CAREINSITE INC, S-1, 1999-03-26

CAREINSITE INC
S-1, 1999-03-26

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As filed with the Securities and Exchange Commission on March 26, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------

CareInsite, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 7374 22-3630930
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

--------------------

CareInsite, Inc.
669 River Drive, River Drive Center II
Elmwood Park, New Jersey 07407
(201) 703-3400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------

David C. Amburgey
CareInsite, Inc.
Vice President -- General Counsel
669 River Drive, River Drive Center II
Elmwood Park, New Jersey 07407
(201) 703-3400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------

Copies to:
Stephen T. Giove Alan J. Jakimo
Shearman & Sterling Brown & Wood LLP
599 Lexington Avenue One World Trade Center
New York, New York 10022 New York, New York 10048
(212) 848-4000 (212) 839-5300
--------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration statement for the
same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration statement for the
same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, please check the following box. |_|

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
Title of Each Class of Proposed Maximum Amount of
Securities to Be Registered Aggregate Offering Price (1) Registration Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock, $.01 par value.............. $62,000,000 $17,236.00
===========================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the
Securities Act of 1933, as amended.
</FN>
</TABLE>

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

================================================================================

<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Subject to Completion
Preliminary Prospectus dated March 26, 1999

PROSPECTUS

CareInsite, Inc.

Common Stock

------------------

We are offering to the public shares of our common stock. We are
reserving of these shares for sale to directors, officers and employees of
our company, of Synetic, Inc., which owns 80.1% of our common stock immediately
prior to this offering, and of Cerner Corporation, a strategic partner which
owns 19.9% of our common stock immediately prior to this offering. In addition,
Cerner Corporation has agreed to purchase directly from us in connection with
this offering shares of our common stock.

This is our initial public offering and no public market exists for our
shares. We anticipate that the initial public offering price will be between $
and $ per share.

We intend to apply to list our common stock on the Nasdaq National
Market under the symbol " ."

INVESTING IN THE SHARES OF OUR COMMON STOCK INVOLVES RISKS WHICH ARE
DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 8 OF THIS PROSPECTUS.

------------------

<TABLE>
<CAPTION>
From
Per Share From the Public Cerner Total
<S> <C> <C> <C> <C>
Public offering price.............................. $ $ N/A $

Underwriting discount.............................. $ $ N/A $

Proceeds, before expenses, to our company.......... $ $ $ $
</TABLE>

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these shares of common stock or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

We have granted the underwriters the right to purchase up to an
additional shares of common stock to cover over-allotments. The underwriters
expect that the shares of common stock will be ready for delivery in New York,
New York on or about , 1999.

------------------

Merrill Lynch & Co.

------------------

The date of this prospectus is , 1999

<PAGE>

TABLE OF CONTENTS

Summary.................................................................. 4
Risk Factors............................................................. 8
Use of Proceeds.......................................................... 17
Dividend Policy.......................................................... 17
Capitalization........................................................... 18
Dilution................................................................. 19
Selected Consolidated Financial and Operating Data....................... 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 21
Business................................................................. 27
Management............................................................... 40
Security Ownership of Management......................................... 50
Transactions and Relationships with Principal Stockholders............... 51
Description of Capital Stock............................................. 54
Shares Eligible for Future Sale.......................................... 56
Underwriting............................................................. 58
Legal Matters............................................................ 61
Experts.................................................................. 61
Additional Information................................................... 61
Index to Consolidated Financial Statements............................... F-1

------------

You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. We are offering to sell, and seeking offers
to buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock. Unless otherwise indicated, all
information in this prospectus:

o assumes no exercise of the underwriters' over-allotment option,

o reflects a 16.02-for-1 split of the common stock effected in the
form of a stock dividend to be declared and paid immediately prior
to the closing of this offering, and

o reflects the filing of our amended and restated certificate of
incorporation with the Delaware Secretary of State immediately
prior to the closing of this offering.

------------

Until , 1999 (25 days after the commencement of this offering), all
dealers that buy, sell or trade our common stock, whether or not participating
in this distribution, may be required to deliver a prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.

------------

CareInsite(TM) is a pending trademark of our company.

<PAGE>

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

This prospectus contains forward-looking statements relating to our
operations that are based on management's current expectations, estimates and
projections about our company, and the healthcare e-commerce industry. Words
such as "expects," "intends," "plans," "projects," "believes," "estimates,"
"anticipates" and variations of these words and similar expressions are used to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions that
are difficult to predict. Further, certain forward-looking statements are based
upon assumptions as to future events that may not prove to be accurate.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecast in such forward-looking statements. We undertake no
obligation, and do not intend, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
A number of important factors could cause actual results to differ materially
from those indicated by such forward-looking statements. Such factors include
those set forth in this prospectus under the heading "Risk Factors."

<PAGE>

SUMMARY

This summary highlights information contained elsewhere in this
prospectus. It is not complete and may not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including the "Risk Factors" section and the
consolidated financial statements and the notes to those statements.

The Company

We are developing and intend to provide an Internet-based healthcare
electronic commerce network for interactive use by physicians, payers, suppliers
and patients. We intend to market a comprehensive set of transaction, messaging
and content services to physicians, to payers such as managed care organizations
and pharmacy benefit managers, or PBMs, to suppliers such as pharmacies and
clinical laboratories and to patients. Physicians will be able to use a web
browser to access relevant clinical, administrative and financial information of
payers and suppliers through our "CareInsite" system to make more informed
decisions at the point of care. We believe our integration of payer-specific
benefit rules and healthcare guidelines with patient-specific information at the
point of care will improve the quality of patient care, lead to appropriate use
of healthcare resources, gain compliance with benefit plan guidelines and
control healthcare costs.

We currently provide services to The Health Information Network
Connection LLC ("THINC"), an entity founded in 1996 by several major managed
care organizations in the New York metropolitan area to facilitate the
confidential exchange of healthcare information. Under our agreement, we will
manage THINC's operations and make a comprehensive suite of healthcare
e-commerce services available to the New York metropolitan area's more than
40,000 physicians. We believe that our relationship with THINC in New York will
serve as a springboard for launching our services on a national basis. As part
of this relationship, we also acquired a 20% ownership interest in THINC.

We have recently entered into a strategic relationship with Cerner
Corporation, a publicly traded corporation that is a leading supplier of
clinical and management information systems to more than 1,000 healthcare
organizations worldwide. Through this relationship, we have a perpetual,
royalty-free license to the clinical and administrative information technology
contained in Cerner's Health Network Architecture (HNA), including their HNA
Millennium Architecture (the "Cerner Technology") for use in our CareInsite
system. Cerner has agreed that CareInsite will be its exclusive vehicle for
providing a full suite of healthcare e-commerce services that connect
physicians' offices with managed care organizations, PBMs, clinical
laboratories, pharmacies and other providers. Cerner also has agreed to market
our services to its customers. In addition, Cerner has acquired a 19.9% interest
in our company.

We believe that our company has several advantages over our
competition. We believe that:

o our integration of payer-specific benefit rules and healthcare
guidelines with patient-specific information at the point of care
provides a unique ability to control the costs and improve the
quality of healthcare;

o our management's experience in clinical process automation,
healthcare transaction processing and benefit management enables us
to design and implement a healthcare e-commerce network that is
responsive to the needs of physicians, payers, suppliers and
patients; and

o our CareInsite system is being built with existing, well-proven
software and system interfaces, including the Cerner Technology,
that can be integrated with other healthcare information systems in
an efficient and scalable manner.

<PAGE>

Healthcare expenditures in the United States totaled approximately $1.0
trillion in 1996, representing a 6.7% compound annual increase since 1990. This
trend is expected to continue. While the techniques which have been used by
payers to control healthcare costs have been initially helpful, we believe that
these techniques have over time become less effective in reducing costs.
Approximately 85% of annual healthcare costs in the United States are estimated
to be represented by patient care costs as opposed to administrative costs. We
believe that healthcare cost management will be increasingly focused on this
larger 85% component of healthcare costs. Control of these costs is dependent
upon compliance with benefit plan guidelines designed to promote the appropriate
use of healthcare resources and adherence to best clinical practices.
Payers are unlikely to gain compliance with these guidelines and practices
without an efficient channel of communications to their affiliated physicians.
We believe that Internet-based healthcare e-commerce systems that enable real
time communication of clinical information as well as basic administrative and
financial information at the point of care will greatly facilitate control of
patient care costs.

Strategy. Our objective is to provide a leading healthcare e-commerce
communication channel that links physicians with payers, suppliers and patients
in order to control healthcare costs and improve patient care. Our relationships
with Cerner and THINC represent the initial execution of our strategy and
enhance our ability to continue to expand upon this strategy. Our strategy
includes the following elements:

o provide transaction, messaging and content services responsive to
the needs of physicians;

o contract with key payers and suppliers to make their
patient-specific rules available to physicians;

o build and deploy the CareInsite system;

o maximize distribution of our healthcare e-commerce services to
physicians with high transaction volumes; and

o pursue strategic relationships and acquisitions.

Relationships with Principal Stockholders. We are a majority-owned
indirect subsidiary of Synetic, Inc., a publicly traded corporation. Upon
completion of the offering, Synetic will own approximately % of the outstanding
common stock of our company. Prior to the offering, Cerner owned 19.9% of our
outstanding common stock, and has agreed to purchase directly from us in
connection with the offering shares of our common stock. We will issue to Cerner
approximately 801,000 shares of our common stock on or after February 15, 2001
at a price of $.01 per share if we realize a specified level of physician usage
of our services. In addition, THINC and Cerner have warrants exercisable for an
aggregate of 1,557,401 shares of our common stock. These warrants are
exercisable six months after completion of this offering. For a discussion of
various intercompany arrangements and agreements we have with Synetic, Cerner
and THINC, see "Risk Factors -- Our company will be controlled by Synetic,"
"Risk Factors -- Litigation by Merck & Co., Inc. and Merck-Medco Managed Care,
L.L.C. against our company" and "Transactions and Relationships with Principal
Stockholders."

---------------

Our principal executive offices are located at 669 River Drive, River
Drive Center II, Elmwood Park, New Jersey, 07407 and our telephone number at
that address is (201) 703-3400.

<PAGE>

The Offering

<S> <C>
Common stock offered by our company......................... shares, including shares being offered to
the public through the underwriters and
shares Cerner has agreed to purchase directly from
us in connection with this offering.

Common stock outstanding immediately prior to the
offering ................................................... 20,000,000 shares

Common stock outstanding after the offering................. shares

Use of proceeds............................................. We intend to use the net proceeds from this offering
for working capital, including financing the cost
of development and deployment of our services, increased
sales and marketing activities, and for general corporate
purposes. We may use a portion of the net proceeds
to fund acquisitions. See "Use of Proceeds."

Dividend policy............................................. We do not anticipate paying any cash dividends in
the foreseeable future. See "Dividend Policy."

Proposed Nasdaq National Market symbol...................... " "

Risk factors................................................ You should consider the risks involved in an
investment in our common stock. See "Risk
Factors."
</TABLE>

The foregoing information excludes:

o an aggregate of 1,557,401 shares of common stock representing
approximately % of our common stock outstanding after the offering
which may be issued from time to time upon the exercise of warrants
held by THINC and Cerner;

o approximately 801,000 shares of common stock which will be issued
on or after February 15, 2001 to Cerner at a price of $.01 per
share if we realize a specified level of physician usage of our
services; and

o shares of common stock which may be issued upon the exercise of
options outstanding on the date of this prospectus granted pursuant
to our employee stock option plan and an additional shares of
common stock reserved for issuance pursuant to this plan. The
weighted average exercise price of all options outstanding on the
date of this prospectus is the initial public offering price per
share.

<PAGE>

Summary Consolidated Financial Data
(In thousands, except share data)

On December 24, 1996, Synetic acquired Avicenna Systems Corporation.
This acquisition marked the inception of Synetic's healthcare e-commerce
business. The financial data below is based on 16,020,000 shares of common stock
outstanding on December 31, 1998, as adjusted to give effect to the sale of the
shares of common stock offered to the public hereby and the receipt of the
estimated net proceeds after deducting underwriting discounts and commissions
and the estimated offering expenses, the concurrent sale by us of the
shares of common stock Cerner has agreed to purchase directly from us in
connection with this offering and the receipt of $10,000,000 in respect of a
stock subscription receivable. The following information does not reflect the
issuance of 3,980,000 shares of common stock to Cerner in January 1999. See note
(1) to our consolidated financial statements for an explanation of the
determination of the number of shares used to compute basic and diluted net loss
per share. The following summary consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," our consolidated financial statements and notes
thereto and other financial information included elsewhere in this prospectus.

<TABLE>
<CAPTION>
Period from
Inception
(December 24, Year Six Months Ended
1996) Through Ended December 31,
June 30, June 30, ------------------------
1997 1998 1997 1998
-------------------- ---------------- ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
Consolidated Statement of Operations Data:
Costs and expenses:
Research and development....................... $ 7,652 $ 4,762 $ 2,546 $ 5,999(1)
Sales and marketing............................ 1,150 1,733 850 919
General and administrative..................... 1,379 3,887 1,639 1,979
Other income, net.............................. (9) (47) - (91)
Acquired in-process research and development.... 32,185(2) - - -
--------- --------- --------- ---------
Net loss......................................... $ (42,357) $ (10,335) $ (5,035) $ (8,806)
========= ========= ========= =========
Basic and diluted net loss per share............. $ (2.64) $ (.65) $ (.31) $ (.55)
========= ========= ========= =========

December 31, 1998
-------------------------
June 30, 1997 June 30, 1998 Actual As Adjusted
-------------------- ---------------- ------------ ------------
(unaudited)
Consolidated Balance Sheet Data:
Working (deficit) capital ....................... $ (1,592) $ 775 $ 1,424 $
Total assets..................................... 3,476 10,833 15,840
Stockholder's equity............................. 1,566 7,798 12,992

- ---------------------------
<FN>

(1) As a result of obtaining a license to the Cerner Technology, certain software that we previously capitalized
became duplicative. Consequently, $2,381 of capitalized software costs was written off and included in expenses.
(2) Represents a non-recurring charge related to the write-off of acquired in-process research and development costs
in conjunction with the purchase of Avicenna Systems Corporation and CareAgents, Inc.
</FN>
</TABLE>

<PAGE>

RISK FACTORS

You should carefully consider the risks described below before making a
decision to invest in our common stock. Some of the following factors relate
principally to our business and the industry in which we operate. Other factors
relate to our company's relationship with Synetic and our strategic partners.
Finally, other factors relate principally to your investment in our common
stock. The risks and uncertainties described below are not the only ones facing
our company. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business and operations.

If any of the matters included in the following risks were to occur,
our business, financial condition, results of operations, cash flows or
prospects could be materially adversely affected. In such case, the trading
price of our common stock could decline, and you could lose all or part of your
investment.

This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus. See "Disclosure Regarding Forward-Looking Information."

WE HAVE A LIMITED OPERATING HISTORY AND OUR BUSINESS MODEL IS UNPROVEN

Our company began operations in December 1996 and we have not yet
delivered any of our services and have not generated any revenue. Therefore our
historical financial information is of limited value in projecting our future
operating results. We had an accumulated deficit of $61.5 million as of December
31, 1998. We expect to continue to incur significant development, deployment and
sales and marketing expenses in connection with our business. We may also incur
expenses in connection with acquisitions or other strategic relationships which
we may enter into. As a result, we expect that we will continue to incur
operating losses for at least the next two fiscal years and we caution that we
may never achieve or sustain profitability. In addition, it is difficult to
value our business and evaluate our prospects because our revenue and income
potential is unproven and our business model is still emerging. The provision of
services using Internet technology in the healthcare e-commerce industry is a
developing business that is inherently riskier than businesses in industries
where companies have established operating histories.

