athenahealth to acquire Epocrates

Acquisition plays into athenahealth's broad vision, executives say
By Bernie Monegain
09:50 AM
Jonathan Bush, president, chairman, and CEO of athenahealth

athenahealth is expanding its stronghold in the physician market with the announcement today it would  acquire Epocrates, a mobile health company known for its point-of-care medical apps for physicians. The acquisition will accelerate athenahealth’s vision to build the nation’s health information backbone, company executives say.

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 Jonathan Bush, president, chairman, and CEO of athenahealth.

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

[See also: Athenahealth inks $169M real estate deal with Harvard University.]

The boards of directors of athenahealth and Epocrates have agreed to a price of $11.75 per share, in cash, for a purchase price of about  $293 million. The purchase price represents a 22 percent premium over the closing price per share of Epocrates on NASDAQ on Jan. 4. The all-cash offer for all outstanding shares of Epocrates’ common stock.

athenahealth intends to finance the acquisition using available cash and funds available from its existing credit facility, Bush said.

The closing of the transaction is subject to the approval of Epocrates shareholders and other customary closing conditions. The closing 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 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 said.

[See also: athenahealth to acquire HDS.]

“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 RCM services (athenaCollector) designed for physician practices. Its EHR product (athenaClinicals) is a key player in ambulatory settings, it 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 say 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 uniquely 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 highly favored 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.”

As of 10 a.m. this morning athenahealth stock was trading at $77.94, up 2.08 percent over the previous close of $76.35.