ProxyMed, a Fort Lauderdale, Fla.-based healthcare information technology company, has brought two of the nation's largest drugstore chains into its computerized prescription network.
The company provides electronic data interchanges between physicians and pharmacies, as well as laboratories, radiology centers, payers and managed-care organizations.
The company also agreed on July 1 to sell 100,000 shares of common stock to Bellingham Industries for $11 per share. Expected to close on July 30, the private placement of stock would give Bellingham an 18.8% stake in publicly traded ProxyMed.
On June 30, ProxyMed agreed to acquire an electronic prescription network from Walgreen Co. for $2 million in cash upfront, $500,000 a year for three years, and 200,000 warrants to purchase ProxyMed stock at the current market price of $10 per share.
Under a second agreement, ProxyMed agreed to provide connections between Walgreen pharmacies and ProxyMed's physician network for 12 years, the first three on an exclusive basis. Deerfield, Ill.-based Walgreen will pay a set fee per prescription processed.
ProxyMed is developing connections to 150,000 physicians through agreements with 27 physician practice management companies, integrating its software into the existing systems in physician offices.
Last week, Eckerd Corp. of Largo, Fla., signed a service agreement to use ProxyMed's network for its chain of 2,832 drugstores in 24 states. Eckerd had been a customer of the Walgreen prescription network purchased by ProxyMed.
The proliferating stable of destinations for physician orders sets up ProxyMed for revenue growth as physician groups start sending and receiving prescription data electronically, said Eric Handler, an analyst with Commonwealth Associates, a New York-based brokerage firm.
Investors are counting on that growth to overtake the upfront investment costs of the network and start producing economies of scale, Handler said. ProxyMed has posted identical net losses of $2.8 million in 1995 and 1996 as net sales fluctuated from $7.6 million in 1995 to $3 million in 1996.
And the company lost $6 million in the first quarter of 1997 alone, on revenues of $430,000. But now ProxyMed has "the biggest player in the industry" in Walgreen, which fills 190 million prescriptions a year, or 9% of the market, Handler said.
He expects the company to close in on the break-even point in the fourth quarter of 1997 and break into the black in 1998.