Monday, February 23, 2009

AMICAS To Buy Emageon!


Wonders in the PACS business never cease. I've been reporting on the merger/acquisition debacle concerning Emageon and HSS, which was scuttled by the imminent demise of Stanford Financial. But like the Phoenix, coincidentally, the code-name for AMICAS' revolutionary Version 6 software, Emageon will rise from the ashes to be purchased by...AMICAS!

I just received an e-mail from Dr. Stephen Kahane, President of AMICAS (I'm sure I wasn't the only recipient) which included the following paragraphs:

Emageon is an organization with a mission and goals that are very similar to AMICAS'. While AMICAS and Emageon have approached the market with different strategies, we believe that our strategies and our businesses are highly complementary.

Together, we believe that AMICAS and Emageon will be the undisputed independent leader in image and information management with over 1,000 customers. As one organization, we'll bring together the best employees, customers, and solutions in image and information management - including radiology PACS, radiology information systems, cardiology PACS, cardiovascular information systems, referring physician tools, business intelligence tools, enterprise content management systems, and revenue cycle management systems.

From the Frequently Asked Questions:
    • Our combined business will have over 1,000 customers!
    • Our combined business will span the entire continuum of imaging customers – from large radiology practices, like Radiology Limited (Tucson, AZ), all the way to prestigious institutions such as The Johns Hopkins Hospital (Baltimore, MD).
    • Our combined business will have a comprehensive portfolio of image and information management solutions for both radiology and cardiology.
And:

We‘ll move quickly to bring Emageon and AMICAS together. There won’t be an "Emageon" division of AMICAS. There will be ONE AMICAS: one team, one plan, one mission. This acquisition is a fairly significant acquisition for a business of our size, so it will take time and a lot of hard work. We expect the integration to be substantially complete in the weeks following the closing and fully complete within 180 days.
What about product overlap?


There is remarkably little product overlap between the companies. The core products at AMICAS include radiology PACS, radiology information systems, revenue cycle management solutions, referring physician solutions, and business intelligence solutions. The core products at Emageon include radiology PACS, cardiology PACS, cardiovascular information systems, and enterprise content management systems. The only product overlap is with radiology PACS – the other solutions are already highly complementary to one another.

The radiology PACS solutions from both AMICAS and Emageon will continue to be sold, deployed, supported, and maintained – both solutions are robust offerings with very happy customers!

Given the slaughter of Emageon's stock price, it was a bargain waiting to be plucked, and AMICAS apparently had the cash on hand to take advantage.

Here's my personal assessment, neither reviewed or endorsed by AMICAS: This move bought AMICAS a significant increase in its customer base. That alone was probably worth the expenditure. AMICAS now (finally) will own its own cardiac package. You might recall that Emageon bought Camtronics, and their cardiac software and EMR, in November, 2005, for $40.4 million.

As for PACS, I would expect AMICAS to support the Emageon product as they promised, but. . . I haven't played with Emageon PACS in quite a while. The last I heard about it was from Dr. Elliot Fishman during a Johns Hopkins lecture in 2007. He wasn't terribly complementary, saying that it choked if they tried to load anything larger than a 100-slice CT, forcing him to use the Siemens InSpace/Leonardo station. Now, Elliot loves InSpace, so maybe there was a little hyperbole involved. Still, I think we can probably label Emageon PACS as "End of Life". Knowing the principals (and the principles) of AMICAS, I expect them to keep Emageon PACS sites up and running for several years, as they have promised. Ultimately, I would expect those sites to be moved to AMICAS PACS (Version 6), although I have no idea how much they will or won't charge for this privilege. Again, this is only my personal speculation, with absolutely no confirmation from AMICAS whatsoever.

I have heard that the Emageon "back end" may have some advantages, although I don't know much about that at this time.

To me, the most important thing to come out of this deal is an unsaid message. Amicas loses deals here and there because they are "too small" or "likely to be taken over". With the Emageon purchase, they have made a loud statement: They are solvent, they are stable, and they are the big company buying the smaller one, the pursuer and not the prey, so to speak. At worst, they got Camtronics for less than what Emageon paid for it in 2005, and they significantly increased their customer base.

