During its second-quarter earnings call on Aug. 2, Allscripts (Nasdaq: MDRX) announced it was selling its majority stake in Netsmart, a provider of health IT software and services to the behavioral health, social services and post-acute market.
In 2016 Allscripts acquired Kansas City-based Netsmart for $950 million in a joint venture with middle-market private equity firm GI Partners, with Allscripts controlling 51 percent of the company. Although it didn’t name the buyer, Allscripts said the sale is expected to close in the third quarter.
In a transcript of the earnings call published by Seeking Alpha, Rick Poulton, Allscripts’ president, began by describing some of the growth Netsmart has been seeing in the post-acute market. “Netsmart experienced continued strong new customer acquisitions, including more than 40 on its new cloud platform that I mentioned last quarter, called myUnity,” he said. “Overall growth at Netsmart continues to be driven by new client wins and expanding services to existing clients. Also in the quarter, Netsmart closed the acquisition of the home care and hospice solutions of Change Healthcare. This was a deal we had previewed for you last quarter.”
That acquisition cements Netsmart as a leading provider of solutions for the home care and hospice markets, he said, adding to the leadership position they have long held in behavioral health and human services. “So, seizing on the momentum we've created in Netsmart, during the quarter, we took further steps to position ourselves to unlock value for shareholders through monetizing our investment in Netsmart.
“After researching and discussing several possible alternatives, we began detailed negotiations with multiple parties on the sale of our interest,” Poulton said. “We have signed a letter of intent and buyer diligence currently continues. Based on the work accomplished to date, we expect to answer a definitive documentation on the sale during the third quarter.”