SXC HEALTH SOLUTIONS ANNOUNCES ACQUISITION OF MEDMETRICS HEALTH PARTNERS, INC.
SXC Health Solutions Corp. (“SXC”) (NASDAQ: SXCI, TSX: SXC), announced today it has entered into a definitive agreement to acquire substantially all of the assets of MedMetrics Health Partners, Inc. (“MedMetrics”), the full-service PBM subsidiary of Public Sector Partners, Inc. which is affiliated with a major medical school.
“We are very pleased to welcome MedMetrics and its employees into the SXC fold,” said Mark Thierer, Chairman, President and CEO of SXC. “We have worked with MedMetrics as a client and a partner over the past seven years; they began with SXC as a healthcare IT client and later expanded the relationship to include PBM services. This transaction is in keeping with our strategy to acquire assets that currently utilize SXC’s technology platform and can be easily integrated. We look forward to leveraging our existing partnership and the strong MedMetrics footprint in the northeast to continue to grow the SXC business in that market.”
“MedMetrics has had a long-term, collaborative relationship with SXC and coming together is a natural fit for both of us. The strength of our relationship combined with the resources that SXC brings to the table will bring additional opportunities for our clients to improve care while benefiting from enhanced operational efficiencies,” said Jim Hooley, Interim Managing Director of MedMetrics.
The acquisition is subject to various closing conditions and is expected to be completed during the second quarter of 2011. MedMetrics manages approximately $200 million in annual drug spend and is accounted for in SXC’s PBM segment. When taking into account deal-related closing expenses and related amortization, the acquisition is not expected to have a material impact to 2011 fully-diluted GAAP EPS.
About MedMetrics Health Partners, Inc.
Founded in 2004, MedMetrics Health Partners, Inc. is a full-service PBM located in Worcester, Massachusetts. MedMetrics features a unique business model which focuses on true net cost drug management with full transparency in all financial transactions and data reporting. MedMetrics is unique among PBMs because of their association with a major medical school, which affords direct access to expert formulary and clinical guidance and academically rigorous, evidence-based clinical programming support.
About Public Sector Partners, Inc.
Public Sector Partners, Inc. is a health care management and consulting organization, affiliated with the University of Massachusetts Medical School’s Commonwealth Medicine division. Public Sector Partners offers a full array of program management and consulting services to public health and human service agencies and managed care organizations.
About SXC Health Solutions Corp.
SXC Health Solutions Corp. is a leading provider of pharmacy benefits management (PBM) services and Health Care Information Technology (HCIT) solutions to the healthcare benefits management industry. The SXC’s product offerings and solutions combine a wide range of PBM services and software applications, application service provider (ASP) processing services and professional services, designed for many of the largest organizations in the pharmaceutical supply chain, such as health plans, employers, Federal, provincial, and, state and local governments, pharmacy benefit managers, retail pharmacy chains and other healthcare intermediaries. SXC is headquartered in Lisle, Illinois with multiple locations in the US and Canada.
Forward-Looking Statements
Certain statements included herein, including those that express management’s expectations or estimates of our future performance, constitute “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. We caution that such forward-looking statements involve known and unknown risks, uncertainties and other risks that may cause our actual financial results, performance, or achievements to be materially different from our estimated future results, performance or achievements expressed or implied by those forward-looking statements. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation, our ability to complete the acquisition of MedMetrics; our ability to achieve increased market acceptance for our product offerings and penetrate new markets; consolidation in the healthcare industry; the existence of undetected errors or similar problems in our software products; our ability to identify and complete acquisitions, manage our growth and integrate acquisitions; our ability to compete successfully; potential liability for the use of incorrect or incomplete data; the length of the sales cycle for our healthcare software solutions; interruption of our operations due to outside sources; our dependence on key customers; maintaining our intellectual property rights and litigation involving intellectual property rights; our ability to obtain, use or successfully integrate third-party licensed technology; compliance with existing laws, regulations and industry initiatives and future change in laws or regulations in the healthcare industry; breach of our security by third parties; our dependence on the expertise of our key personnel; our access to sufficient capital to fund our future requirements; and potential write-offs of goodwill or other intangible assets. This list is not exhaustive of the factors that may affect any of our forward-looking statements. Other factors that should be considered are discussed from time to time in SXC’s filings with the U.S. Securities and Exchange Commission, including the risks and uncertainties discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2010 Annual Report on Form 10-K and subsequent Form 10-Qs. Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to SXC or persons acting on our behalf are expressly qualified in their entirety by this notice. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
Electronic medical records poised to cut costs, improve patient care
Jennifer Gomez sat at her doctor’s office in Evanston after her appointment, waiting for a handwritten prescription. Minutes later, her doctor wondered why Gomez was still in the office.
