Allscripts Healthcare (MDRX) Stock Rockets On Asset Sale

Allscripts Healthcare MDRX Stock News

Allscripts Healthcare Solutions Inc (NASDAQ: MDRX) is running for the top in the market this morning, and for good reason. The company announced that it is healling a subsidiary. Here’s what’s going on:

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MDRX Stock Heads Up On Subsidiary Sale

In the press release, Allscripts said that it has entered into a definitive agreement to sell its CarePort Health business. The business will be sold by a global health and community care technology company known as WellSky. In the release, the company explained that WellSky is jointly owned by two of the world’s largest private equity firms, TPG Capital and Leonard Green & Partners.

CarePort solutions are designed to coordinate and transition patients from different settings of care and has been picked up by hundreds of hospitals and thousands of post-acute care providers.

In the release, MDRX said that it agreed to sell the CarePort business for $1.35 billion. At that rate, WellSky is paying 13 times CarePort’s revenue over the past 12 months and about 21 times CarePort’s non-GAAP Adjusted EBITDA over the past 12 months.

In the release, the company said that it expects for the transaction will close before the end of the year. As is always the case in these types of transactions, closing is dependent on regulatory clearances and the satisfaction of closing conditions.

Finally, the company said that it plans on using the net proceeds from the sale to invest in its solutions, further deleverage the company’s balance sheet and support significant share purchases.

In a statement, Rick Poulton, President and CFO at MDRX, had the following to offer:

WellSky is a great company that will provide both an ideal and permanent home for CarePort and its almost 200 team members. This agreement is another all-around win for Allscripts as it unlocks significant value for our shareholders, enables us to increase our focus on our core business and brings our CarePort customers the benefit of continued investment under new and very strong ownership.

The above statement was followed up by BIll Miller, CEO at WellSky. Here’s what he had to say:

Together with CarePort, WellSky will establish new, meaningful connections between historically disparate settings of care. We have the exciting opportunity to bring care coordination to more providers in service of delivering more informed, personalized care. Through this agreement, we’re ensuring our clients have the intelligent technology they need to do right by their patients, collaborate with payers, and succeed in value-based care models. It’s WellSky’s mission to realize care’s potential, and this moves us that much closer to achieving it.

This Is Big News

The news released by Allscripts was overwhelmingly positive. Think about it, we’re thinking about a company that trades with a market cap of about $1.35 billion. That really puts the sheer scale of this deal into perspective. WellSky has agreed to pay $1.35 billion to acquire CarePort, just about equal to yesterday’s closing market cap for the whole company. But CarePort only generates about 6% of revenue.

This goes to validate the work the company is doing and the view of many investors that MDRX stock is heavily undervalued.

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