HCIA announced a $130 million definitive agreement last week to acquire LBA Health Care Management, an Englewood, Colo.-based subsidiary of HealthVision.
LBA develops and markets products for analyzing and benchmarking hospitals' and healthcare systems' clinical outcomes and labor productivity. The deal already has received federal antitrust clearance (July 22, p. 16).
HCIA, a Baltimore-based healthcare information company, said it plans to expand its databases with LBA's clinical data. To acquire LBA, HCIA will buy all the capital stock of HealthVision for $100 million in cash and $30 million in common stock. The portion of HealthVision's business that is not associated with LBA will be transferred to a newly formed corporation. Santa Rosa, Calif.-based HealthVision sells software for physicians and hospitals.
Also last week, HCIA announced plans to offer 2.2 million shares of common stock. HCIA intends to sell 2 million of the shares and apply a portion of the net proceeds to repay debt incurred in purchasing LBA. The remaining shares will be offered by certain stockholders of LBA's parent company.
HCIA also released earnings for the second quarter ended June 30. For the quarter, the company recorded a net loss of $327,000, or 4 cents per share, compared with net income of $1.1 million, or 15 cents per share, in the year-ago quarter. HCIA said the loss stems from a one-time charge related to research and development costs incurred through its acquisition of Response Healthcare Information Management, an East Greenwich, R.I.-based company that specializes in capturing and analyzing outcome and patient-satisfaction data (May 20, p. 4). Revenues rose 35% to $16.5 million.
Because of the one-time charge, HCIA's net income for the six months ended June 30 declined about 36% to $964,000, or 10 cents per share, from $1.5 million, or 21 cents per share, in the first half of 1995. Revenues increased 46% to $30.7 million.
On news of its earnings and the LBA deal, HCIA's stock price dropped nearly $4.63 per share on July 22 in trading on the NASDAQ system to end the day at $61.75. The following day, after HCIA announced plans to sell stock, shares closed at $61.25.