Atlanta-based Global Payments has agreed to a $1.13 billion sale of AdvancedMD to a California investment firm.
The deal, announced Wednesday, calls for Francisco Partners Management to take control of the Utah-based subsidiary, which Global Payments purchased six years ago for $700 million.
AdvancedMD, founded in 1999, offers doctors, medical practices and billing companies software aimed at making operations and administration more efficient.
The sale of the company will be finalized by the end of this year, subject to regulatory approval, officials said.
Global Payments also announced this week a $600 million stock buyback plan, partly funded by the proceeds from selling AdvancedMD.
Analysts generally praised the sale as a step toward honing the focus of Global Payments, although they said any bump to profitability may not come until late next year.
“This disposition sharpens focus, reduces exposure to the challenging health care market and generates capital that can be returned to shareholders through buybacks,” analysts at William Blair told Reuters.
However, as Global Payments loses roughly one-fifth of its software sales, the bottom-line payback won’t happen right away “due to the current lack of growth catalysts,” said analyst Caydee Blankenship at CFRA.
AdvancedMD is forecast to end this year with sales of $250 million to $260 million, according to Global Payments.
Blankenship said she expects earnings per share at Global Payments this year will come in at around $11.60, about a nickel lower than her previous estimate. She continues to predict earnings per share next year of $12.87.
Global Payment stock was trading at just over $105 a share in early afternoon, up more than $2 since the market’s morning opening. Global Payment stock hit a 52-week high of nearly $104 in February. Over the summer it fell to a 52-week low just over $92 a share.
Last year, Global Payments had revenue of $9.65 billion and earnings per share of $10.42.
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