Private equity firms Hellman & Friedman, Bain Capital to buy Athenahealth in $17B deal

Athenahealth building 2
(Athenahealth)

Two private equity firms plan to shell out $17 billion for Athenahealth, marking the second time in less than three years the health tech company has changed ownership.

Bain Capital and Hellman & Friedman will pick up the cloud-based electronic medical record (EHR) company from current private equity owners Veritas Capital and Evergreen Coast Capital. Its purchase, announced on Monday, is expected to close in the first quarter of 2022. 

A potential deal for the health tech company was first reported Friday by the Wall Street Journal, citing people with knowledge of the matter. 

Bloomberg reported in September that Veritas Capital and Elliott Investment Management were exploring options for the health tech company including a sale or an initial public offering.

Athenahealth partners with more than 140,000 ambulatory care providers, throughout all 50 states and across more than 120 specialties, according to the company.

RELATED: Veritas Capital closes acquisition of Athenahealth, says combined company will have 'transformational impact'

“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 in a statement. 

David Humphrey, a managing director at Bain Capital Private Equity, said the private equity firm plans to leverage its extensive vertical software and healthcare experience to help Athenahealth accelerate growth, develop new products, gain market share, and "continue to innovate in a highly scalable and vitally important end market."

The Watertown, Massachusetts-based company, which provides EHR and practice management software, went private back in February 2019 after Veritas Capital and Evergreen Coast Capital, a subsidiary of Elliott Management, acquired the company for $5.7 billion. As part of that deal, Athenahealth was combined with Virence Health, the former GE Healthcare value-based care asset Veritas acquired in 2018.

Paul Singer-owned activist hedge fund Elliott began publicly pressuring the company in May 2018 to consider a takeover offer valued at $160 a share, or about $7 billion, arguing the company was undervalued.

That kicked off a tumultuous several months in which founder and longtime CEO Jonathan Bush was forced to resign, and the company began considering outside offers under the direction of chairman and former GE CEO Jeff Immelt. UnitedHealth and Cerner were reportedly among those that submitted initial bids. At one point, healthcare payments company nThrive was supposed to swoop in as the company's white knight.

RELATED: Athenahealth owners Veritas Capital, Elliott Management exploring sale or IPO: report

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), according to a press release.

Athenahealth's sale comes as investment and merger and acquisition activity in the health tech sector are booming and multiples are ballooning.

Notable transactions include the anticipated merger of health data company Datavant and health IT firm Ciox Health for an estimated $7 billion along with Accolade's acquisition of PlushCare, a virtual primary care and mental health treatment company, for $400 million.

Other major deals to track include Nordic Capital and Insight Partners’ $6.4 billion purchase of Inovalon Holdings Inc. and UnitedHealth Group's plan to purchase Change Healthcare for about $13 billion.

Hellman & Friedman has offices in San Francisco, New York and London and has more than $80 billion in assets under management and committed capital.

Bain, which is based in Boston, manages about $150 billion in assets across private equity credit, public equity, venture capital and real estate.