A Medical Device Daily
Health Systems Solutions (HSS; New York) has agreed to acquire Emageon (Birmingham) for $62 million in cash, or $2.85 a share. The price represents a roughly 37% premium on Emageon's share price as of market close on Oct. 13.
HSS said the purchase is being financed by a facility of $85 million, provided by Stanford International Bank, a member of the Stanford Financial Group and HSS's principal shareholder. HSS said the additional funds will be used for working capital and growth initiatives. The financing will take the form of 6% convertible secured debentures, due 2013, with warrants to purchase up to 9 million shares of common stock.
"This transaction allows HSS to reach critical scale and positions us well for future growth," said Stan Vashovsky, CEO and chairman of HSS. "Our acquisition strategy is based upon using Emageon as our platform acquisition that will enable us to realize synergies from future acquisitions."
HHS said that the timing of this combination will accelerate its delivery of next generation Picture Archiving and Communication Systems (PACS), a category that it says Emageon leads in.
"Emageon's network of loyal customers, which includes some of the largest hospital networks in North America, will benefit meaningfully as a result of our becoming a part of HSS," said Chuck Jett, president/CEO of Emageon. "HSS will be able to augment Emageon's technological capabilities as the industry moves to the start of the PACS replacement cycle in early 2009."
The merger creates a company with more than 400 employees. Current Emageon management will continue to operate the business, but as part of the HSS group of companies. Sales and support functions of both organizations will be maintained, affording no disruption in the manner that customers work with them, the companies said.
The transaction is subject to approval of Emageon's stockholders. Oliver Press Partners, which owns about 16.6% of Emageon's voting stock, and all officers and directors of Emageon have agreed to vote approval of the deal.
Until the transaction closes, each company will continue to operate independently. Following the closing, HSS said it anticipates applying for listing on the Nasdaq.
Financial advisors for this agreement were Stanford Group Company for HSS and Jefferies & Co. and Sun Trust Robinson Humphrey for Emageon. Legal counsel was provided to HSS by Olshan, Grundman, Frome, Rosenzweig & Wolosky and to the Strategic Alternatives Committee of Emageon's board by Bass, Berry & Sims.
The HSS portfolio of products and services extends across several segments of healthcare, including home healthcare, medical staffing, acute and post-acute facilities, and telehealth/telemedicine, grouped into three segments: technology solutions, software and consulting.
Emageon provides information technology systems for hospitals, healthcare networks and imaging facilities.
In other dealmaking news: Interventional Spine (Irvine, California) reported that it has entered an agreement with Rudolf Morgenstern, MD, for the acquisition of all intellectual property, product prototypes and test data of Morgenstern's Percutaneous Nucleus Scaffolding System (PNSS).
The PNSS system, when used with Interventional Spine's PercuDyn system, is intended to provide a totally percutaneous procedure to replace the open surgical total disc replacement procedure using conventional artificial spinal discs.
Financial details of the purchase were not disclosed.
"The spine therapy market is the last major surgical discipline yet to see this transformation away from 30-year old surgical techniques that subject patients to major trauma, extended operating room procedure times, high costs, extended post procedure hospital stays, and relatively high rates of complications, as well as related rehabilitation hurdles," said Walter Cuevas, Interventional Spine's CEO.
Interventional Spine said that Morgenstern, director and chief surgeon of the Morgenstern Institute of Endoscopic Spine Surgery at the Centro Medico Teknon (Barcelona, Spain), is one of Europe's most experienced minimally invasive and endoscopic spine surgeons. He also holds a PhD in mechanical engineering.
Interventional Spine makes implantable devices for the spine that can be deployed via percutaneous techniques.