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Analysis: An Early Wave Crest?

May 26, 2011
by Mark Hagland
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Healthcare it Vendors Move Ahead, Across Inpatient and Outpatient Spheres, at a Time of Rapid Industry Change

Even a cursory glance at this year's Healthcare Informatics 100 list provides fascinating glimpses into the current state of the healthcare IT vendor market, when this year's list showing 2010 revenues is compared to previous years' lists documenting 2009 and 2008 revenues.

With only three exceptions, every single vendor whose revenues are listed in this year's compendium has seen increased revenues between 2009 and 2010, and many vendors have seen considerable upticks, some through expansion or acquisition. (The only two exceptions among those companies reporting revenues are the Conshohocken, Pa.-based Apollo Health Street, whose revenues declined by $4 million in the past year, and the Sacramento, Calif.-based E*HealthLine.com, which reported the exact same revenues in 2010 as in 2009. Our analysts have estimated that revenues for the Mortsel, Belgium-based Agfa HealthCare have seen a decline in the past year, but that company has not reported revenues to us.) In other words, 97 of 100 companies listed in this year's 100 have seen revenue increases.

And some have seen dramatic increases, including the Chicago-based Merge Healthcare, which leapt from $56.7 million in 2008 revenues to $66.8 million in 2009 revenues to $140.3 million in 2010 revenues (marking a 110-percent jump between 2009 and 2010), partly on the strength of acquisitions-fueled growth. Other companies benefiting from acquisitions-fueled growth include the Burlington, Mass.-based Nuance Communications (from $356.3 million in 2008 to $392 million in 2009 to $449.3 million in 2010), and the Horsham, Pa.-based NextGen Healthcare (from $214.9 million in 2008 to $262.9 million in 2009 to nearly $334.8 million in 2010).

There were even a few spectacular leaps, arising out of exceptional circumstances. Among these were for the Boston-based Keane, whose reported revenues jumped 687 percent from 2009 to 2010, based on its operations being merged with Knight Subsidiary Corp. to form the new Keane International, itself a subsidiary of Tokyo-based NTT Data. Another exceptional case involved a 362-percent jump for the Owings Mills, Md.-based Edaptive Systems, whose federal government healthcare contracts have been exploding in volume, so much so that the company noted the leap on its website (along with the announcement of the awarding of three contracts from the Centers for Medicare and Medicaid Services totaling $108.5 million). Even some consulting firms are seeing big leaps, as was the case with the Chicago-based Burwood Group whose 199-percent growth between 2009 and 2010 certainly reflected boom times for IT implementation consultants.

TWO AREAS OF PARTICULAR INTEREST TO CONSIDER ARE HEALTHCARE IT VENDORS SUPPORTING HEALTH INFORMATION EXCHANGES, AND THOSE WHOSE CORE OFFERINGS CENTER AROUND CLINICAL DECISION SUPPORT, PARTICULARLY FOR PHYSICIANS.

Core Clinical Vendors Move Ahead Strongly

Even apart from exceptional situations such as those being experienced by Keane and Edaptive Systems, some of the strongest growth on the Healthcare Informatics 100 list in the past year came from some of the larger core clinical IS sphere, including the Verona, Wis.-based Epic Systems Corp., which grew from $602 million in revenues in 2008 to $650 million in 2009 to $825 million last year. And the Chicago-based Allscripts Healthcare Solutions, whose merger with the Atlanta-based Eclipsys last year was the most talked-about merger of the year in healthcare IT, leapt from $383.8 million in 2008 to $561 million in 2009 to $704.5 million last year.

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