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Renowned imaging and printing solutions provider Lexmark International Inc. (LXK) has announced the acquisition of PACSGEAR, a leading provider of connectivity solutions for hospitals and healthcare facilities, for a cash consideration of $54 million.

PACSGEAR solutions, used to capture, manage and share medical images and other relevant documents, will be incorporated into Lexmark’s picture archiving and communication systems (PACS) and electronic medical records (EMR) systems.

Post-acquisition, PACSGEAR will be a part of Perceptive Software, an operating segment of Lexmark. The acquisition will help Lexmark to evolve as a software and solutions provider and add to its capabilities in the healthcare segment.

Healthcare organizations and clinicians are struggling with incomplete patient records both on account of the increasing volume of this data and the heterogeneous nature of this data (videos, scans, other records). With the acquisition of PACSGEAR technology, Perceptive Software will be able to bridge the content gaps within the system through an EMR delivering a vendor-neutral, standards-based clinical content platform to create a more comprehensive patient record.

PACSGEAR is a leader in PACS/EMR connectivity solutions for hospitals and healthcare facilities. It integrates documents, film, video, visible light and other images from various departments to any PACS/EMR, thus improving patient care and enabling better health information exchange.

Lexmark’s acquisitions have strengthened its Perceptive Software revenues. These revenues (excluding acquisition-related adjustments) grew 34.0% year over year to $62.0 million in 2Q13.

Apart from this, Lexmark recently acquired a German enterprise firm Saperion, a leading developer of enterprise content management (ECM) for a purchase consideration of $72 million in cash.

We see good growth prospects for Lexmark in the software sector although the company is also trying its luck in new hardware solutions. But the overall macro uncertainty could have an effect on product demand. Lexmark has a strong market position, but reduced demand for traditional printing hardware has impacted pricing in the computer peripherals market.

Lexmark is doing really well in the MPS (managed print services) market and is winning deals continuously. It has been declared a leader in this market by research firms IDC and Gartner Inc. (IT).

Though constant pricing pressure from competitors such as Canon Inc., Xerox Corp. (XRX) and Hewlett-Packard Co. (HPQ) and a high debt burden remain concerns, we expect Lexmark to turn the tables with an increased focus on software and services.

Currently, Lexmark has a Zacks Rank #3 (Hold).

 
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