Allscripts to Acquire A4 Health Systems

The clinical software provider says it intends to purchase A4 so as to better target the largely untapped market of smaller physician groups.

Health care clinical software provider Allscripts LLC announced this week that it had agreed to acquire A4 Health Systems for $272 million in stock and cash.

The acquisition is intended help Allscripts target small and midsized physician groups with practice management and electronic health record software.

"Our vision is to make our products indispensable to all physicians, from independent practitioners to the largest physician practice groups, academic medical centers and specialty groups, and today we are taking two significant strategic steps towards that goal," said Glen Tullman, CEO of Allscripts.

A4, a privately held company, has a customer base of over 1,600 health care organizations nationally.

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The acquisition of A4 will double Allscripts clinical software revenues and the size of its sales force, while expanding its existing product portfolio and providing the company with an integrated EHR/PMS for small to midsized groups.

Allscripts has also amended an alliance that integrates and cross-markets its software with the software produced by General Electric Co.s newly acquired IDX Systems Corp.

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The amended agreement will let Allscripts sell software, including A4s products, to the largely untapped pool of medical practices that have fewer than 25 physicians on staff.

Headquartered in Cary, N.C., with over 400 employees nationwide, A4 also provides emergency room and care management solutions to the multibillion dollar hospital emergency department and discharge planning markets. Both are points of connection with the electronic health care record.

In 2005, A4 generated revenues in excess of $75 million, EBITDA of approximately $15.5 million and net income of approximately $8.3 million. The transaction will consist of $215 million in cash and 3.5 million Allscripts shares valued at approximately $57 million.

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