Hello everyone, we have some exciting news to share this morning. These are my comments from a public webcast earlier today:
Since 1997, we at athenahealth have been trying to make a name for our disruptive business model and our mission to build the nation’s health information backbone. Along the way, our biggest obstacle has been gaining awareness by and access to the care givers we seek to serve. With this acquisition, we believe we have found a breakthrough.
We have always loved Epocrates. At first, we were blown away by their explosive rise in market share. Upon closer examination, our admiration found far deeper root. First, we love their app; athenahealth is strong in mobile development, with 33% of Clinicals clients using their iPhone at least once a week—but Epocrates is masterful. As the first health care app in the Apple store, Epocrates was downloaded on iPhones at a rate of 2,230 downloads per day. Recently, they added their iPad app and are already at 86,000 downloads. Second, we are proud of our own client service, but we have been humbled by how users tout Epocrates. Aside from their beautiful app, users love the current, accurate, and beautifully constructed content within. They also love the culture behind it. Dr. Steve Kania and the Epocrates clinical content team pore over thousands of complex medical reference documents, turning the vast ocean of drug company claims into a digestable stream of understandable truth. Today, there are over 1,000,000 clinicians worldwide on Epocrates, and over half of U.S. physicians use their services every week. It’s no wonder there were 200 million drug lookups in the last year—or that 96% of physician-users reported changing a prescribing decision, thanks to Epocrates.
Like athena, Epocrates was born of an idea shared by two students in the late ‘90s. Since then, we’ve embarked on similar, almost parallel missions. We both earn client trust by making it easier for physicians to provide the health care they set out in life to deliver. Epocrates builds this trust by delivering a combination of technology and research to provide “information of value when and where users want it.” At athenahealth, our core competency is in “combining technology, knowledge, and work to provide situational awareness at the point of care.” We earn clients’ trust by helping them do well, doing the right thing. Our complementary missions form the foundation of what we believe would be a very successful partnership once the deal closes.
The complementary nature of our collective mission and cultures provides the perfect platform to fix strategic problems in our respective businesses. For Epocrates, there’s a need to build a broader and richer stream of revenue from the excellent market share and satisfaction they’ve earned. For athenahealth, whose services are deep and whose revenue model is robust, our need is awareness and share. We have so much to give doctors, and there are so few of them who really know who we are.
For years, athenahealth has been seeking a “lite” entry point that will allow physicians to learn about our services and sample our capabilities. Ideally, such an “athena-lite” exposure would include a meaningful slice of our core service set. We want doctors thinking “if I lived here, I’d be home now.” Assuming this deal closes, we will immediately set to work activating every doctor on Epocrates who wants it as an athenaCoordinator sender and receiver. As a receiver, they will get “a free sample” of athenaClinicals with each inbound referral from an athenahealth client. Because athenaClinicals is so darn beautiful, they will be able to use the app to evaluate the patient without enduring the ramp-up exhaustion associated with traditional, software based EHRs. If they like the experience, they will have the option to upgrade to athenaClinicals. Our research suggests that it will take very little work for us to deploy a simplified version of athenaClinicals that does not include pay for performance program management (i.e., meaningful use and others) or document services. Of course, our fondest wish is that those who try will want to buy more.
We are very excited about what Epocrates could do for athenahealth, but we are just as inspired by how we could help it. Following closure of the acquisition, we would add the depth of athenahealth’s 40 million de-identified health records to the research resources Epocrates sells to drug companies today. Second, we would accelerate current Epocrates’ work on new reference tools for doctors. On top of drug reference, there would be complex consult referencing and diagnostic referencing. Each of these new channels would be sponsored by new categories of Epocrates clients. And some of these—such as labs and institutions that perform complex procedures—are already athenahealth clients. Our work with Epocrates would further equip doctors to make the best choices possible for their patients and their own bottom line in the emerging accountable care marketplace. It would also enable athenahealth clients to showcase their excellence and generate appropriate referrals in the same environment. Accountable care is coming, and not everyone will survive. We intend to make darn sure that our clients will lead the charge and prosper.
We are still about 90 days away from closing, and so there are lots of kinks to iron.
Lastly, as some of you know, we’ve come to view culture as our most valuable asset and the thing we want to protect the most. Epocrates has it. Most companies don’t, but they do. They are a mission-oriented group of teachers and learners out to make a dent in the universe and I look forward to calling them colleagues.
REGULATION M-A DISCLOSURE
In connection with the acquisition of Epocrates, Inc. (“Epocrates”) by athenahealth, Inc.(“athenahealth”) pursuant to an Agreement and Plan of Merger (the “Merger”), Epocrates will file with the U.S. Securities and Exchange Commission (the “SEC”) a proxy statement and other relevant materials in connection with the proposed transaction. Epocrates will also mail the proxy statement to Epocrates stockholders. athenahealth and Epocrates urge investors and security holders to read the proxy statement and the other relevant material when they become available because these materials will contain important information about athenahealth, Epocrates, and the proposed transaction. The proxy statement and other relevant materials (when they become available), and any and all documents filed with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, free copies of the documents filed with the SEC by athenahealth will be available on the “Investors” portion of athenahealth’s website at www.athenahealth.com. Free copies of the documents filed with the SEC by Epocrates will be available on the “Investor Relations” portion of Epocrates’ website at www.epocrates.com. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION.
athenahealth, Echo Merger Sub, Inc. (“MergerSub”), Epocrates, and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the security holders of Epocrates in connection with the Merger. Information about those executive officers and directors of athenahealth is set forth in athenahealth’s proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC on April 26, 2012, and is supplemented by other public filings made, and to be made, with the SEC. Information about those executive officers and directors of Epocrates and their ownership of Epocrates common stock is set forth in Epocrates’ proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC on August 30, 2012, and is supplemented by other public filings made, and to be made, with the SEC. Investors and security holders may obtain additional information regarding the direct and indirect interests of athenahealth, MergerSub, Epocrates, and their respective executive officers and directors in the Merger by reading the proxy statement and the other filings and documents referred to above. This posting does not constitute an offer of any securities for sale.
This posting contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding consummation of the proposed transaction; anticipated improvements in, expansion of, and benefits of combining the companies’ service offerings and the timing thereof; the potential market for and awareness of the companies’ services; and expectations for market developments and opportunities. These statements are neither promises nor guarantees, and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: consummation of the transaction is subject to customary closing conditions, which if not met or waived would cause the transaction not to close, including the failure to obtain required approval of the contemplated transaction; failure to effectively integrate the services and operations of the companies; the risk that the anticipated market for the companies’ combined services does not materialize; the risk that service offerings will not operate in the manner expected (e.g., due to design flaws, security breaches, or otherwise); potential interruptions or delays in service offerings; reliance upon third parties, such as computer hardware, software, data-hosting, content, and internet infrastructure providers, which reliance may result in failures or disruptions in our service offerings; errors or omissions in services and the information they provide; and the evolving and complex government regulatory compliance environment in which the companies and their clients operate. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. athenahealth undertakes no obligation to update or revise the information contained in this posting, whether as a result of new information, future events or circumstances, or otherwise. For additional disclosure regarding these and other risks faced by athenahealth, please see the disclosure contained in our public filings with the Securities and Exchange Commission, available on the Investors section of athenahealth’s website at www.athenahealth.com and the SEC’s website at www.sec.gov.
January 7, 2013