Athenahealth and Virence Health to Merge in $5.7 Billion Deal to Form Leading Private Healthcare IT Company

Recently, VCBeat (WeChat Official Account: vcbeat) learned from foreign media reports that Veritas Capital and Evergreen Coast Capital announced on November 12 (local time) that they had reached a final agreement under which Virence Health, an affiliate of Veritas and Evergreen, would acquire Athenahealth for approximately $5.7 billion in cash. Under the terms of the agreement, shareholders of Athenahealth will receive $135 per share in cash, representing a premium of approximately 12% over the closing price on November 9, 2018.

Image from the Athenahealth official website

Virence Health, originally an asset under GE Healthcare’s Value-based Care division, was acquired by Veritas earlier this year. Following the completion of this acquisition, Athenahealth and Virence Health will merge into a single entity. The combined company is expected to become a leading private healthcare information technology firm, operating under the Athenahealth brand and led by an executive leadership team comprising Bob Segert, Chairman and CEO of Virence, along with senior executives from both companies.

Athenahealth Executive Chairman Jeff Immelt stated, “Following a thorough strategic review, we have decided to enter into this agreement with Veritas. We believe these agreements will create maximum value for shareholders and accelerate our mission to transform the healthcare industry.”

Ramzi Musallam, CEO and Managing Partner of Veritas Capital, stated, “Athenahealth is a market leader and strategic partner of Virence. Both companies possess differentiated and complementary solutions, maintain deep relationships with their respective customer bases, and share a strong commitment to innovation. We look forward to leveraging our expertise in this sector, along with the capabilities and solutions of both companies, to deliver exceptional service to our clients.”

Bob Segert, Chairman and CEO of Virence, stated, “Athenahealth and Virence have complementary portfolios and high-caliber talent. I look forward to combining our strengths to create a more powerful healthcare IT company.”

Athenahealth investor Elliott Management Corporation has expressed its support for the transaction. Upon completion of the deal, Elliott’s private equity subsidiary, Evergreen Coast Capital, will retain a minority stake in the merged company.

The transaction is expected to close in the first quarter of 2019, subject to approval by holders of a majority of Athenahealth’s outstanding shares and regulatory authorities, as well as the satisfaction of customary closing conditions. The Athenahealth Board of Directors has unanimously approved the merger agreement and recommends that Athenahealth shareholders vote in favor of the transaction at the special meeting of shareholders. Additionally, according to the transaction announcement, Athenahealth will no longer hold its previously scheduled conference call for the third-quarter 2018 financial results.

Veritas Capital, founded in 1992, is a leading private equity investment firm that primarily invests in companies providing critical products and services to government and commercial customers worldwide. Its investment sectors include aerospace and defense, healthcare, communications, energy, government services, and education. The company currently has a total value exceeding $8 billion and manages assets worth over $8.8 billion.

Virence Health, founded in 1996, is a leading software service provider dedicated to creating patient-centric solutions that empower healthcare professionals to leverage data and information to improve care outcomes, enhance the quality and efficiency of the healthcare industry, and reduce waste. Virence serves clients across China and excels in building strong customer partnerships.

Elliott Management Corporation, founded in 1977, manages approximately $35 billion in assets. Elliott primarily invests in companies within global public equity and fixed-income markets that are undergoing bankruptcy or restructuring, employing a conservative investment approach and utilizing various hedge fund strategies. Evergreen Coast Capital is an affiliate of Elliott’s Menlo Park office, focusing on technology investments.