Continuing its buying binge, Healtheon (HLTH)-WebMD agreed yesterday to lay out something like $5 billion in stock to swallow up its one close competitor in the nascent business of automating the flow of doctor, patient and insurance-company paperwork over the Internet. Healtheon-WebMD will issue new stock to acquire Internet competitor CareInsite and its majority owner Medical Manager (MMGR). Wall Street liked the arrangement, rewarding the stocks of all three companies with healthy gains yesterday.
The media disagreed about the merger's value - a common occurrence for all-stock deals in a volatile market. Based on Friday's closing prices, the New York Times assessed the deal at $5.2 billion. The Wall Street Journal and the San Jose Mercury News said $5.4 billion, while the Financial Times and the Motley Fool went with $4.9 billion.
Reports also differed over how many doctors would be involved. The Merc said Medical Manager serves 185,000 doctors while Healtheon works with 65,000. The Wall Street Journal, apparently using a broader definition of a doctor "relationship," implied that Healtheon-WebMD's number is closer to 215,000; the Journal pegged the number of doctors working with the merged company at 400,000, out of a total number of physicians the Times reported as 777,000. So it's a bit of a mystery how the Merc could conclude that the combined companies' network will "[reach] 80 percent of all physicians in some form." For the Merc, such a figure raised the specter of FTC intervention in the merger. None of the other outlets even mentioned the FTC.
But what else can we expect from an immature and fast-morphing market? As Brian Graney wrote for the Motley Fool: "The interconnected relationships between the various operational elements of the growing Healtheon-WebMD will no doubt lead to a great deal of confusion on the part of investors, but a general air of disarray is not an altogether unfamiliar element of the health care business." Say on, Graney.
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The Industry Standard
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San Jose Mercury News
Healtheon Agrees to Acquire Medical Manager, CareInsite
Wall Street Journal
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New York Times
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