Acquisition of Rx Systems Lim

RNS Number : 3128R

EMIS Group PLC

19 August 2010

 



                                                                                                                                                                                 19 August 2010

EMIS Group plc

("EMIS", "the Company" or "the Group")

 Acquisition of Rx Systems Limited

EMIS Group plc (AIM: EMIS), the UK's leading supplier of healthcare software to GPs, today announces that it has acquired 78.9% of the issued share capital of Rx Systems Limited ("RX"), a pharmacy software and services company, for a total consideration of up to £9.95 million.

The initial consideration of £9.0 million comprises:

·     a cash payment of £8.3 million at completion, to be funded from the Group's existing cash resources; and

·     a further £0.7 million to be satisfied by the issue of 216,683 ordinary shares of 1 penny each ("Ordinary Shares") in EMIS at 326.3 pence per Ordinary Share, being the average closing middle market price for the 30 calendar days immediately preceding the acquisition. 

A maximum of £0.95 million contingent deferred consideration shall also be payable, dependent on achievement of certain levels of operating profit over a 17 month period following completion.     

Rx has grown rapidly since it began trading in 2004. Based in Hertfordshire and operating throughout the UK, Rx has developed a range of integrated pharmacy and retail systems and services for the community pharmacy, including its core product, ProScript, a Windows based dispensary management system.  The company also provides information required under the NHS IT programme for pharmacist audit and remuneration purposes. Rx's customer base comprises 2,500 pharmacies, representing a 20.5% share of the market. The board of EMIS believes that further growth in market share can be achieved post-acquisition.

For the year ended 31 January 2010, Rx reported revenues of £9.97 million and generated a normalised profit before tax of £1.50 million. The acquisition is expected to be earnings enhancing in the first full year of ownership. It has an annual licensing model and approximately 80% of revenues are recurring in nature.  Rx is also highly cash generative and net cash balances at completion are anticipated to be circa £5.1 million.   

As outlined at the time of EMIS' flotation earlier this year, the Company's core strategy is to grow its business organically and also, where appropriate, by acquisition. 

The acquisition of Rx represents a unique strategic opportunity for EMIS to develop further its presence in this adjacent segment of the healthcare IT market and progress its objective of joining up healthcare IT.

The vendors of the 78.9% holding being acquired by EMIS include company founders Ian Taylor and Simon Ward, currently Managing Director and Technical Director of Rx respectively. The remaining 21.1% of Rx's issued shared capital will continue to be held by Phoenix Medical Supplies Limited, a top five global pharmaceutical wholesaler, owner of 500 pharmacies in the UK and significant user of Rx's systems and services.

Following the acquisition, Phoenix Medical Supplies' appointed representative, Paul Smith, will continue as Non-executive Chairman of Rx and Ian Taylor will continue as the company's Managing Director. They will be joined on the Rx board by Sean Riddell and Phillip Woodrow, CEO and Finance Director of EMIS respectively.  Simon Ward will also continue with Rx in a consulting role for the next 18 months.

Commenting on the acquisition, Sean Riddell, Chief Executive Officer of EMIS, said:

"Since inception Rx has made rapid progress in penetrating the pharmacy market, demonstrating superior customer service levels and a commercial and innovative approach to its product offering. The opportunity to purchase a majority stake in Rx fits perfectly with our strategy of supplementing organic growth with diversification through acquisitions, where felt appropriate, into related areas of healthcare IT. We look forward to working with the management team to take the company forward as we build our 'joined-up healthcare' proposition."

Application will be made for admission ("Admission") of the new Ordinary Shares to trading on the AIM Market ("AIM") of the London Stock Exchange plc. It is expected that Admission will become effective and that dealings will commence in the new Ordinary Shares at 8.00 a.m. on 25 August 2010. On Admission of the new Ordinary Shares, the Company will have 58,550,017 Ordinary Shares in issue with voting rights.

There will be a conference call for analysts today at 9:30 am. Please contact Giles Robinson at Hogarth on 020 7645 3988 for details.

For further information, contact:

EMIS Group plc                                                                                 Tel:  [phone]

Sean Riddell, CEO

Evolution Securities Limited                     

Leeds                                                                                                    Tel:  [phone]

Joanne Lake / Peter Steel

London                                                                                                 Tel:  [phone]

Adam Strachan                                

Hogarth                                                                                                Tel:  [phone]

Sarah MacLeod / James White / Giles Robinson

Notes to Editors

EMIS Group is the UK's leading supplier of software and related services to GP practices, with approximately 39 million patient records in the UK held on EMIS' software.

Established in 1987, EMIS' core activities include software licensing and support, hardware support and maintenance services, hardware sales, third party software sales and training services.

The Group's software includes all of the functionality specified in NHS accreditation standards for GPs, including holding the patient's cradle to grave electronic healthcare record, practice appointment booking systems and consultation and intelligent prescribing modules.

EMIS Web represents the next generation of clinical software systems and the Directors believe it has the potential to transform the delivery of healthcare by enabling GPs and other healthcare practitioners to connect with each other and securely share access to a patient's cradle to grave electronic health record.

EMIS' shares were listed on AIM under the trading symbol EMIS.L following a successful fundraising in March 2010.

www.emis-online.com

 

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