A Medical Device Daily

McKesson (San Francisco) reported signing a definitive agreement to acquire Medcon (Tel Aviv, Israel) for $3.05 a share, or a total value of about $105 million.

Medcon is a provider of web-based cardiac image and information management addressing the spectrum of needs for heart centers, including diagnostic digital image management and archiving, procedure reporting, and workflow management.

McKesson said that the addition of Medcon would further strengthen its leadership in enterprise imaging, which includes integrated solutions for medical specialties such as radiology, gastroenterology, ophthalmology and cardiology. The company reports more than 300 system installations around the world, including more than 100 customers in North America.

Uzi Blumensohn, Medcon chairman and CEO, noted that Medcon would enable McKesson to accelerate its efforts in the cardiac market, saying that they share “a common vision of providing a single point of access to the patient’s entire imaging record.”

Blumensohn and all other personnel associated with sales, installation, development and support will become part of McKesson Provider Technologies (MPT).

McKesson said that Medcon’s approach to cardiology would support its own strategy for enterprise image management as a component in building electronic health records. “This information-rich, enterprise-based approach enables our customers to provide clinicians with orders, results, vital signs and other patient data based on their natural workflow,” said Sunny Sanyal, MPT group president, clinical solutions. “With easier online access to information, the stage is set to drive broad-scale adoption of clinical IT tools that help to make healthcare safer.”

The acquisition is expected to close in McKesson’s fiscal second quarter and is subject to Medcon shareholder approval and other customary conditions.

Pamela Pure, president of McKesson Provider Technologies, said, “Medcon’s integrated cardiology imaging and IT solution will be a strong addition to our enterprise imaging strategy, and we believe it will accelerate McKesson’s reach into one of the fastest-growing, high-cost medical specialties in hospitals. Less than 15% of hospitals in the U.S. have a robust, integrated solution for cardiology, which next to radiology is the largest producer and consumer of images and associated patient information.”

She said that McKesson sees “significant opportunity to grow our position in a $250 million market category that’s expected to encompass more than 1,500 decisions over the next five years.” She added that the purchase “should also stimulate added growth in our Horizon Medical Imaging PACS business . . . [I]n the past year alone, we added a record number of new customers, increasing system usage by 40%.”

Medcon reported 2004 sales of about $17 million.

McKesson said that the acquisition would have no material impact on its fiscal 2006 earnings per share but that certain one-time costs of in-process R&D expense, would result in a negative impact to MPT profits in 2006.

McKesson provides pharmaceutical and medical-surgical supply management across the spectrum of care; healthcare information technology for hospitals, physicians, homecare, and payers; hospital and retail pharmacy automation; and services for manufacturers and payers.

Elbit eyes additional Elscint shares

Elbit Medical Imaging (EMI; Tel Aviv) reported that its committee appointed to consider the potential business combination with Elscint has approached Elscint’s independent committee to begin negotiations on the transaction, and made an initial proposal to acquire all ordinary shares of Elscint not already owned by EMI in a share-for-share transaction pursuant to which each ordinary share of Elscint would be exchanged for 0.40 ordinary shares of EMI .

The average closing price of EMI’s and Elscint’s ordinary shares on the Nasdaq and the New York Stock Exchange, respectively, during the 30-day period ending on June 8 – the first announcement of this potential transaction – was $18 and $5.78, respectively. Elbit said that there is no assurance that discussions will continue or that a transaction will be consummated.

Should the companies decide to carry out the transaction, it will be subject to the execution of a definitive agreement, the approval of the audit committee, board of directors and shareholders of both companies, Israeli court approval and any other required approvals.

EMI is a subsidiary of Europe Israel and focuses on four operations: image-guided treatment through InSightec; commercial and entertainment malls through its subsidiary Plaza Centers (Europe); a hotel segment through its subsidiary Elscint; and telecom venture capital investments.