Healthcare software vendor NextGen explores sale, sources say

Nextgen Healthcare

23/08/2023 19:30

(Adds share reaction in paragraph 3)
    By David  Carnevali
       NEW YORK, Aug 23 (Reuters) - NextGen Healthcare
 NXGN.O , a provider of software that helps manage patients'
records, is exploring options that include a sale of the
company, according to people familiar with the matter.
    The U.S. company, which does not maintain headquarters as
many of its employees work remotely, has hired investment bank
Morgan Stanley  MS.N  to advise it on its discussions with
potential buyers, the sources said.
    There is no certainty that NextGen will reach a deal to sell
itself, the sources added, asking not to be identified because
the matter is confidential.
    NextGen and Morgan Stanley did not immediately respond to
requests for comment. NextGen shares rose 10% to $18.01 on the
news in afternoon trading in New York on Wednesday, giving the
company a market value of about $1.2 billion.
        Dealmaking in the healthcare sector has picked up as
companies push to gain scale and cut costs, and private equity
firms bet on an industry that has traditionally proved resilient
in economic downturns, which some on Wall Street worry is
looming.
    Healthcare deals totaled $187.8 billion globally during the
first half of 2023, an increase of 43% from a year ago,
according to Refinitiv.
    Last month, private equity firm TPG  TPG.N  agreed to
acquire healthcare information technology platform Nextech from
Thomas H. Lee Partners for $1.4 billion. Reuters reported on
Monday that Waystar, one of NextGen's private equity-owned
rivals, is preparing an initial public offering at a valuation
of as much as $8 billion. 
    NextGen's technology platform helps healthcare providers
with operations ranging from digitalization of patients' health
records to the administration of finances. Roughly 90% of the
company's $653.2 million revenue in fiscal year 2023 was
recurring.
    NextGen shares were down 9% year-to-date prior to news of
the company exploring a sale, deeply underperforming a 32% rise
in the Nasdaq Composite Index, as some of its clients trim
spending on information technology and the company grapples with
the fallout of a federal investigation.
    The company agreed to pay $31 million last month to settle
claims by U.S. prosecutors that it misrepresented the
capabilities of its software and paid users kickbacks to get
them to recommend it. 

 (Reporting by David Carnevali in New York; Editing by Bill
Berkrot and Jonathan Oatis)
 ((David.Carnevali@thomsonreuters.com;))