WE MAY NOT ACHIEVE BROAD PHYSICIAN PENETRATION AND MARKET ACCEPTANCE OF OUR
SERVICES

Our business model depends on our ability to generate usage by a large
number of physicians with a high volume of healthcare transactions and to sell
healthcare e-commerce services to payers and other healthcare constituents. The
acceptance by physicians of our transaction, messaging and content services will
require adoption of new methods of conducting business and exchanging
information. We cannot assure you that physicians will integrate our services
into their office workflow, or that the healthcare market will accept our
services as a replacement for traditional methods of conducting healthcare
transactions. The healthcare industry uses existing computer systems that may be
unable to access our Internet-based solutions. Customers using existing systems
may refuse to adopt new systems when they have made extensive investment in
hardware, software and training for existing systems or if they perceive that
our CareInsite system will not adequately protect proprietary information.
Failure to achieve broad physician penetration or successfully contract with
healthcare participants would have a material adverse effect on our business,
financial condition and results of operations.

Achieving market acceptance for our services will require substantial
marketing efforts and expenditure of significant funds to create awareness and
demand by participants in the healthcare industry. We believe that we must gain
significant market share with our services before our competitors introduce
alternative services with features similar to ours. We cannot assure you that we
will be able to succeed in positioning our services as a preferred method for
healthcare e-commerce, or that any pricing strategy that we develop will be
economically

<PAGE>

viable or acceptable to the market. Failure to successfully market our services
would have a material adverse affect on our business, financial condition and
results of operations.

OUR BUSINESS PROSPECTS DEPEND ON THE QUICK AND SUCCESSFUL DEPLOYMENT OF OUR
CAREINSITE SYSTEM

We believe that our business prospects will suffer if we do not deploy
our services quickly. We have not deployed our architecture or processed any
transactions over our CareInsite system. We currently intend to deploy access to
our services by the end of 1999, although we cannot assure you that we will be
able to do so at that time, or at all. In order to deploy our services, we must
integrate our architecture with physicians', payers' and suppliers' systems. We
will need to expend substantial resources to integrate our CareInsite system
with the existing computer systems of large healthcare organizations. We have
limited experience in doing so, and we may experience delays in the integration
process. These delays would, in turn, delay our ability to generate revenue from
our services and may have a material adverse effect on our business, financial
condition and results of operations. Once we have deployed our CareInsite
system, we may need to expand and adapt it to accommodate additional users,
increased transaction volumes and changing customer requirements. This expansion
and adaptation could be expensive. We may be unable to expand or adapt our
network infrastructure to meet additional demand or our customers' changing
needs on a timely basis and at a commercially reasonable cost, or at all. Any
failure to deploy, expand or adapt our CareInsite system quickly could have a
material adverse effect on our business, financial condition and results of
operations.

WE RELY ON STRATEGIC RELATIONSHIPS THAT MAY NOT PROVIDE ANTICIPATED BENEFITS

To date, we have entered into strategic relationships with Cerner and
THINC. These relationships are in the early stages of development. We may enter
into additional strategic relationships in the future. We cannot assure you that
any of these relationships will provide us with the ability to successfully
develop or sell our services. In addition, we may not be able to establish
relationships with or provide our services to key participants in the healthcare
industry if we have established relationships with their competitors.
Consequently, it is important that we are perceived as independent of any
particular customer or partner. Also, some of our current and potential partners
may decide to compete with us. If any of our current or future strategic
relationships are disrupted, or if we do not realize the expected benefits from
these relationships, our business, financial condition and results of operations
may be materially adversely affected.

We may also make acquisitions of companies which we believe have
attractive technologies or distribution channels. Integrating newly acquired
organizations and technologies into our company could be expensive, time
consuming and may strain our resources. The healthcare industry is consolidating
and we expect that we will face intensified competition for acquisitions. We
cannot assure you that we will succeed in consummating any such strategic
relationships or acquisitions, that such transactions will ultimately provide us
with the ability to offer the services described or that we will be able to
successfully manage or integrate any resulting business. Consequently, we may
not achieve anticipated revenue and cost benefits.

OUR REVENUES WILL INITIALLY COME FROM A FEW PAYERS

We expect that initially we will generate a significant portion of our
revenue from providing our products and services in the New York metropolitan
area and from a small number of payers. If we do not generate as much revenue in
this market or from these payers as we expect, our revenue will be significantly
reduced which would have a material adverse effect on our business, financial
condition and results of operations.

<PAGE>

WE MAY FACE SIGNIFICANT COMPETITION IN PROVIDING HEALTHCARE E-COMMERCE PRODUCTS
AND SERVICES

The market for healthcare e-commerce services is rapidly developing and
is becoming increasingly competitive. Several service companies, some of which
may have greater financial, technological and marketing resources than we do,
have announced that they are developing a combination of one or more healthcare
e-commerce services that may be competitive with ours. We expect to compete with
software vendors, electronic data interchange network providers, emerging
e-commerce companies or others.

Traditional healthcare software vendors such as Medical Manager, Medic,
and IDX primarily focus on the administrative functions in the healthcare
setting. Electronic data interchange network providers and claims clearinghouses
like Envoy (reported to be being acquired by Quintiles) and NDC provide
connectivity to edit and transmit data on medical and pharmacy claims. These
companies are beginning to offer services which may be competitive with our
clinical e-commerce services. Companies like Healtheon and other emerging
e-commerce companies may offer a range of services which may compete with ours.
Any organizations that create stand-alone healthcare software products may
migrate into the healthcare e-commerce business. Our competitors may be first to
market new services or may also independently develop services and/or technology
that is substantially equivalent to or superior to ours. There can be no
assurance that such companies will not develop and successfully market
healthcare e-commerce products and services in a manner which would have a
material adverse effect on our business, financial condition and results of
operations.

POTENTIAL CUSTOMERS COULD TAKE A LONG TIME TO EVALUATE THE PURCHASE OF OUR
SERVICES

A key element of our strategy is to market our services directly to
large healthcare organizations. We do not control many of the factors that will
influence physicians', payers' and suppliers' buying decisions. We expect that
the sales and implementation process will be lengthy and will involve a
significant technical evaluation and commitment of capital and other resources
by physicians, payers and suppliers. The sale and implementation of our services
are subject to delays due to physicians', payers' and suppliers' internal
budgets and procedures for approving large capital expenditures and deploying
new technologies within their networks.

RAPIDLY CHANGING TECHNOLOGY MAY IMPAIR OUR ABILITY TO DEVELOP AND MARKET OUR
SERVICES

All businesses which rely on Internet technology, including the
healthcare e-commerce business that we are developing, are subject to, among
other risks and uncertainties:

o rapid technological change,

o changing customer needs,

o frequent new product introductions, and

o evolving industry standards.

Internet technologies are evolving rapidly, and the technology used by
any e-commerce business is subject to rapid change and obsolescence. These
market characteristics are exacerbated by the emerging nature of the market and
the fact that many companies are expected to introduce new Internet products and
services in the near future. In addition, use of the Internet may decrease if
alternative protocols are developed or if problems associated with increased
Internet use are not resolved. As the communications, computer and software
industries continue to experience rapid technological change, we must be able to
quickly and successfully modify our services so that they adapt to such changes.
We cannot assure you that we will not experience difficulties that could delay
or prevent the successful development and introduction of our healthcare
e-commerce services or that we will be able to respond to technological changes
in a timely and cost-effective

<PAGE>

manner. Moreover, technologically superior products and services could be
developed by competitors. These factors could have a material adverse effect
upon our business, financial condition and results of operations.

WE DEPEND ON THE PROTECTION OF OUR PROPRIETARY RIGHTS

Our future success and ability to compete in the healthcare e-commerce
business may be dependent in part upon our proprietary rights to products and
services which we develop. We expect to rely on a combination of patent,
copyright, trademark and trade secret laws and contractual restrictions to
protect our proprietary technology and to rely on similar proprietary rights of
any of our content and technology providers. We currently have no patents
covering any of our technology, whereas some of our competitors have patents
which may cover some aspects of their technology. We intend to file patent
applications to protect certain of our proprietary technology. We cannot
assure you that such applications will be approved or, if approved, will be
effective in protecting our proprietary technology. We enter into
confidentiality agreements with all of our employees, as well as with our
clients and potential clients seeking proprietary information, and limit access
to and distribution of our software, documentation and other proprietary
information. There can be no assurance that the steps we take or the steps such
providers take would be adequate to prevent misappropriation of our respective
proprietary rights.

WE MAY INFRINGE THE PROPRIETARY RIGHTS OF THIRD PARTIES

We expect that we could be subject to intellectual property
infringement claims as the number of our competitors grows and the functionality
of our applications overlaps with competitive offerings. Although we intend to
take steps to minimize the likelihood that we are infringing the proprietary
rights of any third parties, we cannot assure you that patent infringement or
other similar claims will not be asserted against us or one of our content or
technology providers or that such claims will not be successful. We could incur
substantial costs and diversion of management resources with respect to the
defense of any such claims. Furthermore, parties making such claims against us
or a content or technology provider could secure a judgment awarding substantial
damages, as well as injunctive or other equitable relief which could effectively
block our ability to provide products or services in certain of our markets.
Such a judgment could have a material adverse effect on our business, financial
condition and results of operations. In addition, we cannot assure you that
licenses for any intellectual property of third parties that might be required
for our products or services will be available on commercially reasonable terms,
or at all.

LITIGATION BY MERCK & CO., INC. AND MERCK-MEDCO MANAGED CARE, L.L.C. AGAINST OUR
COMPANY

On February 18, 1999, Merck & Co., Inc. and Merck-Medco Managed Care,
L.L.C. filed a complaint in the Superior Court of New Jersey against our
company, Synetic, Martin J. Wygod, Chairman of our company and Synetic, and
three officers and/or directors of our company and Synetic, Paul C. Suthern,
Roger C. Holstein and Charles A. Mele. The plaintiffs assert that our company,
Synetic and the individual defendants are in violation of certain
non-competition, non-solicitation and other agreements with Merck and
Merck-Medco, and seek to enjoin us and them from conducting our healthcare
e-commerce business and from soliciting Merck-Medco's customers. The Synetic
and Wygod agreements provide an expiration date of May 24, 1999. The other
individuals' agreements provide for expiration in December 1999, in the case
of Mr. Suthern, March 2000, in the case of Mr. Mele, and September 2002, in
the case of Mr. Holstein. A preliminary injunction hearing was held on
March 22, 1999. Following the hearing, the Court took the matter under
submission.

We believe that Merck's and Merck-Medco's positions in relation to us
and the individual defendants are without merit, and intend to vigorously
defend the litigation. If we are unsuccessful in defending this
litigation, our company could be prevented indefinitely from pursuing the
development and deployment of our healthcare e-commerce services. Any
unanticipated adverse result could have a material adverse effect on our
company's business.

<PAGE>

FAILURE TO DEAL EFFECTIVELY WITH YEAR 2000 TECHNOLOGY RISKS

We are not currently aware of any Year 2000 compliance problems
relating to our information technology or non-information technology systems
that we believe would have a material adverse effect on our business, financial
condition and results of operations. There can be no assurance that we will not
discover Year 2000 compliance problems that will require substantial revisions
to our systems, products or services. In addition, there can be no assurance
that third-party software, hardware or services incorporated into our material
information technology and non- information technology systems will not need to
be revised or replaced, all of which could be time consuming and expensive. Any
failure to fix our information technology systems or to replace third-party
software, hardware or services on a timely basis could result in lost revenues,
increased operating costs, the loss of customers and other business
interruptions, any of which could have a material adverse effect on our
business, results of operations and financial condition.

In addition, there can be no assurance that physicians, payers,
suppliers, Internet access companies, third-party service providers, vendors,
business partners and others outside our control will be Year 2000 compliant.
The failure by such entities to be Year 2000 compliant could result in a
systemic failure beyond our control, such as a prolonged Internet or
communications failure, which could also prevent us from delivering our services
to customers, decrease the use of the Internet or prevent users from accessing
our service. Such a failure could have a material adverse effect on our
business, results of operations and financial condition. Also, a general Year
2000 systemic failure could require healthcare companies to spend large amounts
of money to correct any such failures, reducing the amount of money that might
otherwise be available to be spent on services such as ours.

As the Year 2000 issue has many elements and potential consequences,
some of which are not reasonably foreseeable, the ultimate impact of the Year
2000 on our operations could differ materially from our expectations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000."

WE RELY ON THE INTEGRITY AND SECURITY OF OUR SYSTEMS

Our customer satisfaction and our business could be harmed if we or our
customers experience any system delays, failures or loss of data. We currently
intend to initially process substantially all our customer

<PAGE>

transactions and data at our facilities in Cambridge, Massachusetts. Although we
will have safeguards for emergencies, the occurrence of a catastrophic event or
other system failure at our facilities could interrupt our operations or result
in the loss of stored data. In addition, we depend on the efficient operation of
Internet connections from customers to our systems. These connections, in turn,
depend on the efficient operation of Web browsers, Internet service providers
and Internet backbone service providers. In the past, Internet users have
occasionally experienced difficulties with Internet and online services due to
system failures. Any disruption in Internet access provided by third parties
could have a material adverse effect on our business, results of operations and
financial condition. Furthermore, we are dependent on hardware suppliers for
prompt delivery, installation and service of equipment used to deliver our
services.

Despite the implementation of security measures, our infrastructure may
be vulnerable to damage from physical break-ins, computer viruses, programming
errors, attacks by hackers or similar disruptive problems. A material security
breach could damage our reputation or result in liability to us. We retain
confidential customer and patient information in our processing center. An
experienced computer user who is able to access our computer systems could gain
access to confidential patient and company information. Furthermore, we may not
have a timely remedy to secure our system against any hacker who has been able
to penetrate our system. Therefore, it is critical that our facilities and
infrastructure remain and are perceived by the marketplace to be secure. The
occurrence of any of these events could result in the interruption, delay or
cessation of service, which could have a material adverse effect on our
business, results of operations and financial condition.

A significant barrier to electronic commerce and communications are the
issues presented by the secure transmission of confidential information over
public networks. We rely on encryption and authentication technology licensed
from third parties to secure Internet transmission of and access to confidential
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the methods we use to protect
customer transaction data. A party who is able to circumvent our security
measures could misappropriate or alter proprietary information or cause
interruptions in our operations. If any such compromise of our security or
misappropriation of proprietary information were to occur, it could have a
material adverse effect on our business, financial condition, and results of
operations. We may be required to expend significant capital and other resources
to protect against such security breaches or to alleviate problems caused by
security breaches. We may also be required to spend significant resources and
encounter significant delays in upgrading our systems to incorporate more
advanced encryption and authentication technology as it becomes available.
Concerns over the security of the Internet and other online transactions and the
privacy of users may also inhibit the growth of the Internet and other online
services generally, and our services in particular, especially as a means of
conducting commercial and/or healthcare-related transactions. There can be no
assurance that our security measures will prevent security breaches or that
failure to prevent such security breaches will not have a material adverse
effect on our business, prospects, financial condition, and results of
operations.

Our operations are dependent on the development and maintenance of
software. Although we intend to use all necessary means to ensure the efficient
and effective development and maintenance of software, both activities are
extremely complex and thus frequently characterized by unexpected problems and
delays.

WE WILL NEED TO EXPAND OUR MANAGEMENT INFORMATION SYSTEMS AND PERSONNEL TO MEET
THE INCREASED DEMANDS OF OUR BUSINESS

Although our existing management information systems are sufficient to
meet our current needs, we intend to acquire new systems to meet the
requirements of our expanded operations. These systems need, among other
requirements, to capture complex information. There can be no assurance that
these new management information systems, when installed, will be sufficient to
meet our needs. In addition, we may experience interruptions of service when we
transition from our existing systems to new ones.

<PAGE>

GOVERNMENT REGULATION OF THE INTERNET OR HEALTHCARE E-COMMERCE SERVICES COULD
ADVERSELY AFFECT OUR BUSINESS

Our services may be subject to extensive and frequently changing
regulation at federal, state and local levels. The Internet and its associated
technologies are also subject to government regulation. Many existing laws and
regulations, when enacted, did not anticipate the methods of healthcare
e-commerce we are developing. We believe, however, that these laws and
regulations may nonetheless be applied to our healthcare e-commerce business.
Accordingly, our healthcare e-commerce business may be affected by current
regulations as well as future regulations specifically targeted to this new
segment of the healthcare industry.

