Veritas, Elliott Consider $20 Billion-Plus Athenahealth Sale

(Bloomberg) -- Veritas Capital and Elliott Investment Management are exploring options for Athenahealth Inc. including a sale or initial public offering, according to people familiar with the matter. 

Veritas and Elliott are aiming for the health information technology company to be valued at more than $20 billion in a transaction, said the people, who asked to not be identified because the matter isn’t public. 

The firms are working with Goldman Sachs Group Inc. and Evercore Inc. to help explore options for the company, the people said. The bankers have reached out to about a half dozen potential buyers to gauge their interest, one of the people said.

The two firms hope to complete a deal by the end of the first quarter, one of the people said. A final decision hasn’t been made, though, and the Veritas and Elliott could decide to keep Athenahealth, the people said.

Representatives for Athenahealth, Veritas, Elliott and Goldman Sachs and Evercore declined to comment. 

Health-Care IT

A deal would come as multiples in health-care IT are booming. The coronavirus pandemic accelerated the need for health systems to adopt digital technologies to transform the way they care for patients, manage their businesses and analyze data. U.S. provider groups and hospitals are facing more pressure to watch their bottom lines after the coronavirus pandemic caused many potential patients to delay procedures, wiping out billions of dollars of revenue. That increased demand for services from companies like Athenahealth. 

At the same time, companies across sectors are rushing to complete deals as quickly as possible while debt is still cheap and accessible, bankers say. Federal Reserve Chair Jerome Powell said Wednesday the U.S. central bank could begin scaling back asset purchases in November after officials revealed a growing inclination to raise interest rates next year.

Veritas and Elliott agreed to buy Athenahealth for about $5.7 billion in 2018, after then-CEO Jonathan Bush, the cousin of George W. Bush, stepped down amid allegations of misconduct. Elliott, the activist fund run by billionaire Paul Singer, had built a stake and was agitating for a sale at the time, arguing the company was undervalued. After the deal closed, the company was combined with Virence Health, a health-care services company Veritas had acquired from General Electric Co.

Athenahealth helps doctors and hospitals collect money from health insurers and the government for services they provide. It processes $230 billion in bills a year, according to its website. It also has an electronic health records service that helps providers manage workflow and document patient visits, among other services.

Veritas is also considering an exit from another health technology portfolio company, Cotiviti, Bloomberg News reported in July. The firm hired advisers to help it explore an IPO of the health-care information and analytics company that could value it at more than $15 billion, the people said at the time. 

Health-care technology companies have announced at least $44 billion of deals so far this year, a more than three-fold increase compared to last year, according to data compiled by Bloomberg. That includes Nordic Capital and Insight Partners’ $6.4 billion purchase of Inovalon Holdings Inc., and UnitedHealth Group Inc.’s plan to purchase Change Healthcare Inc. for about $13 billion, including debt.

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