Global Payments to Sell AdvancedMD for $1.13 Billion
Global Payments, a leading financial technology firm, has announced the sale of its medical software business, AdvancedMD, to investment firm Francisco Partners for $1.13 billion. This strategic move is part of the company’s efforts to streamline its operations and focus on core business activities.
Key Highlights
- Shares of Global Payments surged nearly 4% following the announcement of the sale.
- The company also revealed a $600 million accelerated stock buyback plan using a portion of the proceeds from the deal.
- Analysts at William Blair noted that this divestiture will help Global Payments sharpen its focus, reduce exposure to the challenging healthcare market, and generate capital for shareholder returns.
- Global Payments reported a 13% decrease in third-quarter profit due to higher costs.
- AdvancedMD, established in 1999, offers payment and software services to independent physicians and small-to-medium sized healthcare facilities in the U.S.
- Global Payments had acquired AdvancedMD in a $700 million deal back in 2018.
Industry Trends
As companies in the competitive payments industry seek sustainable growth opportunities, many are strategically divesting non-core assets to focus on high-potential areas.
Global Payments CEO, Cameron Bready, emphasized the importance of strategic focus, stating, “We recognize that global does not mean everywhere.”
Expert Insights
J.P.Morgan analyst Tien-tsin Huang commented, “We didn’t consider AdvancedMD a priority asset for Global Payments to sell as we thought stickiness and payment monetization made it worth keeping.”
Francisco Partners, the acquiring investment firm, has previously invested in healthcare analytics and medical services units from prominent companies like CVS Health, IBM, and Qualcomm.
Deal Closure
The AdvancedMD sale to Francisco Partners is expected to be finalized in the fourth quarter. Moelis & Co is serving as the financial adviser to Francisco, while Bank of America is advising Global Payments on this transaction.
In conclusion, this strategic divestiture by Global Payments marks a significant move in the ever-evolving payments industry landscape. By focusing on core operations and leveraging strategic partnerships, companies can drive sustainable growth and create value for their shareholders.