Imprivata, a publicly owned vendor of user and patient authentication, enterprise single sign-on and secure messaging software for the healthcare industry, is becoming a privately held company, with investment firm Thoma Bravo buying the company for about $554 million.

That’s a hefty multiple for a company that in the first quarter of 2016 had revenue of $31.5 million and a net loss of $6.7 million; overall, Thoma Bravo is paying nearly four times projected annual revenue for Imprivata.

The company’s technology specifically helps healthcare providers protect patient information and comply with regulations, entered the public markets only two years ago, with an initial public offering price for its stock of $15 a share. The stock was selling for $14.50 a share before the sale was announced, which will offer shareholders $19.25 a share in cash.

The acquisition is a strategic opportunity for the investment firm, says John Osberg, a merger and acquisition specialist at the consulting firm Informed Partners.

John Osberg
John Osberg

Imprivata, Osberg notes, is a best-of-breed company with products that help hospitals migrate from systems that require clinicians and employees to use pagers or cellphones for communication. Cell phone use within hospital walls is often restricted because of concerns over security and medical device interference, but employees still use their phones. Pagers are inefficient devices that alerts users to events, but only if users have their pagers with them. Neither phones nor pagers integrate into a coherent workflow for staff.

It takes a long time for healthcare organizations to change, Osberg says, but they are changing now to adopt better and more secure communication tools. “Imprivata has a lot of intellectual property and interfaces with many IT vendors. That’s worth a lot of money.”

Other reasons the purchase makes sense include the presence of a seasoned management team and good growth prospects, he adds. “It would appear there is a solid pipeline of new growth and products that would enable Thoma Bravo to value the company at that premium.”

That Imprivata is losing money should not be a concern, Osberg says, because he believes management has been investing in the company. Further, when the acquisition is complete, as a privately held company, Imprivata won’t be bound by the regulatory burdens that public companies face, and that will save it money, Osberg notes. “It will be a leaner, more efficient company.”

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