NEW YORK (The Deal) -- As doctors increasingly try to reduce their costs, leading to interest in healthcare information companies, Physicians Interactive, backed by the venture capital arm of Merck (MRK) has plans to pursue acquisitions to expand its geographic reach and its product offerings with an eye towards completing a deal by the end of this year, according to the CEO and founder.
"The acquisition strategy right now is two-fold," said Donato Tramuto, the CEO of Physicians Interactive, a technology company linking physicians, patients and pharmaceutical companies through mobile and online healthcare applications, by phone. "We want to continue to expand the physician database domestically but I also want to go global. We also want to figure out and smoke out more of these small startup companies that have great innovation but may not have the scale to gain the users they want."
Based in Reading, Mass., with offices in Libertyville Ill., Mumbai, Paris and San Francisco, Physicians Interactive said June 25 that it had acquired MedHelp, an online health community and health application site, for undisclosed terms. Following the acquisition, Physicians Interactive's employee base will increase to 400 or so from about 300 people now across its various offices.
"MedHelp really boosts our exposure to customers and gives us a platform to grow the consumer-facing business," Tramuto said, adding that the company will look to integrate its physician- and consumer-facing units by the end of the year.
Physicians Interactive traces its beginnings back to 2008 when Tramuto, along with the backing of Bethesda, Md.-based private equity firm Persues LLC, bought the company from Allscripts Healthcare Solutions (MDRX). After years of growth, Perseus sold its share of Physicians Interactive to Merck Global Health Innovation Fund last August.
"A lot of entrepreneurs don't know when to make that strategic exit or when to bring in another player. I felt that Merck was the right company to appreciate the technology," Tramuto explained, noting that Merck holds about a 17% stake in Physicians Interactive. "When Merck got into looking at this company more closely, they thought they could continue to build scale."
Tramuto expects to be in more than 43 countries by the end of 2014.
The eagerness of physicians and consumers to adopt Physician Interactive's technology is a boon to the rest of the healthcare IT sector, where both public and private investor money is flowing.
"Anything that can take costs out of healthcare is something that investors are looking at," said one healthcare-focused private equity source who asked not be named. "Physicians are looking to get their costs down and the consumer is being asked to do more in picking their health care. Educating the consumer with technology is something people are very interested in."
To that end, on June 23, WhiteGlove Health Inc., a leading chronic care and population health management provider backed by Enhanced Equity Funds- and Biomark Capital, announced the acquisition of Glenridge HealthCare Solutions, a premier provider of technology-enabled network development and consulting services. Terms of the deal weren't disclosed.
"The WhiteGlove Health-Glenridge partnership is founded on the principal that both organizations have very ambitious goals and collectively will be able to open doors to new opportunities," said WhiteGlove Health CEO Nicholas Balog in a statement. "This is a new chapter as we continue to pursue much needed meaningful and sustainable change in health care."
On April 16, Thomas H. Lee Partners-backed Intermedix said it had completed its acquisition of Auckland, New Zealand-based Optima, a move that will bolster the health information technology provider's global presence. Financial terms of the deal weren't disclosed.
Public investors are also eager to get in on the changing landscape of healthcare, leading to a number of successful initial public offerings for heathcare IT companies.
Among the year's most successful IPOs so far has been venture-backed Castlight Health, which on March 14 began trading on the New York Stock Exchange under the ticker CSLT.
The San Francisco-based company, which specializes in pricing transparency software, priced its shares at $16 per share, above the $13 to $15 range it had originally expected. Its shares closed up 148% at $39.80 per share on its first day of trading, despite the fact that it has yet to post a profit.
Prior to founding Physicians Interactive, Tramuto was one of the founders of Protocare Inc., a pharmaceutical outsourcing company comprised of two divisions.