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Healtheon depends on non-Web revenue

Wall Street welcomed the firm as an Internet company when it went public last year, but most of its revenue comes from management fees and from a proprietary health-care network it operates.

Healtheon's IPO got the royal Internet treatment on Wall Street earlier this month, but the company still generates most of its revenue from proprietary, non-Web based products and IT management fees, according to a new filing with the Securities and Exchange Commission.

The company went public in February and saw its shares almost triple in value on the first day of trading, buoyed by investor enthusiasm for Internet stocks.

The company, founded by former Netscape chairman Jim Clark, is developing a product called Healtheon Practice, a Web-based platform for information exchange and transactions among health care providers, insurers, and benefits administrators. That product is still in beta.

But in its 10K filing, Healtheon said it derives revenue primarily from ProviderLink, a proprietary, non-Internet network service that Healtheon acquired when it purchased ActaMed in May 1998. More than 4,000 providers currently use ProviderLink, Healtheon said.

Also contributing heavily to Healtheon's top line, which totaled $48.8 million in 1998, are consulting and service fees it charges for managing and operating the IT infrastructures of Brown & Toland, a health care network based in San Francisco, and Beech Street, a benefits administrator. Revenue from IT services increased from $2.1 million in 1997 to $15.1 million in 1998, boosting services revenue to 55 percent of the 1998 total.