Thoma Bravo swoops in to take NextGen Healthcare private for $1.8bn

Private-equity firm Thoma Bravo on Wednesday agreed to take healthcare software provider NextGen Healthcare private in a deal valued at $1.8bn, including debt.

Thoma Bravo agreed to pay $23.95 for each NextGen share, reflecting a nearly 46% premium since Reuters reported on Aug. 23 that the company was exploring options, including a potential sale. NextGen’s shares were up nearly 15% at $23.54 in afternoon trading.

The deal comes at a time when private equity sponsors are doubling down on bets in the business of healthcare technology, which has traditionally proved resilient in economic downturns.

In July, private equity firm TPG agreed to acquire healthcare information technology platform Nextech for $1.4bn.

Healthcare deals totaled $187.8bn globally during the first half of 2023, an increase of 43% from a year ago, according to Refinitiv.

In recent years, Thoma Bravo has invested in other healthcare software providers like Bluesight and Logex.

NextGen’s technology platform helps healthcare providers with operations ranging from digitalization of patients’ health records to the administration of finances. Roughly 90% of the company’s $653.2m revenue in fiscal year 2023 was recurring.

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NextGen shares were down 9% year-to-date prior to news of the company’s exploring a sale, as some of its clients trimmed spending on information technology and the company grappled with the fallout of a federal investigation. The share performance compared with a 32% rise in the Nasdaq Composite Index.

NextGen’s board of directors has approved the deal, which is expected to close in the fourth quarter.

NextGen tapped Morgan Stanley as its financial adviser, with Latham & Watkins LLP acting as the company’s legal adviser. Thoma Bravo was advised by William Blair & Company and Goodwin Procter LLP.

Source: Reuetrs

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