We expect to conduct our healthcare e-commerce business in substantial
compliance with all material federal, state and local laws and regulations
governing our operations. However, the impact of regulatory developments in the
healthcare industry is complex and difficult to predict, and there can be no
assurance that we will not be materially adversely affected by existing or new
regulatory requirements or interpretations. It is also possible that such
requirements or interpretations could limit the effectiveness of the use of the
Internet for the methods of healthcare e-commerce we are developing or even
prohibit the sale of one or more of our services. Application of any such
regulations or requirements to our business could have a material adverse effect
on our business, financial condition or results of operations. See "Business --
Government Regulation."

CHANGES IN THE REGULATORY AND ECONOMIC ENVIRONMENT AND CONSOLIDATION IN THE
HEALTHCARE INDUSTRY COULD ADVERSELY AFFECT OUR BUSINESS

The healthcare industry is highly regulated and is subject to changing
political, economic and regulatory influences. These factors affect the
purchasing practices and operation of healthcare organizations. Changes in
current healthcare financing and reimbursement systems could cause us to make
unplanned enhancements of applications or services, or result in delays or
cancellations of orders or in the revocation of endorsement of our services by
healthcare participants. Federal and state legislatures have periodically
considered programs to reform or amend the U.S. healthcare system at both the
federal and state level. These programs may contain proposals to increase
governmental involvement in healthcare, lower reimbursement rates or otherwise
change the environment in which healthcare industry participants operate.
Healthcare industry participants may respond by reducing their investments or
postponing investment decisions, including investments in our services. We do
not know what effect any of these proposals would have on our business.

Many healthcare industry participants are consolidating to create
integrated healthcare delivery systems with greater market power. As the
healthcare industry consolidates, competition to provide products and services
to industry participants will become more intense and the importance of
establishing a relationship with each industry participant will become greater.
These industry participants may try to use their market power to negotiate price
reductions for our products and services. If we were forced to reduce our
prices, our operating results could suffer if we cannot achieve corresponding
reductions in our expenses.

OUR COMPANY WILL BE CONTROLLED BY SYNETIC

Immediately prior to the offering, Synetic was the indirect owner of
80.1% of our outstanding common stock. Upon completion of the offering, Synetic
will own approximately % of our outstanding common stock and will therefore
retain effective control of our company and will be able to control the vote on
matters submitted to our stockholders and will also be able to elect all of our
directors. In addition, certain directors or officers of Synetic are also
directors or officers of our company and may have conflicts of interest with
respect to certain transactions that may affect our company, such as
transactions involving business dealings between our company and Synetic,
acquisition opportunities, the issuance of additional shares of our common stock
and other matters involving conflicts which cannot now be foreseen. Officers and
directors of our company also beneficially own and have been granted options to
purchase shares of Synetic common stock.

<PAGE>

The level of ownership of our outstanding common stock by Synetic may
have the effect of discouraging or making more difficult, absent the support of
Synetic, a proxy contest, a merger involving our company, a tender offer, an
open-market purchase program or other purchases of our common stock that could
give our stockholders the opportunity to realize a premium over the
then-prevailing market price of their shares of common stock. See "Risk
Factors -- Litigation by Merck & Co., Inc. and Merck-Medco Managed Care, L.L.C.
against our company" and "Transactions and Relationships with Principal
Stockholders."

WE MAY NEED TO OBTAIN FUTURE CAPITAL

We expect that the money generated from this offering, combined with
our current cash resources, will be sufficient to meet our requirements for
approximately 18 months. However, we may need to raise additional financing to
support expansion, develop new or enhanced applications and services, respond to
competitive pressures, acquire complementary businesses or technologies or take
advantage of unanticipated opportunities. We may need to raise additional funds
by selling debt or equity securities, by entering into strategic relationships
or through other arrangements. However, there can be no assurance that we will
be able to raise any additional amounts on reasonable terms, or at all, when
they are needed.

FUTURE SALES OF SHARES OF OUR COMMON STOCK COULD AFFECT OUR STOCK PRICE

The market price for our common stock could fall dramatically if our
stockholders sell large amounts of our common stock in the public market
following this offering. These sales, or the possibility that these sales may
occur, could make it more difficult for us to sell equity or equity-related
securities in the future. The number of shares of common stock available for
sale in the public market is limited by restrictions under federal securities
law and by certain "lock-up" agreements that we, Synetic and Cerner have entered
into with the underwriters. The lock-up agreements restrict us, Synetic and
Cerner from selling any of their shares for a period of days after the date of
this prospectus without the prior written consent of Merrill Lynch. Merrill
Lynch may, however, in its sole discretion and without notice, release all or
any portion of the shares from the restrictions in the lock-up agreements.

After this offering, we will have outstanding shares of common stock,
assuming no exercise of the Underwriters' overallotment option and no exercise
of outstanding options or warrants. On the date of this prospectus the shares
sold to the public in this offering will be eligible for public resale.
Beginning days after the date of this prospectus, the 16,020,000 shares of our
common stock currently owned by Synetic will become eligible for public resale.
On or after the date 180 days after the occurrence of our initial public
offering, THINC can exercise its warrant to purchase up to 1,298,917 shares of
our common stock. THINC may exercise demand registration rights requiring us to
register for sale any shares granted pursuant to the exercise of its option
beginning any time after January 1, 2001. Cerner may exercise its related
warrant, if THINC exercises its warrant, to purchase up to 258,484 additional
shares of our common stock. All shares of our common stock held by Cerner,
including the 3,980,000 shares currently held and the additional shares
purchased by Cerner from us in this offering, are subject to an additional
lock-up entered into by Cerner with us that restrict Cerner from selling any of
their shares prior to January 2, 2001, subject to certain exceptions. In
addition, we will issue to Cerner approximately 801,000 shares of our common
stock on or after February 15, 2001 at a price of $.01 per share if we realize
specified levels of physician usage of our services.

Any shares that may be purchased in this offering by our "affiliates,"
as defined in Rule 144 of the Securities Act, will be subject to the volume and
other selling limitations under Rule 144 of the Securities Act. All of the
shares eligible for sale at the th day after the date of this prospectus or
afterward will be subject initially to certain volume and other limitations
under Rule 144 of the Securities Act.

On or prior to the th day following the date of this prospectus, we
intend to register for resale an additional shares of common stock reserved
for issuance under our employee stock plans based upon the number of shares
reserved for issuance as of the date of the offering. In addition, the holders
of approximately shares of our common stock have the right to require us to
register their shares for sale to the public. If

<PAGE>

these holders cause a large number of shares to be registered and sold in the
public market, our stock price could fall materially. See "Shares Eligible for
Future Sale."

THERE HAS BEEN NO PUBLIC MARKET FOR OUR COMMON STOCK

Prior to this offering, there has been no public market for our common
stock. We intend to file an application to list the common stock for trading on
the Nasdaq National Market System. We do not know the extent to which investor
interest in our company will lead to the development of a trading market for the
common stock or how the common stock will trade in the future. Our company and
the underwriters will negotiate to determine the initial public offering price.
You may not be able to resell your shares at or above the initial public
offering price due to a number of factors, including:

o actual or anticipated quarterly variations in our operating
results,

o changes in expectations as to our future financial performance
or changes in financial estimates, if any, of securities
analysts,

o announcements of new products or services or technological
innovations,

o announcements relating to strategic relationships,

o customer relationship developments,

o conditions generally affecting the Internet or healthcare
industries,

o success of our operating strategy,

o competition from healthcare information software vendors,
healthcare electronic data interchange companies, nationwide
and regional providers of information technology consulting
services and new technology, and

o the operating and stock price performance of other comparable
companies.

THE PRICE FOR OUR COMMON STOCK MAY BE VOLATILE

The stock market recently has experienced significant volatility that
often has been unrelated or disproportionate to the operating performance of
particular companies. These broad market and industry fluctuations may adversely
affect the trading price of our common stock, regardless of our actual operating
performance.

YOU WILL SUFFER SUBSTANTIAL DILUTION AND OUR CURRENT STOCKHOLDERS WILL BENEFIT
FROM THIS OFFERING

New investors in this offering will experience an immediate and
substantial dilution of $ per share, assuming an initial public offering price
of $ per share. This offering will also create a public market for the resale
of shares held by existing investors, and substantially increase the market
value of those shares. In addition, the issuance by our company of additional
securities, including common stock or securities convertible into common stock,
the exercise of warrants currently held by Cerner and THINC, or the exercise of
employee stock options, could result in substantial dilution of the percentage
ownership of our stockholders at the time of any such issuance and substantial
dilution of our company's earnings per share. See "Dilution."

<PAGE>

USE OF PROCEEDS

We estimate the net proceeds from the sale of shares of common stock
in this offering will be approximately $ million based on an assumed initial
public offering price of $ per share (approximately $ million if the
underwriters' over-allotment option is exercised in full). We currently intend
to use the net proceeds for working capital, including financing the cost of
product development and deployment, increased sales and marketing activities,
and for general corporate purposes. We may use a portion of the net proceeds to
fund, acquire or invest in complementary businesses or technologies, although we
have no present commitments with respect to any acquisition or investment.

Pending use of the net proceeds of the offering, we intend to invest
such proceeds in U.S. government or investment-grade marketable securities.

DIVIDEND POLICY

We currently intend to retain any earnings to finance the development
and expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future. Any declaration and payment of dividends would be
subject to the discretion of our Board of Directors. Any future determination to
pay dividends will depend on our results of operations, financial condition,
capital requirements, contractual restrictions and other factors deemed relevant
at the time by the Board of Directors.

<PAGE>

CAPITALIZATION

The following table sets forth as of December 31, 1998 the actual
capitalization of our company and the as adjusted capitalization of our company
after giving effect to the 16.02-for-1 stock split, the receipt of $10 million
in respect of a stock subscription receivable, the receipt of the estimated net
proceeds from the sale of the shares of common stock offered to the public
hereby at the assumed initial public offering price of $ per share, after
deducting underwriting discounts and commissions and the estimated offering
expenses, and the concurrent sale by us of shares of common stock Cerner has
agreed to purchase directly from us in connection with this offering.

<TABLE>
<CAPTION>
December 31, 1998
(in thousands)
(unaudited)
Actual As Adjusted
------ -----------
<S> <C> <C>
Cash and cash equivalents.............................................. $ 635 $
================= ================
Stockholder's equity:
Common stock, $.01 par value, 100,000,000 shares authorized;
16,020,000 shares issued and outstanding(1)........................ 160
Paid-in capital.................................................... 84,330
Stock subscription receivable...................................... (10,000)
Accumulated deficit................................................ (61,498)
-----------------
Total stockholder's equity......................................... 12,992
-----------------
Total capitalization................................................... $ 12,992 $
================= ================
- --------------------
<FN>
(1) Excludes shares of common stock which may be issued upon the exercise of options outstanding on the
date of this prospectus granted pursuant to our employee stock option plan and an additional shares
of common stock reserved for issuance pursuant to this plan. The weighted average exercise price of all
options outstanding on the date of this prospectus is the initial public offering price per share. Also
excludes an aggregate of 1,557,401 shares of common stock which may be issued from time to time upon the
exercise of the THINC and Cerner warrants and 801,000 shares of common stock which will be issued on or
after February 15, 2001 to Cerner at a price of $.01 per share if we realize a specified level of
physician usage of our services. See "Management," "Security Ownership of Management," and "Transactions
and Relationships with Principal Stockholders".
</FN>
</TABLE>

<PAGE>

DILUTION

As of December 31, 1998, our net tangible book value was $2,638,000 or
$.13 per share on a pro forma basis after giving effect to the issuance of
3,980,000 shares of our common stock to Cerner in January 1999. After giving
effect to the sale of shares offered to the public hereby at an assumed
initial public offering price of $ per share, after deducting the
underwriting discount and estimated offering expenses, and giving effect to the
concurrent sale by us of shares of common stock to Cerner, our pro forma as
adjusted net tangible book value as of December 31, 1998 would have been
approximately $ or $ per share. This represents an immediate increase
in net tangible book value of $ per share to the existing stockholders and an
immediate dilution of $ per share to new investors. The following table
illustrates this per share dilution.

<TABLE>
<CAPTION>
Per Share
<S> <C> <C>
Initial public offering price per share................................ $
Pro forma net tangible book value before the offering (1)........ $
Increase attributable to new investors........................... $
Pro forma net tangible book value after the offering................... $
Dilution per share to new investors (2)................................ $
<FN>

(1) Net tangible book value (tangible assets less total liabilities) of our company divided by the number
of shares of common stock outstanding as of December 31, 1998 on a pro forma basis after giving effect
to the issuance of 3,980,000 shares of our common stock to Cerner in January 1999.
(2) If the underwriters' over-allotment option is exercised in full, the dilution per share to new investors
will be $ per share.
</FN>
</TABLE>

The following table summarizes, on the pro forma basis set forth above,
as of December 31, 1998, the relative investment of the existing stockholders
and new investors.

<TABLE>
<CAPTION>
Total Cash
Shares Purchased Consideration Average
---------------------- ------------------------ Price per
Number Percent Amount Percent Share
------ ------- ------ ------- -----
<S> <C> <C> <C> <C> <C>
Existing Stockholders............... $
New Investors....................... ______ _____ _______ _____
Total...................... 100.0% 100.0% $
</TABLE>

The above computations do not include shares of common stock which may
be issued upon the exercise of options outstanding on the date of this
prospectus granted pursuant to our employee stock option plan and additional
shares of common stock reserved for issuance pursuant to this plan. We expect to
grant to certain of our employees, effective as of the date of this prospectus,
options to purchase an aggregate of approximately of these shares at an exercise
price equal to the initial public offering price per share. See "Management."
These computations also do not include 1,557,401 shares of common stock that may
be issued from time to time upon the exercise of the warrants held by THINC and
Cerner and 801,000 shares of common stock which may be issued on or after
February 15, 2001 to Cerner at a price of $.01 per share if our business
realizes certain performance levels.

<PAGE>

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(In thousands, except share data)

The selected financial data set forth below as of June 30, 1997 and
June 30, 1998 and for the period from Inception (December 24, 1996) through June
30, 1997 and for the year ended June 30, 1998 have been derived from our
Consolidated Financial Statements included elsewhere in this prospectus. The
selected financial data as of December 31, 1998 and for the six-month periods
ended December 31, 1997 and 1998 are derived from our unaudited consolidated
financial statements which, in the opinion of our management, include all normal
and recurring adjustments necessary to present fairly the financial position and
the results of operations of our company for those periods. The operating
results for the six months ended December 31, 1998 are not necessarily
indicative of the operating results to be expected for the full year. The
selected consolidated financial data presented below should be read in
conjunction with the consolidated financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this prospectus.

June 30, 1997 June 30, 1998 December 31, 1998
-------------------- ---------------- ------------------------
(unaudited)
Consolidated Balance Sheet Data:
Working (deficit) capital ....................... $ (1,592) $ 775 $ 1,424
Total assets..................................... 3,476 10,833 15,840
Stockholder's equity............................. 1,566 7,798 12,992

- ---------------------------
<FN>

(1) As a result of obtaining a license to the Cerner Technology, certain software that we previously capitalized
became duplicative. Consequently, approximately $2,381 of capitalized software costs was written off and included
in expenses.
(2) Represents a non-recurring charge related to the write-off of acquired in-process research and development costs
in conjunction with the purchase of Avicenna Systems Corporation and CareAgents, Inc.
(3) Based on 16,020,000 shares of common stock outstanding on December 31, 1998. See note (1) to our financial
statements for an explanation of the determination of the number of shares used to compute basic and
diluted net loss per share.
</FN>
</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our
financial statements and notes thereto. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in forward-looking
statements. See "Risk Factors."

