EHR vendor Allscripts has signed an agreement to sell its interests in Netsmart Technologies, a health IT company focused on behavioral health and social services, to private equity firms GI Partners and TA Associates.
The transaction is expected to close this month.
Allscripts expects to gain $525 million in net after-tax proceeds from the deal. It will use the money to pay off debt, invest in other areas of its business and repurchase stock. After the transaction closes, Allscripts said its outstanding net debt will decrease to about $500 million.
Based in Overland Park, Kansas, Netsmart offers EHRs and IT solutions to the behavioral health, care at home, senior living and social services sectors. The company is far from being a brand new organization; it was founded in 1968.
In 2016, Allscripts and GI Partners acquired stakes in Netsmart as part of a $950 million sale. With this latest deal, GI Partners becomes the majority owner of Netsmart.
“We continue to strongly believe Netsmart represents an attractive business that aligns with our focus on healthcare, IT infrastructure and software,” GI Partners managing director Howard Park said in a statement. “We are excited to work with the company and TA to focus on the next phase of growth for the business.”
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
As for Netsmart, its current CEO Mike Valentine will continue in his existing capacity. In a statement, he commented: “With this new investor group, we will continue to operate independently and be backed by investors that have tremendous access to capital to support our growth needs into this next decade.”
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