Veradigm, a struggling electronic health records company formerly known as Allscripts, has made a bold move to revitalize its business by acquiring ScienceIO, a startup specializing in generative AI models. ScienceIO's models, powered by powerful GPU chips, have the potential to transform Veradigm's vast medical data into structured and usable information.

After facing significant challenges, including a $145 million settlement with the Department of Justice and a delisting from Nasdaq, Veradigm's interim CEO Yin Ho sees ScienceIO as the cornerstone of a Hail Mary strategy for the company's future. The acquisition, valued at $140 million, aims to leverage ScienceIO's AI models to analyze and incorporate Veradigm's trove of medical records, encompassing 200 million patient records and 5 billion doctor's notes.

ScienceIO's language models are specially trained on healthcare-specific datasets, enabling them to efficiently process and structure the often complex and unstructured clinical notes. This breakthrough technology has the potential to significantly reduce the labor-intensive process of cleaning and organizing information, transforming it from months to mere days.

One of Veradigm's unique strengths lies in the ownership of data rights, allowing the company to link patient records between different doctor's offices over extended periods, while ensuring privacy through de-identification. This capability sets Veradigm apart from other medical record companies that typically don't own the patient data flowing through their systems.

The partnership between Veradigm and ScienceIO opens up a lucrative market as pharmaceutical companies seek real-world data to understand how patients react to drugs outside of clinical trials. The FDA has recently started expediting the drug approval process using real-world data, making the market for this type of data expected to reach $7.5 billion this year.

By combining Veradigm's proprietary data rights and ScienceIO's AI models, the companies aim to sell de-identified patient records to pharma companies starting in 2025. The initial focus will be on three areas: cardiac, metabolic, and central nervous system diseases. Interim CEO Yin Ho projects a 10% growth in revenue by 2026, provided that the company can successfully navigate the technological and healthcare expertise challenges ahead.

While Veradigm is profitable and has cash-on-hand following the acquisition, some analysts remain skeptical of the feasibility of the proposed growth targets. The stock has remained flat since the announcement of the acquisition, prompting Ho and ScienceIO CEO Will Manidis to embark on a roadshow to convince bankers of the company's AI-powered future.

This acquisition marks a pivotal moment for Veradigm, which has undergone various reinventions over its nearly four-decade history. Originally founded as Allscripts in 1986, the company shifted its focus to electronic health records and patient data. Veradigm's current leadership aims to leverage the vast potential of its data to fulfill the vision set forth 15 years ago.

As Veradigm embarks on this new chapter driven by AI-powered healthcare data, the potential to revolutionize the industry and provide invaluable insights becomes increasingly tangible. Privacy concerns, data quality, and the ability to meet growth targets remain key challenges, but Veradigm's strategic acquisition of ScienceIO positions it well for future success in a rapidly evolving healthcare landscape.