Healtheon, WebMD May Create Leading Healthcare Site

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Internet software and services firm Healtheon Corp. said yesterday that it will merge with online medical content provider WebMD Inc. in a bid to create the dominant Net healthcare site. Estimates value the pact at $5.5 billion.


Industry watchers and investors were optimistic about a deal that will match two of the most recognized names in the potentially huge Net health market.


Healtheon helps automate medical BTB transactions through its site at www.healtheon.com, while WebMD focuses on providing medical information to consumers and physicians via the Net at www.webmd.com. The firms each will claim 50 percent ownership of the new entity.


"I think it's a good mix," said Chris Pavlic, who follows the firms as director of industry applications at Aberdeen Group, Boston. "Healtheon's doing back-office, behind-the-scenes, provider-to-payer interactions; and then WebMD is trying to do the front half. "


Wall Street concurred. Shares of Healtheon, Santa Clara, CA, surged 24 3/8, or 43.6 percent, to 80 1/4 when merger talks were first reported Wednesday, setting a high for the stock since the company went public in February. Atlanta-based WebMD is privately held.


Microsoft Corp., Excite Inc. and microprocessor giant Intel Corp. are among the backers, reports said. Together, strategic investors will put more than $360 million into WebMD.


Web portal Excite, Redwood City, CA, is slated to put $25 million into WebMD.

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