- Devin Wade, CEO
- ATA Fund III
- ATA Involvement:
- Board: Michael Hodges/Sourced: Hatch Graham
(Aquired by InComm, February 2012)
Medagate’s innovative technology and payment card issuing platform empower cardholders with greater access to health care benefits for use in self–care. Medagate’s OTCMedicare™ and OTCMedicaid™ branded re–loadable payment cards are the first to enable purchase optimization for Medicare and Medicaid eligible items.
From its infancy, a strategic relationship existed between MedaGate and the company’s future acquirer, Incomm. MedaGate’s founding team had developed a consumer-based information system that enabled dramatic savings in healthcare, but lacked the necessary point-of-sale infrastructure to deploy widely to consumers. To unlock MedaGate’s potential, CEO Devin Wade entered a marketing agreement with Incomm, the industry-leader in stored-value gift and prepaid cards. With over $10B in annual retail sales, Incomm’s reach to over 200,000 retail locations would provide the essential network to enable MedaGate’s unique database concept to deploy on a national scale.
Although initially introduced to ATA’s Hatch Graham, the MedaGate seed investment opportunity fit nicely within the background of his ATA partner Mike Hodges. Consequently, Mike worked with the MedaGate team over the next year to develop a solution for healthcare providers to automate reimbursement of Over-The-Counter products to plan members.
“Typical venture firms viewed the Incomm relationship as a complex investment risk; however, Hatch and Mike felt the risk was manageable, and more importantly, the relationship provided unique leverage for accelerating MedaGate’s value growth.” Devin Wade, CEO
Based on the anticipated financial benefits of the solution, leading drug store chains quickly embraced the concept and prepared for its arrival. Not surprisingly, in mid-2011, an indication of interest arrived from Incomm to acquire MedaGate. Devin and Mike worked closely through the initial stages of negotiations, and as the efforts intensified, they enlisted additional insight from Hatch. Hatch’s operating background includes a wide variety of M&A transactions, including several deals between disproportionately sized companies, as was the case of MedaGate and Incomm. Across the next several weeks, the team worked with Incomm to successfully complete an attractive exit.
“ATA’s support of MedaGate covered the entire company life-cycle, from the seed funding of a concept to the final sign-off of a definitive merger agreement. We considered ATA part of our team through the entire process.” Devin Wade
Today, MedaGate operates as a wholly owned subsidiary of Incomm and enjoys a leadership position in healthcare reimbursement. As the only national closed loop Over-The-Counter benefits payments platform, the OTC Network™ of MedaGate has been integrated into Point-Of-Sale terminals at over 20,000 retail locations in all 50 states.