Overview

Our products and services are still under development and no revenues
have been generated from the sale of these products and services. Additionally,
the market for our products and services is unproven. These factors make it
difficult to evaluate our business and prospects. We have incurred substantial
operating losses since our inception and there can be no assurance that we will
generate significant revenues or profitability in the future. We intend to
significantly increase our expenditures primarily in the areas of development,
sales and marketing, data center operations and customer support. As a result,
we expect to incur substantial operating losses for at least the next two fiscal
years.

We expect to generate a significant portion of our revenue from payers
and suppliers who are expected to pay initial set-up and ongoing maintenance
fees associated with organizing, loading and maintaining their content,
transaction fees for the transmission of payer content to physicians and
transaction fees for lab orders/results and prescription routing. The number of
these customers may be relatively small. We believe that management has a unique
understanding of the economic leverage inherent in facilitating the automation
of certain clinical, administrative and financial processes. Accordingly, the
company will contract with payers and other suppliers to guarantee system
performance so that we will have the opportunity to earn in relation to the
value created. We also expect to generate revenue from physicians who are
expected to pay a monthly fee for access to a range of our services.

On December 24, 1996, Synetic acquired Avicenna Systems Corporation, a
privately held company that marketed and built Intranets for managed healthcare
plans, integrated healthcare delivery systems and hospitals. The acquisition of
Avicenna marked the Inception of Synetic's healthcare communications business.
On January 23, 1997 Synetic acquired CareAgents, Inc., a privately held company
engaged in developing Internet-based clinical commerce applications. On November
24, 1998, Synetic formed CareInsite, Inc. (formerly Synetic Healthcare
Communications, Inc.). On January 2, 1999, Synetic contributed the stock of
CareAgents to Avicenna. Concurrently, Avicenna contributed the stock of
CareAgents and substantially all of Avicenna's other assets and liabilities to
our company (the "Formation"). Synetic continues to hold its interest in our
company through Avicenna. Synetic also agreed to contribute $10,000,000 in cash
to our company. The Formation has been accounted for using the carryover basis
of accounting and our company's financial statements include the accounts and
operations of Avicenna and CareAgents for all periods presented from the date
each entity was acquired. In October, 1998, we entered into agreements in
principle with two strategic partners, THINC and Cerner. Definitive agreements
with THINC and Cerner were entered into in January 1999.

Results of Operations

Six Months Ended December 31, 1998 Compared to Six Months Ended December 31,
1997

Research and development expenses consisted primarily of employee
compensation, the cost of consultants and other direct expenses incurred in the
development of our product. These expenses were $5,999,000 for the six months
ended December 31, 1998 and $2,546,000 for the six months ended December 31
1997. Research and development expenses for the six months ended December 31,
1998 include a $2,381,000 write-off of capitalized software costs relating to
components of our existing software which were duplicative with the
functionality obtained through the license of the Cerner Technology. Excluding
this write-off of capitalized software, total expenditures for research and
development, including amounts capitalized, were $11,381,000 for the six months
ended December 31, 1998 and $3,578,000 for the six months ended December

<PAGE>

31, 1997. The increase in total expenditures was related to the purchase of
third party licenses, as well as increases in development personnel and outside
consultants. Of the total expenditures, $7,763,000 was capitalized during the
six months ended December 31, 1998 and $1,032,000 was capitalized during the six
months ended December 31, 1997. Our policy is to capitalize software development
costs once technological feasibility has been established.

Sales and marketing expenses consist primarily of salaries and
benefits, travel for sales, marketing and business development personnel, and
promotion related expenses such as advertising, marketing materials, and trade
shows. Sales and marketing expenses were $919,000 for the six months ended
December 31, 1998 and $850,000 for the six months ended December 31, 1997. The
increase reflects the addition of payer oriented marketing staff partially
offset by the elimination of the remaining advertising and Intranet sales and
marketing personnel. Included in sales and marketing expenses are charges from
Synetic of $306,000 for the six months ended December 31, 1998 and $290,000 for
the six months ended December 31, 1997. These charges represent an allocation of
compensation costs for personnel who devote a majority of their time to our
company, and primarily relate to business development and marketing support
services.

General and administrative expenses consist primarily of compensation
for legal, finance, management and administrative personnel. General and
administrative expenses were $1,979,000 for the six months ended December 31,
1998 and $1,639,000 for the six months ended December 31, 1997. The increase in
general and administrative expenses of $340,000 resulted primarily from
increased costs associated with supporting the growth in our research and
development efforts. Included in general and administrative expenses are charges
from Synetic of $169,000 for the six months ended December 31, 1998 and $56,000
for the six months ended December 31, 1997. These charges represent an
allocation of compensation costs for personnel who devote a majority of their
time to our company, and primarily relate to administrative and legal services.
The increase in these allocated expenses is due to increased staffing to support
our business. We expect to hire additional personnel and incur additional costs
related to becoming a public company. Accordingly, we intend to increase the
absolute dollar level of general and administrative expenses in future periods.

Year Ended June 30, 1998 Compared to Period from Inception (December 24, 1996)
through June 30, 1997

Research and development expenses were $4,762,000 for the year ended
June 30, 1998 and $7,652,000 and for the period from Inception (December 24,
1996) through June 30, 1997. Total expenditures for research and development,
including amounts capitalized, were $9,386,000 for the year ended June 30, 1998
and $8,000,000 and for the period from Inception (December 24, 1996) through
June 30, 1997. The increase in total expenditures was primarily due to the
longer fiscal period and a significant increase in research and development
personnel. This increase was partially offset by the write-off of $5,228,000 in
costs associated with the acquisitions of rights to certain intellectual
property and software technologies in the period from Inception (December 24,
1996) through June 30, 1997, for which there was no comparable write-off for the
year ended June 30, 1998. Of the total expenditures, $4,624,000 were capitalized
for the year ended June 30, 1998 and $348,000 were capitalized for the period
from Inception (December 24, 1996) through June 30, 1997.

Sales and marketing expenses were $1,733,000 for the year ended June
30, 1998 and $1,150,000 for the period from Inception (December 24, 1996)
through June 30, 1997. The increase reflects the impact of the longer fiscal
period partially offset by a reduction in advertising and Intranet sales and
marketing personnel. This reduction is reflective of our change in the business
model from the development of Intranets (and the generation of advertising
revenue from pharmaceutical and medical device manufacturers who advertise on
these Intranets) to our focus on clinical e-commerce. Included in sales and
marketing expenses are charges from Synetic of $575,000 for the year ended June
30, 1998 and $206,000 for the period from Inception (December 24, 1996) through
June 30, 1997. These charges represent an allocation of compensation costs for
personnel who devote a majority of their time to our company, and primarily
relate to business development and marketing support services. The increase in
these allocated expenses is primarily due to the longer fiscal period and to a
lesser extent, increased staffing to support our business.

General and administrative expenses were $3,887,000 for the year ended
June 30, 1998 and $1,379,000 for the period from Inception (December 24, 1996)
through June 30, 1997, respectively. The increase in general and administrative
expenses of $2,508,000 resulted primarily from the longer fiscal period and
increased

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occupancy costs. Included in general and administrative expenses are charges
from Synetic of $261,000 for the year ended June 30, 1998 and $24,000 and for
the period from Inception (December 24, 1996) through June 30, 1997. These
charges represent an allocation of compensation costs for personnel who devote a
majority of their time to our company, and primarily relate to administrative
and legal services. The increase in these allocated expenses is primarily due to
the longer fiscal period and to a lesser extent, increased staffing to support
our business.

Purchased research and development and other for the period from
Inception (December 24, 1996) through June 30, 1997 was $32,185,000. This
relates to the write-off of the portion of the purchase price allocated to
acquired in-process research and development for the Avicenna and Care Agents
acquisitions.

Acquired In-Process Research and Development

In connection with the acquisitions of Avicenna and CareAgents, we
allocated a portion of each purchase price to acquired in-process research and
development. These amounts have been expensed on the respective acquisition
dates as the in-process research and development had not reached technological
feasibility and had no alternative future use. A description of the acquired
in-process research and development and the estimates made by us is set forth
below.

Avicenna. The amount allocated to acquired in-process research and
development of $28,600,000 was determined based on an income approach valuation
methodology. Avicenna's business plan was to design and market Intranets to
provider organizations to provide communication and reference capabilities to
these organizations. Doctors in these organizations would communicate via e-mail
and forum groups with centralized medical reference information with the
objective of reducing costs in a managed care environment. The fundamental
technology plan was to develop a client/server based application to allow
hospital affiliated doctors to access a local Intranet that housed medical
reference information, in-house policies and procedures, and communication among
the various parties. This required development of electronic search, medical
reference material storage and communication capabilities such as forums and
e-mail. The revenue model had been, prior to acquisition, primarily one based on
pharmaceutical and medical device manufacturer's advertising fees on these
Intranets. Avicenna also envisioned creating a search capability that would
allow doctors to quickly access relevant reference information on a variety of
medical topics from databases that were licensed to Avicenna. These databases
would be customized in format by Avicenna.

As of the acquisition date, Avicenna was in the early stages of its
development and the systems under development had not yet reached technological
feasibility. There was a working public Intranet site and they had begun to
implement the search techniques. Their primary mechanism to allow users to
search their Intranet sites and access content provided by hospitals,
advertisers, and others was to develop a method of customizing that content via
a software utility known as "Framework." Framework was in the initial stage of
development with the substantive system design, coding, and testing work
remained incomplete. Framework was the fundamental piece of code that would
enable users to be able to both search and reference the content contained on an
Avicenna Intranet and thereby realize their business model.

As of the December 24, 1996 acquisition date, Avicenna had incurred
approximately $1,238,000 in research and development costs to develop the
technology to its status described above. Significant costs remained to complete
the technological capabilities of its product line and then migrate those
capabilities to the business model envisioned by Synetic encompassing not only
providers but also payers, suppliers, and patients.

CareAgents. Given the small size of the workforce and the lack of any
substantive tangible assets, the entire purchase price of $3,585,000 was
assigned to acquired in-process research and development based on an income
approach valuation methodology.

CareAgents' business plan was to design and market Internet based
clinical commerce applications that allowed the various healthcare participants
to exchange information and conduct basic medical transactions with each other.
Participants included patients, providers, and suppliers. The fundamental
technology plan was to

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create an Internet and standards based connection between the participants and
then provide specific transaction capabilities using both internally and
externally developed application software.

CareAgents' technology was in the very early stages of development with
basic user requirements, a business plan, preliminary system architecture with
process flow diagrams and prototyping efforts comprising the work completed to
date. Substantial costs remained to mature the technology to the point of
technological feasibility and then complete for first product deployment. No
work had been completed on a detailed engineering design or on building or
testing any substantive code.

Liquidity and Capital Resources

Our operations since Inception (December 24, 1996) have been funded
through capital contributions from Synetic. As of December 31, 1998, we had
$635,000 of cash and cash equivalents.

Cash used in operating activities was $5,822,000 for the six months
ended December 31, 1998, $9,052,000 for the year ended June 30, 1998 and
$5,011,000 for the period from Inception (December 24, 1996) through June 30,
1997. The cash used during this period was primarily attributable to the losses
associated with the development of our business activities.

Cash used in investing activities was $7,858,000 for the six months
ended December 31, 1998, $6,721,000 for the year ended June 30, 1998 and
$1,371,000 for the period from Inception (December 24, 1996) through June 30,
1997 and related to capital expenditures.

Cash provided by financing activities was $14,000,000 for the six
months ended December 31, 1998, $15,842,000 for the year ended June 30, 1998 and
$6,628,000 for the period from Inception (December 24, 1996) through June 30,
1997. Such amounts represent capital contributions made by Synetic.

In addition, pursuant to our strategic relationship with THINC, we have
committed to extend up to $3,500,000 in senior loans to THINC. See "Transactions
and Relationships with Principal Stockholders."

We currently anticipate that the net proceeds from the offering,
together with our available cash resources will be sufficient to meet our
presently anticipated working capital, capital expenditure and business
expansion requirements for approximately the next 18 months. There can be no
assurance we will not require additional capital prior to the expiration of an
18 month period. Even if such additional funds are not required, we may seek
additional equity or debt financing. We cannot assure you that such financing
will be available on acceptable terms, if at all, or that such financing will
not be dilutive to our stockholders.

Year 2000

Many currently installed computer systems and software products are
coded to accept or recognize only two digit entries for the year in the date
code field. These systems and software products will need to accept four digit
year entries to distinguish 21st century dates from 20th century dates. As a
result, computer systems and/or software used by many companies and governmental
agencies may need to be upgraded to comply with such Year 2000 requirements or
risk system failure or miscalculations causing disruptions of normal business
activities.

State of Readiness. We have made a preliminary assessment of the Year
2000 readiness of our information technology ("IT") systems, including the
hardware and software that enable us to develop and deliver its healthcare
e-commerce products as well as its non-IT systems. Our assessment plan consists
of (i) quality assurance testing of its internally developed proprietary
software; (ii) contacting third-party vendors and licensors of material
hardware, software and services that are both directly and indirectly related to
developing our healthcare e-commerce network; (iii) contacting vendors of
material non-IT systems; (iv) assessment of repair or replacement requirements;
(v) repair or replacement; (vi) implementation. We have been informed by our
vendors of material hardware and software components of our IT systems that the
products used by us are currently Year 2000 compliant. We have also been
informed by our non-IT system vendors that the products used by us are currently
Year 2000 compliant.

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Costs. To date, we have not incurred any material expenditures in
connection with identifying or evaluating Year 2000 compliance issues. Most of
our expenses have related to, and are expected to continue to relate to, the
operating costs associated with time spent developing a Year 2000 compliant
healthcare e-commerce channel.

In addition, there can be no assurance that physicians, payers,
suppliers, Internet access companies, third-party service providers,
vendors, business partners and others outside our control will be Year 2000
compliant. The failure by such entities to be Year 2000 compliant could result
in a systemic failure beyond our control, such as a prolonged Internet or
communications failure, which could also prevent us from delivering our services
to customers, decrease the use of the Internet or prevent users from accessing
our service. Such a failure could have a material adverse effect on our
business, results of operations and financial condition. Also, a general Year
2000 systemic failure could require healthcare companies to spend large amounts
of money to correct any such failures, reducing the amount of money that might
otherwise be available to be spent on services such as ours.

Recent Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board, or "FASB,"
issued Statement of Financial Accounting Standards, or "SFAS," No. 131,
"Disclosures about Segments of an Enterprise and Related Information." We are
required to adopt SFAS No. 131 for the year ending June 30, 1999. SFAS No. 131
requires disclosure of certain information regarding operating segments,
products and services, geographic areas of operation and major customers.
Adoption of SFAS No. 131 is expected to have no material impact on our financial
condition or results of operations.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." We are required to adopt SFAS No. 133 for
the year ending June 30, 2000. SFAS No. 133 establishes methods of accounting
for derivative financial instruments and hedging activities related to those
instruments as well as other hedging activities. Because we currently hold no
derivative financial instruments and do not currently engage in hedging
activities, adoption of SFAS No. 133 is expected to have no material impact on
our financial condition or results of operations.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position, or "SOP," 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires
that entities capitalize certain costs related to internal-use software once
certain criteria have been met. We are required to implement SOP 98-1 for the
year ending June 30, 2000. Adoption of SOP 98-1 is expected to have no material
impact on our financial condition or results of operations.

In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position, or "SOP" 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires that entities expense start-up

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costs as incurred. We are required to implement SOP 98-5 for the year ending
June 30, 2000. Adoption of SOP 98-5 is expected to have no material impact on
our financial condition or results of operations.

<PAGE>

BUSINESS

We are developing and intend to provide an Internet-based healthcare
electronic commerce network for interactive use by physicians, payers, suppliers
and patients. We intend to market a comprehensive set of transaction, messaging
and content services to physicians, to payers such as managed care organizations
and pharmacy benefit managers, or PBMs, to suppliers such as pharmacies and
clinical laboratories, and to patients. Physicians will be able to use a web
browser to access relevant clinical, administrative and financial information of
payers and suppliers through our CareInsite system to make more informed
decisions at the point of care. We believe our integration of payer-specific
rules and healthcare guidelines with patient-specific information at the point
of care will improve the quality of patient care, lead to appropriate use of
healthcare resources, gain compliance with benefit plan guidelines and control
healthcare costs.

