VitalWare Acquisition: Key Details, Impact, and What Comes Next

Health Catalyst's acquisition of VitalWare marks a significant step in the healthcare analytics industry. By integrating VitalWare's revenue workflow optimization and analytics solutions, Health Catalyst aims to enhance its offerings and provide more comprehensive data insights. This strategic move underscores the growing importance of data-driven decision-making in healthcare, particularly in optimizing financial and operational outcomes.

What Is VitalWare?

Founded in 2011, VitalWare by Health Catalyst offers a suite of revenue integrity solutions designed to enhance efficiency and compliance in the mid-revenue cycle for healthcare organizations. Its core products include VitalKnowledge, VitalCDM, VitalIntegrity, and the Hospital Price Index. Unique selling points include extensive content and robust analytics, a proprietary rules repository, and dedicated concierge service, all aimed at improving coding compliance, charge capture, and price transparency.

Who Acquired VitalWare?

Health Catalyst is a leading provider of data and analytics technology and services in the healthcare industry. The company offers a wide range of solutions, including Ignite Data and Analytics, Population Health Management, Patient Engagement, Clinical Quality Improvement, and Revenue Cycle Management. Health Catalyst is recognized for its significant influence in the sector, driving $2.2 billion in validated measurable improvements for its customers and continually innovating with products like Health Catalyst Ignite™.

When Was VitalWare Acquired?

Health Catalyst announced its agreement to acquire VitalWare on August 11, 2020, and the acquisition was completed on September 1, 2020. This acquisition occurred during a period when the healthcare industry was increasingly focusing on data and analytics to manage the impacts of the COVID-19 pandemic. The timing also aligns with a broader trend towards integrating cloud-based solutions for revenue workflow optimization and compliance in healthcare.

Why Was VitalWare Acquired?

• Market Expansion: The acquisition of VitalWare allows Health Catalyst to expand its offerings in the revenue space, particularly in revenue workflow optimization and analytics. This strategic move enhances Health Catalyst's CFO offerings and value proposition, supporting all major EMRs and acting as a key integration point for health systems with multiple EMRs.
• Technology Integration: Health Catalyst plans to integrate VitalWare's technology with its DOS™ platform, a cloud-based data platform. This integration aims to enhance the analytics insights available by combining charge and revenue data with claims, cost, and quality data, thereby providing more comprehensive data-informed decisions.
• Competitive Advantage: The acquisition of VitalWare, recognized for its Best in KLAS chargemaster management solution, provides Health Catalyst with a strategic anchor technology in the revenue space. This enhances Health Catalyst's competitive advantage by offering a robust solution for complex regulatory and compliance functions, revenue integrity, and price transparency, thereby delivering better financial outcomes for health systems.

Acquisition Terms

• Acquisition Price: The acquisition price for VitalWare was approximately $119.2 million.
• Payment Method: The transaction was funded using a mix of stock and cash, including $69.6 million in net cash consideration and $41.3 million in Health Catalyst common shares.
• Key Conditions or Agreements:
  • The transaction was subject to customary closing conditions and regulatory approvals.
  • Issuance of 203,997 restricted shares with vesting conditions over a 12-month term, with 75% vesting monthly and 25% vesting on the one-year anniversary of the acquisition closing date.
  • Contingent consideration based on certain earn-out performance targets during an earn-out period ending on March 31, 2021.

Impact on VitalWare

The acquisition of VitalWare by Health Catalyst has led to significant changes in operations and management. Health Catalyst has integrated VitalWare's technology into its DOS™ platform, enhancing its analytics capabilities by combining charge and revenue data with claims, cost, and quality data. Leadership transitions have also occurred, with Steve Barlow returning as Senior Vice President and Bryan Hinton taking over as Chief Technology Officer. These changes aim to streamline operations and leverage the combined expertise of both companies to deliver innovative solutions.

Product offerings and services have expanded as a result of the acquisition. VitalWare's flagship chargemaster management solution, along with its revenue integrity and price transparency tools, are now part of Health Catalyst's portfolio. This integration is expected to provide more comprehensive data insights and improve financial outcomes for clients. Employee reactions have been positive, with key team members expressing excitement about the growth opportunities. Customers have also shown increased engagement, particularly in the use of COVID-19-specific products, indicating a favorable reception to the enhanced offerings.

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