Civica has further expanded its presence in the UK health sector with the bolt-on acquisition of Yeovil-based Gateway Computing. Gateway provides electronic document management systems together with associated business process services including outsourced document scanning to 50 NHS organisations in the UK. With the addition of Gateway, Civica claims 275 NHS Trusts as customers, including 80% of Acute Trusts in England. The terms of the deal were not disclosed, but we know that Gateway was too small to need to file full accounts with Companies House last year so it’s clearly not a large purchase by Civica’s standards.
We expected Civica to acquire further to strengthen its relatively nascent healthcare business, which we estimate accounted for just over £7m of its £128m of UK business last fiscal year (Civica's total turnover in FY11 was £183m). This purchase is very much in keeping with its strategy: Gateway brings a complementary technology – Civica already has a strong presence in local government EDM – and a footprint in the NHS market. But perhaps most importantly from Civica’s point of view, Gateway has a business process services (BPS) capability in outsourced document management and scanning. Civica is putting increasing emphasis on platform-based BPS linked to its specialist systems, an area where it (and we) expects growth (see Civica: ambitious plans in a tough market). EDM and outsourced document scanning are in demand in the health sector, which remains heavily paper-based despite the erstwhile National Programme, and Civica’s scale and complementary systems and services should make it easier for Gateway to win business. All in all, another sensible bolt-on by CEO Simon Downing and the team.