The proposed merger of Emageon and Health Systems Solutions has been put in jeopardy once again - and could be scrapped altogether.
On Wednesday - the scheduled closing date of the deal - New York-based HSS announced that its financing firm, Stanford International Bank, Ltd., would not be able to come up with the money to complete the deal. Emageon stands to receive $9 million from HSS if the deal falls through.
The merger was first announced on Oct. 14, 2008, with HSS agreeing to pay $62 million, or $2.85 a share, for the Birmingham, Ala.-based healthcare IT provider. Emageon shareholders agreed to the merger on Dec. 18. Later that month, company officials accused HSS of "stalling" after it appeared that HSS didn't have the money to complete the deal. The two sides then set a closing date of Feb. 11 and added $4 million to the $5 million already set in an escrow account in the event the merger failed.
Emageon officials said Wednesday they are evaluating their options. HSS officials said they would not object to the release of the escrow account to Emageon.
Emageon, launched in 2000 out of the University of Alabama at Birmingham, provides IT systems for hospitals, healthcare networks and imaging facilities, with solutions that include RadSuite and HeartSuite. The company merged with UltraVisual Medical Systems of Wisconsin in 2003.
Emegeon's stock opened at $1.40 this morning on NASDAQ. The stock had sunk below $1.00, then risen almost to $2.80, since December.
HSS officials had said they would use Emageon as a platform for growth.
HSS closed the third quarter of 2008 with $3.02 million in revenues, a 106 percent increase over the third quarter of 2007, and gross profit of $1.33 million, a threefold increase over the same quarter of the year before. At that time, Stanford International Bank, based in Antigua, had agreed to provide an additional $5 million in equity and $85 million in convertible securities to the company for acquisitions and working capital.
"Stanford's funding of HSS during the current global capital markets crisis demonstrates their continued confidence in our strategic plan and our management team. This availability of financing allowed us to negotiate the acquisition of Emageon Inc., a leading provider of radiology and cardiology imaging and technology," said Stan Vashovsky, HSS' chairman and CEO, in a press release at that time.
"We appreciate Stanford's support and will keep working diligently to execute our growth strategy and to enhance our capital markets presence with the goal of listing on a larger stock exchange and increasing shareholder liquidity."
