Is digital health giant Athenahealth heading for new ownership?

In 2018, the takeover of Athenahealth by Veritas Capital and Elliott Management for $5.5 billion was the biggest digital health transaction of the year, but it could be dwarfed by their exit deal.

It's being rumoured that two other private equity groups – Bain Capital and Hellman & Friedman LLC – are in the final stages of agreeing a $17 billion deal to take control of Athenahealth as part of an auction process, according to a report in the Wall Street Journal.

The company has been reported to be heading for either a sale or public listing for several weeks, with several buyers said to be interested in taking ownership.

Veritas and Elliott were reportedly seeking a deal worth around $20 billion, and the WSJ says that the current offer also includes the assumption of Athenahealth's debt, which has risen since the private equity groups took charge of the business.

Athenahealth provides cloud-based services for electronic health records, practice management and care coordination to healthcare organisations, as well as clinical decision support software for doctors under the epocrates brand.

If it goes through, the deal would be the latest in a series of deals in a rapidly consolidating digital health sector, and the largest since Teladoc and Livongo merged last year in an $18.5 billion deal.

It would also represent a stellar return for Veritas and Paul Singer-owned hedge fund Elliott, which took control of Athenahealth after a turbulent period for the company that culminated in the resignation of former chief executive Jonathan Bush, who counts two former US presidents among his relatives.

Bush was forced out after a protracted campaign by Elliott – which now has GlaxoSmithKline in its sights – before resurfacing as CEO of primary care provider start-up Firefly Health. He left amid allegations of sexual harassment and the release of a video with lewd comments made at a 2017 healthcare industry event.

Athenahealth has been expanded since Veritas and Elliott took over, merging in 2019 with former GE business Virence Health Technologies, which provides health IT software for billing and other applications.

The company is now led by Bob Segert, who was chairman and CEO at Virence before the merger.