In announcing its 2011 financial results this week, the San Mateo, Calif.-based company said that its two-year-old EHR development project "has hindered our ability to aggressively pursue" growth opportunities related to its network of 340,000 physicians, interim president and CEO Peter Brandt said in a statement. That realization has led Epocrates to put its EHR assets up for sale or at least look for a strategic partner, Brandt said in a conference call with investors and stock analysts.
Epocrates also reported a net loss of $3.6 million in 2011, including $6.5 million in red ink during the fourth quarter. The company lost $3.8 million the year before, but posted net income of $2.7 million for the 2010 fourth quarter. Annual revenue increased by 9% to $113.3 million last year from $104 million in 2010.
"EHR is a big endeavor," Epocrates chief medical information officer Dr. Thomas Giannulli told InformationWeek Healthcare. "We just couldn't fight a two-front war."
[Learn about some of the latest e-prescribing tools at 6 E-Prescribing Vendors To Watch.]
The news comes just a week after Epocrates debuted a widely anticipated native iPad version of its EHR at the 2012 Healthcare Information and Management Systems Society (HIMSS) conference in Las Vegas. The mobile EHR app, the first product Epocrates had specifically designed for the iPad, is part of the assets being offered for sale, according to Giannulli.
Epocrates had stumbled a bit with developing the ambulatory EHR product, aimed at small practices, pushing back the release of its Web-based primary care system from late 2010 to July 2011. But the company had been building momentum, earning certification for Stage 1 of the federal Meaningful Use incentive program so its customers could qualify for Medicare and Medicaid bonus payments.
Still, Giannulli said the product needed a lot of work, particularly as the health IT industry transitions to Stage 2 of Meaningful Use with last week's release of proposed rules for the next phase. "It wasn't feature-complete yet," Giannulli said of the current Epocrates EHR.
"Stage 2 was part of the uphill battle that would take us further from our core business," the CMIO added.
Epocrates has not said how many customers will be affected by the planned sale, but Brandt confessed in the conference call, "We are already late to the game in an already crowded marketplace."
Giannulli said existing Epocrates EHR users would be "made whole and made happy," though he did not elaborate. "We don't want to tarnish our brand."
Healthcare providers must collect all sorts of performance data to meet emerging standards. The new Pay For Performance issue of InformationWeek Healthcare delves into the huge task ahead. Also in this issue: Why personal health records have flopped. (Free registration required.)