Healthcare technology company Commure plans to buy Augmedix, a healthcare artificial intelligence company founded in 2013, the companies announced Friday.
Commure, which merged with Athelas last year in a $6 billion deal, is getting a foothold in the AI medical scribe market as the sector gets increasingly competitive.
Augmedix shares more than doubled in early trading Friday, soaring 150%.
The acquisition of the ambient AI company values it at $139 million. Augmedix shareholders will receive $2.35 per share in cash when the deal formally closes in late Q3 or early Q4, the company said.
The share price at buyout was 169% more than the volume weighted average price (VWAP) of the stock over the last 30 days, a press release from the company says. Augmedix will become a wholly owned subsidiary of Commure, and Commure will acquire all outstanding shares of Augmedix common stock. Commure is taking the company private.
“As part of Commure, we believe Augmedix will be well-positioned to scale ambient documentation solutions to even more clinicians and health systems while simultaneously accelerating efforts to infuse more innovative features, integrations and AI capabilities into our product suite,” CEO of Augmedix Manny Krakaris said in a statement.
More than 20 major health systems currently use Augmedix's technology, according to the company.
In a blog post, Tanay Tandon, CEO of Commure, said the deal would create "one of the largest, most comprehensive, and fastest-growing artificial intelligence software suites in healthcare."
The companies together are on track to power over 3 million physician appointments using artificial intelligence, ambient scribing, and revenue cycle automation this year, Tandon said.
The acquisition also will improve Commure's health AI operating system, Tandon said.
“Through our acquisition of Augmedix, we’re taking a huge step forward in building the health AI operating system of the future, using language models to consolidate various point solutions into a single, integrated platform for providers, clinical operations teams, and healthcare IT,” Tandon said.
Commure today processes "billions of dollars" worth of healthcare payments, and has the fastest growing ambient AI scribe + documentation tool deployed within hundreds of health systems and private practices, Tandon said in the blog post. "Our technology suite helps power over 250,000 providers nationally. And with the Augmedix acquisition that number will grow even further," he said.
Augmedix brought in $45 million in revenue in 2023, up 45% compared to $31 million in 2022, according to its four-quarter and full-year 2023 earnings report. The company reported a net loss of $19 million in 2023.
In the first quarter, the company brought in $13.5 million in revenue, up 40% from the same period a year ago. Augmedix also reported a net loss of $6.5 million in the quarter. The company is projecting 2024 revenue to hit between $52 million to $55 million.
But, during the first quarter, the company lowered its full-year 2024 revenue projections from its previous guidance of $60 million to $62 million as it faces a competitive, crowded AI scribe market. Some health systems clients are slowing down on additional investments as they evaluate other AI products, Krakaris said during the company's Q1 earnings call in May.
"We have observed an increase in interest broadly in the market, but a slowdown in their purchasing commitments of established solutions such as our Live product. Accordingly, we are adjusting our full year revenue outlook," he told investors.
In October, Commure announced plans to merge with Athelas, a provider of healthcare workflow automation software, to grab a bigger piece of the health system market.
That merger combined Athelas’ large language model expertise and Commure’s scaled software and hardware solutions, according to executives. The combined company will be able to accelerate the integration of language models and workflow automation technology into larger health systems, Tandon said at the time of the acquisition.