Ontario Teachers’ Pension Plan in Talks to Acquire Majority Stake in Omega Healthcare

The deal values the healthcare business process outsourcing (BPO) company at approximately $1.7-1.8 billion, including debt, according to sources familiar with the matter.

The Ontario Teachers’ Pension Plan (OTPP), a Canadian pension fund, is in advanced discussions to acquire a majority stake in US-based Omega Healthcare Management Services. The deal values the healthcare business process outsourcing (BPO) company at approximately $1.7-1.8 billion, including debt, according to sources familiar with the matter.

Goldman Sachs Asset Management, which currently holds a 60% stake in Omega, is expected to reduce its holding. OTPP is set to fully acquire the 33% stake held by Everstone Capital, with the remaining shares held by the management team. OTPP's proposed investment is in the range of $700-800 million.

The healthcare sector continues to attract private equity investments globally, with Omega’s established position in revenue cycle management (RCM) making it a sought-after asset.

Omega’s Operations and Expansion

Founded in 2003 by Gopi Natarajan and Anurag Mehta, Omega Healthcare specializes in medical coding, claims management, billing, and other RCM services for healthcare providers, insurers, and pharmaceutical companies. The company operates 14 delivery centers across the US, India, Colombia, and the Philippines, employing 35,000 people globally.

Omega has grown through strategic acquisitions, completing six deals since 2017. These include ApexonHealth, Vasta Global, and Reventics in 2022, which expanded its AI-driven and oncology-focused RCM capabilities.

According to data from Tracxn, Omega reported revenues of INR1,662 crore in FY24, with a profit of INR 165 crore.

Healthcare BPO Market Dynamics

The increasing complexity of healthcare billing regulations, coupled with rising costs, is driving demand for streamlined RCM solutions. Experts highlight that outsourcing RCM functions to specialized BPOs like Omega is a critical cost-reduction strategy for hospitals and healthcare providers.

According to a Precedence Statistics study, the global healthcare BPO market is projected to grow from $152 billion in 2022 to $259 billion by 2028 at a compound annual growth rate (CAGR) of 9.7%.

Strategic Investments in Healthcare by OTPP

OTPP’s interest in Omega Healthcare aligns with its expanding portfolio in India’s healthcare ecosystem. In 2022, OTPP acquired a majority stake in Sahyadri Hospitals Group, a leading hospital chain in western India, for $300 million. It also holds renewable energy assets from Mahindra Susten.

The BPO market has witnessed notable transactions in recent months. EQT Partners acquired GeBBS Healthcare Solutions for $860 million, while TA Associates invested $250 million in Vee Healthtek. KKR also made a significant minority stake acquisition in Infinx Services for $150 million.