Philips to acquire United States-based clinical IT companies VISICU and Emergin

Amsterdam 18 December 2007Royal Philips Electronics intends to sign a merger agreement with clinical IT and service provider VISICU Inc. through which Philips is offering to acquire the entire share capital of VISICU for USD 12.00 per VISICU share. By integrating VISICU's remote patient monitoring and clinical decision support technology with Philips' patient monitors, both companies expect to accelerate growth by offering products that provide more effective clinical decision support to hospital staff, while allowing them to monitor far greater numbers of critically ill patients. The board of directors of VISICU has approved the transaction and has recommended that VISICU shareholders vote their shares in favour of the merger. Philips has also acquired United States-based Emergin Inc. The terms of the deal were not disclosed.

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Based in Baltimore, Maryland, VISICU is an expert in clinical IT systems that enable critical care medical staff to actively monitor patients in hospital intensive care units (ICUs) from remote locations. The company's patented clinical IT system, called the eICU Programme, provides real time, 24x7 patient monitoring in ICUs, and can be likened to an air-traffic controller's station by centrally networking critical care physicians and nurses to ICU beds using voice and video. Equipped with artificial intelligence algorithms, the system also offers advance clinical support. The eICU Programme has been shown to significantly reduce patient mortality, length of stay, and medical complications while lowering ICU costs.

Philips' cash offer represents an enterprise value of approximately USD 300 million - approximately 200 million euro, when accounting for approximately USD 130 million in cash on VISICU's balance sheet as of September 30, 2007. Closing of the merger is subject to the terms and conditions of the merger agreement, the approval of VISICU's shareholders, and to customary regulatory clearance. The transaction is expected to close in the first quarter of 2008.

In commenting on the transaction, Steve Rusckowski, CEO of Philips Healthcare, stated: "Today's deal builds on Philips' announcement two weeks ago that we're acquiring another clinical IT company, Emergin. Philips is a market leader in patient monitoring systems in the hospital, so we know the challenges our customers face - rising patient numbers, staff shortages and concerns about patient safety. By investing in clinical IT solutions like those offered by VISICU and Emergin, we believe we can offer customers more attractive patient monitoring solutions that improve hospital productivity as well as patient outcomes. So making these investments we believe will drive further growth in our patient monitoring business."

Emergin is a United States provider of software utilized to rapidly transmit medical alarm signals throughout hospitals. The transaction is expected to close in the fourth quarter of 2007, upon which Emergin will become part of the Patient Monitoring business unit within Philips' Healthcare sector. Through this acquisition, Philips will expand the use of information technology in health care - and specifically in its patient monitoring business - to improve patient outcomes and help hospitals work more efficiently.

Steve Rusckowski explained: "At Philips, we've built up a number one position in patient monitoring systems, and you'll find our monitors throughout the hospital - from the emergency room and the operating room, to the intensive care unit. They provide key information on a patient's health for doctors and nurses. We're seeing however the ratios of patients to medical staff on the rise, and our customers are looking for solutions that help them access the critical patient data that our monitors provide, quickly and flexibly throughout the hospital. Emergin's software provides that functionality, and will enhance the performance of our patient monitoring equipment, making it a good fit for this business."

Emergin's powerful alarm management and event notification software helps ensure that critical information is sent rapidly to the right caregiver on the personal communication device of their choice - be it a pager, wireless telephone, PDA or LED sign. Emergin's software has wide acceptance among hospital chief information officers (CIOs), who increasingly play a central role in the purchasing decisions at hospitals. The acquisition of Emergin will enable Philips to integrate the functionality offered by Emergin's software directly into Philips' current and future patient monitoring products. Philips also expects to capitalize on Emergin's strong relations with hospital CIOs.

