Two major health information technology players will combine as physician software vendor Allscripts has announced a definitive agreement to purchase hospital vendor Eclipsys Corp. for $1.3 billion in stock.
The companies believe that combining will best position them to take advantage of increased buying of electronic health records systems spurred by the meaningful use incentive payments in the American Recovery and Reinvestment Act. The goal of the combination is to create a single platform of clinical, financial, connectivity and medical content information systems, enabling one company to deliver a single patient record to hospitals and physicians. "Our vision and the vision behind ARRA is to leverage information technology to create collaboration between providers in all care settings, helping to improve the quality and lower the cost of care," says Allscripts CEO Glen Tullman.
Under the agreement, shareholders of Atlanta-based Eclipsys will receive 1.2 shares of Chicago-based Allscripts' stock for each share of Eclipsys' stock owned, an increase of 19% over Eclipsys' June 8 closing price of $18.51. The total value of the deal is more than double Eclipsys' expected 2010 revenue of $559.27 million, based on consensus analyst expectations obtained by Thomson Reuters.
Allscripts' Tullman will served as CEO of the combined company. Phil Pead, president and CEO of Eclipsys, will serve as chairman. Pead will work full time on handling key client and strategic relationships, product and process integration, strategy, and international business. Allscripts CFO Bill Davis will have the same position in the combined company. Eclipsys CFO Chris Perkins will lead the integration of the companies. The balance of the executive team will include current officers of both companies. The new board initially will include a combination of directors from both companies.
The combined company will have more than 5,500 employees serving 180,000 physicians, 1,500 hospitals and nearly 10,000 nursing homes, hospices, home care agencies and other post-acute organizations, according to the vendors.
The acquisition is subject to the completion of a secondary offering of Allscripts shares owned by Misys plc. London-based Misys expects to reduce its equity stake in Allscripts from 55% to approximately 10% by selling about 36 million shares in a public offering, with Allscripts buying back another 24.4 million shares.
The companies have not yet decided on a name for the combined entity.
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