Athenahealth, Inc., a Massachusetts-based medical records and network services company that has a campus in Belfast, is being acquired by two companies, Veritas Capital and Evergreen Coast Capital, for $5.7 billion in cash. The deal involves the companies to create an affiliate, which combines Athena with Virence Health, the GE healthcare assets that Veritas acquired earlier this year.
“The combined business is expected to be a leading, privately-held healthcare information technology company with an extensive national provider network of customers and world-class products and solutions to help them thrive in an increasingly complex environment,” according to a Nov. 12 Athena news release.
Under the terms of the agreement, athenahealth shareholders will receive $135 in cash per share. The per share purchase price represents a premium of approximately 12 percent over the company's closing stock price on November 9, 2018, the last trading day prior to today's announcement, and a premium of approximately 27 percent over the company's closing stock price on May 17, 2017, the day prior to Elliott Management Corporation's announcement that it had acquired an approximate 9 percent interest in the company.
Following the close of that transaction, the combined company is expected to operate under the athenahealth brand and be headquartered in Watertown, Massachusetts. The company will be led by Virence Chairman and Chief Executive Officer Bob Segert and an executive leadership team consisting of executives from both companies.
Following the completion of the transaction, Virence's Workforce Management business will become a separate Veritas portfolio company under the API Healthcare brand.
"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," said Jeff Immelt, Executive Chairman of athenahealth, in the release. "Combining with Virence will create new opportunities for collaboration and growth. Operating as a private company with Veritas's ownership and support will provide athenahealth with increased flexibility to achieve our purpose of unleashing our collective potential to transform healthcare."
"athenahealth is a market leader and a natural and strategic fit with Virence," said Ramzi Musallam, CEO and Managing Partner of Veritas Capital. "Virence and athenahealth have differentiated and complementary solutions, deep relationships with their respective customer bases and a shared culture of commitment to innovation. 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."
Veritas, a government and technology focused investor, acquired Verscend Technologies and invested in Truven Health Analytics. Veritas wants to get in on the digitizing of the healthcare system and supports focused R&D and product innovation.
"We are excited by the opportunity to partner with athenahealth, one of the largest and most connected provider networks in the nation, to drive outcomes that matter the most to our customers," said Bob Segert, Chairman and CEO of Virence. "athenahealth and Virence have complementary portfolios and highly-talented people, and this combination expands our depth and reach across the continuum of care. I'm looking forward to combining our mission-driven cultures to create an even stronger healthcare IT company."
Upon completion of the transaction, Elliott's private equity subsidiary, Evergreen Coast Capital, will retain a minority investment stake in the combined company.
Evergreen Managing Director Isaac Kim said, "We look forward to taking part in this unique opportunity. Under Bob's leadership and with Veritas' strategic oversight and strong track record of value creation, we believe the combined company will be a true leader in healthcare IT, ideally positioned to improve outcomes and reduce the cost of care."
Approvals and Timing
The transaction is expected to close in the first quarter of 2019, subject to the approval of the holders of a majority of athenahealth's outstanding shares and the satisfaction of customary closing conditions and regulatory approvals.
The athenahealth Board of Directors has unanimously approved the merger agreement and intends to recommend that athenahealth shareholders vote in favor of it at a Special Meeting of Stockholders, to be scheduled as soon as practicable.
The transaction is not subject to a financing condition.
Lazard and Centerview Partners are serving as financial advisors, and Weil, Gotshal & Manges LLP is serving as legal counsel to athenahealth.
Schulte, Roth & Zabel, LLP is acting as legal counsel to Veritas.
Deutsche Bank and RBC Capital Markets are acting as financial advisors to Evergreen, and Gibson, Dunn & Crutcher LLP is acting as legal advisor.
About athenahealth, Inc.
athenahealth partners with hospital and ambulatory customers and offers medical record, revenue cycle, patient engagement, care coordination, and population health services. It combines insights from our network of more than 120,000 providers and approximately 117 million patients with deep industry knowledge and perform administrative work at scale. For more information, visit athenahealth.com.
About Virence Health
Virence Health Technologies is a software provider that leverages technology and analytics to help healthcare providers across the continuum of care effectively manage their financial, clinical, and human capital workflows. Offering a comprehensive suite of innovative technology-enabled solutions, Virence aims to improve quality, increase efficiency, and reduce waste in the healthcare industry. Learn more at virencehealth.com.
About Veritas Capital
Veritas Capital is a private equity firm that invests in companies that provide products and services, primarily technology and technology-enabled solutions, to government and commercial customers worldwide, including those operating in the aerospace and defense, healthcare, technology, national security, communications, energy, government services and education industries. Veritas seeks to create value by strategically transforming the companies in which it invests through organic and inorganic means. For more information on Veritas Capital and its current and past investments, visit veritascapital.com.
About Elliott and Evergreen
Elliott Management Corporation manages two multi-strategy investment funds which combined have approximately $35 billion of assets under management. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds of its kind under continuous management. The Elliott funds' investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm. This investment is being led by Evergreen Coast Capital, Elliott's Menlo Park affiliate, which focuses on technology investing.