What happened
NextGen Healthcare (NXGN +0.00%) will soon cease to exist as a publicly traded stock, and the market said farewell by bidding up its price. The company is going private at a handsome premium, hence the increase. As of early Friday morning, week to date NextGen's soon-to-vanish shares were up 22% in value, per data compiled by S&P Global Market Intelligence.
So what
NextGen, which as its name implies concentrates on current healthcare tech services such as cloud-based record keeping, is being bought out. The buyer is private equity firm Thoma Bravo, which is paying $23.95 per share for its asset-to-be in a deal valued at $1.6 billion. Following the buyout, NextGeneration's stock will cease to be traded on the exchange.
Rather quickly after that announcement, NextGen's share price rose sharply to nearly the price Thoma Bravo agreed to pay in the buyout.
Although NextGen recently reached a $31 million settlement over some of its business practices, several key fundamentals have been growing. In its latest reported quarter, the specialty healthcare services provider delivered double-digit revenue and net income growth on a year-over-year basis.
Following news of the deal, several analysts tracking NextGen reassessed their takes on the stock. RBC Capital's Sean Dodge was one of the pundits raising his price target; he lifted it to $23.95 per share, matching the buyout price. Previously, he had estimated its fair value at $17.
Meanwhile, several changed their recommendation on the shares to neutral, as the healthcare company's current share price isn't likely to move much. Among these modifiers were Cantor Fitzgerald's Sarah James and Guggenheim's Jack Wallace, both of whom shifted their assessments down from the equivalent of buy to neutral.
NASDAQ: NXGN
Key Data Points
Now what
In the press release announcing the buyout, NextGen said it has been approved unanimously by its board of directors. The deal is anticipated to close at some point in the fourth calendar quarter of this year, the company added.
CLARIFICATION: Edited to add information about NextGen's recent settlement.
