WebMD Acquires Medscape Portals

Posted on December 28, 2001

WebMD Corporation has acquired the portal assets of MedicaLogic/Medscape, Inc., including the Medscape Medical Professional and Medscape Health for Consumers websites, for $10 million in cash. Medscape's Medical Professional portal will become the company's online brand of information, research and educational services for physicians and allied medical professionals. WebMD Health will continue as the company's brand of online information, community and services for consumers. With the addition of the Medscape assets, the company's websites will reach more than 15 million cumulative monthly visitors, including approximately 575,000 members registered as physicians worldwide.

WebMD restructed in 2001 and laid off over 1,400 employees. The company posted nearly a $2 billion loss for the first half of 2001. Despite the drawbacks in 2001 the company announced in November, 2001 that it planned to have a profitable first quarter of 2002. Good news for WebMD came in December, 2001 when it was one of 13 health websites given a seal of approval from the American Accreditation HealthCare Commission.

``This acquisition is a great opportunity to further strengthen our product offering for physicians and is in keeping with our goal of creating the leading communication channels connecting physicians and their patients with health plans, providers and suppliers,'' said Martin J. Wygod, Chairman of the Board and Chief Executive Officer of WebMD. ``Although there are strategic synergies, we expect to incur certain costs and expenses related to the combination of the respective operations. The acquisition may impact our financial expectations by $1-2 million for each of the next two quarters as we complete the integration.''

WebMD plans to integrate the Medscape Medical Professional portal into its suite of professional products and services. The Medscape services will become part of the integrated portal offering of the Medical Manager, physician practice management software used by more than 185,000 physicians, and into WebMD Envoy, a provider of electronic transaction services, used by 300,000 physicians.

``When consumers or medical professionals look for information online, they seek objective, credible and trustworthy sources for that information. The Medscape editorial team brings a longstanding track record for the highest quality medical journalism,'' said Roger C. Holstein, Chief Executive Officer, WebMD Health. ``With unmatched brand awareness, distribution and utilization, the WebMD Medscape Health Network is now the most effective way, online or offline, to reach physicians in virtually every specialty, as well as healthcare involved consumers with specific diseases or conditions.''