Medical Software Company Picis Files for IPO

by: Evelyn Rubin

Medical software developer Picis filed for a Nasdaq IPO on Friday. Highlights from the company's S-1:

Proposed Ticker: (PICS)

Underwriters: Goldman Sachs, Piper Jaffray, Thomas Weisel, William Blair

Business Overview:

We are an established provider of innovative healthcare information technology solutions designed to transform the delivery of patient care in the high-acuity areas of the hospital, including the emergency department, operating and recovery rooms and intensive care units. We offer what we believe to be the most advanced suite of integrated products focused on these life-critical areas of the hospital, where the patients are the most vulnerable, the care process is the most complex and an increasing majority of hospital costs are incurred. Our line of software solutions is designed to help our customers enhance clinical outcomes for patients, improve operational efficiency, increase productivity of physicians and nurses and achieve a rapid return on investment. We have licensed our systems for use in more than 1,000 hospitals in 19 countries.

CareSuite, our integrated line of software solutions, captures, manages and analyzes the large amount of data generated in the delivery of high-acuity patient care. CareSuite generates a single electronic high-acuity patient record by automating the collection of patient vital signs from a variety of medical devices, as well as information from other clinical systems within the hospital. It is designed to optimize workflow by automatically prioritizing and guiding physicians and nurses through the critical and complex tasks of high-acuity care. Our products also help to manage the business of high-acuity care with features and tools that schedule, monitor and control patient throughput, increase the capture and accuracy of billable charges, manage the supply chain and track quality and performance indicators. The competitive strength of our CareSuite solutions is based on the breadth and depth of product functionality, ease of integration with existing enterprise systems and the flexibility of configuration and deployment.

Financial Highlights: The company grew revenue from $37.3 million in 2004 to $59.7 million, an increase of 60.1%. Software licenses were 56% in 2005, and maintenance comprised the remainder of revenues. In the same period, cost of license revenue grew 77% to $11.7 million, partially attributable to the acquisition of Ibex Software; cost of maintenance revenue grew 82.4% to $12.1 million. Net loss grew from $13 million to $17.8 million in the year. In the first half of 2006, revenues grew 19.3% over the same period in 2005 to $28.8 million. Cost of software revenue grew 29.9% to $6.9 million, and cost of maintenance revenue grew 1.7% to $6.2 million. Net loss grew from $6 million to $6.7 million.

At the end of June, the company had $17.2 million in the bank, and $15 million of debt (primarily senior bank debt).

Use of Proceeds:
General corporate proceeds (new products, sales and marketing in the US and internationally), and repayment of debt.

The company lists among its competitors players in the following categories:

  • Clinical and Hospital Information Systems: Cerner (NASDAQ:CERN), Eclipsys (ECLP), GE Healthcare (NYSE:GE), McKesson (NYSE:MCK), and Medical Information Technology.
  • Perioperative Systems: Surgical Information Systems, McKesson (MCK), Per-Se Technologies (NASDAQ:PSTI).
  • Emergency Care Systems: Allscripts Healthcare Solutions (NASDAQ:MDRX), Wellsoft Corporation, and MEDHOST, Inc.
  • ICU and Critical Care Systems: Philips Medical Systems, a division of Philips Electronics (NYSE:PEG), GE Healthcare (GE), Visicu (EICU), and iMDsoft.
  • Employees: The company has 439 employees of whom 117 are in R&D and 198 in implementation and support.

    Management: Co-founder Todd C. Cozzens is President and CEO:

    Previously, Mr. Cozzens was president of a division of Marquette Medical Systems Inc. (now GE Healthcare, a division of General Electric Company) and served in several other senior management positions at Marquette, including vice president of sales from 1983 until 1995. Mr. Cozzens graduated from Marquette University and from the Harvard Business School Executive Program for Management Development.

    Ownership: The 1818 Fund is the largest shareholder with 32% of the company. Additional investors include Camden (9.7%) and Rabbi Trust (10%). Mr. Cozzens holds 9.7% of the company.