Calsoft to buy American HealthNet

California Software (Calsoft) is to pay $1million take a 51 per cent stake in a US software company American HealthNet (AHN). The $ 6.5 million AHN's existing management team in the US is to continue.

AHN's software business is aimed at small hospitals. Calsoft's managing director S Santosh said the majority stake in AHN gave the company a chance to enter a vertical business. The stake would give Calsoft three members in the five member board.

AHN registered a loss of $ 600,000 last year. AHN's executive vice president, Steven Nelson, told a press conference on Tuesday that the company picked a partner who could bring in management expertise.

Calsoft has done software development work for AHN before. The knowledge it brings to the table helped lower the cost of acquiring AHN's equity. A company official said that generally in North America, a product company is valued between 3.5 to 6 times its sales.

While AHN's management would continue, Calsoft expects to prune some of the US-based workforce. Santosh said that some of the on-site workforce would be pruned.

The information technology solutions market for the healthcare industry in the US is expected to be about $ 50 billion this year.

Nelson said that the company's key product aims to provide all departments of a hospital with complete information about patients. Some of the larger hospitals in the US have fragmented information systems, thereby, leading to duplication of work.

AHN's products are meant for hospitals with up to 250 beds. Nelson said that the company's target market would be about 4,000 of the 5,000 hospitals in the US.

Calsoft's current move comes on the heels of acquisitions in two Indian infotech companies this year. It had acquired 51 per cent in the Kochi-based Team Frontline and 100 per cent in Web Spectrum that is located in Bangalore.

Santosh said that Calsoft, which is listed in Indian stock exchanges, expected to end the current year with a turnover of about Rs 44 cror