WEX Acquires Discovery Benefits for $425 Million to Enhance HSA and Employee Benefits Management Platform

VCBeat (WeChat Official Account: vcbeat) has learned that global payment services company WEX has acquired Discovery Benefits, an employee benefits administration firm based in Fargo, North Dakota, for $425 million. The acquisition is expected to close in the first quarter of 2019, subject to regulatory approvals and the negotiation of other customary closing conditions.

Under the terms of the acquisition agreement, Discovery Benefits will also retain approximately 5% equity interest in the combined entity of WEX Health and Discovery Benefits. WEX expects that the acquisition will have minimal impact on its adjusted net profit in the first year, and will generate approximately $15 million in net profit in the second year following the closing of the acquisition.

Discovery Benefits, established in 1987, is a rapidly growing employee benefits administration company. Discovery Benefits has been streamlining the employee benefits administration process so that employers, participants, and advisors can focus on what matters most to them. The company achieves this by providing cutting-edge technology, instant access to information, expertise, and exceptional customer service. In 2018, the company generated approximately $100 million in revenue and served more than one million consumers across the United States.

WEX is a cloud-based healthcare financial management platform covering areas such as vehicle, travel, and healthcare. It was renamed WEX Health in April 2016. Leveraging advanced benefits administration technology, WEX has provided industry-leading, award-winning solutions to 200,000 employers and over 17 million consumers in the United States and Canada. WEX’s product offerings include HSAs, HRAs, FSAs, VEBAs, PRAs, advanced billing systems, public and private health insurance exchanges, COBRA administration, health plans, and transportation plans.

WEX has partnered with Discovery Benefits for over a decade, and this acquisition will help expand its health division and further advance health benefits technology.

“The consumer-driven healthcare market is currently booming, and WEX plans to expand its influence in this sector,” said Jeff Young, President of WEX Health, in an email. “The acquisition of Discovery Benefits will enable WEX to provide customers with additional services, such as carrier integration tools. WEX may have further acquisition plans, focusing on enhancing customer loyalty while strengthening our overall value proposition.”

“The acquisition of Discovery Benefits strengthens WEX’s position as a leading technology platform in the healthcare sector,” said Melissa Smith, CEO of WEX. “We are excited to expand our business into the rapidly growing employee benefits market and look forward to achieving new milestones in the healthcare space.”