Emis buys bulk of pharmacy IT firm for £10m

HEALTHCARE software group Emis has bought the bulk of a pharmacy software firm for up to £10m.

Leeds-based Emis today revealed it has bought 78.9 per cent of Rx Systems for up to 9.95m.

Hertfordshire-based Rx was founded in 2004 and has developed a range of systems and services for pharmacies. It counts 2,500 pharmacies as its customers, representing a 20.5 per cent share of the market. Emis said there is more market share to be gained.

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An initial 9m payment includes 8.3m in cash and 216,683 shares worth 700,000. Another 950,000 will become payment dependent on Rx hitting profit targets.

Emis chief executive Sean Riddell 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."

Rx's core product, ProScript, is a dispensary management system. The company also provides information required under the NHS IT programme for pharmacist audit and remuneration purposes.

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For the year ended January 31, Rx reported revenues of 9.97m and generated a normalised profit before tax of 1.5m.

Emis said the acquisition is expected to be earnings enhancing in the first full year of ownership. It has an annual licensing model and about 80 per cent of revenues are recurring.

Rx is also highly cash generative and net cash balances at completion are expected to be about 5.1m.

Emis said: "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."

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The remaining 21.1 per cent of Rx's issued shared capital will continue to be held by Phoenix Medical Supplies, a global pharmaceutical wholesaler.

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.

Emis was founded by two North Yorkshire GPs more than 20 years ago and computerises the records of patients of GP surgeries, also linking other medical professionals.