Healtheon/WebMD Dn 12% On 4Q Results, Analyst Downgrade
By Johanna Bennett
NEW YORK -- Fourth-quarter earnings and an analyst downgrade sent shares of Healtheon/WebMD Corp. (HLTH) plunging for the second straight day and pulled down the company's recent merger partners.
Shares of the online health-care giant were trading Monday at 45 3/4, down 6 3/16, or 11.9% after exchanging more than 3.5 million shares.
CareInsite Inc. (CARI) shares recently traded at 56 13/16, down 6 3/4 or 10.6% on volume of 182,000 shares, compared with a daily average of 182,000.
The dip followed a downgrade by Deutsche Banc Alex. Brown, which lowered the stock's rating to market perform from buy, on the heels of a fourth-quarter earnings report that showed wider losses despite the company's revenue growth.
Meanwhile, shares of software maker Medical Manager Corp. (MMGR) and Web health-care concerns OnHealth Network Co. (ONHN) were also trading down Monday morning.
All three companies announced merger agreements with Healtheon/WebMD last month in deals that involve stock swaps. And that leaves their stock values closely tied to the movement of Healtheon/WebMD's shares.
"They are all strongly correlated since those transactions are expected to close," said CIBC World markets analyst Mike Clulow.
Analysts said Healtheon/WebMD's fourth-quarter losses stemmed from higher spending by the rapidly growing Internet company as it works to digest new businesses.
Healtheon/WebMD reported a net loss Friday of $234.7 million, or $1.98 a diluted share, for the three months ended Dec. 31, compared to a net loss the previous year of $18.2 million, or 34 cents a diluted share.
Revenue rose to $33.2 million from $15.6 million the previous year. But total operating costs rose to more than seven times to $269.9 million, including sales and marketing costs that rose to $35.9 million from $3.5 million.
"They had decent top-line growth. But people did not expect them to reports expenses so high," said Clulow, the CIBC World Markets analyst. "I think a lot of it was related to running around trying to close these transactions."
Healtheon/WebMD is in the process of completing a dizzying array of acquisitions announced after the end of the year, including online rival CareInsite's parent company Medical Manager Corp. (MMGR).
The company has centered its efforts on gaining the lion's share of the medical transaction business by connecting the various factions of the health-care industry - patients, doctors, insurers, hospitals, laboratories - over the Internet. Buying Medical Manager, in a deal valued by some at more than $5 billion, not only eliminates CareInsite's Web site as an online rival, but also provides the company access to a ready-made customer base among the more than 100,000 physicians who use Medical Manager's practice management software.
-Johanna Bennett; Dow Jones Newswires; 201-938-5240; johanna.bennett@dowjones.com
|
