Big news from the world of advancing health technology today, as athenahealth, the 15-year-old electronic health records giant, announced that it has acquired Epocrates, maker of popular mobile health apps for physicians. The deal is worth $293 million, and athenahealth has agreed to fork over $11.75 per share in cash — about 15 percent of the company’s current share price.
It’s a significant deal for athenahealth both in that this represents its first acquisition and that the price represents about 10 percent of its current $2.83 billion market cap. For Epocrates, also a public company, the deal is a good one, as the purchase price represents a 22 percent premium over its closing price on Friday, which was about $9.65. The all-cash acquisition is for all outstanding shares of Epocrates’ common stock (which was trading on NASDAQ) and is expected to close in the second quarter. Shareholders must approve the deal, however, and at present only 17.5 percent of the outstanding common stock have approved the deal.
That likely has something to do with investigations being launched by Los Angeles law firm Glancy Binkow & Goldberg into concerns over a potential breach of fiduciary responsibility by Epocrates. The firm is alleging, simply put, that Epocrates did not “adequately shop” the company around before agreeing to sell to athenahealth, given its recent growth, as some analysts had projected the company’s stock would reach $15 per share this quarter.
Athenahealth is best known as a provider of digital business services for practices, particularly practice management and electronic health record (EHR) software, as well as back-office service operations and patient communication solutions.
The company saw $324 million in 2011 revenues and now has over 2,200 emploees. With its acquisition of Epocrates, athenahealth wants to expand its physician support to mobile, as the company’s apps are used by more than 330K physicians.
Epocrates, on the other hand, offers Yelp-like services for physicians and, by offering a host of mobile apps (and services) for physicians might be seen as something like Rovio (and Angry Birds) for the mobile health world. The company’s “Rx” iPhone app is free for all to use, and offers drug reference with brand, generic and OTC medicines, interaction check and pill ID, etc.
It also makes a far pricier (and robust) all-in-one clinical reference suite, which provides doctors with drug and disease monographs and diagnostic info, among other things. On top of that, Epocrates offers a host of apps — anatomy atlases, cardiology, flashcards, first aid Q&A and so on — which are available for Android, iOS and Blackberry. It’s quite a roster. Check it out here.
“No other company has been able to replicate the brand awareness, familiarity, and trust that Epocrates has across the clinical mobile user base,” said athenahealth President and CEO Jonathan Bush (who also happens to be the first cousin of former president George W. Bush). “We are confident that we can provide Epocrates with the stewardship and resources it needs to grow and develop within health care and that Epocrates’ capabilities are going to mesh exceptionally well with athenahealth’s cloud-based physician and patient services.”
Furthermore, athenahealth wants to combine Epocrates’ mobile expertise with its own cloud-based network to introduce new apps and create advanced mobile workflows to improve provider efficiency, focusing on care coordination, provider-to-provider comms and patient engagement. It also allows athenahealth to expand its provider base of 38,000 with over one million healthcare professionals on the Epocrates network.
That is, of course, if the deal is actually approved by shareholders. More on that coming soon.