Targeting yet another piece of the healthcare puzzle, HBO & Co. last week agreed to acquire a developer of software for managed-care companies and other healthcare payers in a stock deal valued at as much as $228 million.
The definitive agreement with GMIS, a Malvern, Pa.-based provider of clinical information systems, is the third in HBO & Co.'s rapid-fire buying spree of the past four months. The company earlier added software firms specializing in home healthcare and physician practice management (Sept. 16, p. 22).
In all three instances, the acquisitions fill gaps in the Atlanta-based company's lineup of software as it moves to carry the full spectrum of information systems in demand by various industry sectors.
The software systems and services company has broadened its offerings to serve providers outside its original base of hospital clients, but this is the first expansion into the healthcare payer market, said Anne Davenport, director of investor relations.
GMIS has more than 250 customers for its products, which help managed-care organizations manage utilization of resources and quality of care. The company said its technologies and proprietary databases also help develop profiles of provider performance, assess outcomes of care and measure patient satisfaction.
As payment for healthcare services moves to negotiated rates for episodes of care, the GMIS software is positioned to sort out payment issues by grouping episodes and determining if certain services are unrelated to the pertinent group, Davenport said.
Besides giving HBO & Co. entry to another software market, the proposed acquisition also would provide a new client base for a complementary managed-care system newly developed for its Pathways line of software systems, Davenport said.
And as an addition to the HBO & Co. product roster, GMIS will provide a steady flow of cash. More than 75% of the $36 million in revenues GMIS posted in 1995 were for recurring services rather than one-time-only sales, Davenport said.
The acquisition agreement calls for GMIS shareholders to receive 0.42 of a share of HBO & Co. stock for each of the 8.5 million shares of GMIS stock and options outstanding.
The price per share will be between $46.88 and $64, to be established in a pricing period ending shortly before a special meeting of GMIS shareholders.
That would put the value of the transaction somewhere between $170 million and $228 million.
On Sept. 23, the day before the deal was announced, HBO & Co. stock closed at $63.75 in NASDAQ trading, down 88 cents.