I can promise, though, that some folks made some money today. Emageon stock (EMAG) went from $0.80 to $1.68 at 1:10 PM today, right around the time of the press release. I wasn't one of them, by the way. The stated purchase price is $1.82 per share, for a total of about $39 million. I wonder if AMICAS could have negotiated it down a bit further.

Any chance of AMICAS headquarters moving down to Birmingham? The weather is so much better there than in Boston. . .

6 comments :

Anonymous said...

It's truly amazing that this might merger might happen....two organizations with marginal technology trying to survive....and they think they can play with the "BIG BOYS"....and worse yet they don't even acknowledge thier real competition....the smaller more technically advanced vendors out there....who would be "stupid" enough to invest in this company...I'm sure there is someone out there looking to lose money....

Anonymous said...

I wouldn't say "marginal technology" is an adequate assessment. Both have a few gems in their arsenal and a few duds.
Who are these alleged smaller more technically advanced vendors out there? With a combined Amicas / Emageon company and 1000 customers that means a very nice flow of recurring revenue as long as their is no attrition. I guess we'll have to see how this plays out.

Anonymous said...

Agreed, who are these smaller more technically advanced companies? On another note, what will the poor "Big Boys" do now that there isnt really anyone left to buy? Philips ate Stentor, GE ate Dynamic Imaging, McKesson ate ALI. Gee without all these "little guys" there wouldnt be much of a PACS market at all would there?

Anonymous said...

I should have more closely paid attention to their finances before I bought my PACS...
Emageon
Income Statement Q3 (Sep '08) Annual
(2007) Annual
(2006)
Total Revenue 15.95 104.62 123.50
Gross Profit 6.86 48.26 55.84
Operating Income -6.18 -7.89 -6.36
Net Income -6.06 -7.08 -6.03
Cash Flow
Net Income/Starting Line -36.46 -7.08 -6.03

Q3 (Sep '08) Annual
(2007) Annual
(TTM)
Net profit margin -38.01% -6.77% -45.12%
Operating margin -38.74% -7.55% -45.79%
EBITD margin - 1.01% -37.41%
Return on average assets -39.77% -6.67% -47.58%
Return on average equity -77.84% -11.12% -82.26%
Amicas
Income Statement Q4 (Dec '08) Annual
(2008) Annual
(2007)
Total Revenue 11.69 50.35 49.89
Gross Profit 6.13 25.67 26.93
Operating Income -29.10 -32.10 -4.52
Net Income -28.70 -30.07 -0.86

Cash Flow
Net Income/Starting Line -30.07 -30.07 -0.86
Q4 (Dec '08) Annual
(2008) Annual
(TTM)
Net profit margin -245.45% -59.72% -59.72%
Operating margin -248.86% -63.75% -63.75%
EBITD margin - -57.22% -57.22%
Return on average assets -126.59% -29.26% -29.26%
Return on average equity -165.57% -36.77% -36.77%

Dalai said...

I thank GE for the above analysis. By the way, how is GE stock doing these days? I own some, you know.

douglas said...

Sorry that this comment does not address the Amicas buyout of Emageon; I am looking for other users of the NEW AMICAS Version 6 to discuss their experience so far.

We LOVED our old 'AMICAS BLUE' , which we had for past 3 yrs. (old version with the Carolina Blue log in page). The older version was simple, stable, fast...worked great for us at small community Hospital

WE just upgraded to the BRAND NEW 'AMICAS 6' a few wks ago(the NEW 'AMICAS the GREY' version has a dark grey log-in screen )
...I hate it so far
..WHAT A RESOURCE HOG!

Although there are some improved & added fxn; much of the additions just clutter & crowd your worklist page, & slow your computer & network down.. In my opinion to this point they mucked it up with a lot of excess crap (..that previously showed up just fine with a right click).

No longer is it lite, clean simple, & fast for those most important fxns. Now i freq encounter that annoying micro second delay for many commands ; & several things that still just dont work quite right. Very frustrating so far. Hope it will get better - We are having to add RAM to all our computers & wkstations , ...which all previously worked great with the old AMICAS

Disappointed so far 2 weeks into it..will keep you posted

ANYBODY ELSE USING AMICAS 6
What is your experience?