Surescripts Acquisition: Key Details, Impact, and What Comes Next

TPG's acquisition of a majority stake in Surescripts marks a significant development in the healthcare technology sector. This strategic move aims to enhance Surescripts' capabilities in e-prescribing and health information exchange, addressing critical healthcare challenges. The partnership is expected to drive innovation, improve patient safety, and reduce costs, benefiting the broader healthcare ecosystem.

What Is Surescripts?

Founded in 2001, Surescripts offers a range of services including intelligent prescribing, prior authorization, and benefit & price intelligence. The company stands out for its nationwide interoperability, high data quality, and comprehensive patient intelligence. Surescripts collaborates with healthcare professionals and organizations across the U.S., ensuring industry-leading reliability, security, and scalability. Its solutions are designed to improve patient safety, reduce costs, and enhance the quality of care through robust data and insights.

Who Acquired Surescripts?

TPG is a prominent global alternative asset manager, known for its innovative approach and diversified investment strategies. The company manages $246 billion in assets, offering services in private equity, impact investing, credit, real estate, and market solutions. Operating through six platforms, TPG has a significant market presence with 29 offices worldwide and over 1900 employees. Its deep sector knowledge and experience in building successful businesses underscore its influential role in the industry.

When Was Surescripts Acquired?

TPG acquired Surescripts on October 2, 2024. This acquisition occurred during a period of heightened focus on healthcare technology investments, as private equity firms increasingly shift away from direct care delivery due to regulatory uncertainties. The timing also follows Surescripts' settlement with the Federal Trade Commission over monopolization allegations, positioning the company to leverage new investments for scaling its solutions in Intelligent Prescribing, Benefits and Authorizations, and Clinical Interoperability.

Why Was Surescripts Acquired?

• Market Expansion: TPG’s investment will allow Surescripts to develop an array of solutions addressing healthcare’s biggest challenges. This investment will accelerate Surescripts’ ability to scale existing Intelligent Prescribing, Benefits and Authorizations, and Clinical Interoperability solutions. Additionally, Surescripts plans to use the deal to invest in new products and markets while scaling its existing portfolio.
• Technology Integration: The partnership will enable Surescripts to advance new innovative technologies that will continue to enhance patient safety, lower costs, and ensure quality care. This includes scaling existing solutions and developing new technologies to streamline the benefits process, reduce clinician burnout, and support the evolving role of pharmacists. Surescripts also aims to invest further in artificial intelligence and machine learning technologies, exploring generative AI while being cautious about its current limitations.
• Competitive Advantage: Surescripts' competitive advantage lies in its extensive reach in the e-prescribing market, connecting 2.14 million healthcare professionals and conducting 23.8 billion network transactions in 2023. The company's technology replaces time-consuming faxes and phone calls with electronic access to information, covering 99% of the U.S. population. The high EBITDA multiple paid by TPG (28x) underscores the perceived value and competitive advantage that Surescripts holds in its market.

Acquisition Terms

• Acquisition Price: $1.8 billion
• Payment Method: The payment method was not publicly disclosed.
• Key Conditions or Agreements:
  • TPG will join the Surescripts ownership group as a majority investor.
  • The transaction is subject to customary regulatory approvals.
  • Existing shareholders, including CVS Health, Cigna-owned Express Scripts, and two pharmacist trade groups, will retain a minority interest.
  • The deal follows a settlement with the Federal Trade Commission over monopolization allegations, prohibiting certain exclusionary conduct.
  • TripleTree served as the exclusive financial advisor to Surescripts, while JPMorgan, Deutsche Bank, and Evercore served as financial advisors to TPG.
  • Legal counsel for the transaction included Cleary Gottlieb Steen & Hamilton for Surescripts and Kirkland & Ellis LLP for TPG.

Impact on Surescripts

The acquisition by TPG is set to bring notable changes to Surescripts' operations and management. TPG's majority stake introduces new members to the Board of Directors, including key figures from TPG and existing stakeholders like The Cigna Group and Walmart. This shift aims to leverage TPG's expertise to scale Surescripts' existing solutions and develop new technologies. The strategic partnership is expected to streamline operations, enhance decision-making processes, and foster innovation in areas such as Intelligent Prescribing, Benefits and Authorizations, and Clinical Interoperability.

On the product front, the investment will accelerate the development and scaling of Surescripts' offerings, focusing on reducing clinician burnout, improving preauthorization processes, and supporting pharmacists' evolving roles. Employee reactions have been generally positive, with leadership expressing optimism about the partnership's potential to enhance patient care and healthcare efficiency. Customers are likely to benefit from more efficient and comprehensive services, aligning with Surescripts' mission to improve healthcare quality and reduce costs. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.