Public spending cuts and NHS reforms have not dampened Allocate Software’s faith in the healthcare market and it continues to build its capabilities in this area with the acquisition of Zircadian Holdings, a UK–based company providing rota planning software for junior doctors and consultants.
It is a neat fit in several ways. Allocate already has nurse rostering software that the doctor-centric new applications can sit alongside and ought to help drive more in the way of cross sales. Cross sales, across the whole portfolio, will be necessary if the company is to achieve is ambition of increasing turnover by nearly 80% (to around £50m) in three years time but we think the economic climate has hampered this opportunity so far (see Allocate Software: One to watch in UK healthcare).
As Zircadian's applications are used by 142 healthcare organisations in the UK, the acquisition will further raise Allocate's profile and expand its market opportunity. As of April 2011 Allocate had 21 PCTs as clients and was working with some of the GP consortia pathfinders.
Zircadian also brings SaaS applications, adding to Allocate Software’s emerging SaaS portfolio, which includes the SaaS assets it gained when it acquired Dynamic Change last year (see Allocate adds SaaS expertise via acquisition). Indeed Allocate has invested heavily in developing a web-enabled infrastructure that is capable of being run on a multi tenant SaaS basis. The move into SaaS, with the lure of recurring revenue, is a necessary one if the company is to achieve its three-year turnover goal. Zircadian’s product is also a technical fit, being built on the Microsoft .NET platform, like Allocate’s own products.
It is a £7m acquisition, which makes it one of Allocates larger purchases. It is expected to be earnings enhancing in the first full financial year of ownership.
Despite the spending cuts there will be winners in the UK healthcare market and Allocate Software has much to recommend it – under CEO Ian Bowles it has certainly emerged as a dynamic player in the sector.