What the 20-year-old Loyola University Chicago student didn’t know was that not only had the prescription been sent to the pharmacy, it also was ready to be filled.
“The prescription was at my pharmacy before I even walked out of the office, because everything is computerized,” Gomez said of her experience at a clinic run by NorthShore University HealthSystem. “I was surprised, expecting to wait.”
Gomez is among the first patients to experience the benefits of electronic medical records, as the nation’s health care industry moves from paper files to computerized records. The momentum is expected to pick up this year as federal stimulus money to help with the transition is starting to arrive at doctor offices and hospitals across the U.S.
Already, hundreds of hospital operators nationwide, including the largest ones in the Chicago area such as NorthShore, have entered the digital age, allowing patients to access email alerts to remind them of appointments, request medical test results or easily connect with insurance companies, pharmacies and other key players of the health care system.
Industry observers project the digitizing of medical records could save the nation’s health care system hundreds of millions of dollars because it would reduce or eliminate redundant testing and the occurrence of errors in patients’ files, among other benefits.
“If you are an emergency room doctor and you are trying to figure out what to do next, an electronic medical record may prevent you from having to do another” test, Dave Seaman, chief executive of Pronger Smith Medical Care, said of expensive procedures such as MRIs and other diagnostic imaging that can cost hundreds or thousands of dollars.
About 90 percent of the medical care providers at Pronger Smith, which has more than 60 doctors, physician’s assistants and nurse practitioners in Tinley Park and Blue Island and handles about 50,000 patients each year, have implemented electronic medical records, Seaman said.
As more health care systems adopt electronic records, consumers also should benefit from the efficient sharing of medical information.
“Most physicians will tell you that if you give me your prescriptions that you are on and show me your lab tests, that tells a pretty good snapshot of a patient,” Seaman said. “(Without electronic records), you’d have all these lab test results, and you would have them in 50 to 100 sheets of paper, if the patient even had them.”
The shift to electronic medical records has been in the works for years, but obstacles such as the cost of digitizing files and concerns about patient privacy have held back many hospitals and physician practices.
A key hurdle has been the doctors themselves. The physician community is highly fragmented, numbering in the hundreds of thousands, with more than 60 percent of office-based physicians in single or a small practice of four doctors or fewer, according to the American Medical Association. So coordinating implementation has been a battle.
These doctors also have been concerned about the affordability of information systems, which can cost tens of thousands of dollars for a small practice. The doctors also worry whether the systems will work and whether they can communicate with other computerized medical systems.
NorthShore digitally connected health records to its three hospitals in Evanston, Glenview and Highland Park, along with its medical group offices, in 2003 at a cost of $35 million. In 2009, its hospital in Skokie, which it purchased in 1999, “went live for an additional cost of approximately $5 million,” NorthShore said.
In 2009, Congress passed and President Barack Obama signed into law the Health Information Technology for Economic and Clinical Health Act, which was part of the federal stimulus legislation known as the American Reinvestment and Recovery Act. The legislation aims to provide more than $20 billion to get doctors and hospitals to use electronic medical records, computerized prescription systems and other health information technology.
And doctors for the first time are eligible to begin getting more than $40,000 in extra Medicare payments this year if they upgrade their health information technology. If doctors can’t demonstrate the “meaningful use” of certified electronic health record system by 2015, they face reduced Medicare payments, federal health officials say.
In Illinois, the state received more than $18 million in federal stimulus dollars to support a statewide health information exchange that will allow medical care providers to share data electronically in a collaborative, secure system, Gov. Pat Quinn’s office said. That, analysts say, should eliminate another hurdle that doctors have said prevented their practices from buying a system: the fear it might not work with a system made by another company.
The financial support is paying off, the nation’s top health official said.
“In the last two years, the share of primary care providers using a basic electronic health record has gone from under 20 percent to nearly 30 percent,” Kathleen Sebelius, secretary of Health and Human Services, told hospitals and health systems in February at the Health Information and Management Systems Society annual meeting in Orlando, Fla.
“When President Obama came into office, only two in 10 doctors … used even a basic electronic health record system. Over the last two years, we’ve created unprecedented momentum behind health information technology.”
But challenges are expected to remain for smaller and solo doctor offices, analysts say.
“The initial startup and transition is difficult,” said Dr. Stephen Sproul, a family physician at Advocate Lutheran General Hospital in Park Ridge.
“You have to learn a whole new way of documenting your patient care and managing your patient interactions, and that change is difficult,” Sproul said. “You start to see a light at the end of the tunnel after about a year. Physicians have to be patient, but they will see results.”