Private equity firm Carlyle Group Inc. is in talks to buy healthcare technology firm Cotiviti Inc. for close to $15 billion, including debt, from Veritas Capital, according to people familiar with the matter. 

Carlyle is working with private creditors to gather around $5.5 billion of financing for the potential deal, though private lenders may not provide all the debt, said the people, who asked to not be identified because the details are private. That would be one of the largest ever direct loans, or non-bank buyout loans arranged in the private credit market, according to data compiled by Bloomberg.

A deal announcement could be weeks away and will depend on Carlyle’s ability to secure financing, the people said. No final decision has been made and discussions could fall through, they added. 

A representative for Carlyle declined to comment. Representatives for Cotiviti and Veritas didn’t immediately respond to requests for comment. 

Financing for deals of this size has traditionally been handled by Wall Street banks. But they’ve pulled back from providing debt for new buyouts after struggling to offload loans to finance deals including the take-privates of Citrix Systems Inc. and Twitter Inc. Some banks booked big losses on those deals. 

Debt Window

Their reluctance has opened the window for private-credit shops including Blackstone Inc., Apollo Global Management Inc. and HPS Investment Partners to take on larger deals that would have been handled by banks and raised in the high-yield bond and leveraged loan markets. Cotiviti has about $5 billion of debt and last came to the leveraged loan market in 2021, according to data compiled by Bloomberg.

Veritas took Cotiviti private in 2018 and has been seeking an exit for a couple of years. The firm tapped advisers to explore an initial public offering and sale of the company in 2021, Bloomberg News reported at the time. A sales process began last year but stalled after the Federal Reserve embarked on an interest rate hiking spree, sending debt markets into a tailspin and complicating private equity’s ability to finance a deal, people familiar with the matter said at the time.

Based in South Jordan, Utah, Cotiviti sells its services to payers like commercial health insurers and the government, auditing claims and analyzing data to help them ensure payments to doctors and hospitals are accurate. It helps clients save $5.7 billion in annual medical costs by improving payment accuracy, making money by sharing in the savings it generates for health insurers, according to its website.

Veritas agreed to sell healthcare information technology firm Athenahealth Inc. for $17 billion in 2021 to private equity firms.