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GHX and Neoforma announce agreement to merge

GHX and Neoforma have announced an agreement to merge their organizations.

As separate organizations, GHX and Neoforma have worked to develop effective supply chain management solutions that help healthcare organizations reduce costs and improve efficiencies.

To provide the most efficient, cost-effective supply chain management services for healthcare, GHX and Neoforma announce they have agreed to merge their organizations, which promises to deliver the greatest results for the healthcare industry. This merger will enable:

• New and enhanced services for both provider and supplier customers;
• Expanded trading partner base for increased utilization;
• Improved financial strength of GHX, bringing new sources of revenue through the delivery of new services and providing new cost efficiencies.

The partners expect the merger will close in early 2006. A meeting of Neoforma’s stockholders will be scheduled as soon as is practicable, following the preparation and filing of proxy materials with the Securities and Exchange Commission.

VHA and UHC, who collectively own the majority of Neoforma’s outstanding shares, have agreed to vote their shares in favor of the proposed transaction, as have the directors and officers of Neoforma, who represent approximately nine percent of the outstanding shares.

GHX will continue to be led by chief executive officer, Mike Mahoney. GHX will be headquartered in Westminster, Colorado, with North American operations in Nashville, TN, San Jose, CA, Ambler, PA and Toronto, Canada.

Immediately upon closing of the merger, GHX and Neoforma will begin combining their operations and technology. Within 30 days, some consolidation of operations will begin to occur, and the majority of all integration activities completed within a year.

One of the first benefits is scale – there will be more buyers and more sellers connected to the exchange, allowing greater utilization and more electronic transactions.

For suppliers, this increases the benefits of accurate electronic orders, such as reducing manual intervention to correct and process orders with discrepancies. As ordering processes improve, suppliers ultimately benefit from reduced DSOs and increases in working capital, resulting from more accurate transactions and rapid invoice processing.

For hospitals, there is an increase in the number of orders they can process electronically. As they process more low-cost electronic orders, they increase their capability to quickly identify order discrepancies, validate accurate prices, utilize content services to identify and classify products, practice more effective contract utilization and measure other benefits related to improved supply chain practices.

Both provider and supplier customers will benefit from new technology and services available from the combined company. The companies’ combined core exchange offerings will benefit from the intellectual property and knowledge both companies have acquired, thus providing a high uptime environment. HPIS and CMS products from Neoforma will enhance the GHX supplier suite that includes GHX Content Intelligence and MetaFax services. Providers will have access to new reporting tools (including pharmaceutical reporting) and enhanced content and contract management tools.

Current GHX customers will not change their connectivity method and will remain connected to GHX exchange services. No changes or interruptions of any services are anticipated.