Private equity firm TPG is reportedly exploring the sale of Lyric, a healthcare software company, according to sources familiar with the matter. The company generates approximately $250 million in annual earnings before interest, taxes, depreciation, and amortization, which could support a valuation of around $5 billion based on a 20x multiple.
TPG is working with investment bankers at JPMorgan to evaluate the potential sale of Lyric, though sources caution that there is no guarantee the process will ultimately result in a transaction. This development comes as software industry deal activity begins showing signs of recovery.
Earlier this year, concerns about artificial intelligence potentially disrupting the software sector triggered a broad selloff across the industry. While transaction activity has since rebounded, market participants remain cautious about what companies are truly worth and how significantly even highly specialized software providers could be impacted by the rapid evolution of AI technology.
TPG acquired ClaimsXten in 2022 for approximately $2.2 billion. The business was previously part of Change Healthcare but was divested to help resolve antitrust hurdles that could have blocked Change Healthcare's $13 billion acquisition of UnitedHealth. TPG renamed the company Lyric the following year.
Insurance companies including UnitedHealth Group Inc (NYSE: UNH), CVS Health Corp (NYSE: CVS), and Humana Inc (NYSE: HUM) use Lyric's software to identify and prevent inaccurate medical claims payments. TPG has previously stated that the company's revenue growth has accelerated significantly since the acquisition, though specific figures were not disclosed.
TPG noted that Lyric benefits from AI deployment, and its business model with rich datasets further amplifies these gains. However, some potential software company buyers are evaluating whether native AI competitors could ultimately perform many of the same functions at lower costs. This could weaken the financial assumptions used to assess corporate valuations, including for payment integrity and claims management technology companies.
The uncertainty in this space is reflected in market performance. Shares of smaller publicly traded peer Claritev Corp (NYSE: CTEV) plunged 80% between September 2025 and May of this year, driven by investor concerns about AI disrupting software companies. While the stock has partially recovered since then, it still trades below $38 per share, compared to $72 per share a year ago.