July 18, 2011 – MedQuist Holdings Inc., a provider of integrated clinical documentation solutions for the United States healthcare system, announced the signing of a definitive agreement to acquire M*Modal and its advanced Speech Understanding technology for total consideration of $130 million. The transaction is subject to customary closing conditions, including review under the Hart-Scott-Rodino Act, and is expected to close prior to the end of the third quarter of 2011.
M*Modal’s current annualized revenue run rate of $24 million (which includes amounts billed to MedQuist Holdings) is derived from its proprietary cloud-based software solutions that enable healthcare providers to easily convert speech into structured clinical information. This improves physician efficiency, enhances the integration of the physician narrative into electronic health records (EHR) and contributes to the analysis of clinical information for quality and reimbursement requirements.
Vern Davenport, MedQuist Holding’s newly appointed chairman and CEO, noted, “This transaction combines MedQuist’s strengths of capturing the physician narrative, our large customer base, global presence and deep domain expertise in healthcare with the innovations of M*Modal’s currently available technologies and strong product roadmap. Their scalable cloud-based solutions, Speech Understanding platform, strong technology pipeline and a large team of speech and language scientists and engineers complement MedQuist’s clinical workflow solutions.”
Michael Finke, CEO of M*Modal, added, “Given the outstanding strategic fit between us, we are positioned to create a whole new level of clinical documentation workflow and analytics solutions that address some of the healthcare industry’s most pressing issues. This merger gives M*Modal the immediate resources and access to customers required to accelerate and extend our technology development efforts.”
MedQuist and M*Modal provide advanced speech understanding technologies and services that seamlessly capture the physician narrative, according to Davenport. “We have an opportunity to jointly become a more visible, strategic technology enabler of healthcare organizations as they strive to successfully adopt electronic health records, navigate the move to a value-based healthcare system, and derive critical quality and outcomes data from the structured clinical intelligence we create,” he said.
The purchase price, which is subject to customary working capital and cash adjustments, comprises $48.4 million in cash paid at closing, $28.8 million in installments paid in cash over the next three years and 4.1 million shares of MedQuist Holdings common stock, currently valued at $52.8 million, based on $12.76 per share using the average closing price over the trailing 10 trading days ending immediately prior to the date of signing the definitive agreement.