BIRMINGHAM, ENGLAND – MARCH 16: A nurse uses a wireless electronic tablet to order medicines from … [+]
NextGen Healthcare, Inc., a cloud-based healthcare technology solution provider, announced that it has entered into a definitive agreement to be acquired by private equity firm Thoma Bravo.
In the short term, the actions of Thoma Bravo will not impact NextGen’s customers. However, customers should closely monitor Thoma Bravo’s next moves as they focus on improving the product and make appropriate investments.
Definitive Healthcare’s report states that NextGen EMR holds a 4.8% market share and faces significant market pressure, especially as Epic enters the ambulatory space with its Garden Plot offering aimed at independent medical groups. Additionally, NextGen recently encountered a data breach and settled for $31 million for violating the False Claims Act, while the stock was down more than 79% this year.
NextGen’s President and CEO David Sides added, “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.”
Expanding Healthcare Customer Base
The acquisition of NextGen expands Thoma Bravo’s customer base for its healthcare IT portfolio companies.
Thoma Bravo offers solutions in medication management, cardiovascular imaging, healthcare analytics, and identity and access authentication, among others. Does Thoma Bravo plan to consolidate market power with this acquisition, or will it operate the acquired company as an independent entity? Only time will answer this question.
Securing NextGen’s Products Further
Thoma Bravo maintains a portfolio of strong cybersecurity companies. This situation presents an opportunity for NextGen developers to prioritize security in software re-engineering and to use solutions from the portfolio to enhance the product’s security even more. Especially after a major breach, hardening security will be instrumental in gaining back the customer’s confidence.
New Direction
A new owner could introduce a new strategic vision for the company, potentially focusing on increasing profitability, scaling the business, or preparing the company for a future sale. After all, PE firms are looking to generate a positive return on their investments.
Prospects and Partners
Healthcare organizations considering using NextGen’s products and services should monitor the acquisition closely and be prepared for any potential changes.
If your ambulatory practice is considering a potential affiliation or merger with a hospital system, joining a larger medical group that uses a different EMR, or operating in a region dominated by a particular EMR, you should actively re-evaluate to ensure easy data interoperability with your partners or nearby healthcare providers.
NextGen partner ecosystem developing healthcare technology solutions should also monitor any potential changes, while on the positive side, they can consider Thoma Bravo as a potential investor.
Looking Ahead
The next few months will be interesting as multiple law firms are investigating whether NextGen board members violated their fiduciary responsibilities in this transaction.
According to the proposed terms, NextGen shareholders will get $23.95 in cash for each share they own. Law firms aim to assess whether this payout and the process leading to it are adequate or if they undervalue the company.
NextGen plans to hold its user conference from November 29 to December 2 at the end of the year. The agenda features more than 125 breakout sessions, but the main topic capturing everyone’s attention will be the future of NextGen under Thoma Bravo.
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