Veritas, Elliott Strike $5.7B Deal for Athenahealth, Will Combine With Ex-GE Assets

Xconomy Boston — 

[Updated 11/12/18, 10:31 am, with deal terms.] Athenahealth has reached an agreement to be bought for approximately $5.7 billion in cash by private equity firms Veritas Capital and Evergreen Coast Capital, an affiliate of activist hedge fund Elliott Management.

The acquisition was announced Monday morning. Reuters first reported the deal Sunday and said an official announcement was imminent. The agreement values the Watertown, MA-based healthcare IT company’s shares (NASDAQ: ATHN) at $135 apiece. Athenahealth’s shares ended Friday trading at $120.35. They were up more than 9 percent Monday morning, trading around $131.70 after news of the sale broke.

Athenahealth has been under constant pressure to boost profitability by Elliott Management after the fund bought a 9 percent stake in the company in 2017 and offered to buy it outright for $7 billion in May. That earlier cash deal valued Athenahealth shares at $160.

In June, the company announced its co-founder and chief executive Jonathan Bush would step down and that the company would explore “strategic alternatives,” including a sale. Former General Electric CEO Jeff Immelt, who was named Athenahealth chairman in February, has been helping to lead the company since Bush stepped down.

After the sale closes, Veritas and Evergreen plan to combine Athenahealth with Virence Health, the “value-based care” business that Veritas acquired from GE Healthcare for $1.05 billion earlier this year. The combined company will be led by Virence CEO Bob Segert, along with a management team of executives from both Virence and Athenahealth, according to the deal announcement. The combined business will be headquartered in Watertown and will operate under the name Athenahealth. [This paragraph added.—Eds.]

Athenahealth’s products include cloud-based electronic health records software, mobile apps, and patient engagement and care services for hospitals and outpatient care centers. The company generated $1.2 billion in revenue last year, up 13 percent from the previous year. (You can read more about Athenahealth from 2010, 2011, and 2017.)

Xconomy editor Jeff Engel contributed to this report.