Healtheon Corporation Acquires WebMD in $7.85 Billion Stock Deal

The Healtheon Corporation, a fast-growing Silicon Valley start-up, has announced its acquisition of WebMD Inc. in a stock deal valued at $7.85 billion. The combined company, Healtheon/WebMD, will have a stake of more than 10 percent in Microsoft Corporation and will receive $100 million in advertising from the software giant. Healtheon/WebMD aims to link doctors, patients, and health care providers through the Internet, leveraging the platform's potential to revolutionize the health care system. The acquisition is seen as a bold move by Healtheon to establish itself as a leader in the rapidly evolving health care industry.

Key Takeaways:

• Healtheon and WebMD have combined to create a large health care company with a market value of $7.85 billion.
• The acquisition will see Microsoft Corporation become a significant stakeholder in the new company, with a stake of over 10 percent.
• Healtheon/WebMD plans to link doctors, patients, and health care providers through the Internet, focusing on electronic health care claims processing and on-line registration for health plans.
• The new company has ambitious goals, including linking hundreds of thousands of doctors to $800 million in annual health care spending, and creating a lucrative audience for drug company advertising and other medical marketers.
• The merger raises concerns about the quality and accuracy of health care information, as well as the protection of patient data and privacy.

Statistics:

• The acquisition deal is valued at $7.85 billion.
• Healtheon has sold $250 million of its high-flying stock to Microsoft Corporation.
• Microsoft has pledged $100 million in advertising to the new company.
• Healtheon/WebMD aims to have positive cash flow by the end of next year.
• The combined company expects to process electronic claims for the United Healthcare Corporation and provide on-line enrollment services for health plan members.
• Healtheon/WebMD has a growth plan to reach out to 180,000 doctors for free introductory access over five years.

Sources:

• The Wall Street Journal, "Healtheon Buys WebMD in $7.85 Billion Stock Deal"
• The New York Times, "Deal to Merge Healtheon and WebMD Stirs Health Care"
• Forbes, "The Rise of Healtheon: How a Silicon Valley Start-Up Could Change Health Care Forever"