Allscripts Sells $525M Netsmart Stake to Private Equity Firms


Allscripts believes selling their share will benefit their shareholders.

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Electronic health record (EHR) giant Allscripts announced this week it signed an agreement to sell its interests in Netsmart Technologies. Now, a document shows that Allscripts is making the deal with private equity groups.

TA Associates, a global growth private equity firm, and GI Partners, a current shareholder in Netsmart, will acquire the stake held by Allscripts. The sale is expected to yield approximately $525 million after tax, or $3 per fully diluted share.

Netsmart is a healthcare software company that delivers management process solutions and EHRs to the health and human services and post-acute markets. Netsmart’s products address clinical, financial and administrative needs.

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Allscripts held the largest ownership stake in Netsmart after the company spun its homecare business into Netsmart in 2016.

According to the release, Allscripts plans to use the proceeds to repay long-term debt, invest in other areas of its business and repurchase its common stock.

“We believe now is the right time to recognize the significant value we have created by monetizing our investment and improving our balance sheet,” Allscripts President Rick Poulton said in a statement.

The transaction will reduce Allscripts’ debt to approximately $500 million. The leverage is expected to allow the company to invest in its core and provide flexibility for additional capital returns to shareholders.

Despite having a new stakeholder, Netsmart estimates the market for health and human services, home health and long-term care software and technology solutions at $25 billion a year. And according to Netsmart, the U.S. market for their core product offering is approximately $14.5 billion.

“Increasingly complex clinical, billing and regulatory requirements, and the need to measure and report patient outcomes, are accelerating the adoption of Netsmart’s software solutions,” Hythem T. El-Nazer, managing director at TA Associates said in a statement.

The transaction is expected to close by the end of the year.

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