WebMD starts sale process, sources say
WebMD Health [NASDAQ:WBMD] recently reached out to potential suitors to invite them to participate in a sale process, three sources briefed on the matter said.
The New York-based health information provider announced in February it had hired JPMorgan and Shearman & Sterling to explore a potential sale of all or parts of the company. Subsequently, activist Blue Harbour Group filed a 13-D and said it has held discussions with the company.
WebMD is currently signing confidentiality agreements with the suitors and has not yet communicated an official process timeline, the sources said. One said initial bids should happen in the next few weeks.
A spokesperson for the company declined to comment.
A spokesperson for the company declined to comment.
Bidders may be willing to offer 12x to 13x EBITDA for WebMD, two of the sources said. With a USD 50.64 per share price, the company currently trades at 8.8x adjusted 2016 EBITDA, assuming its convertible notes are treated as debt.
The USD 398m in 2.5% notes due 2018 convert at USD 66.13, the USD 300m in 1.5% notes dues due 2020 convert at USD 52.81 and the USD 351m in 2.625% notes due 2023 convert at USD 87.07 per share.
WebMD is expected to attract financial sponsors looking to put capital to work on sizable targets, the second source said. Private equity firms may also view WedMD as a value play, the third source said.
Large companies interested in data targets like Quintiles IMS Holdings [NYSE:Q] and Hearst are potential strategic suitors, two of the sources and a sector advisor said.
Some potential private equity suitors are lukewarm about looking at the company again given its failed attempts to sell in the past, some of the sources said. WebMD reportedly considered a sale in late 2011, again in fall 2012 and briefly in early 2016.
The new strategic review comes as WebMD has been losing connections to consumers through its webmd.com website that relies on internet searches, an equity analyst said. He noted that Google has prioritized health information offered by academic institutions in search listings.
Around 80% of WebMD’s USD 705m in revenue comes from advertising from its consumer website and a separate website for physicians, Medscape. The physician site accounts for 60% of the advertising revenue. The company also markets employee wellness programs to employers and sells health data.
The employer wellness market is undergoing a shift as companies look to pass these services along to health insurers and other parties, the analyst said.
The employer wellness market is undergoing a shift as companies look to pass these services along to health insurers and other parties, the analyst said.
One of the sources briefed, however, said that while WebMD has had “its ups and downs,” the business is good and growing, especially the physicians business and that is expected to pique buyer interest.
WedMD’s share price has declined over 15% in the past year at the same time when the NASDAQ Index has rallied over 20%. The company is forecasting 1% to 4% revenue growth in 2017.
WedMD’s share price has declined over 15% in the past year at the same time when the NASDAQ Index has rallied over 20%. The company is forecasting 1% to 4% revenue growth in 2017.
The US hedge fund manager, John Paulson, who famously backed Sino-Forest, before the Canadian business disappeared following short seller inquiries, recently took a large stake in UK-listed Jackpotjoy, a transatlantic transplant known in the Toronto market as Intertain.
As short sellers have already raised concerns about Jackpotjoy, this time, perhaps Paulson’s contrarian optimism is on to something? He did make a fortune by carefully selecting mortgage backed securities to bet against before the financial crisis, after all.
And yet a glance at full-year results released Wednesday may not offer much reason for confidence. Nor does a 5 per cent jump in the share price, to 560p, which fails to retrace the fall of preceding days.
Skip the first 9,000 or so words and go direct to the audited financial statements: Jackpotjoy lost £41m in 2016, on revenues of £269m.
The loss is less than the £115m recorded for the year before, but once foreign currency effects are added in the total comprehensive loss was a shade over £80m in each of the last two years.
In management’s commentary, the focus is instead on adjusted measures of profits in a strong year when “on a constant currency basis we achieved the high end of our market guidance.”
Jackpotjoy’s main asset, remember, is simply the Jackpotjoy brand. The company pays another to operate its online bingo site, and that third party holds the UK licence and is still owed large payments tied to the purchase of the brand.
The annual interest expense for serial loss-making Jackpotjoy, meanwhile, was £36m last year: 13 per cent of revenues.
Still, at number three in the shareholder list Mr Paulson is in good company. Odey Asset Management is at number six.
