New York private equity firm Warburg Pincus has acquired a majority stake in DocuTap, a health care technology company that provides software to more than 1,300 urgent-care and on-demand primary-care clinics. The price and other terms of the deal were not disclosed.
DocuTap, based in Sioux Falls, South Dakota, develops products for practice management and electronic medical records. The software is cloud-based and can be run on mobile devices, tablets and desktop computers.
The proliferation of mobile devices in health care has been a driving force for M&A in the sector. According to DocuTap, when CEO Eric McDonald started the company in 2000, he was already foreseeing a need for the use of mobile, hand-held devices in health care.
The Affordable Care Act has spurred medical professionals to adopt technology and software to manage finances and patient data more efficiently, and that growth in demand has increased the value of software developers focused on health care. One recent example of health care software middle-market M&A was in April, when Accruent—an Austin, Texas, commercial property management software provider—acquired Mainspring Healthcare Solutions in Waltham, Massachusetts, provider of software and technology to U.S. hospitals. In March, PE firm GI Partners partnered with Allscripts Healthcare Solutions Inc. (Nasdaq: MDRX) to buy health care software provider Netsmart Technologies Inc., a health care software developer, from Genstar Capital for $950 million. And in September 2015, Thoma Bravo private equity firm invested in MedeAnalytics Inc., provider of cloud-based financial analytics for health care organizations.
McDonald, the DocuTap CEO, says that Warburg Pincus will help the software developer expand its product line. DocuTap has more than 250 employees, and the firm has added 350 clients in the last year.
Warburg Pincus, based in New York, has more than $40 billion under management, and since its start in 1966 it has invested more than $9 billion in healthcare companies and $18 billion in technology and media companies.