In buying IDX Systems for its GE Health Care division, GE is acquiring a developer of administrative and clinical software for the health-care market. Building upon a foundation in scheduling and billing software, the company has also started to move into patient record software as well. With close to $600 million in trailing revenue, and 150,000 or so physicians and 3,400 sites in service, IDX isn't enormous, but it's no small fry either.
Looking at management's comments on the deal, it seems GE has big expectations for IDX Systems' potential benefits for its software business and its overall health-care operations. That optimism may be reasonably well-founded. Many believe there is still a large, untapped market opportunity for clinical and medical software. Ongoing efforts to drive down costs, improve efficiency, and protect patient privacy should make such programs more appealing to potential buyers.
Given the price involved, I don't know whether this deal is really going to shake up the market valuations very much. While I don't think that IDX shareholders are getting cheated, the price doesn't look too high relative to the valuations of other companies such as Cerner
For more on medical software:
- WebMD's Wobbly Spinoff
- Quality Systems: Vote No!
- All Systems Appear to Be Go
- Quality Systems or Not?
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).