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Our Take: Allscripts to sell its hospital business segment for up to $700 million

Mar 07, 2022

Allscripts Healthcare Solutions has agreed to sell the net assets of its hospitals and large physician practices business segment to N. Harris Computer Corp., a wholly owned subsidiary of the Toronto-based holding company Constellation Software, for $670 million in cash to be paid at closing and potentially another $30 million if the business segment performs well during the subsequent two years.

Based in Chicago, Allscripts provides hospitals, physician practices, and other health care entities with health information technology solutions, including practice management, financial management, and electronic health record technology.

The following solutions are among the specific assets that Harris Computer will be buying: Sunrise, Paragon, TouchWorks, Opal, Star, HealthQuest, and dbMotion.

Of note, Allscripts will retain ownership of its Veradigm segment, as well as its Practice Fusion and Professional segments.

“We think this transaction maximizes focus as well as future opportunity for our clients, our more than 7,500 associates, and our shareholders,” Paul Black, CEO of Allscripts, said in the press release announcing the deal.

The transaction, which is subject to regulatory approval and customary closing conditions, is expected to close in the second quarter.

Our Take: Allscripts continues to streamline its business operations.

About a year and a half ago, the company sold its CarePort care coordination segment to a different health software company, WellSky, for $1.35 billion. That was just a few months after selling EPSi, its hospital financial decision support business, to Strata Decision Technology for $365 million.

And last August, Allscripts sold its precision medicine platform, 2bPrecise, to AccessDX Holdings for an undisclosed sum.

Revenue from Allscripts’ hospital and large physician practices business segment has decreased in recent years, and the segment has been losing clients as well. Given that Allscripts has a much smaller share of the EHR market than Epic or Cerner (5% vs. 31% and 25%, respectively, according to KLAS Research), it makes sense to sell off those assets rather than continuing to compete against the heavyweights in that arena.

Regarding the assets it’s selling, Allscripts picked up the Paragon EHR product, along with the Star and HealthQuest revenue cycle technologies, in 2017 when it bought McKesson’s Enterprise Information Solutions portfolio for $185 million. At the time, Allscripts said it would continue to offer Paragon as an integrated EHR and revenue cycle management solution for small hospitals while using its Sunrise platform for larger organizations.

Opal is a digital health record used in hospitals in Australia, Touchworks is an EHR package developed for large, multidiscipline physician practices, and dbMotion is an interoperability solution that lets organizations share data.

Regarding the assets it’s keeping, Allscripts paid $100 million to acquire Practice Fusion in 2018; the Practice Fusion EHR technology is designed for small, independent physician practices. Allscripts’ Professional EHR is intended for solo practitioners and mid-size multispecialty practices.

It’s Veradigm, AllScripts’ payer and life sciences segment, that appears to be the main moneymaker, with solutions such as ePrescribe, eAuth (for electronic prior authorizations), and eChart Courier (for patient records requests). Veradigm just signed an agreement last week with the Social Security Administration that will allow the government agency to electronically request and receive EHRs through eChart Courier.

By automating these functions, the SSA will “reduce patient health record retrieval time from weeks or days to just minutes for millions of patient-authorized requests,” Veradigm noted in a press release.

Veradigm’s revenue for the most recent quarter was up 8.9% compared with the same quarter a year ago, while revenue for the hospitals and large physician practices segment was down 2.3%. Rick Poulton, Allscripts’ president and CFO, said during an earnings call with analysts that the Veradigm provider platform added approximately 500 new practices and 5,600 prescribing physicians during the quarter.

What else you need to know
Viatris (formerly Mylan Pharmaceuticals) is selling its biosimilars franchise to Bangalore, India-based Biocon Biologics for up to $3.34 billion. The two entities signed a definitive agreement with terms including an upfront cash payment of $2 billion, $1 billion in convertible preferred equity, and up to $335 million in additional cash payments expected to be paid in 2024, Viatris announced in a press release. The two drug companies co-developed Semglee (insulin glargine-yfgn), which the FDA approved in June 2020 under the 505(b)(2) NDA pathway as an equivalent to Sanofi’s Lantus. A year later, the FDA granted approval for the biologics license application for Semglee, making it the first interchangeable biosimilar to be approved in the U.S. With this transaction, which is expected to close in the second half of this year, Biocon will gain full control of Semglee.

In separate news, Viatris agreed to pay $264 million to settle a class-action lawsuit in which the company was accused of “unlawfully exercising its monopoly power” to raise the price of a two-pack of EpiPen auto-injectors from $100 to $608 in 2016. Viatris said the settlement, which must be approved by the court, contains no admission of liability.

AbbVie acquired a Belgian biotech called Syndesi Therapeutics in a deal that eventually could be worth $1 billion. In 2018, Syndesi spun off from UCB, taking with it the rights to UCB’s SV2A modulators. SV2A is a protein involved in the regulation of neurotransmitter release in the brain, thereby playing an important role in synaptic transmission. AbbVie will advance the clinical evaluation of Syndesi’s lead SV2A molecule for its potential to mitigate synaptic dysfunction associated with impaired cognition in various neurodegenerative disorders, including Alzheimer’s disease. To mitigate its own risks, AbbVie only paid $130 million up front to acquire Syndesi, according to a news release, with the remaining $870 million to be paid if certain milestones are achieved.

Civica plans to manufacture and distribute more affordable insulins, with the goal of making the first one, insulin glargine, available as soon as 2024. The nonprofit generic drug company is partnering with numerous health systems, foundations, and nonprofit diabetes organizations, as well as the Blue Cross Blue Shield Association and a dozen independent Blues plans, “to create a new market reality where no one is forced to ration essential diabetes medications,” Dan Liljenquist, Civica’s board chair, said in a press release. In addition to insulin glargine, Civica will produce insulin lispro and insulin aspart (to be interchangeable with Lantus, Humalog, and Novolog, respectively). The recommended maximum price to consumers will be $30 per vial and $55 for a box of five pen cartridges. Through a co-development and commercial agreement, Hyderabad, India-based GeneSys Biologics will make the active drug substance and Civica will complete the manufacturing process at a facility it is planning to build in Petersburg, Va. During last week’s State of the Union speech, President Biden called for the cost of insulin to be capped at $35 per month.

Hint Health is launching a direct contracting primary care network that connects employers, providers and patients to direct primary care, bypassing traditional insurance. The San Francisco-based business said in a press release that the network, called Hint Connect, “simplifies access to [direct primary care] for businesses who want to provide more value-based health care options but have limited resources to do so.” Physicians do not submit claims, but instead receive a set monthly fee from employers for each employee to receive primary care. Additionally, the HintOS platform automates enrollment, eligibility, invoicing, and payment. Currently, Hint Connect is available in Texas, with expansion to Colorado, Arizona, Oklahoma, and Florida anticipated in the next three months and nationwide availability expected soon.

Boston-based Wellforce is changing its name to Tufts Medicine. The health system includes Tufts Medical Center, Lowell General Hospital, MelroseWakefield Hospital, Lawrence Memorial Hospital (in Medford), Home Health Foundation, and a network with more than 2,000 physicians. The change signals the health system’s “strong alignment with the research and education endeavors of Tufts University School of Medicine,” according to an article on Tufts University’s website. The article said the alignment would facilitate collaborations, make the health system and the medical school more competitive for biomedical research funding, and accelerate the ability to bring evidence-based care into practice.

What we’re reading
Health Care Value Through The Lens Of Patients’ Well-Being. Health Affairs, 3.1.22

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