9th Aug 2006 07:00
8 August 2006Sage to acquire Emdeon Practice Services, a provider of software and servicesto doctors and small clinics in the USThe Sage Group plc ("Sage") is to acquire Emdeon Practice Services, Inc.("EPS"), based in the US in Tampa, Florida, from its parent company EmdeonCorporation, for an enterprise value of approximately ‚£297 million*, to be paidin cash and financed through Sage's existing credit facilities. The acquisitionis expected to complete in September, subject to regulatory approvals.EPS revenue for the year ended 31 December 2005 was approximately ‚£160.3million* (2004: ‚£155.8 million*). Earnings before interest, tax, depreciationand amortisation were approximately ‚£11.4 million*^ (2004: ‚£3.7 million*^). EPShad gross assets of approximately ‚£37 million* as at 31 December 2005.With 20,000 customers, EPS is a leading vendor of software and services fordoctors' practices in the US, most of which are small or medium-sizedbusinesses. EPS software is used in practice management and in the maintenanceof patient data. This includes administrative and financial processes such asappointment scheduling, prescriptions and billing, together with the creationand management of electronic health records.EPS support services include software maintenance and, additionally, access toelectronic medical transaction services such as those facilitating claims tohealthcare insure rs.The market for doctors' practice management software has potential forsignificant expansion. There are over 200,000 doctors' practices in the US andmany are seeking to automate their businesses, in order both to increaseefficiency and to ensure compliance with regulations governing electronichealth records, healthcare insurance claims and medical care documentation.Users of practice management software exhibit high demand for support services.Revenue growth is expected to result from increasing use of software toautomate doctors' practices, from higher adoption of electronic health recordssoftware compared with the current low levels of adoption and from theextension of support and network services. Sage's expertise will be used toimprove sales and marketing of additional products to EPS customers and tomaximise retention and productivity in customer support operations.Additional revenue opportunities will arise from cross-selling of Sage accountssoftware to EPS customers and vice-versa, facilitated by progressiveintegration between accounting and practice management. Customer research onthe 7,000 doctors' practices in Sage's US customer base has shown a cleardemand for practice management software and for its integration with accountingsoftware. There are also opportunities to raise operating margins through theapplication of Sage's customer base marketing and support expertise, andthrough administrative synergies.Paul Walker, Sage Chief Executive, commented, "Acquiring Emdeon PracticeServices enables Sage to market its products and services to a substantial newcommunity of small and medium-sized businesses in the US. This market isshowing clear demand for automation of business processes. This acquisitioncontinues our strategy of providing industry-specific solutions, by bringingdedicated Sage solutions to this business sector for the first time.The growing doctors' practices market provides opportunities to offer anintegrated Sage solution to both new and existing Sage customers in the US,covering accounting, health records and practice management. Emdeon PracticeServices will now form the basis for a new doctors' practices division, whichwe aim to grow both organically and through further acquisitions."* All financial information calculated on the basis of ‚£1 = $1.90.^ EPS reported adjusted EBITDA and an estimated allocation of EmdeonCorporation's central costs.A conference call for analysts to discuss this announcement will be held at8.30am today. The dial-in number is +44 (0) 208 3223 183 (pin code 129 844).Presentation material, to be referred to during the call, will be available at www.sage.com/investors/eps from 8:15am.EnquiriesThe Sage Group plc +44 (0) 191 294 3068Paul Walker, Chief ExecutivePaul Harrison, Finance DirectorPhil Branston, Investor RelationsTulchan +44 (0) 20 7353 4200Julie Foster +44 (0) 7799 894262Kirstie Hamilton +44Notes to editorsThe Sage Group plc is a leading international supplier of accounting andbusiness management software solutions and related products and services,principally for small to medium-sized enterprises. Formed in 1981, Sage wasfloated on the London Stock Exchange in 1989 and the Group now employs over10,000 people worldwide.ENDSAGE GROUP PLCRelated Shares:
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