After more than four decades as a publicly traded health IT company, NextGen Healthcare will be taken private by Thoma Bravo in an acquisition valued at $1.8 billion, it was announced on Wednesday.

WHY IT MATTERS

NextGen, which had been in advanced talks with the private equity firm, had also attracted some interest from other suitors, according to Bloomberg earlier this week.

Jeffrey Margolis, chair of the NextGen Healthcare board of directors, confirmed in a statement Wednesday that the deal with Thoma Bravo "validates NextGen Healthcare’s substantial strength and follows interest in the company by many parties."

"With Thoma Bravo as a partner, the company will benefit from increased capital, expertise and strategic flexibility to accelerate the company’s leadership in providing healthcare technology solutions," added NextGen's President and CEO David Sides added, 

Peter Hernandez, vice president at Thoma Bravo, said the firm will "further accelerate product investments to better support the increasingly complex needs of ambulatory providers and ultimately improve patient outcomes." 

The transaction is expected to close in the fourth calendar quarter of 2023, subject to customary closing conditions, including approval by NextGen Healthcare shareholders and the receipt of required regulatory approvals. 

Shareholders are expected to receive $23.95 per share in cash – a 46.4% premium to the unaffected stock price.

THE LARGER TREND

NextGen has a long history in the healthcare IT industry. It was founded back in 1973 by Sheldon "Shelly" Razin as Quality Systems, Inc., which went public in 1982. NextGen became a subsidiary of QSI in 2001 after two decades of various acquisitions (with more acquisitions and partnerships following in the years after).

In 2021, Razin, who died earlier this year, nominated four new candidates to the company's board in an effort to improve the company's "years of poor performance" and "stagnation."

Shares had fallen to 18% that year – even as its ambulatory EHR and PM products continued to earn high marks from organization such as KLAS – so Razin, along with fellow director Lance Rosenzweig, wrote to stakeholders about the "imperial boardroom culture" presided over by Margolis.

This past July, NextGen paid $31 million in a settlement with the Department of Justice for alleged False Claims Act violations. The DOJ said the electronic health records vendor misrepresented "the capabilities of certain versions of its EHR software."

The company told Healthcare IT News that it denied "that any of its conduct violated the law," and that the settlement did not imply an admission of wrongdoing for "claims from more than a decade ago."

ON THE RECORD

“NextGen Healthcare’s mission-critical [EHR] software and surround solutions are the backbone of ambulatory practices across the United States," said A.J. Rohde, a senior partner at Thoma Bravo, said in a statement.

"We have followed NextGen Healthcare’s impressive business transformation for many years and are excited to apply Thoma Bravo’s strategic and operational expertise to drive continued growth and innovation," added Peter Hernandez.

Andrea Fox is senior editor of Healthcare IT News.
Email: afox@himss.org
Healthcare IT News is a HIMSS Media publication.