LOS ANGELES—Healthcare data and tech company Veradigm is picking up ScienceIO in a $140 million deal to build out large language models for healthcare.
The health IT company, previously known as Allscripts, provides electronic health record (EHR) technology for ambulatory providers along with analytics, population health, patient engagement and revenue cycle management services. The company also provides tech and data solutions for the payer and biopharma markets.
The acquisition was approved by Veradigm's board and is expected to close "as promptly as practicable," the company said in a press release.
The deal will be funded through cash on hand. Approximately $44 million of the purchase price is deferred, payable in installments on each of the first three anniversaries of the closing date.
ScienceIO, founded in 2019, specializes in AI foundation models for healthcare. ScienceIO says it uses AI to help healthcare providers and payers organize large amounts of patient data, improve workflows and deliver better patient outcomes. The company's AI models can be use for diverse healthcare use cases including patient anonymization, record linkage, information extraction, summarization and predictive analytics.
The startup emerged from stealth in 2021 armed with $8 million in seed funding. In 2022, ScienceIO was tapped to be one of four companies to participate in May Clinic's AI startup program, called Mayo Clinic Platform_Accelerate, that aims to help AI-based startups get market-ready,
Veradigm plans to use the company's platform to create its own proprietary large language models on its own massive data set, which includes 400,000 providers and more than 200 million patients.
"This acquisition is a natural next step in the strategy our board has been focused on over the past year to drive continued growth across our business units and create outsized value from the data and analytics of our existing business, while maintaining our healthy balance sheet and strong cash position," Greg Garrison, executive chairman of the Veradigm board, said in a statement.
The acquisition of ScienceIO positions Verdaigm "at the center of the largest platform shift in healthcare as the industry becomes increasingly focused on value-based care while also reducing administrative burden," Garrison said.
With ScienceIO's AI capabilities, Veradigm plans to fast-track new features across its business segments, including provider, payer and life sciences businesses, to improve customer experience and enhance outcomes, the company said.
The move also will give Veradigm a boost in the healthcare data intelligent market.
"Joining Veradigm aligns with ScienceIO’s mission to better serve patients and healthcare professionals with the help of responsible AI," said Will Manidis, ScienceIO CEO, in a statement.
Yin Ho, M.D., Veradigm’s interim CEO, said the acquisition accelerates Veradigm's growth strategy.
“Veradigm has built one of the most unique and valuable assets in the healthcare industry: a large-scale, high-quality data set that spans providers, payers and life sciences companies. By building on our existing partnership and fully integrating ScienceIO’s AI platform, we will be able to extract greater and more accurate insights from this data set and build an AI center of excellence to empower Veradigm’s portfolio across all of our business units with market-leading capabilities," Ho said in a statement.
Veradigm aims to provide "highly differentiated and advanced products to provider, payer and life sciences customers" while also positioning Veradigm as a "higher-margin technology and data products company poised for future growth and value creation," Ho said.
Ho stepped in as interim CEO in December after the board requested top executives former CEO Richard Poulton and former Chief Financial Officer Leah Jones to step down from their roles.
Lee Westerfield was tapped as interim CFO.
Concurrently, Veradigm is facing a potential delisting from Nasdaq due to delayed financial reporting.
The company said Tuesday that it will not file its annual report for 2022 or quarterly reports for the first, second and third quarters of 2023 by Feb. 27, the deadline that Nasdaq set back in December.
"The company anticipates it will receive a delisting notice from Nasdaq on February 28, 2024, and that its common stock will be suspended from trading on The Nasdaq Global Select Market while Nasdaq proceeds with delisting," executives said in a press release.
Veradigm said it is "working diligently" to file its required financial statements. The company previously said it was unable to complete the filings as a result of internal control failures stemming from accounting processes and a software tool the company implemented to comply with Financial Accounting Standards Board requirements.
The company also announced that its board unanimously adopted a limited duration stockholder rights plan in anticipation of notification from Nasdaq that it will suspend trading in the company’s stock.