ADAC acquisition of RIS vendor CHC is confirmed by bankruptcy judge

ADAC picks up company for $16.5 million

ADAC Laboratories solidified its position in the information systemsmarket when its acquisition of Community Health Computing wasapproved last month by the federal judge overseeing CHC's bankruptcycase. ADAC, of Milpitas, CA, will pick up Dallas-based CHC forabout $16.5 million plus expenses, according to ADAC CEO DavidLowe.

CHC entered Chapter 11 last December, and ADAC provided thecompany with several bridge loans to enable it to continue operations(SCAN 12/14/94). ADAC later revealed a plan to buy CHC as partof its reorganization (SCAN 2/1/95).

In acquiring CHC, ADAC is gaining access to that company'sinstalled base of 129 radiology information systems sites. Whenadded to ADAC's own customer base, ADAC will have an installedbase of over 300 in the RIS field. ADAC expects the acquisitionto close in July.

Perhaps more significant, however, is the entree CHC givesADAC into the laboratory information systems market, in whichADAC has not previously had a presence. The size of the U.S. LISmarket is estimated at over $400 million annually and CHC has160 installed sites in that segment. In addition, CHC is readyingthe commercial launch of LabStat, a client-server-based laboratoryinformation system.

One of CHC's major problems was the resources and time it spentdeveloping LabStat. Forty-five engineers worked on the project,Lowe said. Most of the development is now complete and ADAC expectsthe introduction of LabStat in early 1996. LabStat is well positionedfor a strong launch because its client-server architecture offersmajor advantages over older systems on the market, according toLowe.

ADAC does not expect major personnel reductions at CHC, whichcut its work force from 300 last year to about 100. ADAC willbring its own management team on board, including Mark Lamp, presidentand general manager of ADAC Healthcare Information Systems. ADACdoes not expect to retain CHC president and CEO Johnnie Domingue.

ADAC last month also released its final second-quarter financialresults, which closely matched the company's preliminary numbers(SCAN 4/26/95). ADAC had revenues of $44.7 million and net incomeof $2.8 million for the quarter.