Allscripts to sell CarePort care coordination segment for $1.35B

Health information technology giant Allscripts has reached a definitive agreement to sell its CarePort Health patient care coordination business to WellSky, a healthcare software company, for $ 1.35 billion.

• Sales price is a multiple of more than 13 times CarePort sales of about $ 100 million and 21 times adjusted earnings before interest, taxes, depreciation, and amortization of about $ 60 million in the last 12 months – analysts point above the company’s Wall Street appraisal.

• The business is expected to close by the end of the year. Allscripts plans to use the proceeds from the transaction to invest in its product line, further lighten its balance sheet and support the share buyback. Shares of Allscripts were up about 50% on Tuesday on secondary market news.

Allscripts, like many other healthcare IT service providers, had a mixed 2020 year as headwinds hit hospital systems and other customers largely deterred them from investing in and using software services. The 34-year-old salesman hired a consulting firm in March to help make selling, general and administrative expenses more efficient after losing $ 182 million last year.

CarePort, which is part of Allscripts ‘data coordination, analytics, and support segment, accounts for approximately 6% of Allscripts’ sales. The segment operates a coordination software platform that helps hospitals and post-acute care providers switch patients across different care settings.

The deal’s $ 1.35 billion valuations represent a “significant premium over historic mergers and acquisitions alongside DSE,” SVB Leerink analyst Stephanie Davis wrote in a note Wednesday morning on the deal, noting that the multiples Average healthcare technology deal is five times higher. Sales.

“In our opinion, the transaction demonstrates MDRX’s ability to unlock shareholder value by monetizing its assets at a much higher multiple than an established company, suggesting additional benefit if MDRX continues to divide its IT focus areas largely. Value] can take advantage of it, Davis said.

Without CarePort, Allscripts data, analytics, and service coordination segment, which includes high-growth non-EHR resources, still has annual revenues of approximately $ 240 million. These include payer Allscripts and life sciences company Veradigm, 2bPrecise Personalized Medicine Arm, and Payerpath’s outpatient clearinghouse.

Allscripts is likely motivated to pursue more monetization opportunities in this segment, Davis said.

Analysts estimate that Allscripts will receive approximately $ 6 per share in after-tax income from the transaction, leaving approximately $ 980 million in cash for debt payments, share buybacks, and investments. The Chicago-based IT provider has total debt of approximately $ 1 billion and $ 40 million outstanding under its existing acquisition program.

In July, Allscripts also announced that it would sell EPSi to help with the hospital’s financial decisions for $ 365 million and use the proceeds to reduce debt.

WellSky, based in Kansas, is jointly owned by two major private equity firms, TPG Capital and Leonard Green & Partners. Upon completion, CarePort customers and nearly 200 employees will move to WellSky.