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Information technology services industry

E-Health Sector Mergers Face Opposition

Strategic Insights

— 1 min read

The medical technology industry has seen significant consolidation attempts in the e-health sector, but several deals have faced opposition from investors. Two notable mergers, TriZetto Group's agreement with IMS Health and Neoforma.com's with Eclipsys Corp., have been canceled due to investor backlash. The collapse of these deals highlights the challenges facing the e-health sector, marked by sluggish stock prices and market uncertainty.

Key Takeaways:

  • TriZetto Group Inc. and IMS Health Inc. canceled their merger agreement in May due to opposition from Wall Street, which resulted in a significant drop in stock prices.
  • Neoforma.com Inc. and Eclipsys Corp. terminated their merger agreement, citing opposition from investors and the sluggishness of the e-health sector.
  • MedicaLogic Inc. and Medscape Inc. successfully completed their merger in May in a stock swap valued at $154 million, down from the initial $734 million valuation in February.
  • The combined company, MedicaLogic/Medscape Inc., will operate under a new brand following the merger.
  • TriZetto Group will pay $255 million in stock to acquire IMS' Erisco Managed Care Technologies unit, which sells managed care software to insurers.
  • IMS will utilize TriZetto's Internet portal to further its online strategy.

Statistics:

  • The initial valuation of the MedicaLogic and Medscape merger was $734 million in February, but the completed deal was valued at $154 million.
  • TriZetto Group will pay $255 million in stock to acquire IMS' Erisco Managed Care Technologies unit.
  • The combined company, MedicaLogic/Medscape Inc., will operate under a new brand following the merger.
  • The e-health sector has seen significant consolidation attempts, but the collapse of several deals highlights market uncertainty and opposition from investors.
  • TriZetto Group is an application service provider, and IMS is a pharmaceutical data company.

Sources:

  • "TriZetto, IMS Health Call Off Merger" (The Associated Press, May)
  • "Neoforma, Eclipsys Scrap Merger Plans" (San Francisco Business Times, May)
  • "MedicaLogic, Medscape Acquire Each Other" (Reuters, May)
  • "TriZetto, IMS Health File Merger Plans" (San Francisco Business Times, March)
  • "Eclipsys, Neoforma Won't Merge" (Modern Healthcare, June)

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