TPG is weighing a potential sale of Lyric, the healthcare software business formerly known as ClaimsXten, in a transaction that could value the company at around $5bn, according to a report by Reuters citing unnamed people familiar with the matter.
The private equity firm is working with JPMorgan on the potential sale, although the sources cautioned that discussions remain preliminary and may not ultimately result in a transaction.
Lyric provides technology used by healthcare insurers to identify and prevent inaccurate or inappropriate medical claims payments. Its customers include UnitedHealth, CVS and Humana.
The potential sale comes as M&A activity in the software sector shows signs of recovering following a sharp sell-off earlier this year, when concerns over the impact of artificial intelligence weighed heavily on software valuations and disrupted some deal and IPO plans.
Lyric generates approximately $250m in annual EBITDA, according to the sources. Applying a valuation multiple of around 20 times EBITDA would put the business at roughly $5bn.
TPG acquired ClaimsXten from Change Healthcare for approximately $2.2bn in 2022. The divestment formed part of the process surrounding UnitedHealth’s $13bn acquisition of Change Healthcare, with the sale helping address potential antitrust concerns. TPG subsequently rebranded the business as Lyric in 2023.
Since the acquisition, TPG has said Lyric has delivered a significant acceleration in revenue growth, although it has not disclosed the scale of that increase. The firm has also highlighted the company’s use of artificial intelligence and argued that its extensive data resources could provide further opportunities to benefit from the technology.
However, the rapid development of AI is creating a new consideration for potential buyers of specialist software businesses. Investors are assessing whether AI-native platforms could eventually replicate some functions offered by established providers at a lower cost, potentially putting pressure on the assumptions underpinning valuations across areas such as claims management and payment-integrity software.
TPG, JPMorgan and Lyric reportedly did not immediately comment on the potential sale.
