WebMD Sale Rumors Send Share Prices Up, Then Back Down Again

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Financial Times published a rumor Wednesday suggesting that online health information vendor WebMD was shopping itself around for a potential buyer. Anonymous insiders were quoted as saying that UnitedHealth, Aetna, Walgreens, and CVS were all at least partially interested, and that discussions with potential buyers were ongoing. The news initially drove share prices up nearly 10 percent, as investors hoped to cash in on the premium WebMD would likely negotiate over its current-value share price.

Late Thursday morning, WebMD issued a statement refuting the story. The press release stated simply “WebMD Health Corp, the leading source of health information, today announced that in light of recent news reports, the Company is reporting that it is not currently in any negotiations to be acquired.” The result of the back and fourth was a volatile day for WebMD share prices. Shares opened at $58.03, up 9.5 percent over the prior day’s closing price of $53.21. Share prices hovered in the $56 to $58 range until just before 11am when the company issued a statement correcting the rumor. From there, share prices tumbled, passing the previous days closing price and continuing to fall an additional 7.7 percent to close at $49.12.

The activity drew speculation from analysts who suggested that WebMD’s unique mix of patient and provider users, along with its 210 million active monthly visits, would likely fetch far higher than its current trading prices. One analyst forecasted a $2 billion valuation, or $65 per share. The idea of a sale is not entirely foreign to WebMD. The company hired bankers to evaluate a potential sale last year, but ultimately chose to remain independent.

Whatever may or may not be happening behind closed doors at WebMD headquarters, an acquisition of the property makes sense for a number of the parties listed as potential suitors. Both Walgreens and CVS have completely redeveloped their business models in the last five years, moving from retail pharmacies that bolster margins with convenience store offerings, to full fledged community health centers. Both companies have rolled out in store clinics, and have directed incredible resources to building out digital health infrastructures to engage with patients online. For either, drawing 210 million monthly users into their digital health ecosystems could be converted to increased pharmacy customers and larger loyalty program enrollments. Insurers like UnitedHealth and Aetna also have a vested interest in connecting with patients while they are still at home, Googling their symptoms. It is difficult to control costs for a patient once they’ve made the decision to go to the ER, but patients on WebMD are likely still at home and could be engaged and triaged to an appropriate care setting based on their symptoms.


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