We have recently entered into a strategic relationship with Cerner
Corporation, a publicly traded corporation that is a leading supplier of
clinical and management information systems to more than 1,000 healthcare
organizations worldwide. Through this relationship, we have a perpetual,
royalty-free license to the clinical and administrative information technology
contained in Cerner's Health Network Architecture (HNA), including their HNA
Millennium Architecture (the "Cerner Technology"), for use in our CareInsite
system. Cerner has agreed that CareInsite will be its exclusive vehicle for
providing a full suite of healthcare e-commerce services that connect
physicians' offices with managed care organizations, PBMs, clinical
laboratories, pharmacies and other providers. Cerner has also agreed to market
our services to its customers. In addition, Cerner has acquired a 19.9% interest
in our company.

We believe that our company has several advantages over our
competition. We believe that:

o our management's experience in clinical process automation, healthcare
transaction processing and benefit management enables us to design and
implement a healthcare e-commerce network that is responsive to the
needs of physicians, payers, suppliers and patients; and

o our CareInsite system is being built with existing, well-proven
software and system interfaces, including the Cerner Technology, that
can be integrated with other healthcare information systems in an
efficient and scalable manner.

Industry Background

Healthcare expenditures in the United States totaled approximately
$1.0 trillion in 1996, representing a 6.7% compound annual increase since 1990.
Increases in healthcare costs have been driven principally by technological
advances in the healthcare industry and by the aging of the population, as older
Americans utilize more healthcare resources on a per capita basis. This
increasing trend in aggregate healthcare costs is expected to continue.

In the past 15 years, the U.S. healthcare industry has undergone
significant changes. Among the most significant of these changes has been a
shift away from fee-for-service indemnity plans into health maintenance
organizations, or HMOs, and other managed healthcare benefit plans. These payers
have used a variety of

<PAGE>

managed care techniques to control administrative costs including, but not
limited to, lowering reimbursement rates, shifting costs from payers to
patients, restricting coverage for services, limiting access to a select group
of providers, negotiating discounts with healthcare providers, case management
functions, and shifting the economic risk for the delivery of care to providers
through alternative reimbursement models, such as capitation and risk pools.
While these techniques have been initially helpful in controlling healthcare
costs, we believe that these techniques have over time become less effective in
reducing costs. Managed healthcare organizations today are experiencing rising
healthcare costs and their ability to reduce patient care costs, which represent
approximately 85% of annual healthcare costs in the United States, is limited.

We believe that future healthcare cost management is increasingly
dependent upon compliance with benefit plan guidelines designed to promote the
appropriate use of healthcare resources and adherence to best clinical practices
to improve the quality of care and control patient care costs. Payers are
unlikely to gain compliance with these guidelines and practices without an
efficient channel of communications to their affiliated physicians. Today,
electronic communication among the physician, payer and supplier is typically
limited to administrative transactions. These communications typically occur at
specified times of day, usually several hours after medical care has been given
or treatment has been prescribed. We believe that compliance with benefit
guidelines can be better achieved through Internet-based healthcare e-commerce
systems that enable real time communication at the point of care of clinical
information as well as basic administrative and financial information.

The dramatic growth of the Internet as an important new medium to
collect and distribute information, communicate, interact and engage in commerce
has emerged as a way to overcome the historical technical barriers for
connecting the participants in the fragmented healthcare industry. These
technical barriers are diminishing as:

o universal, low-cost Internet access is replacing private networks;

o common navigation via browser technology is replacing proprietary
desktop client software; and

o the Internet's open architecture is providing a solution for
integrating existing computer systems.

Factors Influencing Healthcare's Core Constituents

We believe the healthcare industry's core constituents -- physician,
payer, supplier and patient -- will benefit from timely access to
patient-specific information and payer content, such as benefit rules and care
guidelines, in order to reduce the complexity of administration, increase
compliance with benefit plan guidelines, secure appropriate use of healthcare
resources and improve the quality of patient care.

Physicians. Physicians are confronted with a proliferation of health
plans, each of which has complex clinical, administrative and financial rules
and guidelines relating to matters such as eligibility for prescriptions, lab
tests, referrals and follow-up visits, scope of coverage and co-payments. These
complex rules and guidelines require administrative personnel to spend
significant time navigating the cumbersome administrative procedures of a large
number of health plans often after the medical care has been given or
prescriptions or referrals have been written. This complexity has created demand
for real-time information exchange across all patients and all payers to
streamline cumbersome and time-consuming clinical and administrative processes.

Payers. Payers, such as HMOs and PBMs, are finding less incremental
value in the historical levers of managed care. In order to stem the unabated
growth in healthcare costs, managed care plans must do more than automate the
administrative and financial processes that govern the provision of services and
the payment of claims. While administrative costs account for approximately 15%
of annual healthcare expenditures, it is the cost of care itself, approximately
85% of annual healthcare expenditures, which primarily drives the growth in
healthcare expenditures. We believe that compliance with benefit plan guidelines
that promote more efficient use of healthcare resources and adherence to best
practices will result in cost reductions and improvements in the quality of
care. Payers are seeking an efficient channel to communicate their benefit plan
rules and care guidelines to physicians at the point of care in order to realize
savings.

<PAGE>

Suppliers. Pharmacies, clinical laboratories and other suppliers are
being forced to become increasingly efficient in managing their business as
managed care organizations have negotiated significant reductions in price and
demanded measurable improvements in quality. Pharmacies continue to incur
substantial inefficiencies in the process of managing orders with physicians and
patients. As many as ten percent of the nation's 3 billion annual prescriptions
require telephone intervention between the pharmacist and patient or physician.
Fewer than 20% of laboratory orders and/or results in the ambulatory care
environment are submitted or transmitted through electronic systems. Physicians
have been slow to adopt these systems because they are proprietary in nature and
are usually limited to results reporting. Consequently, clinical laboratories
incur unnecessary administrative costs associated with processing and reporting
orders and also incur significant losses related to tests for which
reimbursement is not authorized.

Patients. As the payer exerts increasing influence over plan design,
service coverage, and provider access, patients are demanding ever more
objective measures of quality and cost. This is evidenced by the unprecedented
demand for healthcare information on the Internet, confirming both the absence
of information from traditional sources, and desire for additional sources of
objective, credible and trustworthy information.

Strategy

Our objective is to provide an Internet-based healthcare e-commerce
network for interactive use by physicians, payers, suppliers and patients in
order to control healthcare costs and improve patient care. Our relationships
with Cerner and THINC represent the initial execution of our strategy and
enhance our ability to continue and expand upon this strategy. Our strategy
includes the following elements.

Provide transaction, messaging and content services responsive to the
needs of physicians

We intend to provide physicians with transaction, messaging and content
services. These services are intended to complement the clinical work flows and
existing computer systems which characterize the physician office environment.
Our prescription, laboratory and managed care communication services respond to
the physician's need to provide patient care consistent with payer guidelines.
Specialized messaging services provide the office staff with alert and advisory
applications which facilitate patient treatment compliance, prescription
renewals and laboratory ordering results and automate time consuming paper and
telephonic processes. Content services, in the form of indexed and searchable
directories and databases, provide physicians with convenient access to
payer-specific information and general medical reference material. Together,
these services provide much needed context for informed decision making.

Our services are designed to work for all payers and suppliers, since
physician adoption requires services which work for virtually all patients. Our
strategy, by definition, is to remain "content-neutral." In other words, we do
not create our own content for physicians- this is the role of our payers and
suppliers. Rather, we contract with payers and suppliers to transmit their
content in the form of clinical, administrative and financial guidelines over
our network and display these rules, in the form of alerts, advisories and
annotations to the physician at the point of care.

As part of our relationship with THINC, we intend to deploy on behalf
of THINC and offer to the New York Metropolitan area's 40,000 physicians, a
comprehensive suite of transaction, messaging and content services. As a result
of this relationship, physicians will have the ability to conduct nine different
prescription, laboratory and managed care transaction services that we believe
will simplify and automate their interaction with area health plans.

Contract with key payers and suppliers to make patient-specific rules
available to physicians

Our marketing strategy is to contract with the managed care
organizations, PBMs, pharmacies and clinical laboratories who benefit from the
automation of specific clinical, administrative or financial processes. Payers
define the rules that govern the course of care available to patients, and
contract with physicians and suppliers to meet

<PAGE>

specific cost and quality standards. Suppliers respond to physician orders,
dispensing prescriptions and conducting laboratory tests. By integrating
patient-specific information with benefit plan and supplier specific rules
through our CareInsite system at the point of care, we believe these
institutions will realize administrative and medical resource savings, improved
patient care and more appropriate resource utilization.

We have contracted with each of Empire Blue Cross and Blue Shield,
Group Health Incorporated ("GHI"), and HIP, the payer participants in THINC, to
provide our prescription and laboratory communication services. We are engaged
in discussions with other leading payers and suppliers in the New York
metropolitan area with respect to these services. See "Transactions and
Relationships with Principal Stockholders -- Certain Agreements -- THINC."

Build and deploy the CareInsite system

Our technology strategy is focused upon building and deploying the
CareInsite system, which permits the integration of patient-specific information
with payer- and other supplier-specific guidelines. The CareInsite system is
intended to:

o host or connect to multiple payer- or supplier-specific guidelines,
such as procedure level eligibility, benefit plan coverage, formularies
and order sets;

o host or connect to patient-specific profiles, such as lab results or
medication histories;

o analyze an incoming request or order versus payer- or supplier-specific
guidelines;

o transmit payer- or supplier-specific annotations, alerts and advisories
when the orders or requests are at variance with guidelines; and

o transmit payer- or supplier-specific content and messages to authorized
healthcare participants.

We believe our perpetual, royalty-free license to the Cerner Technology
will allow us to accelerate the building and deployment of our CareInsite
system. This technology is central to the CareInsite system's ability to
register and identify patients, house patient-specific information, analyze
requests, and communicate payer rules in the form of alerts, advisories and
annotation messages.

Maximize distribution to physicians with high transaction volumes

Our distribution strategy is to target the high-volume physicians who
account for the majority of transactions. We work closely with payers and
suppliers to identify these physicians. In addition, we work closely with
providers of desktop software to physicians. Our strategy is to complement,
rather than compete with, vendors who market and provide software and network
services to physicians. We intend to contract with these vendors, such as Cerner
and THINC, to gain distribution of our services. We intend also to provide
physicians with direct access to our networks, as well as indirect access via
links from other web portals. Our primary sales vehicle is our direct sales
force, which targets groups of physicians.

As part of the THINC agreement, we are responsible for maximizing
adoption of these services by the New York metropolitan area's 40,000
physicians. Each of THINC's founding payers is responsible for providing us with
a list of target physicians, and taking appropriate steps to ensure that
physicians understand and use the services. To maximize distribution, we
have entered into a marketing agreement with Greater New York Hospital
Association to market these services to its hospital members. We have entered
into a distribution agreement with Cerner for integrating our services into
Cerner's physician desktop software, and are pursuing discussions with other
leading providers of physician desktop software.

Pursue strategic relationships and acquisitions

We intend to continue to pursue opportunistic strategic relationships,
including customer/vendor agreements, joint ventures and acquisitions. We
believe that making strategic acquisitions and developing

<PAGE>

strategic industry relationships will enhance our ability to penetrate
additional markets through new distribution channels and develop and provide
additional services.

Each of the THINC and Cerner arrangements evidence our intent to
pursue strategic relationships, joint ventures, and partnerships to accelerate
growth of our network and build substantial value for physicians, payers, and
suppliers.

Company Services

We intend to utilize the Internet to provide a broad array of browser
initiated healthcare e-commerce solutions which facilitate the confidential,
on-line exchange of healthcare information for all constituents in the
healthcare industry. Our healthcare e-commerce services include the transaction,
content and messaging services described below.

Transaction Services. Our transaction services include prescription,
laboratory and managed care communication services. Our prescription and
laboratory communication services are focused upon assisting physicians to more
efficiently support diagnoses and plan, prescribe and follow treatment,
consistent with payer guidelines. Our managed care communication
services will be focused upon automating the telephonic and paper processes
physicians and payers conduct in order to verify coverage and reimbursement,
process medical claims, and manage patient access to procedures and providers.
We believe that significant market opportunities exist for these services given
the size of such markets and the potential for improved efficiencies.

Prescription Communication Services. Our prescription communication
services are targeted to physicians, pharmacy benefit managers, pharmacies and
payers. While communication of payer and PBM rules to the pharmacy at the point
of dispensing through existing EDI networks has yielded substantial
administrative savings, payers and PBMs need an efficient means to communicate
their rules to physicians at the point of care in order to further control drug
expenditures and improve the quality of care. We believe that payers and PBMs
may realize significant savings through greater prescribing of generic drugs,
increased use of preferred formulary drugs, and greater compliance with best
clinical practices and treatment guidelines. Since no single payer or pharmacy
benefit manager typically represents a majority of a physician's patients, these
organizations need a common network to communicate with physicians.

These services will provide physicians the ability to write
prescriptions in the context of patient medication histories and payer clinical
rules. As a result, they can improve patient care, reduce potentially harmful
drug interactions, lessen the number of telephone calls from payers and
pharmacies, and improve patient satisfaction. Payers and PBMs who use our
services may gain the ability to communicate their patients' dispensed
medication histories, drug utilization review results, formulary and treatment
guidelines to the physician through the CareInsite system. As a result they may
realize the savings and improvement in patient care that accompany compliance
with their guidelines. Pharmacies may reduce administrative costs as
prescriptions are clarified and corrected before they are submitted to the
pharmacy for dispensing.

Laboratory Communication Services. Our Laboratory Communications
Services are targeted to physicians, payers and clinical laboratories. These
services will facilitate the electronic transmission of laboratory orders and
results between the physician and the clinical laboratory. This will enable the
physician to order diagnostic tests online from the clinical laboratory within
the context of a specific patient's lab coverage. In a managed care environment,
payers are seeking to ensure quality of patient care and to minimize overall
healthcare costs by eliminating unnecessary or redundant tests and establishing
testing protocols. Similarly, clinical laboratories, managing deep discount and
capitation contracts, are seeking to provide care as efficiently and
appropriately as possible. These services will provide payers the ability to
communicate payer-specific information and treatment guidelines which should
lead to significant reductions in test costs. Clinical laboratories also are
expected to gain the ability to obtain significant savings through process
automation of the orders and results process. Moreover, they should be able to
more effectively manage payer rules, minimize costs under capitation contracts
and reduce the incidence of overdue payments and bad debt.

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Managed Care Communication Services. Our managed care communication
services are comprised of a comprehensive set of administrative and financial
network services as described below, and are designed to gain authorization from
payers for procedures, visits and referrals to network physicians and providers
and to facilitate reimbursements.

Claims services. Healthcare claims are the most commonly
communicated transactions between physicians and payers today.
Our claims services are designed to allow physicians to submit
claims to payers for payment, inquire as to the status of
claims previously submitted and receive electronic remittance
advice which provides payment information as well as an
explanation of the settlement of the related claim. Our claims
services will reduce administrative paperwork, resulting in
savings for payers, and expedite the reimbursement process,
which are intended to result in lower average number of
outstanding accounts receivable days for physicians.

Eligibility services. Verification as to whether services
rendered to a patient are eligible for reimbursement is the
most basic of e-commerce applications, but one which is
largely provided today via telephone and fax. Given the
proliferation of managed care organizations and the increasing
complexity of their rules and guidelines, we believe that
there will be an increasing demand for timely and accurate
electronic eligibility determination. Physicians would benefit
by being able to verify the terms of reimbursement prior to
providing services to the patient. Payers would benefit by
being able to eliminate the cost of processing claims and
paying for claims from ineligible patients.

