WebMD Health acquired eMedicine.com for $25.5 million Wednesday, adding an online publisher of medical reference information for physicians and healthcare professionals to WebMD’s set of information services aimed at consumers, health providers, employers, and insurance plans.
Health acquired eMedicine.com for $25.5 million Wednesday, adding an online publisher of medical reference information for physicians and healthcare professionals to WebMD’s set of information services aimed at consumers, health providers, employers, and insurance plans.
The acquisition brings eMedicine’s set of online clinical information for diagnosing and treating a variety of medical conditions to WebMD. eMedicine covers about 6,000 different topics, including dermatology, hand surgery, and orthopedic surgery.
WebMD expects to benefit from the ability to offer more promotional and educational programs on behalf of pharmaceutical and biotech companies. New York City-based WebMD points out that these companies spend more than $8 billion annually on such programs.
WebMD filed for a $90-million IPO last September (see WebMD Health Files $90M IPO). At the time, the company cited eMedicine.com as one of its competitors in its filing with the U.S. Securities & Exchange Commission. But other competitors, such as DrKoop.com, remain.
WebMD Health Files $90M IPO“It’s a good acquisition,” said analyst Alexander Y. Draper of JMP Securities. “You’re taking out a competitor. It also gives them more unique visitors and more page views.”
Shares of WebMD dropped $1.05 to $37.95 in recent trading, while shares of its parent company Emdeon, based in Elmwood Park, New Jersey, slipped $0.19 to $9.22.
“The acquisition of eMedicine.com complements WebMD’s current offerings for physicians and healthcare professionals,” said WebMD CEO Wayne Gattinella.
WebMD plans to leverage the acquisition along with another health information web site, Medscape, which it acquired in December 2001 for $10 million in cash.
“In combination with Medscape, eMedicine.com will strengthen our reach and expand the breadth and depth of our clinical reference information,” said Mr. Gattinella.
WebMD expects to have eMedicine’s sales, technology, and editorial infrastructure integrated by the latter part of 2006. eMedicine’s 2005 estimated revenue totaled about $6 million, with a breakeven net income.
WebMD’s third-quarter 2005 revenue was $45.1 million, up from $37.0 million in the same quarter of 2004.
WebMD believes eMedicine will provide a “small positive contribution” to earnings before interest, taxes, depreciation, amortization, and other non-cash charges for 2006. eMedicine’s anticipated profits will be offset by the integration-related expenses that WebMD anticipates will occur during the first half of 2006.
Combining Acquisitions
“eMedicine currently provides physicians with in-depth clinical information that they use to treat and diagnose patients,” said WebMD spokesperson Jennifer Meyer Newman. “It enhances WebMD’s current offering for physicians.”
She declined to say whether eMedicine will continue to work from its Omaha, Nebraska, base and how many employees will be transferred.
Last November, WebMD acquired another site, TheHeart.org, when it bought Conceptis Technologies, a Montreal-based company, for $19 million in cash. The company plans to combine eMedicine.com, TheHeart.org, and Medscape to strengthen WebMD’s online network.
“This helps us enhance our online value proposition for our pharmaceutical and biotech clients who develop integrated marketing, promotional, and educational programs to reach physicians,” said Ms. Newman.
JMP Securities’ Mr. Draper pointed out that eMedicine has tended to focus more on physicians than consumers. eMedicine could be a valuable asset for WebMD to attract additional revenue from the pharmaceutical companies and medical device makers that pay for sponsorships and ads.
“It gives them the opportunity to upsell their value proposition, so they will have more sponsorship programs,” said Mr. Draper. “It also gives them a broader base of users and that becomes more valuable to the people out there doing the advertising and sponsorships with them.”
