By Niket Nishant
(Reuters) -Global Payments will sell its medical software business AdvancedMD to investment firm Francisco Partners for $1.13 billion, the companies said on Wednesday, as the financial technology company slims down to focus on its core businesses.
Shares rose nearly 4% as the company also unveiled a $600 million accelerated share buyback plan using some of the deal proceeds.
“This attitude sharpens focus, reduces exposure to the challenging healthcare market and generates capital that can be returned to shareholders through buybacks,” William Blair analysts said.
The divestiture follows a trend as some companies in the intensely competitive payments industry focus on areas with the greatest growth potential rather than pursuing expansion at all costs.
“We recognize that global does not mean everywhere” Global payments (NYSE:) CEO Cameron Bready said last month.
In addition, the company reported a nearly 13% decline in third-quarter profit due to higher costs.
Founded in 1999, AdvancedMD provides payment and other software services to independent physicians and small to medium-sized healthcare organizations in the US.
Global Payments had acquired AdvancedMD in 2018 in a $700 million deal.
“We did not consider AdvancedMD a priority for Global Payments to sell because we thought its tenacity and payments monetization made it worth keeping,” said JPMorgan analyst Tien-tsin Huang.
Francisco was an investor in AdvancedMD years ago.
The investment firm has acquired healthcare analytics and medical services units from CVS Health (NYSE:), IBM (NYSE:) and Qualcomm (NASDAQ:) in recent years.
The deal with AdvancedMD is expected to close in the fourth quarter. Moelis (NYSE:) & Co is Francisco’s financial advisor, while Bank of America advised Global Payments.
