Sterling to Offer Market Leading Clinical Solutions Through Acquisition of Vault Workforce Screening
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Insights
The acquisition of Vault Workforce Screening by Sterling Check Corp. is a strategic move that taps into the growing demand for comprehensive background screening and identity services in regulated industries. By leveraging Vault's extensive clinical network, Sterling is positioned to address the acute staffing challenges in sectors like healthcare and transportation, where thorough background checks are critical for compliance and safety. The integration of Vault's clinic management platform with Sterling's services is expected to enhance operational efficiencies and provide a more robust offering to clients.
From a market perspective, this acquisition allows Sterling to diversify its service portfolio and strengthen its competitive edge. The anticipated $40 to $50 million in annualized revenue and the accretive nature of the deal to Sterling's Adjusted EPS underscore the financial benefits. Moreover, the potential for financial synergies through vendor consolidation and pricing optimization could lead to improved profit margins and shareholder value in the longer term.
However, the success of this acquisition will largely depend on the seamless integration of Vault's services and the retention of its expert management team. The ability to maintain high-quality service during the transition will be crucial for client satisfaction and the realization of projected financial synergies.
The acquisition's financial implications for Sterling Check Corp. are significant, with an expected contribution of $40 to $50 million in annualized revenue. The accretive effect on Sterling's Adjusted EPS suggests that the deal is financially sound and likely to enhance earnings per share in 2024. This is a positive signal to investors, reflecting the potential for increased profitability and return on investment.
It is also important to note that Sterling's strategy to in-source key components of its supply chain through strategic mergers and acquisitions like this one could result in a more streamlined operation with potential cost savings. The emphasis on financial synergies related to vendor consolidation and pricing optimization indicates a focus on cost efficiency, which is often well-received by the market.
Investors should monitor the integration process closely, as the realization of these synergies and the impact on Sterling's financial model will be critical to the acquisition's success. Additionally, the acquisition multiple being in line with Sterling's typical tuck-in M&A range suggests a disciplined approach to valuation, which is reassuring from a financial risk management perspective.
For Sterling Check Corp., the acquisition of Vault Workforce Screening represents not only a financial investment but also a legal and regulatory strategic move. The healthcare and transportation industries are heavily regulated and compliance with employment laws and regulations is paramount. Sterling's ability to provide comprehensive drug and health testing services through Vault's network can help clients navigate the complex regulatory landscape more effectively.
The legal expertise of Vault's team, particularly in managing Medical Review Officer (MRO) services, will be a valuable asset to Sterling. MRO services involve a medical professional reviewing drug test results to ensure accuracy and legal compliance, which is crucial for employers in regulated industries. The acquisition may also necessitate a thorough review of contractual obligations with existing clients and the harmonization of privacy and data protection policies to align with Sterling's standards.
Furthermore, the legal considerations surrounding the integration of Vault's employees into Sterling's operations must be handled with care to avoid potential labor disputes and ensure a smooth transition. This includes honoring existing employment agreements and maintaining compliance with employment laws.
Extensive Clinical Network and Flexible Service Model to Meet Hiring Demands in Healthcare and Other Regulated Industries
INDEPENDENCE, Ohio, Jan. 02, 2024 (GLOBE NEWSWIRE) -- Sterling Check Corp. (NASDAQ: STER) (“Sterling”), a leading global provider of background screening and identity services, today announced that it has acquired Vault Workforce Screening (“Vault”), a leading U.S. clinic management platform. The acquisition brings a network of 17,000 clinics and a flexible service model to enhance Sterling’s existing drug and health services. This will enable Sterling to deliver additional market leading screening solutions for employers in healthcare, transportation, and other regulated industries where staffing challenges are most acute, decreasing time-to-hire and improving employee retention.
As part of Sterling’s strategy to in-source key components of its supply chain, the acquisition of Vault will accelerate and strengthen Sterling’s financial model and revenue growth. Vault’s proprietary service model, including Medical Review Officer (MRO) services and emergency/after-hours scheduling, will bring increased flexibility and control over delivery of drug and clinical services. This will enhance Sterling’s suite of pre- and post-employment drug and health solutions, benefiting both Sterling and Vault clients.
“The acquisition of Vault extends Sterling’s drug and health testing capabilities with a broader range of clinical options, delivery channels, and service models,” says Josh Peirez, Chief Executive Officer of Sterling. “This acquisition builds scale within the attractive healthcare and industrials verticals, enabling Sterling to better meet hiring demands and drive growth, consistent with our long-term strategy to expand through organic revenue growth and strategic M&A. We are also particularly pleased to acquire a strategic asset at an acquisition multiple in line with our typical tuck-in M&A range.”
The acquisition is expected to contribute
"This sale allows Vault and Sterling to combine the very best service and delivery of occupational health tests and exams with the broadest possible menu of employment screening products," said Claire Cochrane, Vault Health, Inc. Co-founder. "Sterling is a great fit for Vault as the business continues its rapid growth, offering Vault’s clients the most comprehensive background and identity products and expanding Vault’s service area to address an expanding global marketplace."
Vault’s expert management team and employees will transition to Sterling as the integration process moves forward and build upon the company’s proven model of providing deep market expertise and unrivaled client service.
About Sterling
Sterling (NASDAQ: STER) — a leading provider of background and identity services — offers background and identity verification to help over 50,000 clients create people-first cultures built on a foundation of trust and safety. Sterling’s tech-enabled services help organizations across all industries establish great environments for their workers, partners, and customers. With operations around the world, Sterling conducted more than 110 million searches in the twelve months ending December 31, 2022. Visit us at www.sterlingcheck.com.
Contacts
Investors: Judah Sokel | IR@sterlingcheck.com
Media: Katelyn Brower | Katelyn.Brower@sterlingcheck.com
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