Agfa-Gevaert plans acquisition of leading cardiology IT developer

May 2, 2005

The Agfa-Gevaert Group is making a play for Heartlab, the innovative designer and supplier of cardiac image and information management software.

The Agfa-Gevaert Group is making a play for Heartlab, the innovative designer and supplier of cardiac image and information management software.

The proposed $132.5 million cash deal, if completed, will position the Belgium-based Agfa-Gevaert as an international leader in cardiology image and information management systems. It will also enhance the company's U.S. market position in cardiology.

Heartlab's customers include top academic and research cardiovascular care centers in North America. The company's Encompass network, a cardiology tool that provides increased efficiency and improved image access, is installed at more than 250 medical centers throughout the country. Founded in 1994, Heartlab is headquartered in Westerly, RI. Last year, the company's 160 employees generated revenues of $38.3 million.

The acquisition, which is subject to regulatory approval, is expected to be cash accretive in the first year. If it goes through, Heartlab CEO and cofounder Robert Petrocelli will manage Agfa's cardiology business unit.

Agfa's healthcare business group supplies IT systems for capturing, processing, and managing diagnostic images, as well as IT solutions that integrate provider workflow into hospital operations that cross department boundaries.

The proposed acquisition of Heartlab is in tune with deals Agfa has completed for GWI and Symphonie on Line, two leading healthcare information systems vendors in Europe. These transactions are helping Agfa expand into women's health, pediatrics, oncology, and orthopedics in Europe. Acquiring Heartlab would provide Agfa a firm foothold in cardiology.

In the long term, Agfa might combine Heartlab's Encompass solution with Orbis, a clinical and administrative IT tool developed by GWI. Orbis has a cardiology module that complements the Heartlab solution, according to Agfa executives.

The acquisition would be a logical progression of an already established relationship.

"We've enjoyed a very productive collaboration with Heartlab," said Eric Maurincomme, vice president for business development and integration for Agfa's healthcare business group. "We've been working with them since December 2003, through an OEM agreement."

The collaboration involved codevelopment and distribution of Agfa's Impax for Cardiology, which merged Heartlab's clinical technology and diagnostic tools with Agfa's integration and workflow expertise. The enterprise-wide cardiology solution, characterized by superior connectivity and integration, boasts capabilities that include image review, information management, and reporting. These are accomplished through "neutral integration," a concept that embraces the integration of common modalities and enterprise information systems.

"This acquisition is very much in keeping with our philosophy of acting as a neutral integrator," Maurincomme said.

Neutral integration gives Agfa the capacity to network with technologies produced by other vendors, such as a GE cath lab, Philips ultrasound system, or Siemens nuclear camera. In turn, this networking puts all the images together, generates a report, and improves workflow in a cardiology practice. By the time the cardiologist leaves the exam room, the report is nearly complete, Maurincomme said.

"This works because Agfa has the knowledge in radiology and Heartlab is a leader in cardiology," he said. "That is why we've been with them. It is not only a technical rationale, it's a clinical rationale."