Private Equity Firms Veritas and Evergreen to Buy Athenahealth for $5.7B

Veritas Capital and Evergreen Coast Capital have signed a deal to buy the electronic health record and health-tech company athenahealth for $5.7 billion in cash, according to an announcement.

The private equity firms plan to merge athenahealth with Virence Health, which consists of value-based care properties that Veritas bought earlier this year. The resultant health IT company, still named athenahealth, is poised to help providers across the country navigate healthcare’s digital transformation from several angles.

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“After a thorough strategic review process, we have decided to enter this agreement with Veritas, which we believe maximizes value for our shareholders and accelerates our goal to transform healthcare,” athenahealth executive chairman Jeff Immelt said in a statement. “Combining with Virence will create new opportunities for collaboration and growth.”

Founded more than 20 years ago and based in Watertown, Massachusetts, athenahealth has risen to healthcare prominence, with a network of more than 120,000 hospital and ambulatory providers and roughly 117 million patients. The company develops and sells EHR, billing, patient engagement, population health and care management solutions and services.

The new athenahealth will go from being publicly traded to privately held. As such, investors will receive $135 per share, which is 12 percent above last Friday’s closing stock price. That figure is 27 percent higher than athenahealth’s closing stock price from mid-May, just before Elliott Management Corporation announced its purchase of a 9 percent stake in the company.

When the latest transaction closes, the combined company will comprise executives from each organization, headed by Bob Segert, Virence’s chair and CEO. Virence, meanwhile, will spin out its Workforce Management business to another Veritas company, which will run under API Healthcare.

“Virence and athenahealth have differentiated and complementary solutions, deep relationships with their respective customer bases and a shared culture of commitment to innovation,” Veritas Capital CEO and Managing Partner Ramzi Musallam said in a statement.

“We look forward to leveraging our expertise in the sector, as well as the capabilities and solutions across both companies to provide superior value to customers and create exciting growth opportunities for both sets of employees as Bob and the team build the future of healthcare IT.”

How this could affect providers who use athenahealth solutions is unclear. As Politico reported the other day, many of the company’s customers like athenahealth because of its dedicated support staff, which insiders have said could be threatened by private equity.

The deal is slated to close in the first quarter of 2019.

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