US-headquartered IT services giant CSC has confirmed it will buy troubled Australian e-health player iSOFT, in a move that will finally give CSC full control over the company it has long partnered with in the UK Government’s makeover of its national health technology systems, and will bring long-awaited stability to iSOFT’s operations.
CSC and iSOFT have long worked together on the UK’s massive National Programme for IT as part of the country’s National Health Service. The project utilises the Lorenzo e-health platform developed by iSOFT before it merged with Australia’s IBA Health.
However, iSOFT has been struggling financially for some time. In February the company published its half-yearly financial results, revealing that its revenues had slipped from $222 million for the same period 12 months ago to $167 million. The company made a net loss of $84 million — compared with a modest profit of $4.8 million a year earlier.
In a statement issued early yesterday, CSC said the acquisition price would be 17c per share — representing more than three times the company’s current share price of 5.2c. The deal will be subject to both iSOFT shareholder approval as well as regulatory approval in the Australian and European jurisdictions.
The buyout will see iSOFT’s 3,300 employees scattered around the globe — including many in Australia — added to CSC’s ranks, as well as bringing more than 13,000 customers, including healthcare providers and governments in 40 countries, into the CSC fold. iSOFT’s solutions are installed in more than 8,000 hospitals and clinics internationally.
“iSOFT’s electronic health record software and services, coupled with CSC’s global healthcare expertise and delivery capabilities, will create a very powerful force in the global healthcare market to enhance the provision of integrated care,” said iSOFT chief executive Andrea Fiumicelli, in CSC’s statement.
CSC chief executive Michael Laphen said the acquisition would be “a critical step” in the expansion of the company’s global healthcare business. “CSC will be at the forefront of emerging healthcare technologies, giving our clients access to an expanded range of healthcare capabilities and continuing our journey of bringing the vision of a single patient record to life,” he said.
The losses follow the departure of long-term CEO Gary Cohen (pictured) in August last year, with the executive resigning without a statement and refusing to take calls from the press, in the face of disastrous financial results over the preceding year.
Last year, iSOFT said there were several factors behind its financial woes. For starters, it had been plagued by currency problems, due to the appreciation of the Australian dollar. However, in addition, delays in the UK’s massive e-health program had impacted iSOFT. And more generalised issues also abounded.
“As a result of the more subdued economic environment in iSOFT’s markets, the company has reduced its internal projections for growth in Central Europe, [the] Middle East and Africa, South East Asia and Australia,” iSOFT said at the time. In February iSOFT said it was continuing to carry out a strategic business review of its operations.
CSC is planning to hold a dial-in media conference on Monday 4 April to disclose further details of the acquisition plan.
Image credit: Delimiter screenshot of iSOFT promotional video, believed to be covered under fair use