It’s a done deal. Private equity firms Veritas Capital and Evergreen Capital have finally achieved their fait accompli with athenahealth’s acquisition. The Massachusetts-based company is to be merged with Veritas-owned Virence Health but will continue to operate under the athenahealth banner.
Athenahealth has seen significant changes over the last two years, including Elliott Management’s May 2017 ten percent investment in the company and the subsequent step-down of CFO Karl Stubelis in July 2017 and CEO Jonathan Bush in July 2018 as part of a corporate restructuring.
The company had been struggling financially over the past few years, including a reported net loss of $1.4 million in the Q1 2017 and a $100 million in cutbacks to counteract the costs. In a 2017 investor call, CEO Bush said that that Trump’s election victory had created uncertainty in healthcare and a consequent decline in sales.
Veritas has been sweeping up health IT companies since 2017, including their acquisitions of GE’s Healthcare Value-Based Care division and Cotiviti last year. Their partnership with Elliott Management’s subsidiary Evergreen to acquire athenahealth represents the latest in a long line of purchases that are putting Veritas on top.
“The combination of athenahealth and Virence brings together two innovative companies with complementary expertise and a shared focus and passion for improving healthcare outcomes. With a network of over 160,000 providers, the combined company is positioned for future growth and new market opportunities and has the necessary scale to make a transformational impact in the healthcare industry,” said Ramzi Musallem, CEO and Managing Partner of Veritas Capital.
Veritas Capital was founded in 1992 by Robert McKeon and Thomas Campbell who successfully raised their first fund in 1998. The company invests exclusively in government-supported or government-related sectors, such as aerospace and defense, communications, education, energy, healthcare, government services, national security and technology. Since the company’s establishment, they have completed over 90 acquisitions and raised in excess of $7 billion.
Bronx-born Robert McKeon was raised in a working-class family and said he learned all he needed to know about company take-overs from his dad. His father, who was a delivery driver for Drakes Cakes, went through the anxiety-provoking experience of having his employer change hands three times in as many years in the late 1980’s.
Known as a “corporate cleaner”, McKeon made a practice of purchasing troubled companies, taking them off the stock market and turning them around by making tough cutbacks. After McKeon’s death in 2012, senior partner Ramzi Musallam took over as CEO of Veritas. A large part of the company’s current business remains focused on searching out companies that are foundering financially and streamlining them into successful ventures.