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Apollo BPO arm buys US firm

Source: PTI
August 29, 2006 02:08 IST

Apollo Health Street Pvt Ltd, a healthcare BPO of the Apollo group announced acquisition of the US-based Armanti Financial Services LLC for $31 million.

The acquisition was funded through internal accruals, debt and equity. The consideration include a direct cash payment besides earn-outs based on achievement of milestones over three years. The company officials declined to give the breakup.

"With this acquisition, we have become one of the top 10 healthcare revenue cycle management companies in the US. We now target to be among the top three," said Divya Sehgal, chief operating officer, Apollo Health Street.

AFS is among the leading hospital billing and receivables management companies in the US. Around 90 per cent of the company's business comes from the US.

The US has an estimated $2 trillion healthcare market with $380 billion backoffice operations. Apollo-AFS is responsible for $1 billion receivables management annually.

At present, Apollo Health Street and AFS have 1,200 and 350 employees respectively. The combined entity plans to house 2,000  employees and a client base of 75 by August-end next year.

While Apollo has operations in the US and UK, Armanti is based only in the US. AFS and Apollo expect revenues worth $26 million and $16-19 million respectively in the next 12 months – targeting a combined turnover of $45 million.

Apart from this, acquisition talks are also on with two other US-based companies. Apollo Health Street eyes firms which are complementary in nature, have an annual growth rate of 15-20 per cent and a diversified customer base across the globe. Acquisitions are likely to drive 50-60 per cent of the company's overall revenues in the next 24 months.

Also, the company plans to cross the $100-million mark through organic and inorganic growth and an employee strength of 3,750 and a client base of 125.

Sangita Reddy, managing director of Apollo Health Street said the company had kept the option of raising funds open. These include further infusion of funds from existing investors (Apollo Hospitals, One Equity Partners and Temasek) and a possible listing on the Indian or the US bourses.

"While Indian listing may happen soon, Nasdaq listing will only happen after we cross the $200-million mark," she added.

Apollo Health Street also plans to start its operations in Chennai. Currently, the company operates from Hyderabad and Delhi. On plans of entering the domestic health insurance market, Reddy said the picture will become clear in two months. "We are in discussions with potential partners," she added.

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