US healthcare and pharmaceutical giant McKesson has announced its intention to exit its International Technology business, which includes some £100m of SITS business in the UK. McKesson is a top five player in the NHS IT market (see our last UK Healthcare SITS Supplier Landscape report for background) so the news is likely to attract considerable interest from potential investors, existing customers and other suppliers in the market.
McKesson was one of the first US players to enter the UK patient administration system market in its own right and is well known in the NHS. It acquired System C Healthcare in 2011 (see McKesson revealed as System C suitor) and runs the strategically important NHS Electronic Staff Record system, which provides HR and payroll for the NHS in England and Wales. It recently partnered with CGI on its contract to provide managed payroll services to NHS Arms Length Bodies in the UK (see CGI bounces back with DoH payroll deal).
News of McKesson’s decision to exit the International Technology business, along with its Hospital Automation business, came as the corporation announced lacklustre results for 2013. In the year to end of March 2013, revenue from the Technology Solutions division increased by 3% to $3.4bn but adjusted operating profit for the division declined by 16% to $371m. Overall, McKesson’s revenue declined to $122.5bn from $122.7bn a year ago.
Relatively speaking, the International Technology business - which includes some business in other European countries as well as the UK - is pretty inconsequential to McKesson; it doesn’t even split out the revenues in the results for FY13. We can only assume, however, that the performance of the business has been less than stellar over the last year. Indeed, the System C part of the business has been relatively quiet since it was acquired in 2011. Nevertheless, McKesson holds a significant position in the UK NHS IT market and we expect a great deal of interest in the business from a range of parties, including private equity houses, other US healthcare firms hoping to build a presence in the UK, and a broad spectrum of SITS firms looking to grow their existing NHS IT business.