Private equity firms Veritas Capital and Evergreen Coast Capital will acquire Athenahealth in an all-cash deal worth $5.7 billion, the companies announced this morning. The $135 per share sales price represents a 12 percent premium over Friday’s close.
Athenahealth wil be combined with Veritas-owned Virence Health, which sells the former GE Healthcare financial, ambulatory, and workforce management product lines. Veritas acquired that business from GE for $1.05 billion in cash in July 2018.
The combined companies will operate under the Athenahealth brand with headquarters remaining in Watertown, MA. After the transaction is completed, Veritas will restore API Healthcare as a separate workforce management technology company. GE Healthcare acquired API Healthcare in January 2014.
Athenahealth’s CEO will be Virence Chairman and CEO Bob Segert, who was hired by Veritas in September 2018. He has no healthcare experience
Evergreen Cost Capital is the private equity subsidiary of Elliott Management Corporation, the activist investor that targeted Athenahealth and forced the ouster of Athenahealth co-founder and CEO Jonathan Bush in June 2018. Elliott Management offered $160 per share bid for Athenahealth in September 2018 but then backed away, either as a result of due diligence or the realization that Athenahealth turmoil had decreased the price required to buy it. The company says it supports the acquisition and will retain its minority share in it.
Some of Veritas Capital’s previous health IT acquisitions include the healthcare business of Thomson Reuters (now IBM Watson Health’s Truven Health Analytics, $1.25 billion); payments processing technology vendor Cotiviti ($4.9 billion); and analytics vendor Verscend (formerly Verisk Health, $820 million). Verscend and Cotiviti were combined under the Cotiviti name upon completion of Verscend’s acquisition of Cotiviti in August 2018.
ATHN shares rose 10 percent in early trading following the announcement prior to the market’s open. They’re up 5 percent in the previous 12 months vs. the Nasdaq’s 7 percent increase. They peaked in the $145 range in early 2014.