Elliott Management and Veritas Capital acquire Athenahealth for $5.5 billion

Athenahealth’s subscription-based cloud service tracks the revenues of hospitals, physicians and patients.

According to sources familiar with the matter at hand, activist hedge fund Elliott Management and private equity firm Veritas Capital have agreed to acquire Athenahealth Inc, a U.S. healthcare software maker for $5.5 billion in cash.

Athenahealth’s cloud-based service is used to track the revenues from physicians, patients, and hospitals; the tech firm had come under pressure from Elliott to sell itself. In 2017, as part of a restructuring effort, Athenahealth had cut jobs and had hired Jeff Immelt as its Chief Executive.

The acquisition by Elliott and Veritas Capital values Athenahealth at around $135 per share, said sources on the condition of anonymity. On Friday, Athnahealth’s shares ended trading at $120.35.

Neither Athenahealth nor Elliott and Veritas Capital respond to requests for comments.

Earlier this year in May, Elliott had made an unsolicited bid for Athenahealth with $160 per share. Since then, it has been in talks with various private equity firms to try and buy the company, said sources.

The deal represents the largest ever to date for Menlo Park, California-based Evergreen, Elliott’s private equity arm which is spearheaded by Jesse Cohn.

In its third-quarter results, which it reported last Friday, Athenahealth stated an increase of 9% in its $331.4 million revenues under a previous accounting standards. Its net income over the three months ended September 30, 2018 was $44.5 million, equivalent to $1.08 per diluted share.

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