Healtheon/WebMD Corp. (Nasdaq: HLTH) said Monday it will buy Medical Manager Corp. (Nasdaq: MMGR), a provider of physician practice management systems, along with its publicly traded subsidiary, CareInsite, Inc. (Nasdaq: CARI).
Shares in CareInsite, which provides healthcare network and clinical communications services, was up 3 3/4 to 71 3/8. Medical Manager shares jumped 19 to 84.
Healtheon/WebMD, which aggregates physicians and consumers on one portal, www.webmd.com, and provides content and administrative transaction services to the healthcare industry, also saw shares rise 2 13/16 to 57 13/16 in early trading Monday. Healtheon missed estimates it its last solo quarter, and has seen increasing competition from the recent spate of healthcare companies going public.
Under the terms of the agreement, Healtheon/WebMD will pay 1.65 shares of Healtheon/WebMD common stock for each share of Medical Manager and 1.3 shares for each share of CareInsite not owned by Medical Manager. The deal, to be accounted for as a purchase transaction, is expected to close mid-year.
The deal should allow the companies to increase efficiencies and lower costs in the $1.2 trillion healthcare industry, which has been estimated to generate $280 billion in unnecessary administrative and clinical expenditures each year.
"The merger of these three companies represents a critical step in the realization of our collective vision to transform the healthcare industry by using the Internet to enable a more efficient and effective healthcare delivery system,'' said Healtheon/WebMD CEO Jeff Arnold in a press release.
Medical Manager is a supplier of practice management systems (PMS) in the United States with a base of about 33,000 sites, representing around 185,000 physicians, including the pending acquisition of Physician Computer Network (PCN).
CareInsite's regionally focused strategy combined with Medical Manager's nationwide presence complements Healtheon/WebMD's national approach. As part of the agreement, Healtheon/WebMD will maintain CareInsite's existing strategic partnership with Cerner (Nasdaq: CERN), the companies said.
Jeff Arnold will remain chief executive officer of the company, Mike Long will remain chief operating officer and become co-chairman, and Martin J. Wygod, chairman of Medical Manager and CareInsite, will become co-chairman.