Thus, when viewing the Carestream acquisition, we should also consider the wider context of the deal. From our perspective, the Carestream acquisition offers new opportunities for the broader Philips healthcare business, as well as pointing to a slight change in direction in terms of strategy. The key points are summarized below:
The Carestream customer base will almost double Philips’ footprint in imaging informatics; given that the market is consolidating and stagnating with longer replacement cycles and few changes of vendor, inorganic growth in customer base is the only way to significantly increase market share quickly. It will also open the door in some markets to cross-sell the strong Philips Cardiology IT portfolio.
Carestream’s experience in enterprise imaging (multiple departments), data management and cloud offerings should drive less proprietary and flexible future Philips informatics offerings. This is particularly important in large-scale enterprise deals that Philips is targeting.
Transition of Carestream’s customer base toward managed service or operational expenditure deals will support Philips’ transition to more predictable revenue.
The deal also provides several new customers for Philips to upsell consultancy and services around operational and workflow for imaging, a clear strategy founded on the establishment of the PerformanceBridge
Addition of the Carestream customer base opens a “foot in the door” for the Philips Tasy EHR and other clinical informatics business, especially in Western Europe, Latin America and emerging Asia Pacific markets.
The Carestream customer base opens the potential to sell into small and midsize provider markets, something Philips has typically avoided in some markets; this may also provide a new opportunity for Philips modality imaging business, most notably ultrasound, general radiography and value-tier CT.
Underlying many of these trends is the ongoing focus from healthcare providers to establish improved efficiency and care quality, as well as reducing the number of vendors and products in the supply chain. As one of the earlier vendors to fully embrace this trend, Philips has for some time been marketing its capabilities as central contractor and partner for healthcare providers. In combining its breadth of diagnostic imaging, clinical care and enterprise informatics into managed service deals with substantial consulting and professional services support, it is looking to “lock-in” customers to long-term, predictable contracts. This has many benefits, particularly in ensuring ongoing demand for its large imaging modality business units that remain a significant revenue driver.
