Health benefits firm has new owner, name

Performax also gains a capital infusion

April 25, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

Performax, a Baltimore company that manages employer health benefits, emerged yesterday with a new identity, a new chief executive, a new majority owner and a new infusion of capital.

All of that is designed to position the company, which has 135 employees at its downtown headquarters and about two dozen more in 13 sales offices around the country, for rapid growth - 20 percent to 25 percent a year for the next several years, according to Keith B. Sullivan, the new chief executive officer.

Founded in 1987 by Louis J. Nicholas as Corporate Healthcare Financing Inc. (CHF), the company was sold in 1993, then bought back by Nicholas and his management team in 1998.

Yesterday, Sullivan, who had been president, assumed the CEO title from Nicholas, as Legg Mason Merchant Banking Inc. bought much of Nicholas' stake and became the majority owner. Nicholas remains on the board of directors and as a consultant and minority stockholder.

Although CHF still exists as a holding company, in what Sullivan termed "a renaming and a branding," the business will be known as Performax, a label it has used for several years on its health plans.

"This is a track we've been on for more than two years; it began with the reacquisition of the company," Sullivan said.

Terms undisclosed

Terms of Legg Mason's investment were not disclosed, but Legg Mason Merchant Banking says on its Web site that it typically invests between $4 million and $15 million and looks to buy into companies that have values and annual revenue between $20 million and $100 million.

Josh Hall, managing director of Legg Mason Merchant Banking, said his company was investing in Performax because it believed that health plans for midsize employers make up "a sizable and growing market, and one in which this management team has used ingenuity and high levels of customer service."

Sullivan said Performax will use the new infusion of capital to provide more and better computer access for customers and to double the national sales force, now about two dozen people in its 13 offices.

Performax operates as a health plan middleman. It helps midsize employers, with 50 to a couple of thousand workers, design a health benefit plan, contracts with networks of doctors and hospitals, keeps track of employee enrollment and processes claims.

While it does some of the work in-house, such as tracking enrollment, Performax contracts out some other functions, such as claims adjudication.

The employers are self-insured for medical costs (buying a "stop-loss" policy to protect against very large claims), and Performax collects an administrative fee.

Joined company in 1992

While the privately held company does not disclose its revenue, Sullivan said that the care it manages would be equivalent to about $400 million in health premiums and that the portion managed by Performax generally represents about 20 percent of premiums.

Sullivan joined what is now Performax as vice president in 1992, when a benefits company he founded merged with CHF.

He became president in 1998, when the management bought the company back.

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