KKR snaps up WebMD for $2.8B
- New York City-based private equity firm KKR & Co. announced plans to acquire WebMD Health Corp. in a deal valued at about $2.8 billion.
- The online health information and symptom search engine will be merged into KKR’s Internet Brands unit, an online media and services company focused on health, automotive, legal and home/travel. Among its sites are altMD, eHealth Forum and TheGoodDrugsGuide.com.
- In February, WebMD said it would explore strategic options in the wake of a slowdown in advertising paid for by drug companies, according to Reuters.
Under the deal announced Monday, KKR will pay $66.50 per WebMD share, a premium of about 20% over WebMD’s Friday closing price and 30% above the stock’s trading price in February, when the possibility of a sale was broached.
Mergers and acquisitions in the digital health space are on the rise, fueled by the shift to value-based care. During the first quarter of this year, Rock Health tracked close to 20 M&A deals, including McKesson’s $1.1 billion cash acquisition of electronic prior authorization startup CoverMyMeds and Castlight Health’s purchase of employee wellness platform Jiff.
In May, Apple snagged sleep tracking startup Beddit for an undisclosed amount, building on its 2016 acquisition of personal health data company Gliimpse. Other 2016 transactions included Nokia’s purchase of connected health devicemaker Withings and One Medical Group’s purchase of nutrition coaching app Rise.
“Digital health is going to continue to be one of the most active healthcare sectors for the foreseeable future,” Dan Farrell, a partner at PriceWaterhouseCoopers, said in a recent interview with Healthcare Dive.
WebMD was the subject of previous sales speculation when a January 2016 Financial Times report suggested the company was in talks with potential buyers like UnitedHealth Group and Walgreens Boots Alliance, both of which have made investments in digital health. The company issued a one-line statement denying any negotiations.
WebMD announced preliminary second-quarter revenue of roughly $176 million, up 5% from a year ago, and $6 million over earlier projections for the quarter. Net income is estimated to be about $18.9 million, a 6% increase over the 2016 period.
In acquiring WebMD, KKR will gain a number of new business connections. In 2015, WebMD partnered with Blue Cross Blue Shield of Michigan to provide plan members access to benefits information, health assessments, biometric screenings and more. More recently, the company teamed up with Amazon to enable health-related searches on Alexa-enabled devices like Amazon Echo and Echo Dot.
The company’s stock gained 10.91 points to close at 66.10 Monday on news of the pending sale.