WebMD Showing Signs of Life After Dot-Com Collapse, New York Times Says
WebMD is showing tentative signs of a turnaround following the dot-com industry collapse, the New York Times reports. After a rough period during which the company's stock price fell as low as $3.22 per share in September 2001 from a high of $126.19 in May 1999, WebMD stock closed at $7.74 on Friday. The company reported its first "break-even" month in operating cash flow in December, after 15 months under the leadership of CEO Martin Wygod, a health care industry veteran who assumed control with the departure of the company's founders. According to Merrill Lynch analyst David Risinger, a "Herculean restructuring" effort by Wygod's team has allowed WebMD to repurchase more than 77 million company shares since October 2000, a move that has reduced some investors' concerns that former strategic partners would dump the stock they had purchased during the "Internet boom." WebMD has also consolidated its position through acquisitions. The company purchased the consumer health information portal of its "nearest competitor," MedicaLogic/Medscape, in December for the "bargain price" of $10 million. In 2000, WebMD's purchase of Quintiles Transnational Corporation's electronic transaction processing business, Envoy, made the company the leading electronic claims processor for physicians.
Some analysts still are not convinced that WebMD will succeed, however. Michael Davis, a health care research director at the Gartner research firm, said that Envoy may be at risk of losing market share to insurance companies, which could provide physicians with electronic claims processing for free. Technology firms such as IBM and Electronic Data Systems also are eager to expand the services and products they offer to physicians. To maintain its position, WebMD is offering physicians new software to facilitate access to patients' clinical and insurance information. The company is also testing a new handheld device with 500 physicians and expects to expand the pilot this year (Freudenheim, New York Times, 2/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.