CMA approves acquisition of Yorkshire healthcare software and systems firm

The Competition and Markets Authority (CMA) has given preliminary approval for the proposed acquisition of EMIS Group, a North Yorkshire healthcare software developer listed on the stock exchange and valued at £1.24 billion.

Founded in 1987, EMIS Group specialises in integrated healthcare software and systems, catering to various sectors including primary care, community care, accident and emergency, as well as community and hospital pharmacies. Headquartered in Leeds, the company employs approximately 1,400 people.

In June 2022, an agreement was reached between the board of EMIS Group and Bordeaux UK Holdings II (Bidco), an affiliate of Optum Health Solutions (UK) and a wholly owned subsidiary of UnitedHealth Group Incorporated (UnitedHealth Group), for a recommended all-cash offer. The deal encompasses the entire issued and potential ordinary share capital of EMIS, estimating its value at roughly £1.24 billion.

Following a shareholder vote in August, where EMIS Group shareholders agreed to the acquisition, CMA initiated an initial inquiry into the transaction after concerns arose that the deal could potentially reduce competition that may lead to negative impacts on the National Health Service (NHS) and, by extension, patients and UK taxpayers.

To address these concerns, Bidco, in collaboration with EMIS Group, proposed divesting Optum UK’s Medicines Optimisation and Population Health Management divisions in the UK. However, the suggested remedy was rejected by the CMA, leading to the referral of the acquisition for a phase two investigation. The subsequent Phase 2 investigation revealed that EMIS Group holds a dominant position in the market for electronic patient record systems. Despite this, comprehensive analysis concluded that the combination of EMIS’s market position with Optum’s activities was unlikely to cause competition-related issues.

In relation to population health management services, an independent panel provisionally concluded that the merged business would not have the practical capability to leverage EMIS’s assets to hinder competitors. This is largely due to the NHS’s supervisory role, which could prevent the merged entity from pursuing such strategies. However, the panel tentatively determined that it wouldn’t be in the merged business’ best interest to limit access to EMIS’s electronic patient record system.

Kirstin Baker, chair of the independent inquiry panel carrying out the investigation, said: “Digital technology and data analytics play an increasingly important role in supporting high quality healthcare in the NHS and so it’s important we investigate this deal thoroughly.

“We want to ensure the NHS continues to benefit from innovation and efficiencies brought about by technology services competing for its business. After carefully considering a broad range of evidence, we have provisionally found that this deal is not expected to harm competition or adversely affect patients.”

The CMA will now consult on its findings before reaching a final decision, with its final report due to be issued by 5 October 2023. Bidco and EMIS are both to provide a further update once the final report has been issued.