NEW YORK, April 4 (Reuters) - Shares of Internet health
network Healtheon/WebMD Corp. <HLTH.O> fell 14 percent and hit
a year low on Tuesday after a downgrade and general technology
sell-off, but analysts don't think it will effect the company's
merger pipeline.
The stock was trading down 3 at 18-1/4, and hit a 52-week
low of 15-5/8 earlier in the day.
Healtheon, which is seeking to become the Web-based link
between doctors, patients, drug companies and insurers, has
many pending merger agreements, including deals with Medical
Manager Corp. <MMGR.O>, its unit CareInsite Inc. <CARI.O> and
Quintiles Transnational Corp.'s <QTRN.O> Envoy unit.
But unlike many mergers, Healtheon's deals are not
contingent on any range of stock valuations, which protects
them from volatility like the market saw on Tuesday.
"There were no collars on many of those deals," said
Michael Davis, research director with Gartner Group <IT.N>.
"Many of the companies they merged with know that as a combined
entity they are much stronger than stand-alone components. I'm
not too concerned that the deals they are negotiating won't go
through."
Healtheon and CareInsite were downgraded on Tuesday by US
Bancorp Piper Jaffray, both to buy from strong buy, and
investors have been fleeing technology stocks over the past few
days in the wake of the anti-trust ruling against Microsoft
Corp. <MSFT.O>
Indeed, last week a slew of bad news hit the e-health
sector and sent it into a tailspin. The news included:
-- Several health insurers joining forces to create their
own online marketplace in a move that would almost certainly
hurt Healtheon.
-- Drkoop.com Inc.'s <KOOP.O> independent auditors
questioning whether the health Web site has enough cash to
survive the year.
-- A proposed merger between healthcare market researcher
IMS Health Inc. <RX.N> and Internet healthcare firm TriZetto
Group Inc. <TZIX.O> met with strong market disapproval.
-- Federal regulators requesting additional information on
Healtheon's acquisition of Envoy, the electronic transaction
unit of Quintiles.
"There's been one negative piece of news after the next; a
downward spiral is almost expected in this kind of climate,"
said Claudine Singer, an analyst with Jupiter Communications.
"The stories have impacted Healtheon and the space in which
Healtheon plays and have created jitters."
But despite the jitters, Gartner's Davis said that after
the Nasdaq recovers, Healtheon should be able regain its
strength.
"This should not have a lot of impact, Healtheon is still
pretty well-positioned to be the strong vendor over the next
three to five years." |
