Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Takeover Alert for the Healthcare IT Space -- Allscripts Healthcare Solutions

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

On a quiet Columbus Day, on Bloomberg it was announced that Allscripts Healthcare Solutions (Nasdaq: MDRX  ) , the electronic health-records company received first-round bids from private-equity firms including Blackstone Group, Carlyle Group, and Silver Lake Management LLC. The company, looking to be taken private after a board shakeup, and a legal fight with its second-biggest shareholder this year, wants second-round offers within the next three to four weeks. The company was not available for comment.

HealthCor Management LP, which held 7.4% of the common stock outstanding as of June 30, sued Allscripts in May after the board shakeup. New York-based HealthCor dropped the lawsuit a month later when Allscripts agreed to nominate three independent directors to the board.

Another notable event that might have been a catalyst for this possible takeout is that Allscripts lost a bid for a $302 million contract to supply its technology to New York city's public hospitals on September 27th.

Also, to be noted, MDRX is the worst performer of 33 companies in the S&P Midcap Healthcare Index in 2012, falling 30%. In terms of valuation, the stock is trading at $13.9 versus its 52-week range of $8.84-$21.66, and at a trailing-12-month EV/EBITDA multiple of 10 times. Although we don't have more details on the possible takeover bid, the best comparison for this takeover would be the Emdeon deal in 2011, which occurred at 11 times trailing EBITDA, which implies a $15-$16 buyout for Allscripts. Emdeon was acquired by Blackstone in August 2011 for $3 billion, including debt.

The top holders of Allscripts stock include Manning Napier Advisors (9.35%), HealthCor Management (7.5%), BlackRock (6.7%), and Wellington Management (6.15%).

Given where Allscripts is trading versus its best takeout peer Emdeon, there seems to be no reason to run after this stock. That being said, we can take a look at candidates in the space depicted by Kapitall's Compar-O-Matic below:


Click here or visit Kapitall to access free, interactive tools to analyze these ideas.

Written by Kapitall's Sabina Bhatia.

The Motley Fool owns shares of Citigroup. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2050352, ~/Articles/ArticleHandler.aspx, 10/22/2016 1:36:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
MDRX $12.48 Down -0.36 -2.77%
Allscripts CAPS Rating: ***