A portfolio company of KKR (NYSE: KKR) just announced the 99th eHealth deal of 2017, and the second largest eHealth deal in our M&A database dating back to 1993.
On July 24, 2017, KKR portfolio company Internet Brands, an online media and software services organization, announced the acquisition of WebMD Health Corp. (NASDAQ: WBMD). The company provides health information services, serving consumers, physicians, healthcare professionals, employers, and health plans through its public and private online portals, mobile platforms and health-focused publications.
The deal comes five months after New York-based WebMD said it would explore strategic options following a slowdown in advertising paid for by pharmaceutical companies. The slowdown is due in part to the uncertainty surrounding healthcare policy and drug pricing, and exacerbated by the on-again, off-again battle in the Senate regarding passage of legislation to replace the Affordable Care Act. The U.S. Senate was expected to vote to open debate on some form of legislation on July 25, although there was even uncertainty about what exactly would be debated.
Internet Brands paid $66.50 per share in cash, for a total of $3.6 billion, including the assumption of $1.05 billion of WebMD’s debt. The equity value represents a 30% premium to WebMD’s share price on February 15, 2017, the day prior to WebMD’s announcement that it was exploring a sale. The purchase price works out to 16.53x EBITDA and 5.06x revenue. (Internet Brands was acquired by KKR in 2014 for $1.1 billion from two other private equity firms, Hellman & Friedman LLC and JMI Equity.)
Founded in 1996, WebMD is now one of the most popular health websites for consumers and medical professionals, attracting more than 70 million unique monthly visitors in 2016, according to comScore. In addition to WebMD’s main site, the company operates Medscape.com, a physician-focused online service.
