InfoCure Corp. is taking its first
steps towards solvency after a self-examination called for the major
restructuring of its lagging business plan.
The plan calls for the spin-off of its PracticeWorks division, which
provides ASP services to more than 38,000 dental practitioners. The
spin-off should be completed by the end of the year, when it will file for
listing on the Nasdaq exchange.
The remaining entity of InfoCure will get a facelift,
changing its name to VitalWorks with a focus on information technology and
e-health ASP services for its medical customers.
Frederick Fine, InfoCure president and chief executive officer, said
streamlining its functions actually increases the profitability of the two
new companies.
“Since our formation as a public company just over 36 months ago, InfoCure
has built a tremendous customer franchise in a variety of healthcare
specialty practices,” Fine said. “With our increased focus on the dental
marketplace, we are better able to take advantage of the strategic
opportunities and partnerships that are specific to the dental industry.
“As a separate public company,” Fine continued, “PracticeWorks intends to
build on its position as the leading provider of information management
technology and services to dentists, orthodontists and oral and
maxillofacial surgeons. We believe this strategic decision will result in
the establishment of two strong and independent companies that will deliver
greater value to InfoCure’s shareholders.”
Shareholders stand to gain with this spin-off, depending on how generous
InfoCure board members want to reward investor patience. Officials have
already announced InfoCure shareholders will receive a pro rated dividend
of PracticeWorks common stock in a yet-to-be-determined ratio.
The spin-off announcement comes on the heels of InfoCure’s intended merger
of Medical Dynamics, Inc. , a dental independent service vendor, Aug. 18. It’s a merger
InfoCure has plenty of practice with: It marks the company’s sixth
acquisition of a dental ISV, making it the largest supplier of dental
practice management software in the U.S.
The spin-off comes at a price, however. To fund the move, it entered a $60
million equity purchase agreement with Acqua Wellington North American
Equities Fund, Ltd. The firm is notorious for swooping in and taking huge
equity stakes in troubled companies. Recent victims include EarthShell Corp.
and Egghead.com, Inc. and ARIAD
Pharmaceuticals, Inc.
InfoCure also restructured its financial covenants with principal lender
Finova Capital Corp.
The company stands to lose about 25 facilities and 400 employees to the
restructuring plan.
Richard Perlman, InfoCure chairman, said the financial juggling act gives
the two companies firm financial ground to stand on when it completes its
spin-off later this year.
“We are delighted to be able to announce a comprehensive financing package
with two respected financial institutions that will provide foundational
support for the transition to our new business model,” Perlman
said.
“While we were disappointed that we could not complete our
contemplated IPO of VitalWorks last spring due to market conditions, we
believe that these agreements, in addition to the financing available
through our various strategic relationships, provide InfoCure with
additional liquidity, if necessary, while preserving our options to return
to the capital markets when conditions become more favorable.”
