Lyric AI catches eye of private equity buyer as potential valuation reaches $5B
A private equity firm is looking to buy Lyric.AI, a company that provides business intelligence to support the development of health plans. According to a media report, the deal would value the artificial intelligence vendor at roughly $5 billion.
Citing people close to the ongoing negotiations, Reuters was the first to break the news. According to the outlet, the would-be buyer of Lyric is TPG, a publicly traded investment firm based out of Texas, known for backing healthcare and technology businesses, as well as those in other spaces such as consumer retail and hospitality.
Lyric, a privately held company, is partnered with most major insurers, including UnitedHealthcare, CVS Health and Humana. Payers use the AI for, among other things, automatically identifying medical claims that are inaccurate, so that reimbursement payments are withheld or altered appropriately, based on the nature of the potential error.
According to Reuters, TPG is working with JPMorgan Chase on the potential Lyric buyout, which if investors get their way, would be a full acquisition of the company. However, Reuters said terms are still being hashed out and any deal could end up falling through.
The $5 billion valuation is based on 20 times the annual earnings of Lyric, which is currently $250 million.
AI wariness
As Reuters noted, technology stocks struggled earlier this year, as investors wrestled with questions related to the promises of AI versus the reality. Those concerns may be impacting the potential buyout of Lyric.
However, TPG does have businesses under its umbrella that complement the work Lyric does in the healthcare payer space. The private equity group bought ClaimsXten in 2022, a software application that edits submitted medical claims to ensure they are properly written and coded to regulatory standards.
All the same, it seems there are still potential points of contention that could stop TPG from bringing Lyric into the fold.
The healthcare AI decision-making company earned $43.5M in Series B funding around this time last year. At that time, it said its revenue had grown 500% over the last 18 months.
For more, read the full exclusive from Reuters at the link below.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.