FYI, from today's WSJ. Richard Lee of Wit Capital calls MCNS possible acquisition candidate (see last sentence). Could my sad prediction of management selling out for $8 a share come true?
Let's hope not,
Bond
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MedicaLogic Fell on Deal Tuesday
In the latest bid to push health care into cyberspace, online
medical-records provider MedicaLogic, tumbled Tuesday on news of a
$700 million merger with Medscape, which supplies expert medical
information.
MedicaLogic lost 6 11/16, or 13%, to close at 44 on the Nasdaq Stock
Market, while Medscape gained 1 1/8, or 9%, to 13 on the news.
Meanwhile, the Nasdaq Composite Index lost 29.62 to 4382.12 and
Morgan Stanley's high-tech 35 index rose 3.68 to 1929.55. The Dow
Jones Internet Index slipped 9.04 to 414.79.
MedicaLogic also announced plans to acquire the outstanding shares of
Total eMed for eight million common shares, about $405.5 million. Total
eMed Inc. (www.totalemed.com) provides physicians with Web-based
transcription services.
Both moves represent continued consolidation in the online health-care
sector, as the companies merge their features so physicians only need to
stop at one site for information and services designed to streamline their
business as well as the patient/doctor/pharmacist relationship.
MedicaLogic stumble was mirrored by the fall in technology stocks
Tuesday, following the long Presidents' Day weekend.
The news of MedicaLogic's deals follows on the heels of a string of
acquisitions made by Healtheon/WebMD Corp.
Last week, Healtheon/WebMD announced last week a deal to acquire
medical-software maker Medical Manager Corp., the parent company of
CareInsite, Healtheon/WebMD's chief rival.
Richard Lee, an analyst with WIT Capital says Healtheon/WebMD's
recent purchases have prompted other players, like Medscape, to
accelerate their own consolidation plans: "to survive in the space
you have to be as aggressive as the 800-pound gorilla." Mr. Lee has a
"buy" rating on Medscape.
Josh Fisher, an analyst with W.R. Hambrecht, agrees with Mr. Lee;
"There's a land grab going on."
According to analysts, the Medscape/MedicaLogic merger is attacking the
same customers as Healtheon/WebMD, but is focusing on a different
sector of the market.
Healtheon/WebMD's acquisitions appear
targeted at medical office managers -- like
the recent investment of $100 million in
medical-practice management software
maker InfoCure Corp. -- to automate
administrative tasks. A link-up with
drugstore chain CVS Corp. and its
purchase of OnHealth Network Co., which
runs health-information site OnHealth.com,
indicate that Healtheon is courting the
consumer market.
But the Medscape/MedicaLogic union aims at physicians. Their goal is to
have physician-populated personal medical records: a summary of medical
records, available to patients and doctors whenever they want to look at
them.
Mr. Fisher says this focus capitalizes on Medscape's name recognition
among doctors. It's been around since 1995, and is recognized as reliable
among physicians.
Analysts don't expect the consolidation to stop soon. Stephen DeNelsky,
an analyst with Credit Suisse First Boston says "The consolidation is going
to continue as an opportunistic phenomenon -- companies that have high
valuations want to acquire as much as they can while they can." Mr.
DeNelsky has a 'buy' rating on Medscape.
Mr. DeNelsky adds that while the Web companies are consolidating
businesses and technologies at Internet speed, traditional
bricks-and-mortar health-care partners, like health-maintenance
organizations, doctors or specialized nurses, may not move as fast to adapt
new technologies and methodologies. "Electronic medical record is still in
its infancy in terms of adoption," says Mr. DeNelsky.
WIT Capital's Mr. Lee says that time gap is "certainly one of the big
barriers" to online health-care companies, which could consolidate faster
than they create a market. But that remains to be seen.
Numerous companies are still ripe for the picking. Among the remaining independents are DrKoop.com Inc., mediconsult.com and allscripts.com. |
