EMIS buys Rx Systems for £10m

GP system supplier EMIS has acquired a majority share in Rx Systems Ltd, a pharmacy software and services company, for almost £10m.

Rx Systems provides a range of integrated pharmacy and retail systems and services for the community pharmacy, including its core product, ProScript, a Windows-based dispensary management system.

The company also provides information required under the National Programme for IT in the NHS for pharmacist audit and remuneration purposes.

Rx’s customer base comprises 2,500 pharmacies, representing a 20.5% share of the market. EMIS says it believes there is opportunity for further growth in market share post-acquisition.

EMIS says the acquisition of Rx “represents a unique strategic opportunity for EMIS to develop further its presence in this adjacent segment of the healthcare IT market and progress its objective of joining up healthcare IT."

Started in 2004, Rx Systems is based in Hertfordshire. For the year ended 31 January 2010, Rx reported revenues of £9.97m and generated a normalised profit before tax of £1.50m.

The acquisition is expected to be earnings enhancing in the first full year of ownership. It has an annual licensing model and approximately 80% of revenues are recurring in nature. Rx is also highly cash generative and net cash balances at completion are anticipated to be circa £5.1m.

Sean Riddell, chief executive officer of EMIS, said in a statement: “Since inception Rx has made rapid progress in penetrating the pharmacy market, demonstrating superior customer service levels and a commercial and innovative approach to its product offering.”

Riddell added: “The opportunity to purchase a majority stake in Rx fits perfectly with our strategy of supplementing organic growth with diversification through acquisitions, where felt appropriate, into related areas of healthcare IT.

"We look forward to working with the management team to take the company forward as we build our ‘joined-up healthcare’ proposition.”

The remaining 21% of Rx’s shares will continue to be held by Phoenix Medical Supplies Limited, a top five global pharmaceutical wholesaler, owner of 500 pharmacies in the UK and significant user of Rx’s systems and services.