Punt ? Selling retail site.
siliconinvestor.com
HealthAxis.com to Sell Retail Web Site in Comprehensive Acquisition and Strategic Alliance
Pact With Digital Insurance
EAST NORRITON, Pa. and ATLANTA, Jul 6, 2000 (BW HealthWire) --
HealthAxis.com Receives Cash, Stock, Licensing Fees and a Technology
Services Contract
HealthAxis.com Focuses on Its Application Solutions Group to Service
Healthcare Payers
HealthAxis.com--a subsidiary of HealthAxis Inc. (NASDAQ: HAXS chart, msgs) and the proven leader in web-enabling healthcare payers--and Digital
Insurance--an Internet distribution channel for web-enabled insurance carriers focused primarily on the small and medium group markets--today announced that
Digital Insurance will acquire HealthAxis.com's retail web site and related assets. Under the terms of the agreement, Digital Insurance, a company whose financial
partners include Internet HealthCare Group and Capital Z Partners, will acquire assets that include: intellectual property of the presentation layer of the web site,
certain hard assets, and HealthAxis.com's existing block of in-force insurance business.
HealthAxis.com will receive a cash payment, ongoing licensing fees, a technology services contract, and equity in Digital Insurance. Following the completion of the
transaction, HealthAxis.com will be focused exclusively on providing Internet connectivity technology solutions and enterprise application integration services to both
healthcare payers and those entities involved in the digital distribution of health insurance. HealthAxis.com will have completely exited the consumer retail business
and will henceforth service this market only as a provider of back-end technology services and developer of customized presentation software for eDistribution
partners.
The agreement stipulates that Digital Insurance will pay HealthAxis $1 million in cash at closing, which is scheduled to occur on or about August 15th, and $3 million
in software licensing fees in quarterly payments over a 30-month period. In addition, the parties have entered into a technology services contract, for a minimum of
$3 million in fees over the next 12 months, in which HealthAxis.com will provide the critical back-end technology solutions to power Digital Insurance's health
insurance e-platform. The agreement further stipulates that HealthAxis.com will receive an 11 percent ownership stake in Digital Insurance.
"We are now able to focus exclusively on providing carriers and eDistribution intermediaries with the connectivity tools that they will need to survive in the digital
insurance world," said Michael Ashker, chief executive officer of HealthAxis.com. "This takes us a giant step forward in establishing our connectivity platform as the
most universal and carrier-friendly solution available today. We are thrilled to be aligned with Digital Insurance and have a strong vested interest in making them a
highly successful online distribution company."
As a result of the transaction, HealthAxis.com will drastically decrease its expenses while substantially increasing its revenues. "During our most recent conference
call we suggested that we were on track to be cash flow positive by the second quarter of 2001," said Ashker. "We are confident that we can accelerate the time
line to achieve this sooner than originally anticipated."
"Our purchase of HealthAxis.com's retail web site and its next generation web site enables us to significantly ramp-up the pace of our platform's development and
release," said Tom Usilton, chief executive officer of Digital Insurance. "We believe we are buying the most technologically-advanced e-commerce platform for the
health insurance industry, and partnering with the market's leading technology provider. HealthAxis.com's XML-based solutions will enable us to rapidly integrate
carriers in a timely and cost-efficient manner, while dramatically accelerating the ramp-up of our business model. Small and medium-sized employers need a
point-to-point solution when buying health--and other--insurance on the Internet. The HealthAxis.com transaction and related services contract will allow Digital
Insurance to provide those employers that opportunity."
In the transaction, HealthAxis.com will sell its retail web site-related assets to Digital Insurance. Included among these assets are the intellectual property supporting
the present and next generation HealthAxis.com retail web site, carrier partner distribution agreements, affinity partner and pre-paid portal distribution agreements,
select furniture, fixtures, and equipment presently in HealthAxis.com's East Norriton office, and all of the in-force insurance business. The intellectual property
transfer of HealthAxis.com's proprietary retail platform presentation layer is specifically for its application over the Internet and is subject to certain carve-outs, for
which HealthAxis.com retains ownership.
About HealthAxis Inc.
HealthAxis.com, a subsidiary of HealthAxis Inc., is the proven leader in web-enabling healthcare payers and those entities involved in the digital distribution of health
insurance. The Company's proprietary workflow and business application software, built around an application service provider model, enables healthcare
payers--carriers, third party administrators, and large, self-funded groups--to more efficiently capture, process, and share health plan data over the Internet. The
Company's eDistribution Group provides healthcare payers and those entities involved in the digital distribution of health insurance with a fully functional Internet
platform for the distribution of health insurance products to the individual, small group, and large group markets, both on a direct basis and through existing
intermediaries such as agents, affinity relationships and benefits consulting firms. HealthAxis.com is headquartered in suburban Philadelphia, with significant
operations in Dallas, as well as offices in eight additional locations both domestic and abroad. The company employs over 350 IT professionals.
About Digital Insurance, Inc.
Digital Insurance is an on-line distribution channel for web-enabled insurance carriers. The Company provides insurance distribution and administrative functions,
including enrollment, to small and medium group employers. Digital Insurance is headquartered in Atlanta, Georgia, with operations in McLean, Virginia. Its capital
partners are Internet HealthCare Group and Capital Z Partners.
Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995:
Certain statements made by the Companies, which are not historical facts may be considered forward-looking statements, including, without limitation, statements as
to trends, management's beliefs, expectations, forecasts and opinions, which are based upon a number of assumptions concerning future conditions that ultimately
may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors, which may cause actual
results to differ materially from those in the forward-looking statements. For further information, which could cause actual results to differ from the Companies'
expectations as well as other factors, which could affect the Companies' financial statements, please refer to HealthAxis Inc.'s reports filed with the Securities and
Exchange Commission and the appropriate company contact listed below for Digital Insurance.
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