Veritas Capital agrees $17bn athenahealth exit

February 2022 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2022 Issue

Veritas Capital and Evergreen Coast Capital have agreed to exit athenahealth Inc, a provider of cloud-based enterprise software solutions, in a $17bn deal with affiliates of Bain Capital and Hellman & Friedman.

The deal is expected to be completed in the first quarter of 2022, subject to regulatory approvals and customary closing conditions.

According to a statement announcing the deal, Bob Segert, chairman and chief executive of athenahealth, will continue in his position with the present management team following the acquisition.

“Today marks a significant milestone for athenahealth and our partnership with Veritas Capital and Evergreen Coast Capital, and we are thrilled to work with Hellman & Friedman and Bain Capital to drive the next phase of our growth journey,” said Mr Segert. “Our employees, customers, and partners are the source of our success and inspiration as we create a thriving ecosystem that delivers accessible, high-quality, and sustainable healthcare for all.”

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 co-investors, including GIC, Singapore’s sovereign wealth fund, and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

“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, a partner at Hellman & Friedman.

“athenahealth’s technology leadership has differentiated the Company as a next generation cloud-based SaaS technology platform, facilitating innovation in a rapidly evolving and dynamic market,” added Sameer Narang, a partner at Hellman & Friedman.

“athenahealth is at the frontier of digital health in the United States, enhancing the clinical quality, operational efficiency, and delivery of preventive care to nearly 20 percent of the population today, unlocking the front door of the consumer healthcare journey and positioning the Company to support physicians in the continuing shift towards value-based care,” said Devin O’Reilly, a managing director at Bain Capital Private Equity.

“We are excited to leverage our extensive vertical software and healthcare experience to help Bob and the management team accelerate growth, develop new products, gain market share, and continue to innovate in a highly scalable and vitally important end market,” said David Humphrey, a managing director at Bain Capital Private Equity.

“Over the course of our successful partnership with Bob and the management team, athenahealth has driven tremendous growth and transformation, reinforcing its position as the premier healthcare IT company supporting the largest nationwide network of healthcare providers,” said Ramzi Musallam, chief executive and managing partner of Veritas Capital. “Following our take-private and combination with Virence in 2019, athenahealth delivered unrivaled value to its customers by significantly increasing R&D investment resulting in higher quality care, lower costs across the healthcare ecosystem, and overall improved patient outcomes.”

athenahealth, founded in 1997, has a presence across all 50 states in the US. The company uses software as a solution (SaaS) technology to offer customers access to the athenaOne cloud platform, with modules including patient engagement, revenue cycle, telehealth, payments, population health and value-based care management.

Veritas Capital and Evergreen Coast Capital took the company private for $5.7bn in 2019. athenahealth was founded by Jonathan Bush, nephew of former president George HW Bush, and specialises in digitising health records and in electronic claims and billing. Veritas and Evergreen Coast Capital received $4.9bn in debt financing from lenders, meaning the equity they put into the deal contributed a fragment of the overall purchase price.

The transaction will be financed with about $7bn of equity. Hellman & Friedman, which has a $24.4bn fund to invest, will take the largest portion of the equity, ahead of Bain Capital, though the two firms will have equal board representation.

Richard Summerfield