CBaySystems buys Spheris for Rs 525 cr

London Stock Exchange-listed CBaySystems Holdings, which specialises in medical transcription and related services, has acquired Spheris — a global provider of clinical documentation technology and services — for $116.3 million (around Rs 525 crore). Spheris, with consolidated revenues of $182.8 million (around Rs 820 crore), had filed for Chapter 11 bankruptcy protection on February 3, 2010.

MedQuist will acquire Spheris’ North American assets and CBay will acquire the entire stock of Spheris India. India contributes almost 30 per cent to CBay’s revenues, but the company expects this to touch 50 per cent by the middle of 2011.

“This strategic buy would be a strong catalyst for CBay’s growth in the future. This buy out is in continuation of the MedQuist Transcription acquisition we did a year ago,” Raman Kumar, vice-chairman & CEO of CBay Holdings told Business Standard. The acquisition has been done by the company’s two subsidiaries MedQuist and CBay.

The acquisition is being funded by $98.8 million (Rs 445 crore) in cash and $17.5 million (Rs 78 crore) through an unsecured subordinated promissory note issued by MedQuist Transcription, Ltd. The company anticipates to close the deal in April.

The company had cash of $36 million (Rs 162 crore) but raised around $98 million (Rs 441 crore) for the acquisition. The total debt of the firm is less than $120 million (Rs 540 crore) against revenues of $500 million (Rs 2,250 crore).

With this acquisition, CBaySystems Holdings will add 2,000 people to its delivery process, thereby taking the total headcount to 8,000 people. Moreover, the deal has also led to the company servicing 40 per cent of the hospitals in the US. Of the 6,000 hospitals there, they are servicing almost 2,500 of them.