Referral and Pre-Certification Authorization Services.
Referral authorization transactions facilitate
physician-to-physician referrals by providing the physician
with the payer's referral rules at the point of care.
Pre-certification authorization transactions involve the
determination as to whether a patient can be pre-certified for
hospitalization or in-hospital procedures. These services will
reduce the incidence of referral or pre-certification errors,
which thereby reduce unauthorized treatment.

Content Services. Our content services will provide physicians with
online access to both available medical reference material, and the private
content unique to payers. We continue to license publicly available content
resources, including medical databases and other general reference material. We
intend to contract with payers to re-purpose for publication via the CareInsite
system through the Internet their private-content benefit plan information,
provider directories, formularies, policies and procedures, treatment guidelines
and other patient education and wellness information, and make it available in
an indexed and easily searchable format. We believe our services will be
differentiated from our competitors in our unique ability to integrate content
into our messaging and transaction applications in order to provide physicians
with the requisite context for informed decision making.

Messaging Services. Our messaging services will provide physicians with
online access to patient and payer specific inquiries, alerts and advisories as
well as e-mail and broadcast message applications. Messaging applications
facilitate communication between physician, payer, supplier and patient. In
particular, messaging applications are intended to simplify time consuming
processes for the physicians' staff. Prescription messaging applications include
prescription renewal and interchange programs which automate telephonic
processes between patient, physician and pharmacy. Laboratory messaging programs
will provide the ability to not only view results, but also order subsequent
tests as suggested by payer rules and treatment guidelines. We believe our
services will be differentiated from our competitors in our unique ability to
integrate messaging into our transaction applications.

Sales and Marketing

Our sales and marketing efforts will be focused upon four target
audiences: (1) payers, including PBM's, (2) suppliers, including clinical
laboratories, (3) physicians, including physician practice management groups and
(4) business development partners, including physician software and network
service vendors. Our key

<PAGE>

objectives are to maximize the number of physicians registered to use the
service, maximize the number of patient lives covered by participating payers
and PBM's, and maximize the number of participating suppliers. We will market
our services through multiple channels, including building on our model in the
greater New York area, working closely with payer and supplier customers to
maximize physician enrollment, working with physician office management
information systems and hospital information systems vendors and EDI networks
and through strategic relationships.

Once contracts are in place, our customer service strategies are
essential to our ability to maximize physician use of our services and
minimize payer and supplier attrition. We expect to provide toll free telephone
support to physician and physician office staff members seven days a week, 24
hours per day. We intend to provide online resources and help functions which
should facilitate solutions to most frequently asked questions. In addition to
our customer service center, we intend to provide account management services to
our payer, supplier and distribution partners. These personnel provide
implementation support to customers, and provide an ongoing channel of
communication between our company and our customers to ensure that our services
consistently meet customer needs.

Physicians. We will market our services to physicians in several ways.
Employing the target data from payer and supplier customers, we intend to employ
a direct sales force to contract with large groups of physicians. In addition,
we intend to adopt a strategy of complementing, rather than competing with
traditional providers of desktop software and network services to physicians, by
pursuing marketing relationships with those vendors.

Payers. We will contract with payers to maximize the number of patient
lives accessible by participating physicians. We also intend to work closely
with payers to maximize physician enrollment. Together, we will seek to identify
groups of high volume physicians that represent the majority of potential
transactions. In addition, we will work closely with payers to maximize
physician adoption of these services.

Suppliers. We will contract with clinical laboratories and pharmacies
which represent the bulk of transaction volume on a local and national basis. We
also intend to work closely with payer customers to identify and contract with
the preferred clinical laboratories that comprise their managed care networks.
In turn, we will work with these suppliers to maximize physician enrollment by
identifying those physicians which represent the majority of their prescription
and laboratory transactions.

Relationship with THINC. We have entered into definitive agreements for
a broad strategic alliance in January, 1999 with THINC, and its founding
members, Greater New York Hospital Association, Empire Blue Cross and Blue
Shield, Group Health Incorporated ("GHI"), and HIP Health Plans. Under this
arrangement, among other things, we will manage the operations of THINC,
including all aspects of marketing and sales, implementation, customer service
and technical operations. In addition, THINC will provide managed care
transaction services on behalf of Empire, GHI and HIP, including online medical
claims submission, status, remittance advice, eligibility, referral and
pre-certification authorizations. We have also licensed to THINC our content and
messaging services for use over the THINC network, and have entered into
agreements with each of Empire, GHI, and HIP to provide online prescription and
laboratory communication services. See "Transactions and Relationships with
Principal Stockholders -- Certain Agreements -- THINC."

<PAGE>

As part of our management services agreement with THINC, we are
committed to marketing these services to all other payers and suppliers in the
New York metropolitan area.

Technology Platform

Our network system, which we call the CareInsite system, is a
comprehensive online transaction processing environment focused on the key
physician oriented aspects of healthcare e-commerce. The CareInsite system is
being designed to request, receive, rationalize, and present patients' clinical
records, drug and medical reference content, treatment guidelines, and financial
status and payer rules related to treatment preferences to the physician at the
point of care. Underlying these processes are the capabilities to acquire,
validate, and maintain patient- and plan-specific directories, house, and
execute payer- and provider-specific rules, as well as to analyze and report
results.

The magnitude and complexity of the healthcare data model and rules
engines required to establish precise, relevant communication among healthcare
payers, providers, and (eventually) consumers at various points of care exceeds
the development capability of start-up Internet-focused enterprises. We obtained
a perpetual, royalty-free license to the Cerner Technology, which provides the
foundation for our transaction processing environment and which we believe will
enable us to accelerate the roll out of our services. We will also continue to
leverage commercially available software, make acquisitions, create joint
ventures with strategic partners and pursue internal software development.

Our technological innovation is the integration of the Cerner
Technology with the capability to deliver patient's health benefit rules at the
point of care. We leverage Cerner's proven person-focused data model, its Master
Patient Index supported by industry-leading patient matching procedures and a
portfolio of Web-enabled clinical applications. These applications are currently
accessed by more than 15,000 physicians who use them to support clinical
workflow in the hospital and integrated delivery network environment. We build
upon the Cerner Health Network Architecture to create the CareInsite system
which provides the ability to communicate our customers' benefit plan rules,
such as prior authorization, treatment guidelines, formularies and plan specific
order sets within physician's workflow at the point of care.

The CareInsite system incorporates industry leading capabilities with
respect to the following attributes:

Compatibility. Our technology solution is being designed to work with
virtually any physician's desktop system. We work with vendors to integrate our
transactions into physicians' workflow. We believe that many of our competitors
will have difficulty interfacing with existing systems of multiple payers. The
industry-wide challenge of building interfaces to integrate with providers' and
payers' existing systems is significantly simplified because of Cerner's
Interface Services, which include Open Engine and its library of foreign system
interfaces that have been built, tested and are maintained to interact with over
1,000 healthcare provider and payer-based systems. Our system employs the
Licensed Cerner Technology to provide access to information from servers it does
not control or own by implementing open interface protocols and providing tools
that simplify interface creation and data integration. Moreover, our platform
exploits Cerner's common data/process model, which uses new standards to
seamlessly integrate functions into the workflow of client applications.

Security. A security database defines the relationship among all
elements in the system and maintains the required information to support all
functions, including login, availability of data, user-privileges, user activity
and inactivity monitoring, access control, transaction routing, billing, and
error messages. The security database is being designed to address unauthorized
disclosure of information, unauthorized modification of information, loss of
data integrity, and denial of service. The CareInsite system employs a variety
of techniques

<PAGE>

in order to provide a comprehensive and secure system, including 128-bit data
encryption technology, firewall technology among all subnetworks throughout the
system, and systems to immediately identify break-in attempts and automate
lock-out if breaches are suspected. In addition our system builds upon the
proven patient data security services of the Cerner systems.

Scalability. Our system architecture is designed to support redundant
network infrastructure, web-, application-, and database-servers, system CPU's,
and databases to scale to customers' ultimate needs. In addition, the CareInsite
system is designed to work through any HTML browser supporting frames Java and
JavaScript, which enables rapid deployment of product extensions without
installation of new client software.

Rapid Application Development. Our development of a single
architecture, common data model, use of industry standards wherever available,
and object-oriented approach to development is designed to maximize the speed
with which thoroughly tested, complex healthcare applications can be brought to
market. We use a time-boxed incremental delivery life cycle model for our
software development, with certification and quality assurance processes for
each delivery into our service.

High Availability. We intend to maintain a fully redundant systems
architecture operating in our data center. This center will be in operation
seven days a week, 24 hours a day. High availability of these operations will be
assured through the use of:

o uninterrupted power supply (UPS) equipment;

o building-independent cooling and environmental systems;

o duplicated network, application, and database servers;

o duplicated Primary Rate Interface dial-up facilities;

o redundant array of independent disks (RAID) DASD systems;

o duplicate fiber optic telecommunications connections to enable access
to the Internet;

o automatic fail-over of critical network services; and

o 24 hour a day monitoring of network connectivity, traffic, hardware and
software status.

Disaster Recovery. While we believe our facilities and operations will
include redundancy, back-up and security to ensure minimal exposure to systems
failure or unauthorized access, a comprehensive and prudent disaster recovery
plan will also be put in place. Incremental backups of both software and
databases will be performed on a daily basis and a full system backup will be
performed monthly. Backup tapes will be stored at an offsite location along with
copies of schedules/production control procedures, procedures for recovery using
an off-site data center, all off-site documentation, run books, call lists,
critical forms and supplies. We also intend to maintain power backup throughout
the enterprise should a power outage occur within the data center.

Competition

The market for healthcare e-commerce is in its infancy and is
undergoing rapid technological change. Competition will potentially come from
several areas, including traditional healthcare software vendors, electronic
data interchange network providers, emerging e-commerce companies or others.
Traditional healthcare software vendors typically provide some form of physician
office practice management system. These include companies like Medical Manager,
Medic, and IDX. These organizations primarily focus on the administrative
functions in the healthcare setting. Electronic data interchange network
providers and claims clearinghouses like Envoy (being acquired by Quintiles) and
NDC provide connectivity to edit and transmit data on medical and pharmacy
claims. These companies are beginning to offer services which may be competitive
with our clinical e-commerce services. Companies like Healtheon and other
emerging e-commerce companies

<PAGE>

offer a range of services which are competitive to ours. Any organizations that
create stand-alone healthcare software products may migrate into the healthcare
e-commerce business. Due to a high degree of system and application
interconnectivity, we believe that we will share common customers with many of
these organizations. We also believe that in most instances, our services are
incremental and complementary applications to the existing services offered by
these companies.

Government Regulation

Participants in the healthcare industry are subject to extensive and
frequently changing regulation at the federal, state and local levels. The
Internet and its associated technologies are also subject to government
regulation. Many existing laws and regulations, when enacted, did not anticipate
the methods of healthcare e-commerce we are developing. We believe, however,
that these laws and regulations may nonetheless be applied to our healthcare
e-commerce business.

Current laws and regulations which may affect the healthcare e-commerce
industry relate to the following:

o confidential patient medical record information,

o the electronic transmission of information from physicians'
offices to pharmacies, laboratories and other healthcare
industry participants,

o the use of software applications in the diagnosis, cure,
treatment, mitigation or prevention of disease,

o health maintenance organizations, insurers, healthcare
service providers and/or employee health benefit plans, and

o the relationships between or among healthcare providers.

We expect to conduct our healthcare e-commerce business in substantial
compliance with all material federal, state and local laws and regulations
governing our operations. However, the impact of regulatory developments in the
healthcare industry is complex and difficult to predict. We cannot assure you
that we will not be materially adversely affected by existing or new regulatory
requirements or interpretations. These requirements or interpretations could
also limit the effectiveness of the use of the Internet for the methods of
healthcare e-commerce we are developing or even prohibit the sale of a subject
product or service.

Healthcare service providers, payers, and plans are also subject to a
wide variety of laws and regulations that could affect the nature and scope of
their relationships with us. Laws regulating health insurance, HMOs and similar
organizations, as well as employee benefit plans, cover a broad array of
subjects, including confidentiality, financial relationships with vendors,
mandated benefits, grievance and appeal procedures, and others. State and
federal laws have also implemented so-called "fraud and abuse" rules that
specifically restrict or prohibit certain types of financial relationships
between us or our customers and healthcare service providers, including
physicians and pharmacies. Laws governing healthcare providers, payers and plans
are often not uniform between states, and could require us to undertake the
expense and difficulty of tailoring our business procedures, information
systems, or financial relationships in order for our customers to be in
compliance with applicable laws and regulations. Compliance with such laws could
also interfere with the scope of our services, or make them less cost-effective
for our customers.

Because of the Internet's popularity and increasing use, new laws and
regulations with respect to the Internet are becoming more prevalent. Such laws
and regulations have covered, or may cover in the future, issues such as:

o security, privacy and encryption,

<PAGE>

o pricing,

o content,

o copyrights and other intellectual property,

o contracting and selling over the Internet,

o distribution, and

o characteristics and quality of services.

Moreover, the applicability to the Internet of existing laws in various
jurisdictions governing issues such as property ownership, sales and other
taxes, libel and personal privacy is uncertain and may take years to resolve.
Demand for our applications and services may be affected by additional
regulation of the Internet. For example, until recently current Health Care
Financing Administration guidelines prohibited transmission of Medicare
eligibility information over the Internet. Any new legislation or regulation
regarding the Internet, or the application of existing laws and regulations to
the Internet, could adversely affect our business. Additionally, while we do not
currently operate outside of the United States, the international regulatory
environment relating to the Internet market could have an adverse effect on our
business, especially if we should expand internationally.

The growth of the Internet, coupled with publicity regarding Internet
fraud, may also lead to the enactment of more stringent consumer protection
laws. These laws may impose additional burdens on our business. The enactment of
any additional laws or regulations in this area may impede the growth of the
Internet, which could decrease our potential revenues or otherwise cause our
business to suffer.

We are subject to extensive regulation relating to the confidentiality
and release of patient records. Additional legislation governing the
distribution of medical records has been proposed at both the state and federal
level, and new federal laws or regulations are likely to be enacted within the
next six to nine months, pursuant to the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA"), which requires the Secretary of Health and
Human Services to promulgate rules governing the use and disclosure of
individually identifiable healthcare information no later than September, 1999,
in the event that Congress does not enact legislation on the subject. It may be
expensive to implement security or other measures designed to comply with any
new legislation. Moreover, regulations governing use and disclosure of
healthcare information may restrict our ability to deliver patient records under
certain circumstances or for certain purposes, or in a particular format, such
as electronically.

Other legislation currently being considered at the federal level could
affect our business. For example, HIPAA also mandates the use of standard
transactions, standard identifiers, security and other provisions by the year
2000, for healthcare information that is electronically transmitted, processed,
or stored. We are designing our services to comply with these proposed
regulations; however, these regulations are subject to significant modification
prior to becoming final, which could cause us to use additional resources and
lead to delays in order to revise our services. In addition, our ability to
electronically transmit information in carrying out business activities depends
on other healthcare providers and payers complying with these regulations.

<PAGE>

Employees

As of March 15, 1999, we had a total of 100 employees of whom there
were 63 in technical development and engineering, 14 in sales and marketing, 7
in customer service and 16 in finance and administration. Currently 20 of our
employees are involved full-time in providing services to THINC. None of our
employees are represented by labor unions and we have never experienced a work
stoppage. We believe our relationship with our employees to be good. Our ability
to achieve our financial and operational objectives depends on our ability to
continue to attract, integrate, retain and motivate highly qualified technical
and customer support personnel. A competitive environment exists for qualified
personnel in the New Jersey and Boston, Massachusetts area.

Facilities

Our principal executive office is located in Elmwood Park, New Jersey,
in approximately 10,000 square feet of leased office space under a lease
agreement that expires on December 31, 2002. We also maintain approximately
46,000 square feet of leased office space in Cambridge, Massachusetts under a
lease that expires in February 28, 2002. We believe that our facilities are
adequate for our current operations and that additional leased space can be
obtained if needed.

