Picis acquires LYNX Medical

Less than a month after withdrawing its request for a proposed initial public offering of common stock, Picis, Inc. explained that decision with a new financing agreement and a purchase that moves the company into new territory.

The company announced on July 24 that its has signed an agreement with Goldman, Sachs & Co. for a private placement comprised of convertible preferred stock and senior debt, with an estimated value of $155 million.

The company followed that announcement with news that it will use some of the funding to acquire LYNX Medical Systems, a Bellevue, Wash.-based provider of revenue cycle management solutions to hospital emergency departments.

"When the opportunity to acquire LYNX Medical Systems presented itself, it caused us to reevaluate the timing of our planned initial public offering," Picis President and CEO Todd Cozzens said in a news release. "We are delighted that Goldman Sachs will continue to be our financial advisor and a major investor in Picis."

The Wakefield, Mass.-based company provides an integrated emergency department information system (EDIS) through its CareSuite ED PulseCheck application. LYNX offers E/Point and E/Code software and services that address accuracy in coding procedures through CMS-audited algorithms.

Picis had announced last August that it had filed with the Securities and Exchange Commission for an IPO. News reports at that time indicated the company planned to raise $86.25 million through the IPO for "general corporate purchases," such as developing new products, enhancing existing products, sales and marketing, acquisitions and debt repayment. It put a halt to those plans on July 3.

According to Cozzens, the acquisition of LYNX Medical Systems will create an end-to-end solution, specifically designed for a hospital's emergency department, that links clinical documentation with coding and reimbursement revenue management.

"From every perspective, short and long term, strategically, financially and operationally, this acquisition represents another major milestone for Picis," he said in a separate release. "We believe we will be the only company able to offer our customers a truly differentiated, integrated and cost-effective tool to manage the growing complexities of the emergency department, the fastest growing hospital care department."

"The combination of Picis and LYNX will create an organization that is uniquely positioned and qualified to address the substantial information management challenges and opportunities of the growing high-acuity healthcare market," added Gene Cattarina, LYNX's president and CEO.

Details of the Picis-LYNX deal were not disclosed. Proceeds from the Goldman Sachs funding that won't be used in the LYNX purchase will be deployed to retire existing debt and provide additional working capital.

"The opportunity to invest in Picis is consistent with our long-standing desire to invest in companies with strong growth and earnings potential in healthcare," said Chris McFadden, managing director of Goldman Sachs.

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