Misys Plc Business Information, Profile, and History
Evesham WR11 8SP
Today, Misys is one of the world's largest independent applications software products groups and the UK's biggest. Its main activities include selling software solutions to banks, transaction processing and claims administration for physicians in the U.S., systems for insurance brokers in the U.K., and administrative and compliance services for Independent Financial Advisors, or IFs.
History of Misys Plc
As of 2002, Misys plc was one of the world's largest independent applications software products groups. The United Kingdom-based company had operations in more than 30 countries. Its principal activities were the development and licensing of application software products to customers in well-defined vertical markets. Founded in 1979 to provide computer systems to insurance brokers in the United Kingdom, the company expanded in the 1990s through acquisitions to reduce its reliance on a single market and began providing software solutions to the banking and securities, healthcare, and financial services markets. While Misys's banking and securities division serves global markets, its healthcare division serves the U.S. market only, and its financial services division serves insurance brokers and independent financial analysts in the United Kingdom.
Rapid Growth and Diversification: 1979-95
Kevin Lomax, the chairman of Misys, was the lead investor when Misys was founded in 1979 with private capital. He served as non-executive chairman until 1985, when he became the firm's full-time executive chairman. As a supplier of computer systems to insurance brokers in the United Kingdom, Misys grew rapidly. In 1987, it gained access to public capital by floating its stock on the Unlisted Securities Market. In 1989, the company's stock became listed on the main London Stock Exchange.
Toward the end of the 1980s, Misys decided to broaden the range of its activities and reduce its dependence on a single market. It began a series of acquisitions designed to strengthen its market position and increase its presence through consolidating different market segments. In 1992, Misys acquired a 20 percent interest in Countrywide IF Network, a collective of independent financial analysts (IFs). Misys subsequently acquired all of Countrywide and used it to become a dominant presence in the IF market. In 1994 Misys acquired Kapiti, a financial services software firm with 15 international offices, giving Misys a significant presence outside the United Kingdom. Kapiti was subsequently renamed Midas-Kapiti International Ltd. (MKI).
Although Misys was still considered a "little-known software company," according to Computer Weekly, its 1995 takeover of ACT Group plc made it Great Britain's largest software supplier. Misys's 212-million-pound acquisition of banking software developer ACT Group gave it control of three of the five principal banking software products in the world: Equation, Bankmaster, and Midas. The ACT Group had been troubled by an expensive and overly complicated research and development project called DBA, which was costing it many millions of pounds and involved 20 man-years. Following the acquisition, Misys renamed the subsidiary ACT Financial Systems and replaced its managing director and finance director.
Entering U.S. Healthcare Market: 1997-98
By 1997, Misys had operations in 50 countries, with more than half of its revenue coming from outside the United Kingdom. The company's 1997 annual report noted that 22 percent of its revenue came from emerging markets. For fiscal 1997 ending May 31, the company had net revenue of $477 million (£325 million) and earnings before taxes of $99 million. It had nearly 4,000 employees, including more than 350 in Ireland and about 1,000 in offices around the world.
Toward the end of 1997, Misys expanded into supplying software solutions for the U.S. healthcare market with the acquisition of Medic Computer Systems for $923 million. Based in Raleigh, North Carolina, Medic provided practice management information systems for physicians and was considered one of the top five health care information technology companies in the United States. Its product line consisted of three software suites: +Medic PM was targeted toward smaller physician practices; the recently launched +Medic Vision served larger physician groups and was especially appropriate for managed care; and AutoChart was designed for use by individual physicians to access and maintain patient clinical records. For fiscal 1996, Medic had revenue of $192 million and net income before taxes of $39 million.
Following the acquisition, Medic became the corporate headquarters for Misys's healthcare division. The healthcare division consisted of Medic, which operated exclusively in the United States, and ACT Medisys, which operated in the United Kingdom and some overseas regions. ACT Medisys sold hospital and laboratory systems to private and public customers.