Legal Proceedings

In the normal course of business, we may become involved in various
claims and legal proceedings. In addition, we have recently been named as a
defendant in a complaint filed by Merck & Co., Inc. and Merck-Medco Managed
Care, L.L.C. as described below.

On February 18, 1999, Merck & Co., Inc. and Merck-Medco Managed Care,
L.L.C. filed a complaint in the Superior Court of New Jersey against our
company, Synetic, Martin J. Wygod, Chairman of our company and Synetic, and
three officers and/or directors of our company and Synetic, Paul C. Suthern,
Roger C. Holstein and Charles A. Mele. The plaintiffs assert that our company,
Synetic and the individual defendants are in violation of certain
non-competition, non-solicitation and other agreements with Merck and
Merck-Medco, and seeks to enjoin us and them from conducting our healthcare
e-commerce business and from soliciting Merck-Medco's customers. The Synetic and
Wygod agreements provide an expiration date of May 24, 1999. The other
individuals' agreements provide for expiration in December 1999, in the case of
Mr. Suthern, March 2000, in the case of Mr. Mele, and September 2002, in the
case of Mr. Holstein. A preliminary injunction hearing was held on March 22,
1999. Following the hearing, the Court took the matter under submission.

<PAGE>

We believe that Merck's and Merck-Medco's positions in relation to us

and the individual defendants are without merit, and intend to vigorously defend
the litigation. If we are unsuccessful in defending this litigation, our company
could be prevented indefinitely from pursuing the development and deployment of
our healthcare e-commerce services. Any unanticipated adverse result could have
a material adverse effect on our company's business.

<PAGE>

MANAGEMENT

Directors and Executive Officers

Set forth below is information concerning the current directors and
executive officers of CareInsite. The ages listed below are as of March 18,
1999.

Name Age Position
- ---- --- --------
Paul C. Suthern.......... 47 President and Chief Executive Officer; Director
Richard S. Cohan......... 46 Executive Vice President -- Operations
Roger C. Holstein........ 46 Executive Vice President -- Sales &
Marketing;
Director
David M. Margulies....... 47 Executive Vice President -- Chief Scientist;
Director
David C. Amburgey........ 35 Vice President -- General Counsel and
Secretary
Paul M. Bernard.......... 42 Vice President -- Chief Financial Officer
Martin J. Wygod.......... 59 Chairman of the Board; Director
James R. Love............ 43 Director
Charles A. Mele.......... 42 Director

Paul C. Suthern became Chief Executive Officer and President and a
Director of our company in March 1999. Mr. Suthern has been President and Chief
Executive Officer of Synetic since March 1998 and was an executive officer of
Synetic from February 1993 until July 1996, Vice Chairman of Synetic from July
1996 to March 1998 and also Chief Executive Officer from October 1993 until
January 1995. Mr. Suthern was also President and Chief Operating Officer of
Medco from November 1992 through December 1994 and Assistant to Medco's Chairman
from December 1991 to November 1992. Prior thereto, he was Executive Vice
President --Operations of Medco Containment Services, Inc. ("Medco") for more
than five years.

Richard S. Cohan became Executive Vice President -- Operations of our
company in March 1999. Mr. Cohan joined Synetic in May 1998 as Senior Vice
President. Prior to joining Synetic, he was Executive Vice President, Health
Network Services of National Data Corporation where he led the practice
management systems and transactional services groups for pharmacy, physician and
dental markets for more than five years.

Roger C. Holstein became Executive Vice President -- Sales & Marketing
and a Director of our company in March 1999. Mr. Holstein has been Executive
Vice President -- Marketing and Sales of Synetic since 1997. He was a Special
Consultant to Medco from 1996 to 1998. Prior to such time, Mr. Holstein acted as
Senior Executive Vice President -- Chief Marketing Officer of Medco from 1994 to
1995 and Senior Executive Vice President -- Marketing and Sales of Medco from
1991 to 1994.

Dr. David M. Margulies became Executive Vice President -- Chief
Scientist and a Director of our company in March 1999. Dr. Margulies has been
Executive Vice President -- Chief Scientist of Synetic since January 1997. He
was founder and President of CareAgents. From 1990 to mid-1996, Dr. Margulies
was Executive Vice President and Chief Scientist of the Cerner Corporation, a
leading supplier of enterprise-level clinical applications. Prior to such time,
he was Vice President and Chief Information Officer at Boston Children's
Hospital and on the medical faculties of the Harvard Medical School and Columbia
College of Physicians and Surgeons.

David C. Amburgey became Vice President -- General Counsel and
Secretary of our company in March 1999. Mr. Amburgey has been Vice President --
Legal and Assistant General Counsel of Synetic since March 1999 and Assistant
General Counsel and Secretary of Synetic since April 1997. Prior to joining
Synetic, Mr. Amburgey was an attorney with the law firm of Shearman & Sterling
since 1993.

<PAGE>

Paul M. Bernard became Vice President -- Chief Financial Officer of our
company in March 1999. Mr. Bernard joined Synetic as Vice President -- Finance
and Chief Financial Officer of Avicenna Systems Inc. in June 1997. Mr. Bernard
was Chief Financial Officer of Brainstorm Technologies from March 1997 to June
1997, and prior to that Corporate Controller of Micro-Touch Systems from
December 1996 to March 1997 and Corporate Controller of Thinking Machine, Inc.
from July 1994 to December 1996.

Martin J. Wygod became the Chairman of the Board of our company in
March 1999. Mr. Wygod has been Chairman of the Board of Synetic since May 1989.
From May 1989 to February 1993, Mr. Wygod also served as Synetic's President and
Chief Executive Officer and until May 1994 was an executive officer of Synetic.
Until May 1994, Mr. Wygod was Chairman of the Board of Medco for more than five
years, and until January 1993 he also served as Chief Executive Officer of
Medco. He is also engaged in the business of racing, boarding and breeding
thoroughbred horses, and is President of River Edge Farm, Inc., which is engaged
in the business of breeding and boarding thoroughbred horses.

James R. Love became a Director of our company in March 1999. Mr. Love
became Executive Vice President -- Finance and Administration of Synetic in
March 1999. Prior to joining Synetic, Mr. Love was a Managing Director, since
1993, in the investment banking group of Merrill Lynch & Co. At Merrill Lynch,
he was most recently responsible for the diversified companies group and the
healthcare products group.

Charles A. Mele became a Director of our company in March 1999. Mr.
Mele has been Executive Vice President -- General Counsel of Synetic since March
1998 and was Vice President-General Counsel from July 1995 to March 1998. Mr.
Mele was an executive officer of Synetic from May 1989 until December 1994 and
was an executive officer of Medco for more than five years, until March 1995.
Mr. Mele is also a director of Comnet Corporation and Group 1 Software, Inc., a
computer software company.

No family relationship exists among any of the directors or executive
officers, except that Martin J. Wygod, Chairman of the Board of our company, and
Paul C. Suthern, Chief Executive Officer and President of our company, are
brothers-in-law. No arrangement or understanding exists between any director or
executive officer and any other person pursuant to which any director or
executive officer was selected as a director or executive officer of our
company. All executive officers are elected annually by the Board and serve at
the discretion of the Board.

Board Composition

Our Board currently has six members, all of whom are currently
executive officers and/or directors of Synetic. We expect to add two independent
Board members following the offering. Each director holds office until his
successor is duly elected and qualified or until his resignation or removal if
earlier.

Committees of the Board

Our Board has established an Audit Committee and a Compensation
Committee.

Audit Committee. The Audit Committee's primary responsibilities are to
meet with and consider suggestions from members of management and our
independent public accountants concerning the financial operations of our
company. The Audit Committee also reviews the audited financial statements of
our company and considers and recommends the employment of, and approves the fee
arrangement with, independent public accountants for audit functions and
advisory and other consulting services. The Audit Committee will be comprised of
two independent directors to be appointed after consummation of the offering.

<PAGE>

Compensation Committee. The Compensation Committee's responsibilities
are to make determinations with respect to salaries and bonuses payable to our
executive officers and to administer our stock option plans. The Compensation
Committee will be comprised of two independent directors to be appointed after
consummation of the offering.

Compensation of Directors

Our directors who are employees of our company will not receive
additional compensation for serving as directors of the company. Directors who
are not employees of either our company or Synetic will either receive cash
compensation or participate in our stock option plan. See
"Management -- Compensation Pursuant to Plans and Arrangements of the
Company -- Stock Option Plan."

<PAGE>

Executive Compensation

The following table presents information concerning compensation paid
for services to Synetic and our company to our CEO and the next four most highly
compensated officers of our company (the "Named Executive Officers") for Fiscal
1998. It is anticipated that the base salaries following the offering will
initially be generally comparable to present levels of base salary.

Summary Compensation Table

Annual Compensation
-------------------
<TABLE>
<CAPTION>
Long Term
Compensation
Securities All Other
Salary Underlying Compensation
Name and Principal Position Year ($) Bonus ($) Options/SARs ($)
- --------------------------- ---- ------------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Paul C. Suthern
President & CEO (beginning 1998 97,692 - 194,000 -
March 1998, and CEO from 1997 - - - -
October 1993 to January 1995)..... 1996 160,000 - - -
David M. Margulies
Executive Vice President--Chief 1998 175,000 - 272,728(2) -
Scientist......................... 1997 72,019(1) - 272,728(2) -
Paul M. Bernard
Vice President--Chief Financial
Officer........................... 1998 116,827 31,250 50,000 -
David C. Amburgey
Vice President--General
Counsel and Secretary............. 1998 103,846 40,000 25,000 -
Roger C. Holstein
Executive Vice President--Sales
& Marketing....................... 1998 112,404 225,000(3) - 1,750(4)

- --------------------
<FN>

(1) Dr. Margulies became an employee of our company after our acquisition of CareAgents, Inc. on January 23, 1997.
As such, only compensation paid subsequent to January 23, 1997 is reflected above.
(2) These options were originally granted January 23, 1997 and were canceled and replaced January 7, 1998.
(3) Represents a one time bonus paid to Mr. Holstein upon his execution of his employment agreement with Synetic.
For a description of his employment agreement, see "Employment Agreements; Holstein Employment Agreement."
(4) Comprised of company matching contributions to the Porex Technologies Corp. 401(k) Savings Plan (the "Porex
401(k) Plan").
</FN>
</TABLE>

<PAGE>

The following table presents information concerning the options to
purchase Synetic common stock granted during the last fiscal year to the Named
Executive Officers for services rendered to Synetic and our company. We have
adopted a stock option plan which contains substantially similar terms and
conditions to certain of Synetic's stock option plans. For a description of such
plans, see "Management -- Compensation Pursuant to Plans and Arrangements of the
Company -- Stock Option Plan."

Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
% of Total
Number of Options/
Securities SARs
Underlying Granted to Exercise
Options/ Employees or Base Grant Date
SARs in Fiscal Price Expiration Present
Name Granted (#) Year(2) ($/Sh) Date Value ($)(3)
---- ----------- ------- ------ ---- -------------
<S> <C> <C> <C> <C> <C>
Paul C. Suthern................ 10,000(1)(4) 0.40% 38.750 7/1/12 145,856
184,000(1) 7.40 36.875 1/7/08 2,553,898
------- ---- ---------
194,000 7.80% 2,699,754
David M. Margulies............. 272,728(5) 10.97% 36.875 1/7/08 2,818,841
Paul M. Bernard................ 50,000(1) 2.01% 37.000 7/1/07 624,551
David C. Amburgey.............. 25,000(1) 1.01% 36.875 1/7/13 315,242
- --------------------
<FN>

(1) These options vest and become exercisable at the rate of 20% per year, commencing on the first
anniversary of the date of grant and were granted on the following dates: 10,000 on July 1, 1997 and
184,000 on January 7, 1998 for Mr. Suthern, 50,000 on July 1, 1997 for Mr. Bernard and 25,000 on
January 7, 1998 for Mr. Amburgey. The options to purchase Synetic common stock will continue to
vest and remain exercisable, subject to such Named Executive Officer's continued employment with
Synetic or our company and the terms and conditions of Synetic's stock option plans.
(2) Based upon the total number of stock options granted to all employees of Synetic.
(3) The estimated grant date present value reflected in the above table is determined using the
Black-Scholes model. The material assumptions and adjustments incorporated in the Black-Scholes model
in estimating the value of the options reflected in the above table include the following: (i) the
respective option exercise price, specified above, equal to the fair market value of the underlying
stock on the date of grant; (ii) the exercise of options within one year of the date that they become
exercisable; (iii) a risk-free interest rate of 6.3% per annum; and (iv) volatility of 0.2986
calculated using daily prices of Synetic common stock during the period from the date of purchase of
shares of common stock from Merck & Co. Inc. ("Merck") by Synetic and SN Investors on December 14,
1994 to June 30, 1998. The ultimate values of the options will depend on the future market price of
Synetic common stock, which cannot be forecast with reasonable accuracy. The actual value, if any, an
optionee will realize upon exercise of an option will depend on the excess of the market value of
Synetic common stock over the exercise price on the date the option is exercised. There is no
assurance that the value realized by an optionee will be at or near the value estimated by the
Black-Scholes model or any other model applied to value the options.
(4) These options were awarded to Mr. Suthern while serving as Vice Chairman of the Board of Synetic under
Synetic's 1991 Director Stock Option Plan.
(5) These options vest and become exercisable at the rate of 40%, commencing on the second anniversary of
the date of grant and 20% on each subsequent anniversary and were granted on January 7, 1998. This grant
represents the replacement of a grant of an option originally issued on January 23, 1997. For a description
of the consequences of a termination of his employment on such options, see "Employment Agreements; Margulies
Employment Agreement."
</FN>
</TABLE>

<PAGE>

The following table presents information concerning the value realized
upon the exercise of options to purchase Synetic common stock and the fiscal
year-end value of options to purchase Synetic common stock held by the Named
Executive Officers.

No options to purchase Synetic common stock were exercised by the Named
Executive Officers during the fiscal year ended June 30, 1998.

Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs at
FY-End (#) FY-End ($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul C. Suthern.................. 234,000 266,000 8,944,500 6,471,500
David M. Margulies............... - 272,728 - 4,670,467
Paul M. Bernard.................. 10,000 90,000 191,250 1,615,000
David C. Amburgey................ 15,000 85,000 277,500 1,538,125
Roger C. Holstein................ 108,000 400,000 2,371,750 8,175,000

- ------------------
<FN>

(1) Based upon the Fiscal 1998 closing price of Synetic common stock of $54.00.
</FN>
</TABLE>

Employment Agreements

Margulies Employment Agreement. Synetic entered into an employment
agreement (the "Margulies Agreement") with David M. Margulies, M.D. as of
January 23, 1997 in connection with Synetic's acquisition of CareAgents. The
Margulies Agreement provides for an employment period of five years, subject to
monthly renewal thereafter. Dr. Margulies's base salary is $175,000, which may
be increased by the Board of Directors of Synetic in its sole discretion. Dr.
Margulies is entitled to participate in any group insurance, hospitalization,
medical, health and accident, disability, fringe benefit and tax-qualified
retirement plans or programs of Synetic. The Margulies Agreement does not fix
Dr. Margulies's responsibilities or title, other than to provide that he will
provide services to Synetic, CareAgents, Synternet Acquisition Corp. and their
respective affiliates and subsidiaries, as specified by the Chief Executive
Officer or the Board of Directors of Synetic from time to time.

If his employment is terminated (i) by Synetic for "cause" (as such
term is defined in the agreement, generally consisting of a breach of any
material provision of the agreement, willful misconduct relating to Synetic or
its affiliates, failure to perform his duties in any material respect, willful
violation of laws applicable to the business of Synetic or its affiliates,
commission of a common law fraud or conviction of a felony or crime involving
moral turpitude), or (ii) due to the resignation of Dr. Margulies for any
reason, Synetic will have no obligation to Dr. Margulies other than the payment
of his earned and unpaid compensation to the effective date of termination.
Termination of employment for any of these reasons will constitute a
"Termination Event" under the Escrow Agreement dated as of January 23, 1997,
among several employees of CareAgents including Dr. Margulies and the United
States Trust Company of New York , as escrow agent, pursuant to which shares of
Synetic common stock owned by Dr. Margulies are held in escrow to secure, among
other things, his obligations under the Margulies Agreement. If his employment
is terminated (i) by Synetic as a result of Dr. Margulies's permanent
disability, (ii) as a result of Dr. Margulies's death or (iii) by Synetic
without "cause", Synetic will

<PAGE>

have no obligation to Dr. Margulies other than the payment of his earned and
unpaid compensation to the effective date of termination and as specified in the
stock option agreement described below.

