PACS firm Merge eFilm is moving to build a presence in the burgeoning market for integrated RIS/PACS networks, inking a deal to buy radiology information systems provider RIS Logic for just over $13 million.
The purchase will allow Merge to offer a single-source, integrated RIS/PACS network to its target market of imaging centers and small to medium-sized hospitals, according to Merge eFilm president and CEO Rich Linden. Customers in these segments strongly prefer a single relationship with an established vendor who can provide a full-featured RIS/PACS, he said.
"Our combined software offers ... the core functional components that are needed by our target markets to automate their operations, go digital, and achieve the value proposition of a filmless and paperless workflow environment," he said. Linden spoke about the acquisition during an investor's conference call Thursday.
RIS Logic will also give Merge eFilm an stronger presence in the imaging center market. Founded in 1997 by neuroradiologist Dr. Frank E. Seidelmann, Solon, OH-based RIS Logic has focused on the imaging center segment and has 64 imaging center customers, with its software operating at over 200 sites. The firm's most current product is RIS Logic CS 2.0, which is designed to support multiple sites in a healthcare enterprise.
Known traditionally for its connectivity products and services, Milwaukee-based Merge eFilm has been making inroads into the broader PACS market in the last few years, driven by an initiative to become a global provider of image and information management systems and services. In 2002, those efforts were boosted with its acquisition of Canadian software developer eFilm, which developed a software-only image viewer that could be downloaded over the Internet.
Merge eFilm’s flagship product is Fusion Server PACS, a software-only package that provides an integrated database, image storage, and workflow capabilities on one platform. While the combined Fusion Server and RIS Logic CS product roadmap has not yet been determined, company engineers are actively discussing those plans, Linden said.
"(Fusion Server and CS) already talk to each other and interact with each other at the basic message level," he said. "We will begin to move up the food chain, if you will, in terms of tighter integration (such as) single desktop experience, single database and so forth, over time."
In addition to opportunities for integrated RIS/PACS sales, the firms hope to take advantage of cross-selling opportunities.
"RIS Logic's existing customer base has an existing need for PACS software, that we're hoping to go back and look at very quickly here for sales of our PACS solutions," said CFO Scott Veech. "On the flip side, we have a fairly healthy customer base of existing imaging centers that also would be good opportunities for RIS Logic to go back and look at to sell some of their products."
Together the firms have approximately 15 direct sales staff in the U.S., Linden said. The sales forces are already working together to form two-person (RIS and PACS) teams to jointly sell the combined offering within their territories, he said.
RIS Logic will be run as a wholly owned division of Merge eFilm, and will maintain its operations in Ohio. RIS Logic president and CEO Dan Quigg will remain as president of RIS Logic, Linden said.
Merge eFilm agreed to acquire all shares of privately held RIS Logic for $2.725 million in cash and 772,000 shares of Merge, which closed July 9 at $13.54 a share. The deal, which is expected to be finalized this month, was announced after markets closed yesterday.
While RIS Logic has experienced losses in previous years, the firm is now making money, Veech said.
"Our expectation is that they will be cash-flow neutral in the near-term, and cash-flow positive thereafter," he said.
By Erik L. RidleyAuntMinnie.com staff writer
July 10, 2003
Related Reading
Merge eFilm sales, earnings climb, April 30, 2003
Merge integrator software available for download, April 22, 2003
Merge reports banner year, February 27, 2003
RIS Logic launches new version of CS software, June 9, 2003
RIS Logic adds to installed base, May 30, 2003
RIS Logic to add Sectra PACS, March 14, 2003
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