WebMD (Nasdaq: HLTH) on Thursday gave investors their first peek at the company's long awaited restructuring plans. The company said the first phase of its cost-cutting will eliminate 1,100 jobs by the end of calendar 2001, consolidate operations and divest two stray subsidiaries.
The restructuring was expected by Wall Street, which has taken a wait-and-see approach with WebMD, the former Healtheon, which recently got shareholder approval for the acquisitions of Envoy, Medical Manager, CareInsite and OnHealth.
Judging from WebMD's release, Thursday's announcement is just the first installment of a series of moves. The company said it will detail its integration plans Oct. 12 in an analyst meeting to be Webcast.
WebMD's restructuring moves are designed to save $250 million by the fourth quarter of 2001. The company plans to take a restructuring charge of $35 million and $45 million for the quarter ended Sept. 30.
WebMD said it will incur additional costs related to moving and relocations and plans to give employees severance packages and outplacement services.
The company may terminate existing business relationships and plans to divest its plastics and filtration technologies subsidiaries. WebMD "received indications of interest from several potential buyers and plans to explore various divestiture alternatives in consultation with financial advisors."
In other news, WebMD also made a few management changes. Anthony Vuolo has been named chief financial officer, filling the vacancy created by the retirement of John L. Westermann III. Until WebMD's merger with Medical Manager and CareInsite, Mr. Vuolo had been senior vice president of business development at Medical Manager. Charles A. Mele, former general counsel of Medical Manager, will join Jack D. Dennison as co-general counsel of WebMD.
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