CBaySystems CEO Raman Kumar's words will vouch for his deal with MedQuist, “This is the big one, the one we’ve been waiting for,” after the $285 million (1425 crores) deal struck with Royal Philips Electronics that has straightaway catapulted his company to the number one slot in medical transcription industry from number three. After announcing the sealing of deal in May last year, the combined revenues of Cbay Group stood at $400 million (2000 crores) and thus almost dwarfed its nearest competitor Spheris. As per the business data, the deal was backed by SAC Private Capital Group and Lehman Brothers who put in $123 million (615 crores), thus giving them 57.8% stake in the combined share capital of CBaySystems Holdings while Philips will maintain a convertible equity stake in the company.
With an average growth rate of around 70% since its inception, Cbay Systems has managed to achieve what no other MT company has ever achieved, taking control of US healthcare operations through its offices, franchies, offshore centers.
But, the deal might not have come to Cbay without its added litigations. As it is well known, alleged over-billing practices have put MedQuist into financial and legal wrangles, lawsuits, compensation payouts, and a Nasdaq de-listing. Raman Kumar set his eyes on MQ some 6 years back only, according to him, “In 2003 MedQuist got into trouble. This is when we knew that the company would become a target at some point.” From that point onward, the market leader in MT industry started taking a downward trend and showed 6% slump in revenues, thus giving the CBay opportunity to snap up Phillips' 69.5% stake at a rate of $11 per share. Being an Indian, Raman Kumar knows how the system works in India. In his own words, “MedQuist has kept its exposure to India to a minimum because it’s a minefield. If you don’t know how to navigate the country, you can end up with problems. You need to be a specialist in India and that’s what CBay brings to the deal.” He adds, “I believe that integration will be simple. When you combine a high-price seller, such as MedQuist with a low-cost producer like CBay, you create a magnum opus.”
Though not officially confirmed yet, if rumor mills are to be believed, CBay has struck the deal with Spheris to take it over, and as it can be seen that Spheris India website http://spherisindia.com is not loading, giving the rumor further authenticity boost, that something is wrong with Spheris and everything is good with CBay. Maybe, we can say now that only 4 large players are left in India in MT industry, CBay, Focus, Heartland, and Acusis, but it will be really interesting to know who will be the final Big TWO.
© 2010 Ranjan Kumar
