Divestiture increases focus on financial services industry
FIS™ (NYSE:FIS), the world’s largest global provider of banking and payments technology, have announced it has signed a definitive agreement to sell its Healthcare Benefit Solutions business to Lightyear Capital for $335 million. The all-cash transaction is expected to close by the end of the third quarter of 2012, subject to required regulatory approvals and customary closing conditions.
The sale includes FIS’ Consumer Driven Healthcare Solutions and Health and Financial Network Solutions, which provide benefits administration, multi-purse debit card and benefit account processing and payment fulfillment services to consumers, healthcare providers and payers. FIS will retain its state and federal government-sponsored electronic benefits transfer (EBT) businesses and programs which serve clients in more than 25 states.
“FIS has built a market leading position in healthcare account processing and payment services, and this business has performed very well,” said Frank Martire, chairman and chief executive officer, FIS. “The divestiture is consistent with our primary focus to serve financial institutions, as well as our strategy to maintain leadership positions in markets where we have meaningful scale.”
“We are pleased to have partnered with FIS in this transaction,” said Donald B. Marron, chairman of Lightyear Capital. “We believe that this transaction will bring many benefits to the customers of both businesses including new independent resources focused on the healthcare benefit administration and payments market.”
Anticipated Impact to 2012 Results
In accordance with generally accepted accounting principles, the Healthcare Benefit Solutions business will be classified as a discontinued operation for all periods presented effective in the second quarter of 2012. FIS expects the sale and related reclassification to reduce adjusted earnings per share from continuing operations by approximately $0.02 in the second quarter of 2012. The company expects to receive after-tax proceeds of approximately $220 million in conjunction with the transaction. FIS expects the sale to reduce full year 2012 earnings from continuing operations by up to $0.07 per share, before the benefit of any reinvestment of the net proceeds, and expects no material impact to adjusted earnings per share in 2013. The business generated approximately $120 million in revenue, $34 million in earnings before interest, taxes, depreciation and amortization (“EBITDA”) and $0.05 in adjusted earnings per share in 2011.
In addition, FIS anticipates that it will incur an after-tax GAAP loss of approximately $55 million, or $0.19 per share, upon completion of the sale in the third quarter which will also be included in discontinued operations. The Company plans to furnish additional detail per an 8-K filing regarding historical financial results for the Healthcare Benefit Solutions business as soon as is practicable.