Private equity firm TA Associates is to invest, alongside GI Partners, in Netsmart Technologies (Netsmart) a healthcare software company delivering management process solutions and electronic medical records to the health and human services (HHS) and post-acute end markets.
TA Associates and GI Partners, a current shareholder in Netsmart, will acquire the stake in Netsmart held by Allscripts Healthcare Solutions, Inc. (NASDAQ: MDRX). The transaction is expected to close in the fourth quarter of 2018 and is subject to customary closing conditions. Financial terms of the transaction were not disclosed.
Founded in 1968, Netsmart provides software and services to the HHS and post-acute markets. The Company’s products, comprised primarily of electronic health records (EHRs) and related offerings, address the clinical, financial and administrative needs of its clients. The Netsmart suite includes care coordination, connectivity and integration, analytics, benchmarking, consumer engagement, mobility and telehealth offerings, among others. The largest provider of its kind in the United States, Netsmart serves more than 600,000 users from over 25,000 organisations across the country within four core areas: behavioural health, social services, care at home and senior living. The Company is headquartered in Overland Park, Kansas, with additional offices in Arkansas, California, Illinois, Missouri, New York, North Carolina and Ohio.
“We are excited to partner with the leading healthcare technology provider serving these growing and important end markets,” says Mark H Carter, a Managing Director at TA Associates who will join the Netsmart board of directors. “Netsmart’s compelling attributes include a high-quality business model, a large and diversified customer base and software solutions that we believe are mission critical. We welcome the opportunity to work with Netsmart CEO Mike Valentine, whom we have known for many years, and with the investment professionals at GI Partners.”
“Since our founding, Netsmart has sought partners who share our commitment to excellence and quality healthcare outcomes,” says Mike Valentine, CEO of Netsmart. “TA Associates brings decades of experience investing in the healthcare industry and supporting efficiency, quality care and cost containment. Along with the team at GI, I am delighted to welcome TA as an investor and look forward to a close collaboration in continuing the evolution of Netsmart.”
Netsmart estimates the addressable market for HHS, home health, and long-term care software and technology solutions at USD25 billion annually. According to the Company, the US market for its core product offering is approximately USD14.5 billion, with behavioural health comprising nearly half of that figure.
“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,” says Hythem T El-Nazer, a Managing Director at TA Associates who also will join the Netsmart board of directors. “In addition, as the HHS and post-acute industries continue to consolidate and expand, the need for technology solutions to coordinate care and drive efficiency will grow. As the leader addressing the unique and complex billing needs of customers spanning the continuum of care, we believe that Netsmart is very well positioned for continued growth.”
Kirkland & Ellis is providing legal counsel and Deloitte is serving as financial advisor to TA Associates.
