What You Should Know:
– HealthStream acquires Change Healthcare’s staff
scheduling business for $67.5M in cash which includes the ANSOS™ Staff
Scheduling (“ANSOS”) platform and related products.
– The acquisition will help establish HealthStream as a
market leader in healthcare workforce scheduling business.
HealthStream, a
leading provider of workforce and provider solutions for the healthcare
industry has entered into a definitive agreement to acquire
Change Healthcare’s staff
scheduling business, which includes their market-leading ANSOS™
Staff Scheduling (“ANSOS”) application and related products. : The purchase
price payable upon the closing of the ANSOS acquisition will be approximately
$67.5 million in cash (subject to working capital and other customary purchase
price adjustments), which will be funded with cash on hand.
ANSOS Platform Background
ANSOS is an enterprise solution for healthcare providers
that want to anticipate workload requirements, manage labor costs, apply
complex work rules, and meet credential requirements for shifts—all for the
purpose of optimizing staff deployment. Today, the platform is used by over 300
hospitals and health systems and continues to be recognized as a market leader
in nurse and staff scheduling by KLAS™.
In addition to the ANSOS Staff Scheduling application, the
contemplated acquisition includes related products: Enterprise Visibility™, a
patient tracking system, and Capacity Planner™, a predictive analytics tool.
Importantly, all three products (i.e. ANSOS, Enterprise Visibility, and
Capacity Planner) work in concert with each other, creating a powerful solution
suite for aligning staff and scheduling based on patient acuity, predicting
patient demand, and adjusting resources for optimal outcomes.
Acquisition Expands HealthStream’s Portfolio of Staff
Scheduling & Workforce Solutions
The addition of Change Healthcare’s staff scheduling
business will expand HealthStream’s growing portfolio of solutions for staff
scheduling and workforce management, which began in early 2020 with the
acquisition of NurseGrid and grew further with the acquisition of ShiftWizard
last month. The complementary positioning of ANSOS, ShiftWizard, and NurseGrid
will enable future data integrations and advanced analytics that yield smarter
schedule development while enhancing engagement with staff.
“We are excited to add ANSOS to HealthStream’s growing nurse
and staff scheduling business for healthcare providers as we believe this is a
major win for everyone: customers, partners, employees, and shareholders,” said
Robert A. Frist, Jr., Chief Executive Officer, HealthStream. “The closing of
this transaction will establish HealthStream as an industry leader in nurse and
staff scheduling for healthcare providers. Considering our strong track record
of strengthening acquired products and solutions to deliver even greater value
to customers, I believe we are well positioned for continued growth and
innovation in workforce management.”
Post-Acquisition Plans
Following the acquisition, customer support for each of
these products will remain in place. Approximately 90 employees from Change
Healthcare will join HealthStream upon closing. Together, ANSOS, ShiftWizard,
and NurseGrid represent HealthStream’s portfolio of nurse and staff scheduling
solutions with executive oversight provided by Scott McQuigg, Senior Vice
President, HealthStream. These solutions will be included in HealthStream’s
Workforce Solutions business segment.
Financial Details
Revenues for the business to be acquired are primarily
associated with sales of perpetual software, maintenance, and professional
services. HealthStream expects incremental revenues in 2021 to range between
$16.5 and $19.5 million, taking into account an estimated reduction of between
$7.0 and $8.0 million related to deferred revenue write-downs. While the
business has historically sold perpetual software licenses, future product
development and sales efforts are anticipated to be directed towards a
software-as-a-service model.
HealthStream plan to make investments in the areas of sales,
marketing, product development, and operations to support this initiative. In
addition, we anticipate the amortization of acquired intangible assets to range
between $3.0 and $4.0 million during 2021. Considering the additional investments
intended during 2021, the deferred revenue write-downs, the amortization of
intangible assets, and transition services expenses, we expect the acquired
business to generate an operating loss in 2021.
