Francisco Partners has entered into a definitive agreement to buy QuadraMed (NASDAQ: QDHC) for $126 million. According to the agreement, Francisco is acquiring QuadraMed's outstanding Series A Cumulative Convertible Preferred stock for $13.7097 per share and its common stock for $8.50 per share, a premium of about 32.6%. There are no financing conditions, but Wells Fargo Foothill and Silicon Valley Bank have committed to provide debt for the buyout. QuadraMed develops information technologies and services for the healthcare industries.
Private equity firms have made 56 investments in Healthcare Technology Systems companies over the past three years, according to the PitchBook Platform. 2009 has been slow for this sub-sector of the healthcare industry, with only 12 completed deals as compared to 25 in 2008 and 19 in 2007. Interestingly, 47 of the 54 deals were buyouts, with 21 of them classified as add-on acquisitions. This high percentage of add-on deals is explained by a few PE firms like Parthenon Capital, Francisco Partners and Baird Capital Partners rolling up companies in areas of the industry like patient reporting software and medical billing.