Francisco Partners’ NexTech weighs a sale

  • NexTech software specializes in dermatology, plastic surgery and ophthalmology
  • Francisco invested in Tampa company in October 2013
  • Company hopes to fetch Net Health-like multiple

Francisco Partners is exploring the sale of NexTech, a specialty-specific provider of electronic medical record software, according to four people familiar with the matter.

The auction is being conducted by Aeris Partners, the people said. The process is in its initial stages, one of the people said, while another said indications of interest were submitted earlier this month.

Francisco Partners’ investment in NexTech dates to October 2013. The San Francisco firm invested in the company through its third fund, which collected $2 billion in February 2011.

NexTech, of Tampa, Florida, provides EMR, practice management, revenue cycle management and patient engagement tools, serving the ophthalmology, plastic surgery and dermatology specialties.

NexTech posts Ebitda in the low-$20 million range on revenue in the mid-$60 million range, one of the people said.

The sellers hope to produce a deal valued off of an upper-teens multiple of Ebitda, similar to that which another asset in the space, Net Health, commanded in its recent sale, sources said.

Spectrum Equity in January concluded its Aeris-run sales process for Net Health via a sale to Carlyle Group. The latter purchased the software provider through its U.S. Equity Opportunity Fund. Net Health concentrates on the urgent care, wound care, employee health, occupational medicine and physical therapy markets.

K1’s July 2017 sale of chiropractic-focused EMR provider, ChiroTouch, to Chicago’s Waud Capital Partners, went for a comparable multiple, one of the sources said.

The outcome of the NexTech process ought to be a good testament of private equity’s appetite of the market, another source said. While its plastic surgery-related offerings serve as a big margin contributor, the end market is less recession proof as opposed to other specialties like cardiology, for example, the source said.

Other sponsors that have made notable plays in the specialty EMR segment include Warburg Pincus, which in May 2017 injected $231 million in Modernizing Medicine. The Boca Raton, Florida, company serves a broad range of specialties, including dermatology, gastroenterology, ophthalmology, orthopedics, ambulatory surgery centers, pain management, among other verticals.

Ezra Perlman and Leonid Rozkin of Francisco Partners serve as associated investment team members.

The technology-based firm has a flexible approach, with investments ranging in value from $20 million to $2 billion-plus, its website states. The firm closed its fifth fund in November at about $3.9 billion.

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