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Healtheon/WebMD acquires OnHealth

Internet healthcare giant Healtheon/WebMD Corp. (Nasdaq: HLTH) snapped up another competitor Wednesday with its purchase of OnHealth Network Company (Nasdaq: ONHN).

Healtheon/WebMD just can't get enough of acquisitions. Just two days ago, the end-to-end Internet healthcare company bought Medical Manager Corp. (Nasdaq: MMGR), a provider of physician practice management systems, along with its publicly traded subsidiary, CareInsite, Inc. (Nasdaq: CARI). Healtheon shares fell 1/8 to 68 1/2 Wednesday, while OnHealth shares were up 1 9/32 to 11 1/4, or 13 percent.

With this acquisition, Healtheon/WebMD said it expects to become the most trafficked health site for consumers and physicians. Based on Media Metrix's report issued in January, 90 percent of the audience for the two combined sites is unduplicated. Healtheon/WebMD also said the deal combines the two largest consumer healthcare websites, and should create critical consumer mass, which can be leveraged to encourage physician adoption and utilization of new Healtheon/WebMD services.

Under the terms of the agreement, shareholders of OnHealth stock are to receive .189435 shares of Healtheon/WebMD Common Stock for each share of OnHealth stock. Closing of the transaction, which will be accounted for as a purchase transaction, is expected in the second quarter this year, subject to regulatory approval.

The companies plan to integrate content, advertising and sponsorship programs to leverage the sites' complementary demographics and content focus. The combined companies' advertisers can leverage Healtheon/WebMD's relationships with News Corp., CNN, Reader's Digest and others for integrated programming and cross-promotion, the company said.