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In sign of strength for health tech industry, private equity firms acquire Athenahealth for $17b

Bain Capital and Hellman & Friedman will take control of the Watertown cloud healthcare technology company.

Inside the lobby of Athenahealth in Watertown.Erin Clark / Globe Staff

Athenahealth, the Watertown-based software firm that makes technology for health care providers, said Monday that it will be acquired for $17 billion by private equity firms Bain Capital and Hellman & Friedman, the latest signal that the health tech sector is booming as medical providers shift services online amid the pandemic.

The sale, which is expected to close by the first quarter of next year, is about triple the $5.7 billion that two private equity firms paid in 2019 to take the company private. Athenahealth’s software aims to improve communication between patients and doctors and streamlines billing and record-keeping.

Bob Segert, Athenahealth’s chief executive officer, said in an interview that the acquisition allows the company to “double down” on its mission to create high-quality, accessible health care products for its customers. Segert and his current management team are expected to stay on in their roles.


“It’s a real shot in the arm,” Segert said of the acquisition. “This is about growth. This is about extending our capabilities and creating more value in the [health care] ecosystem.”

The buyout solidifies Athenahealth as one of the most prominent health care tech companies in the region. The local cluster also includes firms like Devoted Health, the Waltham health insurance startup, which recently raised $1.2 billion in funding; PathAI, a Boston-based pathology tech startup that bought a network of labs in an eight-figure deal over the summer; and CarePort, a health software company that streamlines after-hospital stays and was acquired for $1.35 billion last year.

Athenahealth was founded in 1997 by Jonathan Bush, a nephew of former president George H.W. Bush, and Todd Park, who later served as chief technology officer of the United States. In its early years, the company focused on enabling doctors to schedule and bill more easily for their services. Later, it expanded into offering telehealth and other online services, including a drug information phone app called Epocrates. Along the way, Athenahealth raised $113 million in an initial public offering in 2007.


In 2017, activist investor Elliott Management Corp. purchased a 9.2 percent stake in the company. Shortly after, it made a $6.4 billion bid to acquire the company, which Bush resisted. In 2019, Veritas Capital and Evergreen Coast Capital — the private equity arm of Elliott — took the company private for $5.7 billion. The sale followed a bitter campaign focused on Bush, who stepped down from his role as CEO in 2018 following allegations from years-old court documents that he assaulted his former wife. Bush publicly apologized in 2018.

Veritas and Evergreen merged Athenahealth with Virence Health, a health IT business that was formerly part of GE Healthcare, in 2019. As part of that deal, Segert, who was chief executive of Virence, took over as CEO of Athenahealth. Now, the company has grown its health care platform to serve more than 140,000 ambulatory care providers throughout all 50 states and across more than 120 medical specialties, according to company officials. Athenahealth has about 6,300 employees, Segert said, and expects to hire more in the coming year.

Segert said the company will expand into chronic care management, use the data its platform provides to identify gaps in patient care, and work to make referrals easier for health care providers and insurers.


As part of the new deal, the current owners will retain a minority stake in the company, officials said. New investors, including GIC, Singapore’s sovereign wealth fund, and a subsidiary of the Abu Dhabi Investment Authority will come on board as well. Evercore and Goldman Sachs are serving as lead financial advisers on the acquisition.

Devin O’Reilly, managing director at Bain Capital who oversees its health care portfolio in the United States, said Bain executives have kept a close eye on Athenahealth for years and have long admired it. In fact, Bain considered teaming up with Evergreen Coast Capital to buy the health IT firm in 2018, he said, but the valuations in the bidding process were getting too high for Bain at the time.

O’Reilly said Athenahealth is much more valuable now for several reasons, including its focus on its core electronic medical records business, and the long-term trends in the health care industry that point toward the need for its software. He said it would be the largest health care company in Bain’s portfolio.

“They did a really good job focusing on that great core business,” O’Reilly said. “They’ve had a lot of success winning market share, and developing the product further … over the last several years.”

Michael Greeley, cofounder and general partner at investment firm Flare Capital Partners, said the pandemic played a crucial role in Athenahealth selling for three times what it went for two years ago.

“The health care system has had to go virtual, on-demand, [and] intelligent in the space of two years. The only way you can do that is through really cutting-edge technology,” he said. “Athenahealth sits right in the middle of that whole infrastructure to enable that.” (Greeley is not involved with the company.)


He added that it is likely this acquisition sets up Athenahealth for going public again in the future, with a valuation that could soar higher. “They’re investing, thinking they’re going to make two to three times their money,” he said of Bain Capital and Hellman & Friedman. “There’s conviction that there’s a $50 billion company here.”

Greeley said the acquisition shows Greater Boston’s strength in the health tech sector, which could have spillover effects on the region for years to come.

“It just solidifies Boston as a really important market for health care technology,” he said. “Once this company kind of gets sold or taken public ... the executives become angel investors, the mid-level managers become entrepreneurs. So there’s just a really nice regenerative effect of these kinds of success stories.”

Jon Chesto of the Globe staff contributed to this report.