EXHIBIT 99.1
Acquisition of ICG From HCIA to Create Industry's First Comprehensive
Clinical and Operations Cost Management Solution
SAN RAMON, Calif., April 1 /PRNewswire/ -- MECON, Inc. (Nasdaq: MECN), a
leading provider of healthcare benchmarking data and cost management tools,
today announced that it has completed the acquisition of the Implementation
Consulting Group (ICG) of HCIA, Inc. (Nasdaq: HCIA), formerly known as LBA
Healthcare, for $7.5 million in cash. ICG, based in Denver, Colorado, is a
leading provider of benchmarking-based consulting services for clinical
service lines.
"The two fundamental cost drivers in today's healthcare delivery system are
clinical efficiency and operational efficiency, both of which must be managed
while maintaining quality outcomes," stated Vasu Devan, President and Chief
Executive Officer of MECON. "To date, health care providers have been unable
to obtain a comprehensive cost management solution that addressed the complete
clinical and operational environment. This acquisition adds ICG's clinical
efficiency database and consulting services to MECON's operational cost
management solution. As a result, MECON's market opportunity has effectively
doubled. More importantly, we are now positioned to deliver the industry's
first comprehensive solution for benchmarking-based healthcare cost
management that encompasses the full spectrum of clinical and operational
requirements."
ICG's consulting services and data products are designed to lead hospitals
and physicians to improve their competitive position in clinical service
lines, with special focus in Cardiology, Pulmonary, Orthopedics, and
Neurosciences. They help position the hospital as a high-quality/low-cost
provider with reduced length of stay, decreased
resource utilization, standardized processes of care, improved quality and
patient satisfaction, and a better foundation for ongoing measurement and
management of costs and quality.
ICG's proprietary databases serve as a true complement to MECON's flagship
MECON-PEERnext-TM- Operations Benchmarking Database Service (formerly known
as MECON-PEERx-TM-), that provides operational efficiency benchmarks to help
improve the efficiency of the provider infrastructure. "Both companies
leverage proprietary databases with their consulting services to provide a
detailed, integrated cost management solution to health care providers,"
noted Devan. "Given our shared business models, ICG constitutes a highly
complimentary fit with MECON's existing business and strategy."
ICG has been renamed LBA Healthcare and will remain headquartered in Denver.
Jim Reilly, formerly Vice President of HCIA, has been named Vice President of
the new LBA Healthcare division at MECON, and will continue to manage its
group of 33 clinical consulting professionals. He has been joined by Larry
Byrne, founder and former CEO of the company, who is returning in a strategic
role to guide the resurgence of the LBA Healthcare division, which is
currently operating at a $5 million run rate. Devan said, "We are extremely
pleased to welcome Jim to the MECON team and are especially gratified to be
able to offer Larry's renowned expertise to the combined organization and our
expanded customer base."
The acquisition, valued at $7.5 million, is being accounted for as a purchase
transaction. In conjunction with the transaction, MECON has signed separate
license agreements with HCIA allowing HCIA's use of LBA Healthcare data and
MECON's use of HCIA risk adjustment methodologies. MECON expects to record
one-time acquisition-related charges of up to $1.5 million in the fourth
quarter of the current fiscal year, ending March 31, 1999. Based on expected
synergies and current assumptions for the amortization of goodwill, but
excluding any reduction in goodwill from in-process research and development
write-offs, the Company expects that the acquisition will be nondilutive to
FY 2000 earnings per shares.
The MECON-PEERnext Operations Benchmarking Database offers extensive and
actionable healthcare performance information through instant access to the
MECON data warehouse via any industry-standard browser. The interactive
capability of MECON-PEERnext provides an unprecedented ability to create and
analyze benchmarking reports to customer specifications online for a
real-time response. MECON customers utilize the data in short and long term
operational improvement programs to learn from the successes and failures of
their peers.
MECON, The Benchmarking Solutions Company, brings the first integrated
clinical and operational solution to healthcare providers who are seeking
answers to their cost reduction challenges. MECON's family of benchmarking
data, software products, and advisory services combine to address both the
clinical and operational arenas where the company finds opportunities for
improvement, fixes problems, and sustains high levels of performance. The
Company's customers use the MECON suite of products and services to quantify,
develop, and implement strategies to reduce costs and improve quality across
the continuum of care.
Except for the historical financial information contained herein, the
matters discussed in this news release may be considered "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include declarations regarding the intent, belief or
current expectations of the Company and its management. Prospective investors
are cautioned that any such forward-looking statements are not guarantees of
future performance and involve a number of risks and uncertainties; actual
results could differ materially from those indicated by such forward-looking
statements. Such risk factors and uncertainties include:
(1) Dependence on acquiring data from customer systems which may not yet be
Year 2000 compliant, which could have a material adverse effect on the
Company's business, operating results and financial condition, if customers
are incapable or unwilling to submit data. (2) Variability in quarterly
revenues related to the timing of large consulting engagements. Consulting
contracts are typically large dollar contracts that represent a material
percentage of the Company's quarterly revenue. Delays in contract signing
could result in lower services revenues for the Company, which could have a
material adverse effect on the Company's business, operating results and
financial condition, and (3) Non-renewal of older, steeply discounted
contracts at higher prices due to pricing sensitivity. Termination of
customer relationships could result in lower subscription revenues for the
Company, which could have a material adverse effect on the Company's
business, operating results and financial condition, as well as:
* Variability of quarterly results and seasonality
* Dependence on principal products
* Integrity and reliability of database
* Competition
* Dependence on strategic relationships
* Consolidation and uncertainty in the healthcare industry
* Potential acquisitions
* Dependence on key personnel
Such factors also include the risk factors listed from time to time in the
Company's SEC reports, including but not limited to, the report on Form
10-KSB for the year ended March 31, 1998, and/or Form 10-QSB for the quarter
ended December 31, 1998, copies of which are available from the Company's
Investor Relations Department. The Company assumes no obligation to update the
forward-looking statements included in this news release.
SOURCE MECON, Inc.
CONTACT: media, Eleanor Anderson-Miles, 925-552-6906, or investors, Daylene
Guidice, 925-552-6915, both for MECON, Inc.
1999, PR Newswire