The newly created healthcare division was the company's fourth. Its other divisions were banking and securities, insurance, and information systems. The company's banking and securities division was the world's largest independent supplier of software products to this sector and had more than 1,600 customers in 100 countries. The division had 24 branch offices in addition to those in the United Kingdom and Ireland. It served the wholesale banking market, the retail banking market, and provided software for corporate banking activities.
Misys's insurance division supplied computer systems, software, and related services to the General and Life & Pension markets in the United Kingdom. It also provided transaction processing services. During 1997 and 1998, the insurance division was involved in developing a retail Web site for insurance products through Misys Interactive Trading.
The information systems division provided software products and services to a variety of vertical markets in the United Kingdom, including contracting and construction, the hotel and leisure industry, and manufacturing and distribution.
For fiscal 1998 ending May 31, Misys reported revenue of £448 million and an operating profit of 98 million pounds. The banking and securities division contributed £252 million toward revenue and had an operating profit of £71 million. The healthcare division had revenue of £83 million and an operating profit of £13 million. The insurance division reported revenue of £50 million and had an operating profit of £13 million, while the information systems division had revenue of £47 million and an operating profit of £5 million. During fiscal 1998, Misys disposed of Misys Computer Services and Misys Integrated Solutions, which comprised its support services businesses, for £10 million. The two companies joined with Zygal Dynamics, which sold printers to banks, to form a desktop management company, Cyberdesk.
Growth Through Acquisitions: 1999-2001
At the beginning of 1999, Misys acquired C-ATS Software Inc. for about $60 million in cash. C-ATS was based in Palo Alto, California, and developed risk management and other sophisticated financial software. C-ATS had become a takeover target following substantial losses in 1997 and 1998. Its flagship software product, Carma, served large banks and other financial institutions by helping them manage their risks and exposure to interest rate fluctuations and other market swings. Following the acquisition C-ATS was renamed and became a subsidiary of Misys subsidiary Midas-Kapiti International Ltd. (MKI), which also provided software applications to the securities and banking industries. Midas-Kapiti had 1,200 customers in 90 countries and provided software to 18 of the world's 20 largest banks.
In addition to acquiring C-ATS Software during fiscal 1999, Misys also sold all of its operations in the information systems division to a group of investors that included their management for about £32 million. As a result of disposing of those non-core assets, Misys was now focused entirely on financial services--including insurance--and healthcare. For fiscal 1999, Misys reported revenue of £582 million and an operating profit of £135 million.
Believing that the Internet would be a catalyst for a fundamental restructuring of many financial services internationally, Misys was determined to establish a pivotal position in Web-based financial services. It planned to build twin Web portals that would serve both independent financial analysts (IFs) and consumers in the United Kingdom. During fiscal 2000, Misys invested £11 million in its portal initiative.
The company's Internet strategy also extended to healthcare and insurance. In the United States, Misys and Medic entered into an alliance with Healtheon/WebMD, a leading healthcare e-commerce business. The terms of the alliance were finalized in January 2000, resulting in Misys gaining up to 4.4 million warrants in Healtheon/WebMD and revenue sharing from new Internet services to be offered to Medic's physician base. In the United Kingdom, Misys's newly established Internet services division was pursuing an investment and marketing program to establish Screentrade as the dominant insurance portal. Screentrade provided U.K. consumers with comparative insurance quotations and the ability to purchase car, home, and travel insurance over the Internet.
In fiscal 2000, Y2K issues affected Misys's banking and securities division as well as its healthcare division. In banking and securities, Misys checked every customer's system for Y2K compliance and, where necessary, provided the required upgrades. This massive project involved systems spread across 110 countries. In the U.S. healthcare market, Y2K concerns resulted in an anticipated slowdown in activity. The healthcare division reported sluggish demand for its larger systems, while demand for small and medium-size systems was strong in the early part of 1999 as old systems were replaced. During fiscal 2000, Misys strengthened its position in the retail financial services market with the acquisition of Financial Options Group and the i.e. group, which owned the 850-member IF Network. Following these acquisitions Misys created the subsidiary Misys IF Services to consolidate its position in the IF market. Overall Misys reported revenue of £708.8 million for fiscal 2000 ending May 31 and an adjusted operating profit of £130.2 million.
