Looking to broaden their footprint in the fast-growing digital medical sector, athenahealth, Inc. (ATHN) said Monday that it will pay $11.75 per share, or $293 million, in a cash transaction to acquire Epocrates Inc. (EPOC), a leading mobile provider of clinical content, practice tools and health industry engagement at the point of care. The deal price represents a 22 percent premium to Epocrates closing price on Friday.
The boards at both athenahealth and Epocrates have approved the transaction.
The acquisition will help Massachusetts-based athenahealth, a provider of electronic health records, practice management and other services, gain greater exposure to doctors. Epocrates is the owner of the uber-popular self-titled iPhone app that is used by more than 330,000 doctors in the U.S. to check on drugs for things like descriptions, reference guides, interactions and side effects. All tallied, Epocrates has more than one million health care professionals in its network.
Epocrates app has a free version that is used by most physicians, but the company also generates revenue from drug makers that want to get in front of doctors through sponsored ads that run on the app.
athenahealth currently has a provider base of 38,000, so leveraging the brand recognition of Epocrates could prove a boon to business.
Combining technologies, doctors will be able to look-up information on a drug and prescribe it at the same time with athenahealth’s software handling contacting the pharmacy and the billing claims.
“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.
Andrew Hurd, President, CEO, and interim CFO of Epocrates, added, “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 health care.”
athenahealth plans to fund the acquisition using available cash and funds available from its existing credit facility. Subject to customary conditions, such as shareholder and regulatory approval, the deal is expected to close in the second quarter.
In December, athenahealth agreed to buy “Arsenal on the Charles,” a 760,000-square-foot, 11-building complex in Boston, from Harvard University for $169 million. athenahealth currently has its headquarters in two of the buildings. The closing of the transaction is expected mid-2013.
Shares of ATHN are trading ahead 1 percent on Monday morning at $77.35 each, while shares of EPOC have risen by 21.73 percent to near the $11.75 purchase price.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer