VitalWorks sells medical division to Cerner

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VitalWorks Inc. this week revealed plans to unleash to Cerner Corp. its medical division, which markets private physician office information technology, for $100 million in cash.  The divestiture of VitalWorks' medical division will allow the company to focus completely on its radiology business.

According to VitalWorks, its medical division serves more than 3,000 private physician offices and hospital clients with software for practice management, ambulatory electronic medical records, transaction processing, and emergency departments. The sale of the medical division, which VitalWorks said is slated to produce approximately $70 million in revenue for 2004, is expected to be completed in 45 to 60 days, pending regulatory approval.  

The move is intended to strengthen VitalWork's radiology IT foothold. VitalWorks said it established a unified division focused on the image and information management business by consolidating the Amicas PACS operations and the VitalWorks radiology division operations. Adopting the name Amicas, the company and will be lead by a single management team, VitalWorks said.

To facilitate a "smooth and expeditious transition" to the new structure, VitalWorks said it plans to sign an amendment to its Amicas merger agreement for the immediate end of any further earnout contingencies and provides up to $14.5 million of additional consideration to former shareholders of Amicas and Amicas management.  

Payments will be made over the next 12 to 14 months, with certain payments being contingent upon continued employment of certain members of the management team, VitalWorks said.