Business Essentials for Professionals


US Healthcare Firm Athenahealth To Be Acquired By Veritas Capital & Elliott For $5.5B

US Healthcare Firm Athenahealth To Be Acquired By Veritas Capital & Elliott For $5.5B
U.S. healthcare software maker Athenahealth Inc is to be acquired by a joint collaboration between the private equity company Veritas Capital and the hedge fund Elliott Management for a cash value of $5.5 billion, said media reports quoting people familiar with the developments.
The US firm Athenahealth offers services, through its cloud computing systems, to clients to help them track the revenues generated from patients, physicians and hospitals. The company has been put under pressure for getting itself sold by one of its bigger investors - Elliott, which owns a total of 9 per cent of the stakes of the company. The company was already in a program of a restructuring since earlier this year and has engaged in the process of cutting jobs and in an effort to shore up revenues has already hired former General Electric Co Chief Executive Jeff Immelt as the chairman of the company.
Sources said that the companies would soon make official the news of the deal which has put a value of Athenahealth at around $135 per share. The shares of the company ended trading on Friday at $120.35.
None of the media reports carried any comments from either of the three concerned companies - Athenahealth, Elliott and Veritas Capital.
This deal follows the exit for the company’s CEO Jonathan Bush in June this year. Athenahealth was founded in 1997 by Bush who is a nephew of former U.S. President George H.W. Bush. There were news reports earlier in the year about Bush allegedly assaulting his former wife 14 years ago and he had stepped down from the position following such news reports.
In May, an unsolicited bid for Athenahealth was made by Elliott first. The offer was for valuing Athenahealth at $160 per share. Reports said that the company has been  in talks since then with multiple private equity firms in its effort to acquire Athenahealth.
While it is coming for activist investors such as Carl Icahn to press for and acquire companies, the New York-based equity firm Elliott which owns and manages assets worth more than $35 billion, is amongst the very few investing firms that has set up a team that is dedicated to pursue acquisitions.
For Elliott’s private equity arm, the deal to acquire to Watertown, Massachusetts-based Athenahealth is its largest ever deal for the company till date. The private equity arm of Elliot is called Evergreen. It is based in Menlo Park, California, and it is spearheaded by partner Jesse Cohn.
Its revenue under its previous accounting standards was $331.4 million, according to the third-quarter results reported of Athenahealth published last Friday. That was a rise of about 9 per cent year-on-year. The company reported net income of $44.5 million, or $1.08 per diluted share during the quarter.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc