Allscripts Jumps on Kinetra Deal

Allscripts' medication management product, TouchScript, will be integrated into Kinetra's existing physician and managed-care network.
Publish date:

Shares of


(MDRX) - Get Report

jumped 29% Monday after the electronic prescription company said its services would be offered through


large network of health-care professionals.

Under the terms of the deal, Allscripts' medication management product,


, would be integrated into Kinetra's existing physician and managed-care network. Kinetra, a joint venture between the drug giant

Eli Lilly

(LLY) - Get Report

and professional services firm

Electronic Data Systems


, provides electronic commerce services to more than 75,000 physicians.

The terms of the five-year deal were not disclosed.

Allscripts' stock gained 8 1/4 after the agreement was announced to close at 36 3/4. Lilly popped 2 15/16, or 4%, to 75 3/8. EDS closed up 1 13/16, or 3%, at 64 1/8.

"This is clearly very good for Allscripts; for Kinetra it was a build-or-buy decision," said James Kumpel, an analyst at

Raymond James & Associates

, who rates the stock accumulate, or buy. His firm has done no underwriting for the company.

"Kinetra gets an immediate Internet product that's scalable. In other words, it can offer health-care solutions today through the Internet, and speed products to market."

Essentially, Allscripts, which is based in Libertyville, Ill., gets a huge network of doctors and a big sales force through which it will sell TouchScripts, its real-time medical information device, Kumpel said.

"If Allscripts can get to a fifth of Kinetra's doctors, it would still be good," Kumple calculated. He said that that depth of penetration was "not unreasonable."

The combination of these technologies allows medical professionals access to 90% of all managed-care formularies to prescribe drugs quickly and cost efficiently. Formularies are lists of drugs available through managed-care organizations.

"This agreement will allow (Kinetra) to extend their reach directly to the physician at the point of care and, using our TouchScript electronic prescribing software, offer an even broader set of services to their physician and managed-care customers," said Glen Tullman, Allscripts' chief executive.

Allscripts stock broke through Kumpel's last target price of $33. He is currently reevaluating a new target price.