Mediconsult.com Buys Physicians Online for $180 Million

Healthcare information Web site Mediconsult.com has agreed to buy privately held Physicians Online for stock valued at about $165 (US$) million and the assumption of $13.5 million in debt.

Physicians Online is available to doctors only — who use it to exchange information and discuss clinical issues via the Internet. According to company officials, Mediconsult.com’s acquisition of Physicians Online creates the largest community of doctors and patients online.

“The 80,000 physicians using the Physicians Online service, combined with Mediconsult’s leadership position in patient and caregiver communities, changes the landscape of online healthcare,” said Robert Jennings, chief executive of Mediconduct.com.

Improve Individual Care

Jennings added that by combining Mediconsult.com’s patient-oriented healthcare information with privately held Physicians Online, doctors and patients will be able to communicate better — thereby improving care and treatment. He added that Mediconsult.com intends to develop tailor-made Web sites for all physicians using Physicians Online.

The deal is expected to close by the end of the year. MacvFarland Dewey & Co. and Warburg Dillon Read LLC advised Mediconsult.com. J.P. Morgan & Co. advised Physicians Online.

Proliferation of Healthcare Web Sites

Analysts point out that this acquisition is just the latest chapter in the ongoing positioning and convergence of online healthcare sites in the e-commerce marketplace. Just recently, former U.S. Surgeon General C. Everett Koop launched dr.koop.com.

The site has already attracted 1.4 million unique visitors and established 100 health-related chat support groups. It also cut a $89 million deal with AOL to provide healthcare information to its subscribers. In addition, there are at least another six sites aggressively promoting similar services with multimillion-dollar advertising budgets.

This glut of sites is one reason that observers expect even more consolidation in the months ahead, as the market for healthcare services skyrockets in tandem with the daily increase of people coming online.

About The Companies

Since the inception of Tarrytown, New York-based Physicians Online, the company has rapidly gained the membership of more than one-quarter of the practicing physicians in the United States. It provides a secure physicians-only environment, featuring access to MEDLINE and other medical databases, clinical symposia with peers and national experts, daily news and private e-mail.

Founded in 1996, Hamilton, Bermuda-based Mediconsult.com (Nasdaq: MCNS) provides consumer-oriented medical information through its flagship Web site and related sites. The Mediconsult.com site contains information on about 70 medical conditions and offers MediXpert, a fee-based service that lets visitors present a case to a medical specialist who responds with a confidential report.

The company also operates Web sites that specifically address pharmaceutical products, nutrition and infertility. CEO Jennings owns more than 60 percent of the company.

In 1998, Mediconsult.com, which employs about 35 workers, lost $4.9 million on revenue of $1 million.

Yesterday, shares of Mediconsult.com closed down at 1/16 at 8-1/4 on Nasdaq.