Warburg Pincus Working With Goldman Sachs on Potential Sale of Modernizing Medicine

Reporting: Armie Margaret Lee
Credit Research: Kyle Owusu

Warburg Pincus LLC is working with Goldman Sachs Group Inc. as it evaluates options for Modernizing Medicine Inc., including a potential sale of the healthcare technology company, according to industry sources.

Based in Boca Raton, Fla., Modernizing Medicine, or ModMed, provides medical practices with electronic medical record and practice management software and revenue cycle management services.

Reuters reported on Jan. 8 that Warburg has tapped a financial advisor to solicit interest in ModMed from potential acquirers, and a potential sale could value the company at north of $5 billion, including debt.

Warburg invested $231 million in ModMed in 2017. ModMed has completed acquisitions, including orthopedics electronic health records, or EHR, vendor Exscribe, the allergy testing and immunotherapy software of Xtract Solutions, and TRAKnet and other assets from podiatric EHR company NEMO Health.

ModMed and Warburg previously considered a partial stake sale in 2022, Axios reported.

Given the aging U.S. population’s contribution to patient admissions growth, the ongoing challenges health systems face due to an ever-changing regulatory environment, the subscription-based revenue model underlying most healthcare technology companies, high customer switching costs, and the ability potential to bring technology to bear to address tangible problems, it is unsurprising that electronic health records and revenue cycle management companies have received a lot of attention from private equity.

In 2019, Bon Secours Mercy Health sold 51% of equity in revenue cycle management company Ensemble Health to Golden Gate Capital, translating to an enterprise value of $1.8 billion, or 11.5x EBITDA. In 2022, Berkshire Partners and Warburg Pincus entered into an agreement to make an investment in Ensemble, valuing the company at about $5 billion, including debt, according to third-party news sources.

AthenaHealth was sold in February 2022 by Veritas Capital and Evergreen Coast Capital to Bain Capital and Hellman & Friedman, for $17 billion, or 16x LTM EBITDA.

R1 RCM was taken private in 2024, by Towerbrook and Clayton Dubilier & Rice, in a transaction valuing the company at $8.9 billion, or 14x LTM EBITDA; $3 billion of term loan debt, $1 billion senior secured note, and $5.2 billion of equity proceeds were raised to help fund the $6.6 billion cash purchase price and refinance $2.3 billion of existing debt.

Warburg Pincus and Goldman declined to comment for this story. A representative for Modernizing Medicine did not immediately respond to a request for comment.