Malvern-based Scala, pioneer in digital signage, sold to Ohio competitor

Tom Paine

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Scala, Inc., the Malvern-based company that's been a global leader in the digital signage industry, has agreed to sell a controlling majority interest in itself to Dayton, Ohio-based Stratacache, it was announced Monday. Terms were not disclosed.

The website Sixteen-Nine.com, which covers the digital signage industry, noted that "the deal is not all that big a surprise, as Scala has been known to be on the market, for the right price, for the last few years. The executive house-cleaning that saw CEO Tom Nix and several other execs leave in June was a bit of a signal that things weren’t going all that swimmingly for the company."








While Scala had long been the gold standard in the industry, it had suffered in recent years from its attachment to a proprietary architecture in a market that was increasingly moving to open source, among other factors. But Scala's value to Stratacache is in its unmatched global partner network.

"Combining the largest U.S. digital signage company with the largest international digital signage company will provide significant operational synergies and allow both firms to deliver enhanced solutions and services to customers across the globe. Stratacache’s strong balance sheet and large-scale operations will enhance Scala’s competitive edge – and Scala’s global channels and significant reseller and partner network will fuel Stratacache’s growing business outside of the United States," Stratacache’s release announcing the deal stated.

Scala was founded in 1987 by a Norwegian entrepreneur, and as I understand it landed in West Chester to be close to Commodore International, as its initial platform was based on the Amiga. However, Commodore soon thereafter folded and Scala eventually switched to Windows, but remained in West Chester until moving to Malvern in recent years.

But Scala continued under largely European ownership and board oversight.

While Scala was never a huge local employer (59 according to the latest count on LinkedIn), its force multiplier was its large international partner network. And I'm sure that if that network wasn't getting the product or support it needed, those issues found their way back to the board.

Stratacache has 270 employees, presumably not including those joining from Scala, according to the Dayton Business Journal.

NextGen Healthcare (Horsham) parent Quality Systems settles with activist investor; Could sale be in the future?

Tom Paine

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Quality Systems, Inc., the Irvine, California-based corporation whose primary business unit is Horsham-based NextGen Healthcare, may be looking for a buyer, according to some reports.

Speculation was heightened by an agreement announced on Wednesday between Quality and activist investor Clinton Group, in which Quality is expected to add three of the investor's nominees to its board, two of whom will also serve on a transaction committee which will evaluate Quality Systems' strategy and direction.

Quality Systems, which provides electronic health record (EHR) systems and related services, was riding the wave of "meaningful use" funding authorized by the Federal stimulus program to incentivize medical practices to adopt electronic record keeping. The stock hit $48.50 in September 2011, but closed at $22.01 (NASDAQ: QSII ) on Friday as growth has lagged behind several other EHR providers, giving it a current market value of $1.3 billion.

Qaulity reported revenue of $460.2 million for its fiscal year ending March 31, 2013, an increase of 7% over the prior year. Net income was $42.7 million, a decrease of 44% from the prior year. Revenue generated by NextGen's operating units account for well over 90% of Quality's total revenue.

An analyst quoted in an Med City News article names Siemens, whose Malvern-based Healthcare IT unit already partners with NextGen in certain areas, as one possible buyer should it be sold.

Patrick B.Cline co-founded Clinitec, based in Horsham, in 1994; it was acquired by Quality Systems two years later and became the foundation of NextGen Healthcare. Cline retired from NextGen and Quality at the end of 2011, and is currently CEO of Irving, Texas-based Lightbeam Health Solutions.

Conshohocken-based CardioNet to reorganize corporate structure, become BioTelemetry, Inc

Tom Paine

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Conshohocken-based CardioNet, a pioneer in telemetry-based cardiac monitoring, announced a proposed major corporate reorganization along with its quarterly earnings announcement on Monday. Pending shareholder approval, it will adopt a holding company structure and change its corporate name to BioTelemetry, Inc. CardioNet and acquisitons Cardiocore and Braemar will become operating subsidiaries of BioTelemetry. BioTelemetry will continue to trade on the NASDAQ under the symbol "BEAT".

CardioNet CEO and President Joseph H. Capper said in a statement: “Qur strategy is to achieve sustained long-term growth by solidifying our leadership position in remote cardiac monitoring; building a leading research services business; and identifying markets that would benefit from the application of our wireless platform and proprietary technology. As a result, we recently launched a more comprehensive sales approach in our patient services business and acquired Cardiocore in order to expand our research services capabilities. Simultaneously, we have built an operational infrastructure capable of sustained growth in several areas of the developing mobile health services market. Consequently, we expect to derive economic and functional benefits through the alignment of our adjacent businesses, each with distinct brand equity, under this holding company structure."

Although Capper was not very specific during the earnings conference call (free registration required for transcript) in identifying the markets BioTelemetry might expand into under its new structure, the implication is that it plans to move beyond cardiac monitoring into other areas of remote health monitoring, as well as expanding research applications for the patient data it collects. In this sense, it is possible CardioNet's strategy may begin to look more like that of Sotera Wireless, a California-based venture that Safeguard Scientifics took a 7.7% stake in earlier this year as I wrote about here.

Dr. Eric Topol, the cardiologist and leading wireless healthcare technology pioneer who is now Chief Academic Officer of Scripps Health and serves on Sotera Wireless' board, was the first physician to serve on CardioNet's Medical Advisory Board in 1999, although to the best of my knowledge he no longer has a connection to CardioNet.

CardioNet, which did an IPO in 2008 and moved to Conshohocken from San Diego, has since suffered due to reimbursement rate cuts by payers and questions by some about the value of its services. It has since recovered somewhat and is showing revenue growth again, although its still losing money. BEAT closed today at $2.76, well down from its 2008 post-IPO high of $34.50.