VISICU's eICU Programme can track ICU patients at various hospitals, and provides continuous monitoring of patient vitals signs, medications, labs and early-warning alarms - known as 'Smart Alerts' - which are triggered by deviations in a patients' vital signs based on their admitting or current diagnosis. 'Smart Alerts' use embedded algorithms and protocols to send warning signals to physicians and nurses to provide early medical intervention and optimal care. The eICU Programme also supplements hospitals' critical care staff by allowing them to increase the number of ICU patients monitored by a factor of 15. The clinical and financial benefits of the eICU Programme have resulted in several affiliated hospitals electing to expand their eICU programme to serve smaller regional and rural hospitals outside of their network.

VISICU chairman and CEO, Frank T. Sample stated: "At VISICU, we have a long and successful track record of developing innovative solutions to enhance the delivery of patient care within the ICU resulting in significant improvements in clinical outcomes and saving more lives. We're excited to be teaming up with Philips - a global leader in patient monitoring - as it will give us the opportunity to build on Philips' extensive market presence to grow beyond our current focus on the ICU and United States market. As a result the Board will recommend approving the merger to our shareholders."

"Over the past five years, Emergin has brought several innovations to market in concert with Philips, from new care models to multi-faceted alarm notification methods. The Philips acquisition will enable Emergin to maintain its market leadership by accelerating its time to market and immediately expanding its global footprint", stated Michael A. McNeal, President and CEO of Emergin.

Emergin is a privately-held software vendor based in Boca Raton, Florida, with approximately 100 employees. Founded in 1995, Emergin has seen strong demand for its software solutions, with 2007 sales at an estimated USD 18 million - or roughly 50 percent year-on-year growth over the past three years. Following completion of the acquisition, growth is expected to accelerate further as Philips expands Emergin's activities beyond its North American base.

Founded in 1998, VISICU has a staff of approximately 100, which includes clinicians, software developers, sales and client services personnel. The company had sales over a 12-month period ending in the third quarter of 2007 of approximately USD 36 million and earnings before interest, taxes, depreciation and amortization of approximately USD 9 million. Over the last three years, VISICU has seen its sales almost double, and the company reported in its third quarter results that it had approximately USD 60 million in revenue backlog.

VISICU Inc. is a health care information technology and clinical solutions company focused on transforming the delivery of critical care through its eICU Programme. Through remote monitoring technology and clinical intelligence, experienced critical care resources are leveraged to provide coverage and early intervention for safer, more effective patient care. Currently more than 180 hospitals serving over 250.000 patients annually have partnered with VISICU to implement eICU programmes. More company news is available in the VMW June 2007 article IBM and VISICU wire Pacific Rim with remote critical care services for military.

Upon completion of the acquisition, Philips intends to capitalize on its extensive sales channel network to accelerate VISICU's adoption by ICUs at United States hospitals, while internationalizing VISICU's activities and migrating its technologies into other departments within the hospital. Philips believes leveraging VISICU's and Emergin's clinical IT capabilities will also accelerate growth in its existing patient monitoring business. Philips has a leading position in the global patient monitoring market, which in 2006 was estimated to be approximately 2 billion euro or approximately USD 3 billion.

Emergin has helped more than 5000 enterprise organisations improve real-time communications, safety and quality. In health care, Emergin has provided messaging and connectivity solutions to more than 1000 hospitals, including five Malcolm Baldrige Quality Award recipients, 30 percent of the United States' Magnet Hospitals, 50 percent of the Leapfrog Top-50 hospitals, and six of the Top-10 Heart Hospitals.

Royal Philips Electronics of The Netherlands is a global expert in health care, lighting and consumer lifestyle, delivering products, services and solutions through the brand promise of "sense and simplicity". Headquartered in The Netherlands, Philips employs approximately 128.100 employees in more than 60 countries worldwide. With sales of 27 billion euro in 2006, the company is a market leader in medical diagnostic imaging and patient monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well as consumer electronics. More company news can be found in the VMW December 2007 article St. Lucas Andreas Hospital to start home monitoring of cardiac patients using Philips remote system.


Leslie Versweyveld

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