athenahealth's Epocrates acquisition opens new avenues to physicians

Cloud-based software and services provider athenahealth announced on Jan. 7 that it has made an all-cash $293 million offer for all outstanding shares of Epocrates, a mobile health company known for its point-of-care medical apps for physicians. The boards of directors of both companies have agreed to an acquisition price of $11.75 per share of Epocrates stock. That's a 22 percent premium over Epocrates' closing share price on Jan. 4.

The closing of the transaction is subject to the approval of Epocrates shareholders and other customary closing conditions, and is expected to occur early in the second quarter of 2013. Epocrates shareholders representing approximately 17.5 percent of the outstanding common stock have agreed to vote their shares in favor of the transaction.

athenahealth CEO Jonathan Bush said his company intends to finance the acquisition using available cash and funds available from its existing credit facility.

More than 330,000 physicians use Epocrates,  according to company officials.

“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 Bush. “No other company has been able to replicate the brand awareness, familiarity, and trust that Epocrates has across the clinical mobile user base."

athenahealth believes it will be able to better serve an expanded network of providers with the acquisition by building on  Epocrates’ success to date in transforming the way physicians access and engage with clinical information, with each other, and with their patients, Bush explained.

“We are confident that we can provide Epocrates with the stewardship and resources it needs to grow and develop within healthcare, and that Epocrates' capabilities are going to mesh exceptionally well with athenahealth’s cloud-based physician and patient services,” he added.

In a Dec. 17 blog post, Zacks Equity Research highlighted athenahealth’s "unique business model," noting that it makes the company a strong provider of revenue cycle management services (athenaCollector) designed for physician practices. Its EHR product (athenaClinicals) is a key player in ambulatory settings, Zacks noted, adding, "We believe that sales of athenaClinicals are likely to remain robust. In addition, the company will harness its newer products, namely athenaCommunicator and athenaCoordinator."

athenahealth executives said the Epocrates acquisition would help athenahealth realize its vision in a number of key ways:

  • Better information access for health organizations. By combining Epocrates’ mobile expertise with knowledge and data from athenahealth’s cloud-based network, the combined company will be positioned to introduce new mobile applications that deliver high-value information to the clinical community when, where, and how they want it.
  • Advanced mobile workflows. The combined company will seek to pioneer new mobile workflows to improve provider efficiency and support care delivery outcomes; initial efforts will focus on care coordination, provider-to-provider communication and patient engagement tools.
  • Accelerated awareness and growth across the physician market. athenahealth would expand its current provider base of 38,000 to include the more than one million health care professionals on the Epocrates network, allowing athenahealth to build upon the Epocrates brand, recognized today by approximately 90 percent of practicing U.S. physicians.

“Epocrates and athenahealth are two strong and progressive brands dedicated to helping clinicians deliver high-quality care more efficiently through continued innovation and a keen understanding of physicians’ workflows,” said Andrew Hurd, president, CEO and interim CFO of Epocrates. “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 healthcare.”