Verisk Analytics (VRSK) - Get Report  has agreed to sell its healthcare business to Veritas Capital Management. Despite short-term uncertainty around the terms it received, followers of the data analytics company expect investors will be happy with the long-term results as it refocuses on its faster-growing insurance segment.

The transaction is valued at $820 million, including a $720 million cash component and a $100 million long-term subordinated promissory note with interest paid in kind.

Jersey City, N.J.-based Verisk expects to garner about $675 million in after-tax proceeds from the sale, about $600 million of which will be received at closing.

Verisk announced on Oct. 27 it was exploring strategic alternatives for Verisk Health, a few weeks after The Deal reported Verisk had tapped Morgan Stanley to explore a sale of the business, with a process that had gotten underway sometime earlier. The Deal reported in February that the buyer was likely to come from private equity rather than the industry, with UnitedHealth's (UNH) - Get Report  health services platform Optum, McKesson (MCK) - Get Report  and Roper Industries (ROP) - Get Report  likely sitting on the sidelines.

Despite questions about the price it received, the exit from healthcare should improve Verisk Analytics' margins. As Verisk sells its healthcare services business, the parent company will be better positioned to focus on its core business, which is centered around information services tailored to the property and casualty insurance industry.

Verisk Health's population health analytics arm uses predictive science to identify and stratify opportunities for interventions as well as to judge risk levels for patients, while its payment answer arm provides claim accuracy and fraud protection services. It also supplies medical record requests and reviews, as well as a risk adjustment program to ensure appropriate funding.

The health unit, while growing at a rate of 112% in 2012, slowed to a 3% growth rate in 2014, before gaining back some momentum last year. The growth rate for Verisk's core business has been less volatile, with a variance of about 2% over the years.

Verisk disclosed in latest year-end results that its healthcare business generated $307.3 million in sales for its year ended Dec. 31, slightly below the $315.6 million it posted a year earlier.

While company followers agree that the divestiture is a good move from a long-term perspective, diverging reports around valuation since the process initially got underway have analysts at odds about the the price-tag.

"I think from an after-tax cash standpoint, it will be viewed negatively by the market," Hamza Mazari, an analyst at Sterne Agee CRT said.

Mazari said he had anticipated after-tax proceeds would be closer to $800 million with alongside an enterprise value within the $850 million to $900 million range. Verisk has spent more than $500 million on the its health division since entering the healthcare space in 2004, estimates Mazari.

"Hopefully this is a catalyst for management to be more prudent around capital allocation," Marzari said.

But Arash Soleimani, of Keefe, Brunette & Woods Inc., said the valuation is slightly better than expected based upon misconceptions about the anticipated price tag. While initial reports suggested a deal within the $1 billion range, a recent Reuters report implied a deal would fall at a significant discount to that level and left investors thinking Verisk might only fetch about $600 million to $700 million for the asset, Soleimani said.

In light of the most recent price expectations, $820 million should be viewed favorably and as a bit of a relief to investors, he said.

Robert W. Baird & Co.'s Jeff Meuler added that baseline assumptions around a likely valuation were largely a result of the company not disclosing subset Ebitda levels before the process got underway. Based on 2015 Ebitda of about $75 million, the valuation equates to an EV-to-Ebitda multiple of about 11 times on a pre-tax basis, Meuler said.

Originally, Verisk Health was thought to have had closer to $90 million in Ebitda.

From a long-term standpoint, the deal has several positive long-term implications.

The company will generate about 82% of its revenue from subscriptions as opposed to 76% post-transaction, implying a less volatile revenue mix. The deal is also expected to boost its Ebitda margins to about 50% from 46%. In addition, the divestiture leaves the company with greater exposure to revenue from insurance, a monopoly-like business.

"Verisk, excluding its healthcare position, looks good from a financial profile perspective," Soleimani said.

The data analytics company said it would use the cash proceeds to pay down its revolver and work towards its leverage target by the end of the year. Verisk will report its healthcare business as discontinued operations within its first-quarter results.

Post-transaction, Verisk Health will be renamed and will operate as an independent company at its current Waltham, Mass., headquarters.

The deal is anticipated to close by June 30, pending regulatory approvals and other customary closing conditions.