In line with an industry moving towards integrated RIS/PACS networks, radiology information systems provider VitalWorks has signed an agreement to acquire PACS firm Amicas for $30 million in cash.
Ridgefield, CT-based VitalWorks will also pay an additional $25 million based on attainment of specified earnings targets through 2004, and will assume incentive plans for certain Amicas management employees that provide up to $5 million in compensation based on earnings targets.
For VitalWorks, the deal is a response to customer interest in integrated image and information management technology, according to Joe Walsh, chairman and CEO.
"Adding a PACS system to our radiology product line has been a major goal of ours," Walsh said. VitalWorks and Amicas executives spoke about the proposed acquisition today during a conference call.
As it weighed its option for adding PACS functionality to its portfolio, VitalWorks determined that it needed to actually own the technology, rather than move forward with a third-party relationship, said Dr. Stephen Kahane, VitalWorks' vice chairman and chief strategy officer. In an earlier PACS initiative announced in early 2002, VitalWorks had signed an agreement with Fujifilm Medical Systems USA to integrate its RIS with Fuji’s Synapse PACS offering, and market the combined offering to U.S. imaging centers.
"We believe that the market wants this integrated and modular, industrial-strength offering from a major, radiology-focused company," Kahane said.
Founded in 1995 in cooperation with Massachusetts General Hospital in Boston, Amicas has focused on a Web-based approach for its PACS software. The company has approximately 60 employees and over 200 customer sites.
"The combination of VitalWorks and Amicas PACS will address both ends of a growing market," said Amicas president and CEO Hamid Tabatabaie.
Retaining its focus on PACS, Amicas will become a wholly owned subsidiary of VitalWorks and will maintain its Boston-based operations. Its employees will continue to report to Tabatabaie.
VitalWorks will expand the six-person Amicas sales staff to about 13 field sales reps. VitalWorks’ current RIS and billing sales personnel for the imaging center market will partner with their PACS counterparts at Amicas for each territory, Walsh said.
On the product side, an integrated version of the VitalWorks RIS software and Amicas PACS is available now, and is in use at several joint customers, Walsh said. Over the next several weeks, engineers from both companies will detail a mutual product roadmap that will lead to a seamless desktop environment for the radiologist and referring physician, he said.
"This means that parts of the RIS and PACS will actually be driving each other," he said. "From the user’s perspective, it will be almost as if they’re using a single product from the start."
VitalWorks estimates that a combined product with this functionality could be available by the end of 2004.
The acquisition is expected to close this month, subject to satisfaction of customary closing conditions. VitalWorks said it expects to use a portion of its credit line to finance $15 million of the purchase price.
Allocation of the purchase price has not yet been completed, as VitalWorks is in the process of determining the fair value of the assets to be acquired and liabilities to be assumed. VitalWorks expects the acquisition to dilute earnings per share in 2004 by approximately 9¢ to 12¢ per share, due in part to the amortization of intangible assets. The deal is expected to be accretive to 2005 earnings, VitalWorks said.
By Erik L. Ridley
AuntMinnie.com staff writer
November 25, 2003
Related Reading
VitalWorks posts Q3 results, October 30, 2003
VitalWorks adds Florida install, October 1, 2003
VitalWorks negotiates new credit agreement, August 22, 2003
Fuji and VitalWorks sign RIS/PACS deal, January 29, 2002
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