M&A of Online health publisher, WebMD Health Corporation by KKR & Co.: Dynamics in Health Care Media, Web-Health and Health Information Markets
Reporter and Curator: Aviva Lev-Ari, PhD, RN
The New York-based WebMD Health Corp., health-information provider (WBMD) was acquired by KKR & Co., deal reached on 7/24/2017. The deal, approved by the WebMD board, is expected to close in the fourth quarter of 2017.
New management at KKR was announced: Co-Presidents and Co-Operating Officers:
- Joe Bae, and
- Scott Nuttall
They are replacing Henry Kravits and George Roberts, who started KKR in 1976.
- J.P. Morgan Securities LLC is WebMD’s financial adviser
- Shearman & Sterling LLP is WebMD’s legal adviser.
- Simpson Thacher & Bartlett LLP is KKR’s Internet Brands’ legal adviser.
WebMD’s chairman Martin Wygod said Monday’s deal was the culmination of a sale process that reached 100 possible buyers as is seen as the best possible premium for shareholders. Though Monday’s deal is struck at a substantial premium to WebMD’s beginning-of-year share price it is roughly the same price as the company’s May 2016 highs. Over the past three and five years, WebMD has returned 15% and 190% respectively, indicating the company’s volatile run on public stock markets as a midcap web health brand.
Herald Chen, head of KKR’s technology industry team, “KKR and Internet Brands are pleased to be investing behind the experienced WebMD management team and trusted WebMD platforms. The combined portfolio of leading vertical internet assets will be a powerful one.”
https://www.forbes.com/sites/antoinegara/2017/07/24/kkr-strikes-deal-to-buy-health-information-giant-webmd-for-2-8b-and-a-former-partner-scores/#6f3f567b2730
Founded in 1996, WebMD has grown into one of the most popular health websites for consumers and medical professionals, attracting more than 70 million monthly unique visitors in 2016, according to analytics company comScore Inc (SCOR.PK). WebMD was founded by Jeffrey Arnold, who became a billionaire at age 29 when the company merged with Healtheon Corp. in 1999.
https://research.tdameritrade.com/grid/public/markets/news/story.asp?docKey=1-SN20170724000559&provider=CBSMarketWatch
Internet Brands, which launched as CarsDirect.com in 1998, licenses and delivers its content and internet technology products and services to small and medium-sized businesses. It was acquired by KKR in 2014 for $1.1 billion from two other private equity firms, Hellman & Friedman LLC and JMI Equity.
Under KKR, the company has expanded its portfolio of brands to include Demandforce and Fodor’s Travel.
A deal would make WebMD the latest healthcare media company to be sold. In December, j2 Global Inc’s (JCOM.O) digital media arm Ziff Davis LLC acquired Everyday Health Inc, a U.S. operator of health-related websites, for $465 million, including debt.
SOURCE
http://uk.reuters.com/article/us-webmd-m-a-kkr-exclusive-idUKKBN1A80US
https://www.wsj.com/articles/kkr-co-near-deal-to-buy-webmd-1500851095
Results for WebMD 4Q2016
Fourth quarter revenue was $207.5 million, compared to $192.1 million last year, an increase of 8%. Advertising and sponsorship revenue grew 8% to $171 million, compared to $158.3 million in the prior year period. Breaking down our advertising and sponsorship revenue further:
• revenue from biopharma and medical device clients increased 11% compared to the prior year period; and
• revenue from OTC, CPG and other clients was comparable to the prior year period.
Health services revenue was $28.8 million, an increase of 6% compared to $27.2 million in the prior year period. Information services revenue was $7.7 million, an increase of 16% compared to $6.6 million in the prior year period. Fourth quarter net income increased 32% to $36.2 million or $0.73 per diluted share compared to $27.5 million, or $0.60 per diluted share in the prior year period. Fourth quarter Adjusted EBITDA increased 16% to $78.1 million, or 38% of revenue, compared to $67.4 million, or 35% of revenue, in the prior year period. Capital expenditures were $5.3 million in the quarter. Operating cash flow was approximately $66.9 million in the quarter. This includes a cash tax benefit of $28 million related to the use of our tax NOL’s generated by stock based compensation which, as required by GAAP, are included in the financing section of the cash flow statement rather than in the operating section.
SOURCE
TRANSCRIPT OF Q4 2016 WEBMD EARNINGS CONFERENCE CALL – Feb. 16, 2017
http://files.shareholder.com/downloads/WBMD/4075514959x0x929898/89CBE95F-8CF1-4234-B809-D93060391CE5/WBMD_Q4_16_TRANSCRIPT.pdf
Current Portfolio of Assets in Health-related Websites: Outcome of
M&A of WebMD by KKR
The deal brings together WebMD’s websites, such as
with those owned by KKR unit Internet Brands Inc, including businesses serving 50,000 health practices and boast a big footprint in cloud web hosting geared towards practitioners such as dentists, chiropractors, veterinarians, eye doctors and therapists. Its operating businesses include
SOURCES
http://www.cnbc.com/2017/07/24/webmd-to-be-acquired-by-kkr-for-66-point-50-a-share-in-cash.html
https://www.forbes.com/sites/antoinegara/2017/07/24/kkr-strikes-deal-to-buy-health-information-giant-webmd-for-2-8b-and-a-former-partner-scores/#6f3f567b2730
The DEAL
…On a P/E basis the deal price represents 32.4x our 2017 GAAP EPS estimate of $2.05 and 31.7x our 2018 estimate of $2.10. EVDY received 9.6x FY1 and 7.5x FY2 Adj. EBITDA last year when it was acquired by JCOM. On an EV/Adj. EBITDA basis we estimate the deal represents 10.7x 2017E EBITDA and 10.1x 2018E EBITDA, which is well above the multiple that EVDY received. This news is a significant positive given that the deal price is slightly above the range we had been assuming, and there had been some news commentary recently that WBMD was having some challenges agreeing on a price with prospective buyers.
SOURCE
http://www.barrons.com/articles/kkr-deal-revives-webmd-shares-1500903910
SOURCE
From: CNBC Morning Squawk <morningsquawk@response.cnbc.com>
Reply-To: CNBC <reply-feef1278736c00-23_HTML-4897801-7204331-344@response.cnbc.com>
Date: Monday, July 24, 2017 at 8:34 AM
To: Aviva Lev-Ari <AvivaLev-Ari@alum.berkeley.edu>
Subject: Earnings, Fed hold keys to Wall Street’s recent record run
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