Healthcare Business News

Allscripts stock slips as client plans merger

By Crain's Chicago Business
Posted: December 17, 2012 - 1:45 pm ET

Shares of Allscripts Healthcare Solutions fell Monday in the first trading day after a big client announced that it would merge with another health system—a move that could put some business at risk for the software maker.

Baylor Health Care System said Friday that it planned to merge with Scott & White Healthcare to create the largest not-for-profit health system in Texas. The new system will include 42 hospitals, more than 4,000 doctors and 34,000 employees.

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The companies said they are in a period of exclusive negotiations, and they plan to reach a definitive agreement on the deal next year.

Allscripts, based in Chicago, develops and sells software for electronic medical records, electronic prescribing and practice management, among other areas. Its competitors include Cerner Corp. and the privately held Epic Systems.

The deal means Allscripts might lose Baylor as a customer over time, Citi analyst George Hill said in a Monday research note. He noted that Scott & White works with Epic Systems, and he expects the combined company "to deploy Epic across the enterprise."

"We suspect that incremental technology purchases from Baylor will likely decelerate immediately while the organizations jointly develop an enterprise technology plan," he wrote.

Hill also said Allscripts shares have fallen the last several days because investors are losing hope that it will be acquired.

Down 2.8 percent, or 30 cents, to $10.48 in afternoon trading while the Nasdaq exchange climbed 1 percent. The company's stock has fallen steadily since closing at $13.75 on October 15, and shares are down about 45 percent so far this year.

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