On Monday, Nov. 22, the private equity companies Bain Capital (based in Boston and New York) and Hellman & Friedman (based in San Francisco) acquired the Watertown, Mass.-based athenahealth electronic health record (EHR) and practice management vendor company, for $17 billion. The acquisition is expected to be completed in the first quarter of 2022; the deal marks the second time in two years. It had been acquired by private equity firms Veritas Capital and Evergreen Coast Capital in 2019 for $5.7 billion.
The company has experienced shifting management and governance for some time now. As this publication reported on Feb. 7, 2018, athenahealth had named Jeff Immelt to the title of chairman, following founder Jonathan Bush’s departure in the summer of 2017. Bob Segert was named chairman in February 2019, replacing Immelt after Immelt’s having been in the position just for just one year. Segert’s term as chairman was initiated during the 2019 Veritas/Evergreen Coast acquisition.
According to the press release published by the companies on Monday morning and posted to Business Wire, “-athenahealth, Inc. (“athenahealth” or “the Company”), a leading provider of cloud-based enterprise software solutions for medical groups and health systems nationwide, today announced it has entered into a definitive agreement to be jointly acquired by affiliates of Bain Capital and Hellman & Friedman for $17 billion. The purchase from Veritas Capital and Evergreen Coast Capital affirms athenahealth’s position as the largest and most innovative provider of cloud-based electronic medical record and physician practice solutions across the healthcare continuum in the United States.”
The press release continued, “athenahealth partners with more than 140,000 ambulatory care providers, throughout all 50 states and across more than 120 specialties, to accelerate the pace of healthcare innovation and support the delivery of leading clinical and financial outcomes. athenahealth’s solutions and services enable its customers to increase clinical efficiency, optimize financial performance, improve patient care outcomes, and support providers in accelerating their shift toward value-based care. The Company’s athenaOne cloud platform addresses the critical aspects of a physician’s practice – with modules spanning patient engagement, revenue cycle, telehealth, payments, population health, and value-based care management. athenahealth delivers this suite of capabilities to customers by combining powerful SaaS technology with the expert services and data-driven insights that come from the country’s largest single connected network.”
And it quoted Bob Segert, chairman and CEO of athenahealth, as saying that “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. Our employees, customers, and partners are the source of our success and inspiration as we create a thriving ecosystem that delivers accessible, high-quality, and sustainable healthcare for all.” Segert will continue to lead the company along with the current management team.
“Given our deep experience in software and healthcare, we are excited to work with Bob and the executive team to rapidly scale the business and continue to innovate and grow alongside our most disruptive and innovative ambulatory care clients to build the foundations of a multi-sided digital care network between patient, payer, and provider,” said Allen Thorpe, partner at Hellman & Friedman. “athenahealth’s technology leadership has differentiated the Company as a next generation cloud-based SaaS technology platform, facilitating innovation in a rapidly evolving and dynamic market,” added Sameer Narang, partner at Hellman & Friedman.
And Devin O’Reilly, a managing director at Bain Capital Private Equity, was quoted as saying that “athenahealth is at the frontier of digital health in the United States, enhancing the clinical quality, operational efficiency, and delivery of preventive care to nearly 20% of the population today, unlocking the front door of the consumer healthcare journey and positioning the Company to support physicians in the continuing shift towards value-based care.” “We are excited to leverage our extensive vertical software and healthcare experience to help Bob and the management team accelerate growth, develop new products, gain market share, and continue to innovate in a highly scalable and vitally important end market,” added David Humphrey, a managing director at Bain Capital Private Equity.
“Over the course of our successful partnership with Bob and the management team, athenahealth has driven tremendous growth and transformation, reinforcing its position as the premier healthcare IT company supporting the largest nationwide network of healthcare providers,” said Ramzi Musallam, CEO and managing partner of Veritas Capital. “Following our take-private and combination with Virence in 2019, athenahealth delivered unrivaled value to its customers by significantly increasing R&D investment resulting in higher quality care, lower costs across the healthcare ecosystem, and overall improved patient outcomes. We are thrilled to continue to support the Company alongside Evergreen, Hellman & Friedman, and Bain Capital in the years ahead.”
And Jesse Cohn, managing partner, Marc Steinberg, senior portfolio manager, on behalf of Evergreen Coast Capital, an affiliate of Elliott Investment Management, were quoted in the press release as saying that “athenahealth demonstrates what can happen when a team of dedicated and talented employees and executives is given the right resources to invest in innovation and to help improve the quality of care that its providers are able to deliver. Elliott is proud to have worked with Veritas to help transform athenahealth, and we welcome Hellman & Friedman and Bain Capital as new stewards of this unique and important healthcare leader.”
The press release noted that, “In addition to Hellman & Friedman, Bain Capital Private Equity, and Bain Capital Tech Opportunities, the investor group includes Veritas Capital and Evergreen Coast Capital, which will each retain a minority investment in athenahealth, as well as other new coinvestors, including GIC, Singapore’s sovereign wealth fund, and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).”
As Reuters reporter Amruta Khandekar wrote on Monday morning, “Companies providing cloud-based solutions to the healthcare sector have enjoyed a demand surge during the COVID-19 pandemic as home-bound people turn to the web for their medical needs. The boom has sparked several deals in the sector, including Microsoft Corp's (MSFT.O) $16 billion buyout of Nuance Communications Inc (NUAN.O) in April. The healthcare industry has also seen a rise in dealmaking by private-equity firms, which have joined hands this year to acquire companies for huge sums. Blackstone (BX.N), Carlyle Group (CG.O) and Hellman & Friedman together agreed to buy medical supply and equipment company Medline Industries Inc in June for $34 billion, including debt. athenahealth was taken private in 2019 by Evergreen Coast Capital, hedge fund Elliott's private equity arm, and investment firm Veritas in a $5.7 billion deal. It later merged with Virence Health, a healthcare software provider Veritas bought from General Electric Co (GE.N).”
Meanwhile, the Boston Globe’s Pranshua Verma wrote on Monday morning that, “Since 2019, Athenahealth has been owned by private equity firms Veritas Capital and Evergreen Coast Capital, which took the company private for $5.7 billion. The sale came amid tension involving cofounder and former chief executive, Jonathan Bush, who stepped down from his role in 2018 following revelations from a divorce proceeding that he assaulted his wife. Bush, a nephew of former president George H. W. Bush, publicly apologized in 2018. As part of the new deal, the current owners will retain a minority stake in the company, officials said. New investors, including GIC, Singapore’s sovereign wealth fund, and a subsidiary of the Abu Dhabi Investment Authority will come on board,” Verma wrote. And he quoted Hellman & Friedman’s Thorpe as stating that “We are excited to ... innovate and grow alongside our most disruptive and innovative ambulatory care clients to build the foundations of a multi-sided digital care network between patient, payer, and provider.”
