St. Paul, Minnesota-based tech and manufacturing conglomerate 3M is acquiring the technology business of Franklin, Tennessee-based healthcare IT vendor M*Modal for $1 billion.
M*Modal specializes in building cloud-based conversational AI systems to ease the burden of physician documentation. The deal is estimated to close in the first half of 2019, subject to regulatory approval.
“This acquisition builds on our strategic commitment to invest in our Health Information Systems business and expands the capabilities of our revenue cycle management and population health priority growth platform,” Mike Vale, executive vice president of 3M Health Care Business Group said in a statement.
Over the past decade 3M have made a series of Health IT additions to their portfolio as they continue to build up their business with providers and payers. Some examples include the acquisition of medical coding companies CodeRyte and Semfinder and the $810 million purchase of early patient warning company Arizant in 2010.
3M’s health care business generated generated $5.8 billion in sales and $1.7 billion in operating profits in 2017. The M*Modal technology division being acquired by 3M earns roughly $200 in annual revenue and around 750 employees are expected to join the company when the deal closes.
The transaction does not include M*Modal’s transcription, medical scribing and coding business which will maintain its strategic partnership with 3M.
M*Modal was spun out of Carnegie Mellon University in 2001 and developed natural language processing technology to ease documentation pressures and speed up workflows by allowing for voice-enabled ordering of medication and procedures.
Over the intervening years the company has had a somewhat checkered business history, filing for Chapter 11 bankruptcy protection in 2014 after a $1.1 billion acquisition in 2012 by One Equity Partners, the private equity arm of JP Morgan Chase. The company was previously acquired by the public company MedQuist Holdings in 2011 for $130 million.
M*Modal President Michael Finke said in a statement that the acquisition will allow the company’s technology to spread to more customers and inject conversational AI into clinical workflows around the world.
Photo: Kritchanut, Getty Images
