Allscripts will sell the net assets of its hospital business segment for up to $700 million to Constellation Software’s subsidiary, N. Harris Computer Corporation, the companies announced Wednesday evening.
Harris will acquire a range of assets from the health IT company’s hospital and large physician practices segment, including Sunrise, Paragon, Touchworks, Opal, dbMotion, STAR and Healthquest solutions.
The deal does not include Veradigm, Allscripts’ data analytics unit, which houses the largest linked electronic health records claims patient database available for research.
The total $700 million cash transaction includes $670 million paid at the close of the deal and up to $30 million depending on the business’s performance in the following two years.
The deal is expected to close in the second quarter of 2022.
“The medical industry we faithfully serve has gone through tremendous change and the needs of the customers in our different business segments continue to evolve in different ways,” said Paul Black, Allscripts CEO, in a statement. “We think this transaction maximizes focus as well as future opportunity for our clients, our more than 7,500 associates and our shareholders.”
Allscript’s shares rose as much as 7% Thursday morning following the news.
In an investor presentation, Allscripts said its hospital business segment was expected to shrink in 2022 for the third year in a row, while its Veradigm business continues to grow.
Proceeds from the deal will be used to support strategic M&A for Veradigm as well as for continued share repurchases.
The company reported $1.5 billion in total revenue last year, on par with its 2020 revenue, and beat Wall Street’s projections on earnings at $1.43 per share, a 191% increase over 2020.
Following the announcement of the deal, the company revised its 2022 guidance to account only for its Veradigm segment, which it expects to grow year over year between 6% and 7%.
Allscripts also inked a deal with the Social Security Administration this week, which will allow the agency to request electronic health records through Veradigm’s medical chart retrieval solution.
The administration makes millions of requests each year for healthcare records to process disability applications.
Allscripts’ health IT solution will help minimize provider burden by reducing health record retrieval time from days or even weeks to minutes, according to the company.