WebMD Health (WBMD) is up sharply this morning after agreeing to be acquired by Internet Brands, which is a KKR & Co. (KKR) portfolio company, for $66.50 per share in cash, or $2.8 billion. KKR is a large private equity firm.
You're probably familiar with WebMD as many people use the site to look up symptoms they are having to try to self-diagnose what an ailment might be. However, you may not be aware of all that WBMD does. It's a provider of health information to consumers, physicians and other healthcare professionals through its Websites, mobile apps and health-focused publications. Its primary websites/apps include WebMD.com (for consumers) and Medscape.com (for physicians and healthcare professionals).
Its websites and mobile apps for consumers help them take an active role in managing their health by providing objective health and wellness information and access to decision-support tools and other services. It also provides content relating to lifestyle and healthy living, including healthy beauty, diet and food, exercise and fitness, and family and pregnancy.
Its content offerings for consumers include news articles and features, special reports, interactive guides, originally produced videos, self-assessment questionnaires, expert led Q&As, community discussions et. Its mobile apps for consumers include the WebMD App, the WebMD Pregnancy App, the WebMD Baby App, the WebMD Pain Coach App, the WebMD Allergy App and the WebMD Magazine App.
Its websites and mobile apps for healthcare professionals help them improve their clinical knowledge and practice of medicine. Medscape.com makes it easier for physicians and other healthcare professionals to access clinical reference sources, to stay abreast of the latest clinical information, to learn about new treatment options, to earn CME or CE credit, and to communicate with peers.
Medscape's original content includes daily medical news, conference coverage and expert commentary and columns by authors from widely respected clinical and academic institutions. Medscape also provides access to full-text journal articles, reference materials and other medical content. Its Medscape App provides formulary information, medical calculators, drug, disease and condition references, and a drug interaction checker.
About 80% of WBMD's revenue comes from advertising and sponsorships. The company also generates revenue from employer and health plan subscriptions to its WebMD Health Services platform. It also sells information products and services on a stand-alone basis.
Turning to today's news, the deal is not entirely surprising considering that WBMD had announced in February 2017 that it was exploring strategic alternatives which usually means a company wants to solicit bids to be acquired. The purchase price of $66.50/sh in cash equates to a 30% premium from where WBMD's stock was trading when it made the announcement in February. It's also a 20% premium over Friday's closing price. WebMD's Board of Directors approved the merger agreement and it's expected to close during 4Q17.
In sum, it's interesting to note that WBMD saw its stock fall in early July with rumblings in the market that takeover interest had been diminishing. However, that seems to have not been the case. The deal is good for WBMD as they get a nice premium for their shares and it's all in cash which many view as superior to receiving shares in an acquiring company. Also, WBMD says it had outreach to 100+ strategic and financial parties, so they probably had a good sense that this was the best deal available. And the deal makes sense for KKR as it will fold WBMD into its Internet Brands unit which has a Health vertical, which owns DentalPlans.com, eHealthForum.com, HealthBoards.com, FitDay.com and VeinDirectory.org. So WBMD's websites should bolster that portfolio.