A few months ago, when NDCHealth
With today's announcement that Per-Se Technologies
The combined payments from Per-Se and Wolters Kluwer will yield NDCHealth shareholders $19.50 per share in a mix of cash and Per-Se stock. For shareholders, this means a buyout at approximately 20 times the company's average free cash flow over the last three years. Free cash flow at both NDCHealth and Per-Se has steadily declined over that period, largely due to competition driven by McKesson
The combined Per-Se and NDCHealth business would appear to offer customers more of a one-stop shop. Both businesses focus primarily on physician and hospital markets, but Per-Se is focused more on internal administrative processes, while the portion of NDCHealth it acquired primarily specializes in transactions between organizations and connectivity to retail pharmacies. (Wolters Kluwer snapped up NDCHealth's pharmaceutical information management business.)
The combined company also expects to realize $15 million - $20 million in potential cost savings in the first year. While these synergies are very likely to exist, I'd caution investors against expecting that entire sum's savings in a single year; it often takes a bit more time to merge operations and cultures than planners expect.
For NDCHealth, it's the end of a long, strange saga that saw the company go from a free-cash-flow growth machine with a stock price above $40 a few years ago to a cash-bleeder beset by SEC investigations, restatements, and restructurings.While its buyout may not be the cure-all some NDCHealth investors hoped for, it certainly does them no harm.
Vital signs of further Foolishness: