Fortune 500 firepower behind Emendo growth

ALAN WOOD
Last updated 05:00 25/11/2013

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Fortune 500 company McKesson acquired Christchurch-based Emendo a year ago, giving the Kiwi company a chance at big-time sales, says its New Zealand boss.

Onetime Emendo chief executive Dave Tinkler now has the title of vice president of McKesson Australia-New Zealand, overseeing 30 people in Christchurch and half a dozen sales staff across the Tasman.

The firepower of a Fortune 500 giant has been important, giving Emendo a growth opportunity that most contemporaries don't have, Tinkler reckons.

"I think it is very difficult for New Zealand companies . . . you hit a ceiling and the ceiling varies a little bit (from company to company) but not very much . . . You get to that point where it's really important to access capital and that's when it gets difficult."

Early capital was "pretty easy" to access but the larger capital for the next stage of growth was the difficult part, he explained.

Tinkler won't discuss revenues for the Christchurch subsidiary or the sale price to San Francisco-based McKesson.

Prior to the February 2011 earthquake the firm's annual software sales were somewhere in the vicinity of $5-$10 million.

The 100 per cent Emendo sale, made by a core group of four shareholders in McKesson plus some smaller "friends and family" stakeholders, had enabled better access to funding.

"We now have better access to capital when we want it, and that to me is one of the major things that most New Zealand companies suffer from - a lack of capital."

Emendo had been in the midst of its own capital-raising process when the 2011 Canterbury earthquakes hit. The process was stopped, then restarted, at which point McKesson became interested in the relative minnow.

"McKesson was one of the people that said, ‘Well we're not going to put capital in . . . but we've got this portfolio gap that we think this [Emendo] fits really nicely'."

Tinkler said the growth into the United States market, with the help of McKesson North American sales staff, had been much stronger than Emendo could have achieved on its own.

From zero sales into the United States, the McKesson staff had in the last year sold into six large hospital or health sites.

"That would have taken us [Emendo] five years to do, it's a slow market."

Emendo sets up programmes to improve operational performance and patient care in hospitals. For example, the software can help a hospital improve patient flow and use of beds and other resources.

Emendo's CapPlan is being used in dozens of hospitals in Australia, Canada and Britain and New Zealand, where the software was being used by a good number of district health boards, including Canterbury.

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McKesson Corp, ranked 14th on the Fortune 500, is a healthcare services and information technology company which partners with the likes of hospitals, doctor's offices, pharmacies, pharmaceutical companies to make these businesses run better. That size gives McKesson a turnover of in the order of US$130 billion, Tinkler notes.

Tinkler said he had agreed to stay with the company for at least two years, but there were no performance "earnouts" associated with that tenure.

Prior to the earthquakes the company had been based in the Scales building, on the corner of Montreal and Cashel streets, and following some time in Worcester Blvd was due to move into a new office space in St Asaph St behind the Epic hub.

"It's the first time since the earthquake we've had a permanent home," Tinkler said.

Fortune 500 company McKesson acquired Christchurch-based Emendo a year ago, giving the Kiwi company a chance at big-time sales, says its New Zealand boss.

- Fairfax Media

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