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In the briefest of news releases, Chicago-based Allscripts notified investors that it has sold its remaining share in Netsmart.

On December 31, 2018, after a nearly six-month search for an investor, Allscripts (NASDAQ: MDRX) closed the previously announced sale of its interests in Netsmart Technologies, Inc.

In March 2016, Allscripts contributed its homecare business to Netsmart, in exchange for the largest ownership stake in the company which has now become the largest technology company exclusively dedicated to behavioral health, human services and post-acute care. It is expected that this sale transaction will yield Allscripts net after-tax proceeds of approximately $525 million or approximately $3 per fully diluted share.


"Netsmart provides the scale and the depth and breadth of solutions required to navigate the significant opportunities in the post-acute care market, and we are thrilled with how the business has performed over the last two years," said Rick Poulton, Allscripts President. "We believe now is the right time to recognize the significant value we have created by monetizing our investment and improving our balance sheet."

Allscripts plans to use the net after-tax proceeds to repay long-term debt, invest in other growing areas of its business, and to opportunistically repurchase its outstanding common stock. Upon closing, total outstanding net debt would be reduced to approximately $500 million. The improved leverage profile is expected to enable the company to continue investing in its core and surrounding solutions while also providing flexibility for additional capital returns to shareholders.

"Allscripts' investment in Netsmart helped create a critical solution for caregivers to achieve the value-based care goal of health communities and populations," said Paul M. Black, Allscripts CEO. "Through our ownership position we quickly generated significant value, and this transaction will be beneficial for our shareholders, our clients and our organization."

Allscripts was advised on the transaction by J.P. Morgan Securities LLC and Evercore.

Additional details relating to the transaction described in this press release will be provided in a filing with the Securities and Exchange Commission on Form 8-K.

Editor's note: For the history of the Allscripts/Netsmart relationship, see these articles from our archives. Allscripts Reinvests in Home Care (3/30/2016). Netsmart and Allscripts, "A Great Marriage" (3/30/2016). Allscripts May Sell Stake in Netsmart (8/15/2018). Serious history buffs may want to recall how Allscripts, a physician practice software company, first entered the home health sector:
Misys Merges with Allscripts (3/22/2008).

About Allscripts
Allscripts (NASDAQ: MDRX) is a leader in healthcare information technology solutions for physician practices and hospitals.


©2018 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Tim Rowan's Home Care Technology Report. One copy may be printed for personal use; further reproduction by permission only.