Warburg snaps up Qualifacts in $300 mln-plus deal, following larger bet for WebPT

Warburg Pincus has surfaced as the winning bidder for Great Hill PartnersQualifacts in what represents the buyout firm’s fourth and latest bet in the universe of specialty electronic health records, Buyouts has learned.

On the heels of Warburg’s August investment in WebPT, the New York firm is buying Qualifacts, whose EHR software is tailored to providers of behavioral health and human services. The deal is valued between $300 million and $350 million, three people familiar with the matter said.

The investment marks the conclusion of an Aeris Partners-run auction sources characterized as hotly contested, encompassing both sponsors and strategic buyers.

Nashville’s Qualifacts, which received a majority investment from Boston’s Great Hill in July 2014, kicked of a sales process shortly after its smaller peer, Credible Behavioral Health, hit the auction block earlier this year, one of the people said.

Martis Capital earlier this month announced its minority recapitalization of Credible, providing an exit for Goldman Sachs Merchant Banking Division.

For Warburg, the deal follows its August agreement to purchase Battery Ventures’ majority interest in another specialty EHR company, WebPT.

While similar to Qualifacts, the clinical tools offered by Phoenix, Arizona’s WebPT are geared towards outpatient physical therapists, occupational therapists and speech-language pathologists.

Financial terms of the WebPT transaction weren’t disclosed, but the deal commanded a valuation of around $675 million, two people said. A third person placed WebPT’s revenue at approximately $100 million.

A formal sales process was not conducted for WebPT, however Battery engaged with a number of tech-oriented PE firms, ultimately bringing in Aeris Partners at the final stages of negotiations, two of the people said. Battery initially invested in WebPT in 2014.

Warburg is an experienced investor in specialty EHR, with its recent pair of investments joining existing portfolio companies Modernizing Medicine and Experity Health.

Despite their relevance, Warburg has no intentions of pursuing any sort of combination between any of the four specialty EHR investments, sources said.

Modernizing Medicine already serves a vast range of end markets, providing EHR, practice management and revenue-cycle-management services for specialties including dermatology, gastroenterology, ophthalmology, orthopedics, otolaryngology, pain management, plastic surgery, urology and ambulatory surgery centers.

Warburg in March 2017 struck a $231 million investment in Modernizing Medicine.

Experity Health, created in May through the merger of portfolio companies DocuTAP and Practice Velocity, provides technology to more than 4,000 primary care and urgent care clinics. Warburg’s investment in DocuTAP dates to May 2016.

Elsewhere, Warburg’s CityMD in June merged with multispecialty group Summit Medical Group, creating an integrated delivery of care network.

Great Hill, for its part, took a slight majority stake in Pareto Health earlier this month in a transaction valuing the manager of employee benefit group captives a total enterprise value north of $200 million, Buyouts reported.

Representatives of Warburg Pincus, Great Hill, Battery Ventures and WebPT declined to comment, while those with Qualifacts couldn’t immediately be reached.

Action Item: Check out Warburg’s latest Form ADV: https://www.adviserinfo.sec.gov/Firm/156945