athenahealth is expanding its stronghold in the physician market with the acquisition of Epocrates, a San Mateo, Calif.-based provider of point-of-care medical apps for physicians.
The acquisition will accelerate the Watertown, Mass.-based company's vision to build the nation’s health information backbone, company executives say.
More than 330,000 physicians use Epocrates, according to company officials.
“I have been an admirer of Epocrates since it first emerged and have watched the company grow consistently, one app download at a time, as it has cemented itself into the consciousness of America’s physicians,” said Jonathan Bush, president, chairman, and CEO of athenahealth.
“No other company has been able to replicate the brand awareness, familiarity and trust that Epocrates has across the clinical mobile user base,” he added.
The boards of directors of athenahealth and Epocrates have agreed to a price of $11.75 per share, in cash, for a purchase price of about $293 million. That represents a 22 percent premium over the closing price per share of Epocrates on NASDAQ on Jan. 4. The all-cash offer is for all outstanding shares of Epocrates’ common stock.
athenahealth intends to finance the acquisition using available cash and funds available from its existing credit facility, Bush said.
The closing of the transaction is subject to the approval of Epocrates shareholders and other customary closing conditions. The closing is expected to occur early in the second quarter of 2013. Epocrates shareholders representing approximately 17.5 percent of the outstanding common stock have agreed to vote their shares in favor of the transaction.
Bush said athenahealth will build on Epocrates’ success in transforming how physicians access and engage with clinical information, with each other and with their patients.
“We are confident that we can provide Epocrates with the stewardship and resources it needs to grow and develop within healthcare, and that Epocrates' capabilities are going to mesh exceptionally well with athenahealth’s cloud-based physician and patient services,” he added.
In a Dec. 17 blog post, Zacks Equity Research highlighted athenahealth’s "unique business model," noting that it makes the company a strong provider of RCM services (athenaCollector) designed for physician practices. Its EHR product (athenaClinicals) is a key player in ambulatory settings, it noted, adding, "We believe that sales of athenaClinicals are likely to remain robust. In addition, the company will harness its newer products, namely athenaCommunicator and athenaCoordinator."
The deal gives Epocrates access to an EHR platform. Earlier this year, the company abandoned its two-year-old plan to roll out its own EHR, with officials saying they couldn't sustain both an EHR business and its core reference tools business without sustaining some loss in quality.
"The foundational strength of Epocrates is our physician network," said Peter Brandt, Epocrates' interim president and chief executive officer, in a Feb. 28 press release announcing the company’s fourth quarter and full year 2011 results. "We believe the opportunities to build upon that strength and expand beyond our current product portfolio throughout our physician network are significant and have the potential to generate meaningful revenue streams for the company.”
athenahealth executives say the Epocrates acquisition would help athenahealth realize its vision in a number of ways:
- Better information access for health organizations. By combining Epocrates’ mobile expertise with knowledge and data from athenahealth’s cloud-based network, officials said, the combined company will be positioned to introduce new mobile applications that deliver high-value information to the clinical community when, where and how they want it.
- Advanced mobile workflows. The combined company will seek to pioneer new mobile workflows to improve provider efficiency and support care delivery outcomes, officials said. Initial efforts will focus on care coordination, provider-to-provider communication and patient engagement tools.
- Accelerated awareness and growth across the physician market. Officials said athenahealth will expand its current provider base of 38,000 to include the more than 1 million healthcare professionals on the Epocrates network, allowing the company to build upon the highly favored Epocrates brand, recognized today by approximately 90 percent of practicing U.S. physicians.
“Epocrates and athenahealth are two strong and progressive brands dedicated to helping clinicians deliver high quality care more efficiently through continued innovation and a keen understanding of physicians’ workflows,” said Andrew Hurd, president, CEO, and interim CFO of Epocrates. “By combining the companies’ unique expertise in mobile and cloud-based services, we are setting out to dramatically improve the accessibility of information and redefine the dynamics within healthcare.”
