Furthering its reach into software services for card-accepting merchants, Global Payments Inc. announced Thursday that it has a deal to buy AdvancedMD Inc., a software-as-a-service provider for 33,000 doctors and 11,000 practices, from Marlin Equity Partners for $700 million in cash.
The announcement came as Atlanta-based Global Payments reported second-quarter net income of $109.1 million, a 63% increase from $66.9 million a year earlier. Adjusted revenues that include an accounting change rose 18% to $982.5 million from $832.7 million in 2017’s second quarter.
Global Payments expects the AdvancedMD deal to close in the fourth quarter. Los Angeles-based Marlin bought AdvancedMD in 2015. At the time, South Jordan, Utah-based AdvancedMD counted 17,500 practitioners and 500 medical-billing companies as customers.
Global Payments’s OpenEdge division, which is centered on integrated payments, already has card-acceptance contracts with providers representing about 20% of the $3 billion payments opportunity represented by the small and medium-sized practices that are AdvancedMD’s clients, chief executive Jeffrey S. Sloan said on an early-morning conference call with analysts. Global Payments expects “to be able to penetrate this base more rapidly going forward,” Sloan said, adding that “we see a large and growing payments opportunity that we are now better positioned to capture.”
The payments piece is mainly patient co-pays, but Global Payments president and chief operating officer David E. Mangum said on the call that the company sees long-term opportunities in other medical billing through AdvancedMD.
In addition to practice management, AdvancedMD’s cloud-based services include electronic records and “patient-engagement” services, Sloan said. The deal gives Global Payments a foothold in what the company calls a fragmented market of software providers serving small and medium-sized medical practices. Advanced MD is roughly twice the size of its nearest cloud-based competitor, according to Sloan.
“We’re buying the No. 1 competitor in the small and medium space by a long shot,” said Mangum. He dubbed AdvancedMD’s market as one “full of legacy traditional providers” and added, “fragmented is what we like.”
The acquisition of AdvancedMD will bring Global Payments’ software business to 15% of total company revenues, according to Sloan. In a similar deal last September, Global Payments bought two major units of the Active Network, a provider of management software for event sponsors, for $1.2 billion from Vista Equity Partners.
Meanwhile, Global Payments said adjusted second-quarter revenues in its three geographic segments all rose by double digits. In the U.S. and Canada, adjusted revenues, including network fees, increased 18% year over year to $718.6 million. Adjusted revenues increased 19% in Europe to $190.2 million and 14% in Asia-Pacific to $73.7 million.