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Healtheon/WebMD Bulks Up with $4.9 Billion Acquisition

Online healthcare giant Healtheon/WebMD Corp. went shopping Monday in order to expand its resources for the business side of medicine.

The company purchased healthcare management firm Medical Manager Corp., (MMGR) and its online subsidiary CareInsite, Inc. (CARI), in an all stock deal worth approximately $4.99 billion. The purchase is designed to increase the information and tools available to streamline the healthcare process.

The terms of the agreement call for Healtheon/WebMD (HLTH) to pay 1.65 shares of Healtheon/WebMD common stock for each share of Medical Manager and 1.3 shares for each share of CareInsite not owned by Medical Manager. Completion of the acquisitions, which will be accounted for as a purchase transaction, is expected mid-year, subject to regulatory and shareholder approvals.

Medical Manager is a leading supplier of practice management systems with an installed base of approximately 33,000 sites, representing an estimated 185,000 physicians, including the pending acquisition of Physician Computer Network (PCN). CareInsite is an Internet-based healthcare network for physicians, payors, suppliers and patients, designed to enable physicians to conduct clinical and administrative transactions that deliver relevant information at the point of care.

The companies will combine their resources under the Healtheon/WebMD brand. Its aim is to reduce healthcare costs and improve the quality of care, by providing access to information and replacing inefficient healthcare processes with convenient, and efficient technology, tools and services, said Jeff Arnold, chief executive officer of Healtheon/WebMD.

"The merger of these three companies represents a critical step in the realization of our collective vision to transform the healthcare industry by using the Internet to enable a more efficient and effective healthcare delivery system," said Arnold. "Each company brings unique core competencies that will facilitate a new paradigm in healthcare.

The new combined company will employee more than 5,000 and be worth approximately $1.5 billion.

The deal is part of an ongoing business development process for the transaction firm, which invested up to $100 million in health care subsidiary VitalWorks.com last week. Three weeks ago, Healtheon snapped up billing services company Quintiles Transnational (QTRN) for $2.5 billion.