slightly more than a year ago, Primus completed a similar $70 million equity and debt recapitalization with Franklin-based Passport Health Communications. Passport's announcement of the deal revealed that in addition to Primus, Allied Capital provided subordinated debt financing; Fifth Third Bank provided senior debt financing; and, Brentwood Capital Advisors served as financial advisor to Passport.

The same Primus investment managers who led the Passport deal are believed to have executed the HMS deal, and one or more of them may soon take seats on the HMS board.

Responding to a request for further details HMS President and Chief Operating Officer Tom Stephenson today  told NashvillePost.com that he would be available tomorrow.

Both Stephenson and Chief Financial Officer Paul Agee are expected to remain in-place.

Privately held HMS generates about $56 million in revenue annually integrating clinical and financial information systems for its customers. Currently, the 23-year-old, West End-based company serves about 570 community hospitals.

While reporting steady growth, HMS has been facing tough choices in the increasingly competitive and cost-sensitive e-Health arena.

In July, NashvillePost.com sister publication "News of Nashville Technology" reported that HMS had decided to sell its customers technology from SSI Group Inc., rather than develop a proprietary HMS tool for claims management.

HMS Co-Founder and CEO Tom Givens and Co-Founder and Executive Vice President John Doss stepped-down from daily operations in 2005, but have remained engaged in the company's development, since then.