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Marlton-based ONPATH Technologies acquired for $40 million

Tom Paine

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One recent transaction I missed involving an area tech company was the acquisition of Marlton-based ONPATH Technologies by Massachusetts-based NetScout Systems, Inc., which was announced on November 1 of last year. In an SEC filing, NetScout said it would pay $40,000,000 for ONPATH minus the cost of any company debt.

NetScout describes ONPATH as "an established provider of scalable monitoring connectivity solutions for high-performance networks that aggregate and distribute network traffic for data, voice, and video testing, monitoring, performance management, and CyberSecurity deployments." NetScout said in announcing the deal that about 45 existing ONPATH employees will be integrated into NetScout’s ongoing operations. NetScout Systems, Inc. (NASDAQ: NTCT) decribes itself as a "market leader in Unified Service Delivery Management enabling comprehensive end-to-end network and application assurance." In its last quarter NetScout reported net income of $11.1 million on revenue of $91.6 million,up from $83.3 million a year ago.

A spinoff from Brocade Communications Systems, ONPATH received reported funding of at least $11.5 million from investors including Blueprint Ventures, GKM Ventures, L Capital Partners and The Carlyle Group. It raised an additional $1 million last year.

With its acquisition, I have removed ONPATH from Philly Tech News' 'Young Companies to Watch' and added Hamilton, NJ-based Billtrust, which recently received a $15 million investment from Bain Capital. A major update and expansion of that list should be out within a few weeks.




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Philly Tech News VentureWatch 12/3/2012: 5 startups report new funding

Tom Paine
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InsPro Technologies, the Eddystone-based Insurance SaaS provider I recently profiled, has raised $1.5 million out of a proposed $3 million offering, according to a recent SEC filing. CEO Robert Oakes had told me the company would be raising one more round that should get it over the hump, funding wise, and this apparently is it. Past investors have included Cross Atlantic Capital Partners and Independence Blue Cross.

Xtium, the King of Prussia-based Cloud Services provider, has raised another $2 million. Xtium raised a $11.5 million Series A round of funding from Boston-based OpenView Venture Partners last year.

Southampton-based Smart Structures, Inc., which provides wireless Embedded Data Collector (EDC) solutions to monitor the integrity of concrete foundations, has raised $210,000 of a proposed $2 million offering. Smart Structures had previously raised about $2.3 million, according to SEC filings. Previous investors have included Ben Franklin Technology Partners of Southeastern Pennsylvania, Delaware Crossing Investor Group, and Emergent Growth Fund.

Philadelphia-based PHmHealth LLC has raised $175,000 of a $750,000 offering. PHmHealth says its platform allows home health care providers to check in through its NFC-enabled app verifying the visit and uploading the collected data to a secure cloud-based server.

Glen Mills-based Versify Solutions, which markets an energy usage management and trading platform, has raised $406,000 out of a total offering of $500,000. Versify had previously raised at least $2.3 million.
Past investors have included Fairbridge Venture Partners and Ben Franklin Technology Partners of Southeastern Pennsylvania.




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Daily Links 9/28/2011: Comcast testing theme-based Cable packages in Connecticut; small step towards a la carte pricing?

Updated: Amazon Stunner: New Kindle Tablet Will Go For $199 (paidContent)

The Kindle Fire Will Have A Whole New “Cloud Accelerated” Mobile Browser Called Amazon Silk (TechCrunch)

Kindle Fire will prime the pump for Amazon Video (Gigaom)

Comcast Testing Theme-Based Cable Packages In CT; A National First For Choice? (Hartford Courant)
A small move towards a la carte pricing?

SAP upbeat in face of global economy worries -paper (Reuters)

INTERVIEW: NetSuite CEO Zach Nelson On Why The Cloud Will Eat Microsoft And SAP (Silicon Alley Insider)
Nelson: "The first thing I've discovered is SAP actually doesn't work... ".

Comcast Ventures Announces Formation of CTI Towers, Inc.
Anthony F. Peduto Named CEO (Business Wire)

Connectify Secures Strategic Investment from IQT to Advance Wireless Networking Capabilities for U.S. Intelligence Community (PR Newswire)
Philly-based network tech company gets investment from CIA-backed VC firm.

USA Technologies Reports Record Full Year and Fourth Quarter Revenues (Business Wire)

NewSpring Capital cinches up $220M for mezzanine fund (Philadelphia Business Journal)

Analyzing the SAP/Crossgate Acquisition: Customer, Product and Competitive Implications (Part 2) (Spend Matters)

Online Ad Revenues Hit $15 Billion in First Half 2011 (ClickZ)

QlikView on Mobile Expands Support for Apple iOS, Android, and BlackBerry Platforms (Business Wire)

Kenexa and The Brooklyn Group Announce Joint Venture
Relationship Expands Kenexa's Footprint in the Australian Talent Acquisition Market (Marketwire)



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A piece of Philly Tech history: Digital Access, Inc.

Private Equity Hub (published by Thomson Reuters) ran a piece this week, on the heels of solar panel maker Solyndra's bankruptcy filing, on what it calls the 10 of the largest VC busts over the last 20 years. (Its slideshow doesn't seem to be working). Third on its list was Bala Cynwyd-based Digital Access Inc., which raised $490 million between 1999 and 2001 before shutting down in 2001.


Digital Accees was building broadband fiber networks to compete with companies such as Comcast in several midwestern cities. As the telecom bubble burst, there was an oversupply of fiber capacity and the company simply could not raise more money. Digital Access also blamed regulatory delays that slowed buildouts in some cities. Investors included Goldman Sachs and Bala Cynwyd-based Bachow & Associates, which still has a website up but with very little information on it other than past investments. Joseph W. Cece, who previously ran Suburban Cable (acquired by Comcast in 1999), was its CEO.



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