Allscripts Healthcare Solutions plans to sell its hospital and large physician practice business to N. Harris Computer, a subsidiary of Constellation Software, the companies announced Wednesday.
N. Harris Computer, which sells software to healthcare organizations, utility companies and public sector agencies, will pay $670 million for the assets. The price could rise by as much as $30 million depending how well the operations perform over the two years after the transaction closes. The parties expect the deal to be final next quarter.
Allscripts Healthcare Solutions plans to use proceeds from the sale on share repurchases and acquisitions to support its Veradigm payer and life sciences business.
"The medical industry we faithfully serve has gone through tremendous change and the needs of the customers in our different business segments continue to evolve in different ways," Allscripts Healthcare Solutions CEO Paul Black said in a news release. "We think this transaction maximizes focus as well as future opportunity for our clients, our more than 7,500 associates and our shareholders."
The deal includes Allscripts Healthcare Solutions' Sunrise, Paragon, TouchWorks and Opal electronic health record systems, STAR and HealthQuest revenue-cycle management systems, and dbMotion population health management services. The hospital and large physician practice portfolio will become part of N. Harris Computers' expanding digital health operation.
"We have been watching and admiring the hospitals and large physician practices franchise for many years," N. Harris Computer CEO Jeff Bender said in a news release. "We believe that we are the perfect forever home for the many talented employees and loyal customers that are the backbone of the franchise."
The sale will allow Allscripts Healthcare Solutions to focus on its Veradigm division, a business it launched in 2018 to sell data and analytics tools that link providers with payers and life sciences companies, according to a presentation the company shared with investors Thursday. Veradigm has been growing 6%-7% organically, while the hospital and large physician practices segment is expected to retract for the third consecutive year, according to the company.
Allscripts Healthcare Solutions recorded $1.5 billion in revenue in 2021, a 2% increase from the previous year, the company announced last week. The company's hospitals and large physician practice business generated $927.6 million in revenue last year, down 2.4% from 2020. In the fourth quarter, revenue reached $392 million for the whole company, a 1.4% increase, and $232.2 million for the hospital and large practice segment, a 2.3% decline.
Veradigm accounted for $552.2 million of the company's 2021 revenue, a 4.6% rise, and $155.2 million of fourth-quarter revenue, 8.9% more than the year-ago period.
Epic Systems is the leading hospital electronic health records vendor with 31% of the market, according to KLAS Research. The other largest players are Cerner (25%), Meditech (16%), Computer Programs and Systems, Inc. (9%) and Allscripts Healthcare Solutions (5%).
Allscripts Healthcare Solutions' deal with N. Harris Computer marks the third major recent acquisition in the EHR sector.
Private-equity firms Bain Capital and Hellman & Friedman closed a $17 billion acquisition of Athenahealth in February and Oracle announced plans in December to acquire Cerner for $28.3 billion. There were 255 mergers and acquisitions of digital health companies in 2021, up from 184 in 2020, according to Modern Healthcare's Digital Health Business & Technology.