PRA Health Sciences Inc., a North Carolina-based clinical research organization that tests drugs, has agreed to pay $520 million for Symphony Health Solutions Corp., a Conshohocken-based medical data company assembled by Silicon Valley investors from mostly suburban Philadelphia-based firms that collected patients' drug prescriptions from doctors and sold the information to drug makers.
"Our use of data has been rising exponentially," PRA chief executive Colin Shannon told investors in a conference call last week, explaining the deal. And "it became vital that we secured a strong, dedicated data supply."
Symphony Health's Integrated Dataverse "contains information on over 280 million lives, including robust, multi-dimensional real world evidence observations," PRA said in a statement.
With sales of around $200 million a year, Symphony employs around 250, according to PRA. That's down from 500 in 2012. The company's profit margin, before financial expenses, was 20 percent last year, PRA chief financial officer Linda Baddour told investors in the conference call. She added that Symphony Health has invested heavily in its systems and "won't have to add a lot of personnel to grow."
PRA is well positioned to afford the deal: Its share price has more than quadrupled, to around $74 in recent trading on Nasdaq, since buyout giant Kohlberg Kravis Roberts sold shares to the public in 2014.
Neal Bibeau will stay in place as Symphony Health's chief executive. He previously headed Alphastaff Group Inc. and DecisionOne Corp.
Shannon called Symphony the "leading provider of integrated health data and analytics delivered as cloud-based solutions," collecting patient data from doctors, securing and processing it to sell to biopharmaceutical companies, including PRA. "We were very culturally aligned, " Shannon added. "They've invested in all the things we need." He said Symphony "has been solely concentrating on building within the U.S." so PRA can start selling the data to its own customers in 85 countries.
The seller is Symphony Technology Group in Palo Alto, Calif., founded by Romesh Wadhwani, who became a billionaire building and selling Aspect Development Inc. in the dot-com era. Symphony Technology at first avoided medical software investments. But managing director J.T. Treadwell told me in 2012 that Symphony Technology had been enticed by the data incentives set up under the Affordable Care Act of 2010, aka Obamacare, as insurers and the government began favoring therapies whose costs could be measured and projected. "We think it's going to be a really interesting decade in health care. We want to be part of it," he said at the time.
Symphony Technology formed Symphony Health from a string of smaller firms in 2012, with plans to build it into a much larger company, as I wrote at the time. Symphony included:
– April 2011: ImpactRx, a Merck-backed, Mount Laurel-based firm, run by Richard Altus, which collected data on physician prescription patterns.
– September 2011: TargetRx, a Horsham firm that had built its own proprietary database of "physician attitudes and behaviors" on drug prescriptions.
– March 2012: AlphaDetail, a Phoenix- and Horsham-based market-research firm focused on drug sales analysis, headed by Rishi Varma.
– May 2012: Source Healthcare Analytics LLC, a California- and Yardley-based "physician-level targeting" firm that bought market and patient data "on an anonymous basis" and sold it to drugmakers.
"We have the ambition of building a great company. We are growing, and we are hiring," and had plans to add "dozens or scores" of engineers, sales and service people over the next few years, Treadwell told me in 2012. He hoped to add "many hundreds of millions of dollars of revenue and profitability," asking, "Who knows what the buying opportunity will be in five or seven years?"
Symphony hasn't reached those targets, according to its recent sales and headcount data. PRA officials didn't immediately return calls.