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Health Works Collective > Business > AthenaHealth Makes a Move, Buys Epocrates
Business

AthenaHealth Makes a Move, Buys Epocrates

Chris Hoffmann
Last updated: January 15, 2013 9:56 am
Chris Hoffmann
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In a move to expand its platform and marketplace relevance, athenahealth announced a definitive agreement last week to acquire Epocrates for $293M, a 22% premium to the stock price.  Epocrates is a well-known provider of drug information to physicians via a mobile device and has 340K physician users in the U.S.

In a move to expand its platform and marketplace relevance, athenahealth announced a definitive agreement last week to acquire Epocrates for $293M, a 22% premium to the stock price.  Epocrates is a well-known provider of drug information to physicians via a mobile device and has 340K physician users in the U.S.

As we’ve previously opined, the hopelessly  fragmented electronic medical records (EMR) vendors face a shrinking timeline for government funding of Meaningful Use technologies, others will likely pursue a similar path to Athena as they look to make the lasting leap from desktops to smartphones and tablets.  Said differently, simply “mobilizing” EMR features won’t be enough to create continued growth and competitive differentiation.

A few drivers are likely behind this deal:

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  • Brand Awareness:  Fewer than 8,000 physicians using athenaClinicals today according the most recent 10-Q, and Company CEO Jonathan Bush has offered that their internal estimates showed that roughly 90 percent of doctors are familiar with Epocrates, 3x the name recognition of his own company.   Bush further asserted “our biggest obstacle is that 70 percent of doctors don’t even know we exist… Epocrates is to HIT what Angry Birds is to games.”
  • Decreasing athena’s cost of sale:  As a corollary to the above point, the in-person cost of sale for athena’s RCM and EMR solutions remains high, and with Epocrates name recognition and lighter deployment footprint,  represents a Trojan horse approach to market growth.  In effect, athena will now have access to 300,000 physician pockets.
  • Meaningful Use:  As mentioned above, MU dollars are going to dry up in 2014, which should  slow EMR adoption, and because much of the revenue generated by Epocrates comes from selling access to its physician network (to pharma and other companies), athenahealth gains an important new revenue stream.

Similar to how Aetna planted its stake in mobile by acquiring Healthagen/iTriage in 2011, many large healthcare solution providers have struggled to build successful in-house mobile solutions and are opting to pick off specialized firms with unique features.  There is a lot of news coverage on this acquisition, and given our focus on mobile and HIT we would be happy to connect with you to share viewpoints.

Let us know what you think.

 

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