News in brief - July 10/17, 2000

Healtheon moves to salvage deals - OnHealth under SEC investigation - Blue Shield links doctors, patients

Healtheon moves to salvage deals

Healtheon/WebMD Corp. has amended the terms of its proposed acquisition of Medical Manager Corp., and its subsidiary, CareInsite Inc., to save the deals from collapsing under the weight of its battered stock price.

Based on Healtheon's closing stock price of $18.875 on June 16, the deals are valued at $2.1 billion, down from $5.2 billion.

Healtheon now will exchange 2.5 shares of its common stock for each share of Medical Manager, up from the 1.65 share ratio originally announced Feb. 14 when its stock was $55 a share. Also, executives of Medical Manager, a practice management software company, will have a greater management role and the same number of representatives on the board of directors of the new company as Healtheon.

Terms of Healtheon's acquisition of Medical Manager's unit, CareInsite, an online medical transactions company, remain unchanged, with CareInsite shareholders receiving 1.3 shares of Healtheon stock for each CareInsite share they own.

Transactions are expected to close in September, subject to regulatory and shareholder approval. The new firm will be called WebMD.

Healtheon and IDX Systems Corp., a direct competitor of Medical Manager, have restructured the terms of an alliance announced earlier this year. Healtheon will continue to provide electronic transaction services and content to clients of IDX and IDX's ChannelHealth portal, but not on an exclusive basis as was the case before.

OnHealth under SEC investigation

OnHealth Network Co. reports that it has restated financial statements for the past three years and that Securities and Exchange Commission continues to investigate the company.

The online health company said it did not believe these developments would affect its merger with Healtheon/WebMD Corp., which it expects to close in the third quarter.

But in a report filed with the SEC June 21, the company acknowledged that Healtheon could terminate the merger if the SEC's investigation causes "a material delay" in the deal. The investigation centers on granting stock options to employees that were exercisable at below fair market value.

Blue Shield links doctors, patients

Blue Shield of California has teamed up with Healinx Corp. of Alameda, Calif., to enable the 50,000 doctors in its provider network to communicate securely online with their patients, including non-Blue Shield members. Healinx, which is offering its services for free to Blue Shield and the plan's affiliated doctors, will make its money from transaction fees.