GE launches $1.2 billion bid for IDX

Sep 28, 2005

GE Healthcare has moved aggressively to broaden its presence in the healthcare IT market, announcing an agreement today to purchase IT giant IDX Systems in a cash deal valued at $1.2 billion.

In radiology, the deal allows GE to combine IDX's radiology information system with GE's PACS line to form a powerful radiology IT package, according to Tom Riesenberg, vice president and global general manager for radiology and cardiology IT business at the Chalfont St. Giles, U.K.-based vendor.

"What we see going forward is the combined GE/IDX corporation (will) offer new products that will link the best of the companies together in an offering that will be accepted by the market in the radiology space," he told AuntMinnie.com.

Specific product integration plans have yet to be finalized, but future PACS activities will likely be focused on GE's Centricity line, and RIS activities will likely be based on IDX's ImageCast RIS program, Riesenberg said. Customers who have purchased PACS technology from IDX will continue to be serviced, however.

"(For) customers who have a legacy relationship with IDX in the legacy RIS/PACS space, those commitments will be honored to their fullest," he said.

IDX still has a long-term PACS partnership in place with Stentor (now part of Philips Medical Systems), and that remains an option, Riesenberg said.

"However, in a more practical sense, customers will see that the more strategic offering that GE/IDX will bring to bear is GE's PACS and IDX's RIS coming together," he said. "But if a customer opted to say 'I want IDX's RIS with Stentor's PACS,' that is clearly something that could be optioned. Whether or not we will offer that remains to be determined."

Likewise, contractual obligations to GE's Centricity RIS customers will continue to be honored, Riesenberg said. Going forward, however, those customers will most likely be offered the option to move forward in however the product line evolves.

"I doubt that we will continue to offer two RIS and two PACS, albeit one from Stentor (now Philips)," he said. "Most likely, there is synergy and rationalization that will yield a singular solution set for the market. And those customers running Centricity RIS will have options to that product however it's presented to the market."

It is possible that elements of GE's RIS line and IDX's PACS offering may also be incorporated into the future systems, Riesenberg added.

"All options are on the table," he said. "It's really hard to speculate what the final end game will be."

Plans for the cardiology market are also still in the works.

"As we look forward, it doesn't make a lot of sense that we would offer two cardiology solutions," he said. "I just don't know how the product sets will sort out."

For IDX, the deal brings the scale necessary to advance the company, according to IDX CEO Jim Crook.

"IDX has grown substantially in recent years, but some months ago, we came to the conclusion that our opportunities to expand further would be better realized through greater scale and additional resources in order to take advantage of the healthcare information technology market opportunity over the next several years," Crook said. He spoke this morning on an investor conference call.

Joining IDX's products and services with GE's global resources, infrastructure, and complementary products will allow the combined company to quickly capture share in a burgeoning global market with a comprehensive suite of products and services, Crook said.

In particular, the acquisition of Burlington, VT-based IDX will allow GE to offer a core clinical data repository (via IDX's Carecast offering), a product that the company has been lacking, Crook said.

IDX has participated in the radiology image management market with products such as its Imaging Suite, ImageCast RIS, and ImageCast PACS. Its efforts in PACS have been aided by its long-term relationship with Stentor, which Philips acquired in August. In November 2004, IDX extended its partnership with Stentor through 2015, and that relationship will be continued, Crook confirmed.

Upon completion of the deal, IDX shareholders will receive $44 in cash per share, a 44% premium compared to the price of IDX shares one month ago.

The transaction, which is expected to close in early 2006, is subject to IDX shareholder and regulatory approval as well as other customary conditions. Certain IDX shareholders representing approximately 20% of the company's outstanding shares have agreed to vote their shares in favor of the proposed transaction, according to the companies. Both GE's and IDX's boards of directors have approved the transaction.

By Erik L. Ridley
AuntMinnie.com staff writer
September 29, 2005

GE names Riesenberg to IT post, August 18, 2005

IDX signs Carecast upgrades, August 2, 2005

IDX completes RTI purchase, July 5, 2005

IDX, Fujitsu cancel NHS collaboration, June 2, 2005