LENEXA, KS — Mediware Information Systems, Inc. (Nasdaq: MEDW) announced on November 24 that it will acquire Healthcare Automation Inc. (HAI) and its sister company Advantage Reimbursement Inc. (ARI). HAI provides software for home infusion and specialty pharmacies. ARI is an outsource billing services provider for the same industries.
According to a company statement, the dual acquisitions, Mediware’s fourth and fifth in the last 24 months, continue the company’s market expansion strategy to increase its penetration of the home care solutions market. Terms of the deal include a cash payment of $5.5 million, with an additional cash payment of up to $1.5 million if performance targets are met. Mediware expects to complete the acquisition before December 15.
This is not the first ownership shuffle for HAI during the past decade. CEO Ken Pereira sold the company he founded once before but bought it back in 2003. He explained to HCTR what he had to do with the company’s home care software development upon his return. “HomecareNet was 80% finished when we got the company back in 2003,” Pereira began. “We completed work on it in 2004 and converted our customers from our legacy product between 2005 and 2007.”
It was then that HAI turned its attention from modernizing existing customers to winning new ones. The vendor rapidly signed deals with Johns Hopkins and then Duke University. This year, HAI announced a contract with Apria. “With that kind of growth,” Pereira continued, “we began to look for the next level. One path would have been to raise equity to acquire one of the many companies out there with older software and offer our updated system to their customers. Another would have been to join up with a larger, growing company. That was when Mediware contacted us.”
Mediware had acquired Hann’s On Software (HOS) in 2008, Pereira explained. “Once they were owners of a very good pharmacy system, they approached us because of our strong reimbursement side, something they did not already have.” In addition to HAI software, Pereira has an interest in Advantage Reimbursement, which billing, A/R and collection services. Takes them from $40m to $47m.
“The addition of these organizations to Mediware is an exciting expansion of a growth strategy that includes strategic acquisitions, developing new products, and expansion of our existing customer base,” said Thomas Mann, Mediware’s president and chief executive officer. “Adding to the acquisition of HOS just over a year ago, our home infusion customer base will increase to more than 450 facilities.”
Home health products and services became a focus for Mediware last year with the acquisition of HOS and the Ascend pharmacy management system. These products help ensure safe and efficient drug therapies in small acute care and outpatient hospitals, as well as home infusion providers and specialty pharmacies.
The HAI acquisition takes Mediware from $40 million to $47 million in annual revenue and expands Mediware’s market penetration by adding complementary pharmacy, home medical equipment, home healthcare and billing capabilities as well as mobile documentation technologies and remote hosting capabilities.
“Research into the specialty pharmacy market indicates the segment is growing at an impressive 20% annual rate,” continued Mann. “These types of services are becoming increasingly popular as they allow therapies to be continued on an outpatient basis to lower the overall cost of care. While cost management is always a concern, medication safety remains our industry’s highest priority.”
Mann said key leaders for each business are being retained, including the group’s CEO, Ken Pereira, and other operational leaders. Pereira will become a Mediware vice president and general manager, leading the Company’s new Alternate Care Solutions group. All staff at both companies will remain in their current positions as Mediware employees, Pereira told HCTR.
According to Mann, Mediware’s strategy is to acquire sound businesses with products and services in or adjacent to the company’s core markets. Prior acquisitions include:
• November 2007: Integrated Marketing Solutions provided donor recruitment technologies to blood centers. IMS formed the basis for Mediware’s Blood Center Technologies product group that provides integrated technology for blood and plasma centers.
• November 2008: Hann’s On Software added a medication management system targeting smaller healthcare organizations. HOS expanded Mediware into home health technology solutions.
• June 2009: SciHealth added a business intelligence solution used by more than 100 hospitals. Its Insight product allows hospitals to create performance managing dashboards.
About Mediware
Headquartered in Lenexa, Kansas, Mediware delivers interoperable software systems that integrate with electronic medical records. Core Mediware products include blood management technologies for hospitals and blood centers; medication management for hospitals, behavioral health facilities, infusion and specialty pharmacy providers; and business intelligence-based performance management systems for clinical, regulatory and financial aspects of the broader healthcare market.
www.mediware.com
www.healthcare-automation.com
