RealTime IT News

InfoCure Announces Spin-Off

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."