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Technology Stocks : Healtheon Corporation (HLTH) -- Ignore unavailable to you. Want to Upgrade?

To: muscle_coach who wrote (687)	5/17/2000 7:37:00 PM
From: Grandk	Read Replies (1) \| Respond to of 861

Soured 'E-Health' Deals Seen As Symptom of Wider Malaise By Angela Moore NEW YORK (Reuters) - The breakup of two unpopular takeover deals in the Internet health sector this week highlights a new-found hesitation among investors toward a business that is showing growing pains, analysts said. ``We're over the euphoria of e-health. People are looking for reality behind the vision and the hype,'' said Daren Marhula, an analyst with US Bancorp Piper Jaffray. Investors ''are sitting on the sidelines to wait and see how this shakes out, and to see some leadership in the space.'' Almost by default, the leadership position is currently occupied by Healtheon/WebMD Corp. (NasdaqNM:HLTH - news), which offers systems for exchanging medical and administrative information over the Internet. Its rapid rise, largely through a series of ambitious acquisitions, has been a catalyst for other companies to start building electronic networks for providing health-care information and transactional services. Speak your mind Discuss this story with other people. [Start a Conversation] (Requires Yahoo! Messenger) Not all of those deals have been in the best interests of their long-term businesses or shareholders, analysts said, and two of them officially began unraveling on Tuesday. Neoforma.com Inc. (NasdaqNM:NEOF - news), an online medical supply company, said it was in talks to terminate its proposed $689 million acquisition of Eclipsys Corp. (NasdaqNM:ECLP - news) and its HEALTHvision affiliate. The Santa Clara, Calif.-based company's stock has dropped nearly 70 percent after the deal was announced in late March. The proposed coupling with Neoforma.com came soon after an attempt by Eclipsys, a provider of health-care-related computer services, to acquire its much-larger rival Shared Medical Systems Corp. (NYSE:SMS - news). That deal was later scrapped. Another pair of would-be partners decided to give up the fight on Tuesday when IMS Health Inc. (NYSE:RX - news) -- an established health-care market researcher -- and the TriZetto Group Inc. (NasdaqNM:TZIX - news) -- which offers health-care providers access to software and other resources via the Internet -- threw in the towel. Their proposed merger had met with so much displeasure on Wall Street that the value of the stock deal plunged to $2.45 billion from $8.4 billion in less than four weeks. The companies on Tuesday said they were opting for a more limited ``strategic alliance.'' News that both deals were on the rocks was afforded a mixed reaction on Wall Street. On Wednesday, shares of Neoforma.com rose 3 to 12-7/8, while TriZetto fell 4-1/4 to 19-3/4. Eclipsys dropped 1-1/16 to 10-15/16, and IMS slipped 1-5/16 to 16-1/16 in afternoon trading. ``Nobody was happy about these deals,'' said Sheryl Skolnick, managing director and a senior analyst with Robertson Stephens. ``It was clearly interpreted that there must be some problem with e-health if all these companies that were supposed to be growing at these fabulous Internet growth rates felt compelled to pair up with legacy companies,'' she said in reference to traditional health-sector companies such as IMS. Such questions have arisen alongside doubts about the viability of other Internet commerce segments. A number of online companies, such as Web grocer Peapod Inc. (NasdaqNM:PPOD - news) and online health information site drkoop.com Inc. (NasdaqNM:KOOP - news) have been struggling to slow their cash-burn rates and create new paths to profitability. Over the past few months, analysts have begun predicting a big shakeout in dot-com retailing, saying many companies will either go out of business or be swallowed up by larger players. Healtheon/WebMD -- formed last year through the merger of Healtheon and WebMD -- has been seen by many analysts as spawning merger mania in the fledgling ``e-health'' sector. Its aim has been to build a system of services and software to enable doctors, patients, drug companies and insurers to do business over the Internet. In one week in February alone, the company agreed to buy its main rival CareInsite Inc. (NasdaqNM:CARI - news), CareInsite's parent Medical Manager Corp. (NasdaqNM:MMGR - news) and OnHealth Network Co. (NasdaqNM:ONHN - news), a health-related Web site. It also signed an advertising sponsorship agreement with Internet direct marketer LifeMinders.com Inc. (NasdaqNM:LFMN - news). But many of its most ambitious deals have yet close, including the CareInsite acquisition and the purchase of Envoy, the electronic transaction unit of Quintiles Transnational Corp. (NasdaqNM:QTRN - news) Meanwhile, Healtheon's stock has plunged from a 52-week high of 126-3/8, reached last May, to as low as 15-5/8. On Wednesday, it was off 11/16 to close at 18-1/8 on the Nasdaq. Even so, Healtheon is still viewed as the company most likely to define the emerging e-health landscape. ``Today, the company is still the best situated,'' said Jeff Peters, an analyst with Dain Raucher Wessels. ``They have a lot of challenges, the greatest being integration risk and the timing of market acceptance, but everyone has that.'' A handful of other alliances are also being closely watched as potential spawning grounds for industry leadership. Neoforma.com recently signed a contract to provide e-commerce services for the 6,500 health-care organizations participating in the purchasing programs of Novation LLC. Five leading health-care companies have launched an online medical device and supply marketplace. And six major health insurers have formed an Internet union called MedUnite aimed at streamlining medical claims processing. Analysts anticipate that over the next few months some clear winners and losers will emerge. ``This summer will be interesting,'' Skolnick said. ``The deals still in effect will probably close by July or August, and we'll see rollouts of new integrated technologies.'' ``We'll see signs of life by summer,'' she said. ``And then it will become clear who the winners are, and who the winners aren't going to be.'' dailynews.yahoo.com