WebMD Board of Directors Approves Strategic Plan To Streamline Business and Accelerate Path to ProfitabilityExecution of Integration Plan Expected to Result in $250 Million In Annualized Cost Savings and a Third Quarter Restructuring Charge Anthony Vuolo Appointed Chief Financial Officer; Jack D. Dennison and Charles A. Mele Appointed Co-General Counsel
PR NEWSWIRE - September 28, 2000 08:15
ATLANTA, Sep 28, 2000 /PRNewswire via COMTEX/ -- WebMD Corporation (Nasdaq: HLTH) announced today that it anticipates total annualized savings of approximately $250 million to be realized by the fourth quarter of 2001 resulting from the execution of the first phase of the Company's integration plan. This phase of the plan, which was approved by its Board of Directors, includes a consolidation of offices and data centers and reduction in marketing and promotional expenses, the result of which substantially eliminates the redundancies that were created in the combination of WebMD with recently acquired companies, Envoy, Medical Manager, CareInsite and OnHealth. The plan will result in the elimination of approximately 1,100 jobs by the end of calendar year 2001. The Company anticipates taking a pre-tax restructuring charge of between $35 million and $45 million in the quarter ended September 30, 2000. As a result of the execution of this phase of the plan, the Company expects to incur additional costs related to moving and relocations that will be expensed as incurred in accordance with the applicable accounting guidelines. Additionally, the Company is evaluating many of its business relationships that are currently in place. It is possible that some of those relationships may be revised or terminated, which may result in additional restructuring charges in future quarters.
WebMD also announced today that it will divest its plastics and filtration technologies subsidiaries. WebMD has received indications of interest from several potential buyers and plans to explore various divestiture alternatives in consultation with financial advisors.
The Company will now focus on its core business which encompasses enabling healthcare transactions and connectivity, providing the software and services that automate the physician's practice and providing Internet-based content, applications and services for physicians, payers, other healthcare organizations and consumers.
"While we are reducing expenses through the consolidation of operations and the elimination of redundancy, the focus of our integration process is to create a streamlined organization with a unified set of goals and objectives. An important step in creating an efficient organization is aligning our development resources with proven domain expertise. For example, the continued development of administrative applications will reside at Envoy in Tennessee, clinical application development will reside at Medical Manager Health Systems in Florida and Internet-based content, applications and services development will reside in Santa Clara. As a result of having the right set of combined assets and management team in place, we believe that we will be able to offer an unparalleled set of value-added services to physicians, payers and other healthcare organizations," said Marv Rich, President of WebMD.
Mr. Rich continued, "A comprehensive integration which results in job reductions is a difficult time at any company. At WebMD, while we are committed to doing what is necessary to ensure a strong future for the Company, we are equally committed to ensuring that all employees are treated fairly and professionally. Employees separating from the Company as a result of the job reductions will be provided with severance packages and outplacement counseling to help with the transition."
The company plans to provide more details on the integration plan and its future operations at an analyst/investor meeting in New York City on Thursday, October 12, 2000. This meeting will also be available via audio conference.
Several significant management changes were also announced today. Anthony Vuolo has been named Executive Vice President, Chief Financial Officer and Treasurer, filling the vacancy created by the retirement of John L. Westermann III. Until WebMD's merger with Medical Manager and CareInsite, Mr. Vuolo had been Senior Vice President of Business Development at Medical Manager. Jeff Arnold, Co-CEO of WebMD said, "Tony has spent his entire career providing leadership and innovation to the financial operations of aggressive, high-growth companies. His breadth of experience ranges from managing financial operations and systems integration to structuring complex corporate transactions. His understanding of the healthcare industry and our company's mission give him the ability to make an immediate contribution to WebMD's success."
Charles A. Mele, former General Counsel of Medical Manager Corporation, will join Jack D. Dennison as Co-General Counsel of WebMD. For the last five years, Mr. Mele has been Executive Vice President and General Counsel of Medical Manager Corporation and prior to that time was Executive Vice President and General Counsel for Medco Containment Services for over ten years. Mr. Dennison is currently Executive Vice President, General Counsel and Secretary of WebMD. Prior to joining the Company in July 1998, Mr. Dennison was Deputy General Counsel of Computer Sciences Corporation and Vice President and General Counsel of The Continuum Company, Inc.
Martin J. Wygod, Co-CEO of WebMD said, "Given the complexity of our business and the nature of the industry's legal and regulatory environment, we have created a position that will allow us to leverage Jack's and Charlie's unique skills and experience. These skills will prove invaluable as we rationalize many of the Company's complex business relationships in order to more effectively bring our services to the leading payers and healthcare organizations across the country." |
