Clearlake Acquires Majority Stake in Healthtech Firm for $5.3 Bn

Clearlake Capital has finalized its acquisition of a majority stake in ModMed, a prominent healthcare SaaS provider, in a transaction that values the company at approximately $5.3 billion, including debt. This strategic investment aims to accelerate ModMed's growth and innovation in AI-driven medical practice technologies.

Founded in 2010 and headquartered in Boca Raton, Florida, ModMed specializes in specialty-specific electronic health records (EHRs) and integrated software solutions designed to enhance clinical and operational efficiency. The company's platform serves over 40,000 providers across various medical specialties, offering tools for practice management, revenue cycle management, patient engagement, and payment processing.

The partnership with Clearlake Capital is expected to bolster ModMed's expansion efforts and further develop its AI capabilities. Clearlake plans to leverage its O.P.S.® (Operational Performance System) framework to support ModMed's mission of transforming the patient-provider experience through innovative technology.

Co-founders Dan Cane and Dr. Michael Sherling, along with Co-CEO Joe Harpaz, will continue to lead the company, maintaining a minority stake post-acquisition. Their ongoing leadership is anticipated to ensure continuity in ModMed's strategic direction and commitment to delivering impactful healthcare solutions.

This acquisition underscores the growing interest in healthcare IT investments, particularly in platforms that offer specialized, AI-enabled solutions to improve healthcare delivery and operational efficiency.

Estimating the Stake and Deal Structure

While the exact percentage of equity acquired by Clearlake Capital was not disclosed, the deal is characterized as a majority investment, with ModMed valued at approximately $5.3 billion including debt. In the private equity world, a "majority stake" typically denotes ownership exceeding 50%, but for deals where operational control and strategic influence are central—like this one—it often means acquiring 65% to 75% of the equity.

ModMed’s co-founders, Dan Cane and Dr. Michael Sherling, along with Co-CEO Joe Harpaz, are reported to retain a “significant minority stake”, a phrase that usually corresponds to 20% to 30% equity. This structure suggests that Clearlake Capital likely acquired around 70% of the company, consistent with common practices in growth-stage SaaS and healthcare technology transactions.

Revenue and EBITDA: ModMed’s 2024 revenue is “north of $500 million,” with adjusted EBITDA positivity for ten years and estimated EBITDA of $100-$150 million (20-30% margin, based on industry norms).

Debt: The $5.3 billion valuation includes debt, estimated at $500 million to $1.5 billion (10-30% of enterprise value, typical for SaaS companies).

Debt Portion: Assuming ModMed had $1 billion in pre-existing debt, with additional debt potentially added by Clearlake to finance the deal.

Price for 70% Stake: around 70% of $4.3 billion = around $3.01 billion