Allscripts CEO Says Eclipsys Synthesis Will Boost Stock Growth
Allscripts Healthcare Solutions Inc. (MDRX)’s $1.3 billion acquisition of Eclipsys Corp. last year will accelerate its stock growth as the integration boost sales, Chief Executive Officer Glen Tullman said.
The clinical-software company’s shares gained 1.4 percent in the past 12 months, held back by concern that combining the businesses would be difficult, he said. Chicago-based Allscripts had focused on digitizing physicians’ practices, while Eclipsys of Atlanta specialized in hospital systems.
“Sometimes when you do a larger merger or acquisition, what happens is you get put in the penalty box,” Tullman said today in an interview at Bloomberg’s Washington office. “People ask, ‘Are they going to make it work? Are they going to continue growing?”
The acquisition positions the combined company to take advantage of health-care consolidation and reimbursement systems that reward providers for quality of care rather than the number of procedures. Allscripts has a dominant share of an electronic health-record market that’s benefiting from $27.4 billion in U.S. government stimulus money, he said.
Allscripts’ vision is to create “a fully connected community,” he said. “Small physicians’ offices connected to the largest, best hospital, connected to post-acute care facilities.”
The stock gained 8 cents to $18.40 at 2:31 p.m. in Nasdaq Stock Market trading.
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Sean Wieland, technology analyst at Piper Jaffray and Co. in San Francisco, said he initially downgraded Allscripts stock as a result of executive departures and customer losses, which are “baked into the cake of large mergers,” and raised his rating last month back to “overweight” from ”neutral.”
Wieland’s prognosis is the company has successfully integrated, and is one of three firms positioned, with Kansas City, Missouri-based Cerner Corp. (CERN) and closely held Epic Systems Corp. of Verona, Wisconsin, to build the backbone of hospital clinical information systems.
The combined company addressed lingering concerns on integration last month by demonstrating its ability to transmit records between physicians’ practices and hospitals at a user conference with 5,000 attendees, said Tullman, 53, who became CEO in August 1997.
Allscripts now has contracts with 180,000 physicians, 1,500 hospitals and 10,000 post-acute care facilities such as rehabilitation centers, he said. The company will “continue to be opportunistic” about investing in smart technology related to care management and analytics.
The company has made two strategic investments in the past year in an Israeli company called dbMotion Ltd., a connector of electronic record systems, and in Boston-based Humedica Inc., which helps health providers manage large numbers of clients.
To contact the reporter on this story: Carol Eisenberg in Washington at Ceisenberg1@bloomberg.net
To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net
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