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Healtheon misses estimates in last solo quarter

Healtheon (Nasdaq: HLTH) reported its last solo results Friday as shareholders approved its merger with WebMD. The company posted third quarter loss of 24 cents a share, missing First Call's estimated loss of 20 cents a share despite strong revenue growth.

Healtheon/WebMD Corp. also announced shareholders approved the merger of Healtheon, WebMD, Inc., MEDE America Corp. and Medcast (Greenberg News Networks, Inc.). Results for the quarter are for Healtheon only, as the mergers didn't close until after the end of the third quarter.

With the deals, Healtheon/WebMD said it has over 1,800 employees and more than $300 million in cash. The combined company would have reported revenue for the quarter of almost $50 million on a proforma basis.

Healtheon/WebMD shares closed at 42 7/16 Thursday. Though the company reported a loss wider than First Call's expectation in its second quarter, shares surged

The stock hit $126 in May after Healtheon agreed to buy the online medical resource WebMD for $7.9 billion, making it one of the biggest Internet mergers to date, with the grandiose plan of creating the largest online health service. Shareholders have seen the stock fall from a high of 126 3/16 in May, plummeting in August as Healtheon's lock-up period ended, giving insiders get their first chance to take profits since the initial public offering.

Revenue grew 128 percent to $28.7 million, compared to revenue of $12.6 million for the year ago quarter. The sequential growth in revenue was 26 percent higher than the $22.7 million reported for the second quarter.

The net loss of 24 cents a share is slightly narrower than the loss of 26 cents a share for the same period a year ago. The operating loss before depreciation and amortization (EBITDA) declined to $12.4 million versus $13.3 million in the second quarter.

In the third quarter, Healtheon said page views increased 230 percent to 47.8 million over 14.5 million in the second quarter. For October, unique users totaled over 2.7 million. The company said it continues to execute on its plan to secure new customers and partnerships in order to drive Healtheon/WebMD's transaction volumes, and expand its base of physician users in the $1.4 trillion U.S. healthcare industry.

"Through our intensive branding efforts, superior connectivity, strategic partnerships, trusted content, and extensive distribution efforts, we are well positioned to become the market leader in eliminating the $250 billion administrative waste in the healthcare industry," said Jeff Arnold, CEO of Healtheon/WebMD in a press release.