Private equity firms Hellman & Friedman and Bain Capital are buying US healthcare technology company Athenahealth in a $ 17 billion deal that is one of the biggest leverage buyouts of the year.
Its current private equity owners, Veritas Capital and Evergreen Coast Capital, sold after taking the company private for $ 5.7 billion in 2019, merging it with assets of GE Healthcare, and cutting costs and reviving growth under Bob Segert , CEO.
Athenahealth was founded by Jonathan Bush, nephew of former President George HW Bush, and specializes in the digitization of health records and in electronic claims and billing.
Its new owners are betting that it could continue to increase revenue at double-digit rates and gain more customers in the electronic medical records market – especially among doctors and independent practitioners as its main competitor dominates Epic Systems in hospitals. Segert will remain as CEO.
Bush was expelled from Athenahealth in 2018 in the wake of revelations about his personal life and a brutally fought activist campaign by shareholder Elliott Management, who argued that he had mismanaged the company and spent wastefully on real estate and aircraft.
As the campaign intensified, Veritas built investments in companies that digitize medical billing, and acquired a unit from GE Healthcare that focused on billing and other medical software for about $ 1.1 billion in 2018.
Within months of concluding the deal, Veritas and Elliott’s private equity arm, Evergreen Coast Capital, announced their plan to buy Athenahealth for $ 5.7 billion in an LBO that merged the company with the former GE business, which was renamed to Virence Health.
Monday’s deal will be financed with about $ 7 billion worth of shares, according to people directly involved in the deal. Hellman & Friedman, which has a $ 24.4 billion fund to invest, will take the majority of the shares, ahead of Bain Capital, although the two firms will have equal board representation.
GIC, Singapore’s sovereign wealth fund, and the Abu Dhabi Investment Authority will also participate in the fundraiser, while current owners Veritas and Evergreen Coast Capital will retain minority interests.
The deal is the latest major healthcare-focused buyout, and one of several where private equity firms have teamed up to buy businesses worth $ 10 billion or more.
In June, Hellman & Friedman, along with competitors Blackstone and Carlyle, acquired a $ 34 billion leverage buyout from Medline, a family-owned medical device supplier. Earlier this month, Advent International and Permira Advisers entered into an agreement to take over the cyber security company McAfee private in an LBO valued at nearly $ 15 billion.