Following several months of testing, Misys's business-to-business portal for IFs, called m-link, launched in July 2000. Later in the year, a free Web builder service was added to m-link that enabled individual IFs to have their own Web site without a set-up cost. IFs could then promote their own Web site to their clients. With the success of m-link dependent on companies offering their insurance and investment products online through the service, Misys signed up seven of the United Kingdom's largest life insurance companies in October 2000.
During fiscal 2001 ending May 31, the Misys insurance division was renamed the financial services division. Its operations were boosted by two acquisitions in the previous year, the i.e. group and the Financial Options Group. In healthcare, Misys disposed of its U.K.-based health businesses, the ACT Medisys group of companies, in February 2001 for £24 million.
Finding that consumer adoption of the Internet for purchasing personal finance products was slower than expected, Misys closed down its consumer portals, Screentrade and theformula.com, in June 2001. Theformula.com, which was still in development, was to be a consumer financial services portal offering insurance, investments, and mortgages. Misys had been unable to find a suitable partner to share development and marketing costs. The Internet Services division was discontinued, and the company's business portals m-link and i2i-link were consolidated into the financial services division.
Revenue for fiscal 2001 ending May 31 reached record levels again. Misys reported revenue of £849 million from continuing operations and an adjusted operating profit of £140 million. The banking and securities division accounted for 41 percent of the firm's 2001 revenue and 59 percent of its operating profit. The healthcare division contributed 22 percent of Misys's revenue and 24 percent of its profit, while the financial services division contributed 37 percent of the company's revenue and 17 percent of its profit.
In June 2001, Misys announced it would acquire DBS Management plc, a principal competitor in the IF market, and Arizona-based Sunquest Information Systems Inc., which provided clinical systems to hospitals and other acute care facilities in the United States. The acquisition of DBA Management was valued at £75 million and resulted in a Misys-controlled network of 7,250 IFs and 3,700 member firms. That made Misys the largest IF network with 25 percent of all IFs as members. Sunquest Information Systems was headquartered in Tucson, Arizona. Its acquisition by Misys was valued at $404 million. Following the acquisition Sunquest became a subsidiary of Misys and part of its healthcare division.
According to Misys chairman Kevin Lomax, the acquisition of DBS Management marked the end of Misys's acquisitions in the United Kingdom. For the future, the company planned to examine acquisition and development opportunities in Germany, which it considered a mature market similar to the United Kingdom.
For 2002, Misys embarked on a major rebranding strategy to take advantage of the Misys name. Although the company remained committed to the philosophy of individual business units with delegated authority and responsibility, Misys planned to bring most of its banking and healthcare subsidiaries under the Misys name. As part of its rebranding strategy, Midas-Kapiti International Ltd. and related MKI operating units were renamed Misys International Banking Systems. In the healthcare division, Medic Computer Systems and Sunquest Information Systems were both renamed Misys Healthcare Systems.
Principal Divisions: Banking and Securities; Healthcare; Financial Services.
Principal Subsidiaries: Misys International Banking Systems Ltd.; Misys Asset Management Systems; Misys Securities Trading Systems; Kindle Banking Systems (Ireland); Summit Systems, Inc. (United States); Physicians Systems, Inc. (United States); Hospital Systems, formerly Sunquest Information Systems, Inc. (United States); Misys IF Services plc; DBS Management plc; Countrywide Insurance Marketing Ltd.; CWA Claims Services Ltd.; Misys Financial Systems Ltd.
Principal Competitors: Applied Systems, Inc.; DST Systems, Inc.; The Sage Group plc; Sun Life Financial Services of Canada, Inc.
- Key Dates:
- 1979: Misys is founded to provide computer systems to insurance brokers in the United Kingdom.
- 1989: Misys stock is listed on the London Stock Exchange.
- 1994: Misys acquires Kapiti, a financial services software firm with 15 international offices.
- 2001: Misys acquires DBS Management plc and Arizona-based Sunquest Information Systems Inc.
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