PRESS RELEASE
Acquisition of COA Solutions for £100m
February 2010 – Advanced Computer Software Plc, (AIM:ASW, "ACS", "the Group"), a leading provider of software and IT services to the primary care sector, has acquired Redac Holdings Limited, owner of COA Solutions ("COA"), from Alchemy Partners for a total consideration of £100m. The transaction is financed through ACS's cash resources and new bank debt.
COA has been a leading supplier of software solutions to the public and private sectors for over 25 years, with in excess of 5,000 direct and indirect customers in Healthcare, Public and Emergency (blue light) services and the private sector. COA provides software products for accounting and budgeting, data analysis, business intelligence (including patient pathways), compliance, billing, executive dashboard, HR, payroll, procurement, document management and business process outsourcing (BPO) services.
Acquisition highlights
- Immediately earnings enhancing and highly cash generative with strong recurring revenues
- Significantly strengthens ACS's position within the healthcare and public-sector markets; provides access to key decision makers, creating significant opportunities for cross selling both ACS and COA products
- £100m cash consideration, funded through ACS's cash resources and new bank debt
- Enabled by £55m of new bank facilities - term loan of £25m and revolving credit of £30m; facilities are committed for 3.5 years and provided by HSBC Bank plc and Royal Bank of Scotland plc
COA Solutions
- 12 months to 31 March 2009, revenues of £59.8m (more than 50% contracted recurring)
- £12.3m adjusted EBITDA
- More than £30m of revenues from public-sector clients in healthcare, emergency services, public sector and not-for-profit organisations:
- 200 of the 240 Foundation/NHS Trusts/Acute Trusts as customers, supplementing the 95% of Primary Care Trusts served by ACS
- Emergency services - 37 police constabularies across the UK
- 5.7m NHS e-procurements transactions
- Public sector - local care home, social services and social housing
- BPO and hosting of 66 NHS customers across 100 NHS sites
- More than 1,600 corporate clients including Barclays, RBS, Santander, BA, Virgin, Trinity Mirror and Specsavers.
Enlarged Group
- Pro-forma revenue to 28 February 2010 expected to be approximately £90m*, including £50m of contracted recurring subscription and maintenance revenue
- Pro-forma EBITDA expected to be approximately £21m*
- Two divisions:
- Healthcare, Public Sector & Emergency Services
- Business Solutions
- Generic services, including BPO and hosting, business intelligence and performance management will be provided cross-division and across the client base
- 800 staff and operational presence across the UK, Vietnam, India, and the US
Vin Murria, ACS Group Chief Executive said:
"This is an excellent earnings-enhancing acquisition that significantly strengthens our position in the healthcare and public sector markets. It also brings us direct engagement with senior decision makers who need to deliver the kinds of efficiency savings that our combined product set can offer.
"There are substantial opportunities to cross sell our existing healthcare products into new markets while many of our existing healthcare clients could benefit from management tools in the COA product suite.
"Furthermore, it gives us a substantial and profitable commercial arm with a blue-chip client base that we will combine with our existing commercial arm.
"As we approach the end of ACS's financial year, I am pleased to report that we continue to trade in line with market expectations."
*Assuming both companies had been operating in the same group for the year to 28 February 2010
COA Solutions, rationale for the acquisition and structure of Enlarged Group
Formed 25 years ago and based in Cobham, Surrey, COA is one of the UK's leading providers of software and IT services to the public and privates sectors. Its principal products include systems for budgeting around patient pathways, data analysis, business intelligence, compliance, accounting and billing, procurement and document management.
The acquisition will support the penetration of health and social care markets, where ACS already serves 95% of out-of-hours hubs and 50% of NHS Walk-in Centres. COA brings a client base including 200 Hospital and Ambulance Trusts, as well as substantial expertise in mobile applications, spend analytics, business intelligence and data analysis. This will provide a bridge from ACS's existing stronghold in the Primary Care market to the Acute sectors of the NHS.
In addition, COA's e-procurement systems have handled nearly 5.7m transactions for the NHS. All of COA's IP is fully owned by COA.
COA's client base is typically the key decision makers of organisations seeking to improve efficiency through the monitoring and measurement of business performance. It delivers access to senior managers in health and social care organisations that could benefit from existing ACS products such as iNurse and iCare. The broad capabilities of the Enlarged Group will drive the development of innovative new products.
COA brings more than 1,600 clients across multiple sectors of the economy that will provide a natural fit with ACS's commercial business, BSG.
The Enlarged Group will be composed of two divisions: Healthcare, Public Sector & Emergency Services; and Business Solutions. Generic services, such as hosting, BPO, business intelligence, performance management will be sold into both sectors.
The mature financial and operational infrastructure of COA will support the Enlarged Group's growth, both organically and by acquisition.
Background on ACS
Advanced Computer Software Plc is a leading provider of software and IT services to the primary care sector.
ACS occupies a strategically important niche in the IT framework of the NHS, from which it intends to expand through a strategy of product innovation, selective acquisition and/or technical collaboration - thus consolidating a fragmented market. By broadening its product range and services, ACS aims to improve the flow of patient information throughout primary care, using where possible, a single view of the patient record. At the same time, the ACS strategy is designed to maximise opportunities for cost savings, shared R&D and cross-selling, whilst aligning with recent changes in NHS IT procurement that increase the purchasing power of the primary care segment.
Since its creation in August 2008, ACS has acquired and integrated five companies: Adastra, BSG, StaffPlan, Healthy Software and Oak Labs India.
Through Adastra, ACS services more than 95% of Out-of-Hours operational hubs and 50% of NHS walk-in clinics in England. Adastra's software interoperates with more than 100 other IT systems serving both the primary care and the acute parts of the NHS. A secondary product automates the flow of information between the National Nurse Helpline Services (NHS Direct, NHS24 and NHS Wales) and the operational hubs of the Primary Care Trusts ("PCTs"). Adastra's software is licensed to more than 5,000 seats and transacts 16 million patient episodes every year.
StaffPlan provides advanced rostering and administration solutions for community care providers. Its Connect solution provides secure point of care systems, delivering live rosters and electronic monitoring to care workers through PDAs. StaffPlan customers include 30 local authorities, Primary Care Trusts and major independent providers of nursing and homecare services.
Healthy Software's principal product is the clinical software solution Crosscare. Crosscare is NHS accredited and provides clinicians and healthcare professionals in hospices, palliative care, and both private and GP practices, with End-of-Life care requirements.
Through its subsidiary BSG, ACS provides innovative outsourced services and solutions. With its skilled application development team and suite of hosting infrastructure and services, BSG adds expertise and services that can be utilized and cross-sold by other ACS subsidiaries.
Oak Labs India, acquired in September 2009, enhances ACS' product development strategy with the addition of an experienced and proven team of 22 developers based in Bangalore.