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What's GE Healthcare Buying in IDX?
One of the bigger software deals this year is GE’s $1.2B agreement to purchase IDX Systems at a rich P/E of about 38x. The deal is part of a wave of consolidation initially set off by new healthcare regulations that are now driving the use of electronic patient records (EPR) coupled with elaborate privacy guards and Internet connectivity.
It helps that the market is also finally awakening to the promise of EPR. In addition to facilitating data manipulation, it offers greater resiliency in the face of natural or man-made catastrophes, and it fits well with telemedicine technology, increasingly relevant to the needs of an aging, less mobile population and to the delivery of world-class medical expertise to remote locations.
IDX will join GE’s huge Healthcare unit that employs 43,000 and generates $15B in sales. GE’s family of healthcare software is marketed under the Centricty brand, but its technology predates EPR and native Internet connectivity. IDX, with 2004 sales of $521M and a profit of $32M, brings more of this sort of technology to the table.
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