Lehman Failure Delays Allscripts-Misys Merger

by: Mike Havrilla

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The Lehman Brothers (LEH) failure last week will delay the merger of Allscripts (NASDAQ:MDRX) with the healthcare info tech division of UK-based Misys (London: MSY), which is dependent on a $305M loan agreement to fund the majority of a $330M payment due to Allscripts from Misys.

Misys is now exploring alternative funding sources in the wake of the Lehman failure and a shareholder meeting for both companies has been delayed until October 6th. UK-based Misys derives roughly half of its revenue from the development of software for hospitals and the other half from banks and the Allscirpts-Misys Healthcare merger will create a new company focused solely on health info tech.

The accompanying table presents an overview of my Global Health Info Tech (HIT) Index, which includes a total of 34 companies. Trends in favor of HIT include a push toward electronic prescribing (e-prescribing), reduction of paperwork, remote patient monitoring technologies, and M&A activity.

Zix Corp (NASDAQ:ZIXI) and Allscripts provide e-prescribing technologies, which have pending legislation in the House and Senate to provide financial incentives to promote the adoption of the technology. Other recent deals in the industry include GE (NYSE:GE) Healthcare's bid for Vital Signs (VITL) and Philip's (NYSE:PHG) purchase of remote patient monitoring company VisICU last year.

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Disclosure: None