Private equity firms Hellman and Friedman, Bain Capital buy Athenahealth for US$ 17 billion

USA – Private equity firms Bain Capital and Hellman & Friedman have paid US$17 billion for Athenahealth, an electronic health records vendor for physician practices.

The investment, which provides electronic health records and physician practice tools, is expected to be completed in the first quarter of 2022, according to the company.

It is one of a few companies competing in the highly concentrated EHR market, alongside larger players such as Cerner and privately held Epic Systems.

Those competitors gradually eroded Athenahealth’s hospital client base, which usually results in larger and more lucrative software deals. In late 2019, Athenahealth announced its exit from the small hospital market.

Athenahealth, which was acquired for US$5.7 billion in 2019 by private equity firms Veritas Capital and Evergreen Coast Capital, claims to work with more than 140,000 ambulatory care providers across all 50 states and 120 specialties.

Before being taken private in 2019, Athenahealth struggled, reporting flagging revenue and disappointing bookings in the competitive health IT sector.

The two private equity firms are acquiring Athenahealth, from its current owners, Veritas Capital and Evergreen Coast Capital, the private equity arm of activist investor Elliott Management Corp. However, both Veritas and Evergreen will retain a minority stake in the vendor.

Chair and CEO Bob Segert, as well as the current management team, will remain in their positions, according to a press release from athenahealth.

This is one of the year’s largest leveraged buyouts, and it means that the previous private equity firms that took Athenahealth private in 2019— Veritas Capital and Evergreen Coast Capital, a subsidiary of Elliott Management — more than tripled their investment.

Athenahealth launched a new EHR-integrated telehealth tool in 2020. Jessica Sweeney-Platt, vice president of research and editorial strategy, claims that the company has provided 18.4 million virtual appointments in the last year.

Today marks a significant milestone for athenahealth and our partnership with Veritas Capital and Evergreen Coast Capital, and we are thrilled to work with Hellman & Friedman and Bain Capital to drive the next phase of our growth journey,” said Segert.

During the COVID-19 pandemic, companies that provide cloud-based solutions to the healthcare sector have seen a surge in demand as homebound people turn to the internet for their medical needs.

The boom has prompted several transactions in the sector, including Microsoft Corp’s US$16 billion acquisition of Nuance Communications Inc.

The healthcare industry has also seen an increase in deal-making by private-equity firms, which have teamed up this year to acquire companies for large sums of money.

According to an article by Reuters, in June, Blackstone, Carlyle Group, and Hellman & Friedman agreed to buy medical supply and equipment company Medline Industries Inc for US$34 billion in cash and debt.

Meanwhile, GE announced that its healthcare division, GE Healthcare, would be spun off in early 2023. Virence Health, which merged with athenahealth, was previously GE Healthcare’s value-based care division.

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