Allscripts to net $525M after selling off Netsmart stake

Allscripts said it will make $525 million in post-tax net proceeds after selling off its ownership stake in a behavioral health EHR.

The EHR vendor announced on Monday that it signed a definitive agreement to sell its interests in Netsmart Technologies, a company that it invested $52.7 million into in 2016. According to Netsmart, the stake was purchased by two private equity firms, TA Associates and GI Partners. 

According to the company’s most recent financial filings, it owns a $468 million stake in Netsmart. During a third-quarter earnings call, executives said the company was finalizing late-stage negotiations with “a group of financial sponsors."

“Netsmart provides the scale and the depth and breadth of solutions required to navigate the significant opportunities in the post-acute care market, and we are thrilled with how the business has performed over the last two years,” Allscripts President Rick Poulton said in a statement. “We believe now is the right time to recognize the significant value we have created by monetizing our investment and improving our balance sheet.”

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CEO Paul Black said the investment “quickly generated significant value” and the transaction will be “beneficial for our shareholders, our clients and our organization.”

The company said it expects to close the sale by the end of the year. It plans to use the proceeds to repay debt, invest in other areas of growth and repurchase stock. Allscripts total debt will be reduced to approximately $500 million after the transaction closes, according to the company.

Allscripts has been planning to sell off its stake since the summer, when executives first mentioned they were exploring a sale. The company’s ownership stake was set up in a joint venture with GI Netsmart Holdings, a complex arrangement that made a transaction difficult.

Editor's Note: This story has been updated to include additional information about the purchasing parties.