Private equity firm Thoma Bravo to acquire NextGen Healthcare

Sep. 6 (Reuters) – Private equity firm Thoma Bravo agreed on Wednesday to take healthcare software company NextGen Healthcare (NXGN.O) private in a deal worth $1.8 billion, including debt.

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

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

In July, private equity firm TPG (TPG.O) agreed to acquire healthcare IT platform Nextech for $1.4 billion.

Healthcare deals totaled $187.8 billion globally during the first half of 2023, up 43% from last year, according to Refinitiv.

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

NextGen’s technology platform assists healthcare providers with operations ranging from digitizing patient health records to managing finances. Nearly 90% of the company’s $653.2 million in revenue in fiscal 2023 was recurring.

Shares of NextGen are down 9% year-to-date ahead of news that the company is exploring a sale, as some of its customers slashed IT spending and the company faced the fallout from a federal investigation. The stock’s performance compares with the Nasdaq Composite Index’s 32% rise.

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

NextGen has appointed Morgan Stanley (MS.N) as its financial advisor, and Latham & Watkins LLP is acting as the company’s legal advisor. Thomas Bravo has been advised by William Blair & Company and Goodwin Procter LLP.

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