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- QHC -29.4%, DCTH -20.8%, PTX -11.1%, CYCC -8.5%, OREX -6.8%
- DEPO -4.4%, (announces that Arthur J. Higgins has joined the Co as President and CEO and member of the Board of Directors, following the resignation of James Schoeneck as President and CEO and member of the Board of Directors; guides Q1 net sales of $95-$100 mln)
- IZEA -3.4%, SCWX -3.3%, PLAY -3.1%, SONC -1.1%, GLUU -0.9%, WLB -0.8%
Select EU financial related names showing weakness:
- PUK -3.2%, SAN -1.6%, BCS -1.2%, CS -1.1%, HSBC -1%, DB -1%
Other news:
- ALQA -36% (prices 9.375 mln common stock offering at $0.40/share)
- ATOS -29.4% (prices $4 mln public offering consisting of units, common stock and warrants)
- DFFN -7.2% (following 80%+ move higher following US PTO news)
- AEZS -5.9% (commences new 'at-the-market' offering of up to 3 mln common shares)
- CARB -3.8% ( to offer $125 mln aggregate principal amount of Convertible Senior Notes due 2022 in a private offering)
- BPMC -2.8% (commences underwritten public offering of $150 mln in shares of its common stock)
- HPJ -2% (following today's notable move higher / close at HoD)
- BAK -0.9% (extends timeframe to finalize its audited FY16 financial statements)
- ATH -0.7% (upsizes offering by 2.5 mln shares and prices secondary offering by selling shareholders of 27.5 mln shares of common stock at $48.50), .
Analyst comments:
- SKX -4.9% (downgraded to Negative from Positive at Susquehanna)
- FFIV -3.1% (downgraded to Sell from Hold at Deutsche Bank)
- DNKN -2.8% (downgraded to Sell from Neutral at Goldman)
- GRPN -1.8% (initiated with Underweight ratings at Barclays)
- USG -1% (downgraded to Neutral from Outperform at Macquarie)
- TWTR -0.6% (initiated with Underweight ratings at Barclays)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- RH +17.1%, SUNW +8.7%, VRNT +7.7%, OLLI +2.4%, UNF +2.2%, HOTR +0.5%
M&A news:
- EXAR +22.2% (to be acquired by MaxLinear (MXL) for $13.00/share in cash)
- CERU +17.2% (Pending merger partner Daré Bioscience discloses 20.7% active stake), .
Other news:
- TNXP +51.9% (will present at The MicroCap Conference on April 4)
- CBIO +30.3% (continued strength following yesterday's 180% move higher)
- SNOA +19.9% (confirms FDA 510(k) clearance for Loyon Skin Descaler)
- VRTX +19% (confirms two Phase 3 Studies of the tezacaftor/ivacaftor combination treatment met primary endpoints with statistically significant improvements in lung function in people with cystic fibrosis)
- SGMO +16% (presentation of new human in vitro and animal model data demonstrating significant reduction of tau mRNA and tau protein expression using the Co's zinc finger protein transcription factor (ZFP-TF)-mediated gene regulation technology)
- DRWI +14.8% (DragonWave's Harmony Enhanced MC backhaul solution was selected by Knoxville Utilities Board )
- IDXG +12.8% (confirms earnings release date for March 29 after the stock market closes)
- ZSAN +9.4% (Amzak Capital Management disclosed increased passive stake to 13.51% (prior 3.61%))
- DRYS +8% (continued strength)
- VIAV +5.1% (AlphaOne Capital Partners' Daniel Niles mention on CNBC FastMoney)
- EGLT +5% (FDA does not object to Egalet's distribution of promotional materials and communications to healthcare professionals regarding the abuse-deterrent properties of ARYMO ER release tablets)
- LITE +2.4% (AlphaOne Capital Partners' Daniel Niles mention on CNBC FastMoney )
- WSM +1% (RH sympathy)
- ACOR +1% (announces results from two studies of CVT-30g)
- INOV +1% (enters into an agreement with Amgen (AMGN) focusedspecifically on rheumatoid arthriti)
Analyst comments:
- CC +3% (upgraded to Buy from Hold at Jefferies)
- EGO +2.8% (upgraded to Buy from Hold at Canaccord Genuity)
- NRG +2.2% (upgraded to Buy from Neutral at Goldman)
- FTNT +2% (upgraded to Outperform at Robert W. Baird)
- MS +1.1% (upgraded to Buy from Hold at Deutsche Bank)
- AMZN +0.5% (initiated with Overweight ratings at Barclays)
- BABA +0.5% (initiated with Overweight ratings at Barclays)