Pursuant to a stock option agreement between Synetic and Dr. Margulies,
Dr. Margulies has been granted nonqualified stock options to purchase 272,728
shares of Synetic common stock. The options become exercisable in the following
manner: 40% on January 7, 2000 and an additional 20% on each of January 7, 2001,
January 7, 2002 and January 7, 2003. Upon termination of his employment, the
options will terminate (to the extent not vested), unless such termination of
employment is without "cause" or as a result of permanent disability or death,
in which case the options will continue to vest as if he remained in the employ
of Synetic through the earlier of the next date on which additional options
would vest or the occurrence of any circumstance or event that would constitute
"cause".

The Margulies Agreement contains confidentiality obligations that
survive indefinitely and non-solicitation and non-competition obligations which
apply for a certain period of time following termination of employment. All
obligations of Synetic may be assigned to any of its affiliates without the
consent of Dr. Margulies.

Bernard Employment Agreement. Avicenna entered into an employment
agreement (the "Bernard Agreement") with Paul M. Bernard as of November 3, 1997.
The Bernard Agreement provides for an employment period of two years, subject to
monthly renewal thereafter. Mr. Bernard's base salary is $156,250, which may be
increased by the Board of Directors of Avicenna or Synetic in its sole
discretion. Mr. Bernard is entitled to participate in any group insurance,
hospitalization, medical, health and accident, disability, fringe benefit and
tax-qualified retirement plans or programs of Avicenna. The Bernard Agreement
does not fix Mr. Bernard's responsibilities or title, other than to provide that
he will provide services to Avicenna, Synetic and their respective affiliates
and subsidiaries, as specified by the President or Senior Vice President of
Avicenna from time to time.

If his employment is terminated by Avicenna for "cause" (as such term
is defined in the agreement, which is substantially similar to the definition
contained in the Margulies Agreement) or (ii) due to the resignation of Mr.
Bernard for any reason, Avicenna will have no obligation to Mr. Bernard other
than the payment of his earned and unpaid compensation to the effective date of
termination. If employment is terminated as a result of Mr. Bernard's death,
Avicenna will have no obligation to Mr. Bernard other than a continuation of his
base salary in effect at the time of termination for a period of six months
following the date of termination. If employment is terminated by Avicenna
without "cause", Avicenna will have no obligation to Mr. Bernard other than a
continuation of his base salary in effect at the time of termination for a
period of six months following the date of termination, although such obligation
will end upon (i) the occurrence of a circumstance or event that would
constitute "cause", or (ii) the re-employment of Mr. Bernard with Avicenna or
its affiliates or the employment of Mr. Bernard with any other employer at an
annual gross salary of at least $156,250. If Mr. Bernard is employed at an
annual gross salary of less than $156,250, the base salary continuation will be
reduced by such amount.

The Bernard Agreement contains confidentiality obligations that survive
indefinitely and non-solicitation and non-competition obligations which apply
for a certain period of time following termination of employment.

Holstein Employment Agreement. Synetic entered into an employment
agreement (the "Holstein Agreement") with Roger C. Holstein as of November 6,
1997. The Holstein Agreement provides for an employment period of five years,
subject to monthly renewal thereafter. Mr. Holstein's base salary is $175,000,
which may be increased by the Board of Directors of Synetic in its sole
discretion, except that when revenues from the healthcare communications
business exceed $30,000,000, the Board of Directors will increase Mr. Holstein's
compensation to a level commensurate with his contribution, as determined in its
reasonable judgement. The Holstein Agreement provided for a one-time payment of
$225,000 to Mr. Holstein upon the signing of the agreement. Mr. Holstein is
entitled to participate in any group insurance, hospitalization, medical, health
and accident, disability, fringe benefit and tax-qualified retirement plans or
programs or vacation leave of Synetic. The Holstein Agreement fixes Mr.
Holstein's title as Executive Vice President of Synetic, and

<PAGE>

provides that his responsibilities will be determined by the Chairman of the
Board of Directors and the Chief Executive Officer of Synetic from time to time.

If his employment is terminated (i) by Synetic for "cause" (as such
term is defined in the agreement, which is substantially similar to the
definition contained in the Margulies Agreement) or (ii) due to the resignation
of Mr. Holstein for any reason other than "cause" (as such term is defined in
the agreement, generally consisting of a breach of any material provision,
demotion or relocation), Synetic will have no obligation to Mr. Holstein other
than the payment of his earned and unpaid compensation to the effective date of
termination. If his employment is terminated (i) by Synetic as a result of Mr.
Holstein's permanent disability or (ii) as a result of Mr. Holstein's death,
Synetic will have no obligation to Mr. Holstein other than the payment of his
earned and unpaid compensation to the effective date of termination and with
respect to stock options, as specified in the following paragraph. If his
employment is terminated by Synetic without "cause" or by Mr. Holstein for
"cause", Synetic will have an obligation (i) to pay Mr. Holstein his earned and
unpaid compensation to the effective date of termination and a monthly severance
payment equal to one twelfth of his then applicable base salary (less required
deductions) for a period ending two years from the date of such termination or
until the occurrence of a circumstance or event that would constitute "cause"
and (ii) with respect to stock options, as specified in the next paragraph. In
addition, Mr. Holstein has the right to terminate his employment upon 30 days'
written notice to Synetic at any time after a 12-month period following the
occurrence of "change of control" (a "change of control" will occur if (i) any
person, entity or group (excluding Mr. Martin J. Wygod) acquires at least 50% of
the voting power of the outstanding voting securities of Synetic and following
such acquisition Mr. Wygod ceases to hold one or more of the positions of the
Chairman of the Board of Directors of Synetic, Chief Executive Officer of
Synetic or a senior executive officer of the acquirer of the 50% voting power
(in each case, with duties and responsibilities substantially equivalent to
those prior to such acquisition) or (ii) the occurrence of a reorganization,
merger or consolidation or sale of or other disposition of all or substantially
all of Synetic's assets and following such an event Mr. Wygod ceases to hold the
positions described above). In the event of such a termination, his stock
options will be treated in the manner described in the following paragraph.

In the event of termination of the Holstein Agreement by Synetic
without "cause" or by Mr. Holstein for "cause", the options to purchase 500,000
shares of Synetic common stock held by Mr. Holstein will remain outstanding and
continue to vest as though Mr. Holstein remained in the employ of Synetic
through the earlier of the second anniversary of the date of termination and the
occurrence of a circumstance or event that would constitute "cause". In the
event of termination of the Holstein Agreement by Mr. Holstein due to a "change
in control" or as a result of Mr. Holstein's death or permanent disability the
options will remain outstanding and continue to vest as though Mr. Holstein
remained in the employ of Synetic through the earlier of (x) the later of
November 6, 2002 and the last date on which such options actually vest and (y)
the occurrence of a circumstance or event that would constitute "cause".

The Holstein Agreement contains confidentiality obligations that
survive indefinitely and non-solicitation and non-competition obligations which
apply for a certain period of time following termination of employment. All
obligations of Synetic may be assigned to any of its affiliates without the
consent of Mr. Holstein.

Compensation Pursuant to Plans and Arrangements of the Company

Set forth below is information with respect to certain benefit plans
and employment arrangements of the company pursuant to which non-cash
compensation was paid or distributed for Fiscal 1998, or is proposed to be paid
or distributed in the future, to the directors and executive officers of our
company. Our executive officers may continue to be included in Synetic's benefit
plans and employment arrangements. Our company would bear a portion of the costs
incurred in connection with such participation.

Under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the deduction for federal income tax purposes by publicly held
corporations for amounts in excess of $1 million paid to certain executive
officers is limited unless such excess compensation is "performance-based" (as
defined in Section 162(m)), subject to certain exceptions. Except for the grant
of stock options, currently scheduled compensation

<PAGE>

of our executive officers will not result in any excess compensation. We intend
to take steps to ensure that compensation realized upon the exercise of stock
options will be "performance-based" as defined in Section 162(m).

Stock Option Plan

We have adopted (and our shareholders have approved) the CareInsite,
Inc. Stock Option Plan (the "Plan"). The following description of the Plan is
qualified in its entirety by the full text of the Plan which is set forth as an
Exhibit to this registration statement. The maximum number of shares of our
common stock that will be subject to options under the Plan is , subject to
adjustment in accordance with the terms of the Plan. The Plan limits the number
of options that may be granted thereunder to an eligible employee in any
one-year period to no more than (subject to adjustment in accordance with the
terms of the Plan).

The Plan will be administered by the Compensation Committee, (the
Board, in the case of grants made to the members of the Compensation Committee,
if any), all of the members of which will be nonemployee directors and "outside
directors" within the meaning of Rule 16b-3 under the Exchange Act and Section
162(m) of the Code, respectively, provided that under certain circumstances the
Compensation Committee may delegate authority to certain designated officers to
make awards under the Plan. The Compensation Committee will have the authority
within limitations as set forth in the Plan, to determine the persons to whom
options may be granted, the number of shares of common stock to be covered by
each option, the time or times at which the options may be granted or exercised
and the terms and provisions of the options to be granted.

Eligibility for the grant of options under the Plan is limited to
employees, officers and directors of our company and its subsidiaries and
certain consultants, agents and key contractors of the company and its
subsidiaries. Options granted under the Plan must have an exercise price of at
least 100% of the fair market value on the date of grant. Under the Plan, if
there is a Change in Control (as defined below), the Compensation Committee may
provide that options granted thereunder will become exercisable in whole or in
part, whether or not the options are otherwise exercisable. A Change in Control
is generally defined in the Plan as the occurrence of (i) any person (excluding
Synetic and its subsidiaries, our company and its subsidiaries and certain
affiliates of our company, and our employee benefit plans) becoming the
beneficial owner of 50% or more of the voting power of our company's securities,
(ii) during a 24-month period the individuals who, at the beginning of such
period, constituted our company's Board of Directors (the "Incumbent Directors")
cease to be a majority of the Board of Directors unless such new directors were
elected or recommended by the Incumbent Directors , (iii) the approval by the
stockholders of our company of a merger or consolidation of our company, without
the consent of a majority of the Incumbent Directors, (iv) stockholder approval
of a sale of all or substantially all of the assets of our company, or (v)
adoption by our company of a plan of liquidation. In addition, the Compensation
Committee may determine at the time of grant or thereafter that an option shall
become exercisable in full or in part upon the occurrence of such circumstances
or events as the Compensation Committee determines merit special consideration.

The Plan may be terminated and may be modified or amended by the Board
or Compensation Committee at any time; provided, however, that (i) no
modifications or amendment will be effective without stockholder approval if
such approval is required by law or under the rules of the Nasdaq National
Market or any stock exchange on which our common stock is listed and (ii) no
such termination, modification or amendment may adversely alter or affect the
terms of any then outstanding options previously granted without the consent of
the affected optionee.

Synetic Plans

The Named Executive Officers have been granted options ("Synetic
Options") to purchase shares of Synetic common stock pursuant to Synetic's stock
option plans. See "Management--Executive Compensation." The Synetic option plans
are administered by a stock option committee of Synetic and contain terms and
conditions which are substantially similar to the terms of our stock option
plan. Subject to the

<PAGE>

terms and conditions of Synetic's stock option plans, the Synetic Options will
continue to vest and remain outstanding so long as the respective Named
Executive Officer remains in the employ of our company.

<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT

We are currently a majority-owned subsidiary of Avicenna Systems
Corporation, which is a wholly-owned subsidiary of Synetic. Prior to the
offering, Synetic owned 80.1% of our outstanding common stock. Prior to the
offering, all other outstanding shares of our common stock were owned by Cerner.
Synetic's address is River Drive Center II, 669 River Drive, Elmwood Park, New
Jersey, 07407 and Cerner's address is 2800 Rock Creek Parkway, Suite 601, Kansas
City, Missouri, 64117. None of our directors or executive officers beneficially
own any of our common stock. The following table, however, sets forth
information with respect to the beneficial ownership of Synetic common stock as
of March 3, 1999 by (i) our directors; (ii) each of the Named Executive
Officers; and (iii) all of our directors and executive officers as a group.

Shares of Synetic
Common Stock
Beneficially Percent of
Name Owned(1)(2) Class(3)

Paul C. Suthern................................ 311,798(5)(6) 1.51%
David M. Margulies............................. 28,917 *
Paul M. Bernard................................ - *
David C. Amburgey.............................. 35,026 *
Roger C. Holstein.............................. 159,363 *
Martin J. Wygod................................ 5,379,948(4)(5)(7) 26.18%
James R. Love.................................. - *
Charles A. Mele................................ 153,084(4) *
Directors and executive officers as a group
(9 persons).................................... 6,068,136 28.66%
- ---------------
* Less than 1% of the shares outstanding of the class.

(1) The persons named in the table have sole voting and investment power
with respect to all shares of Synetic common stock shown as
beneficially owned by them, unless otherwise indicated in the following
footnotes.
(2) Includes the following number of shares of Synetic common stock that
the following persons have the right to acquire on or within 60 days
of March 3, 1999 upon exercise of stock options and upon conversion of
Synetic's 5% Convertible Subordinated Debentures Due 2007 (the
"Convertible Debentures"): Mr. Holstein, 158,833; Mr. Mele, 125,833;
Mr. Suthern, 305,300; Mr. Wygod, 212,000; Mr. Amburgey, 35,000 and all
directors and executive officers as a group, 836,966. Also includes 55
shares of Synetic common stock allocated to the account of Mr.
Holstein, 194 shares of Synetic common stock allocated to the account
of Mr. Mele and 26 shares of Synetic common stock allocated to the
account of Mr. Amburgey under the Porex 401(k) Plan as of September
30, 1998.
(3) The number of shares of Synetic common stock deemed outstanding
includes: (i) 20,337,143 shares of Synetic common stock outstanding as
of March 3, 1999, (ii) the number of shares of Synetic common stock
that the respective persons named in the above table have the right to
acquire presently or within 60 days of March 3, 1999 upon exercise of
stock options and (iii) the number of shares of Synetic common stock
that the respective persons named in the above table have the right to
acquire upon conversion of Convertible Debentures.
(4) Does not include 186,961 shares of Synetic common stock and shares of
Synetic common stock issuable upon conversion of $500,000 principal
amount of Convertible Debentures owned by the Rose Foundation, a
charitable foundation of which Messrs. Mele and Wygod are trustees and
share voting and dispositive power.
(5) Does not include 3,500 shares of Synetic common stock and shares of
Synetic common stock issuable upon conversion of $1,500,000 principal
amount of Convertible Debentures owned by the Synetic Foundation
formerly known as the Medco Containment Services Foundation, Inc., a
charitable foundation of which Messrs. Suthern and Wygod are trustees
and share voting and dispositive power.
(6) Includes 1,200 shares of Synetic common stock held in custodial
accounts for Mr. Suthern's children.
(7) Includes 2,000 shares of Synetic common stock beneficially owned by Mr.
Wygod's spouse, as to which shares Mr. Wygod disclaims beneficial
ownership.

<PAGE>

TRANSACTIONS AND RELATIONSHIPS WITH PRINCIPAL STOCKHOLDERS

Security Ownership

Prior to the offering, 80.1% of our capital stock was owned by Avicenna
Systems Corporation, a wholly-owned subsidiary of Synetic and 19.9% was owned by
Cerner. Upon completion of the offering, Synetic will own 16,020,000 shares, or
approximately % of the outstanding shares of our common stock and Cerner will
own approximately million shares, or approximately % of the outstanding
shares of our common stock. In addition, THINC owns a warrant which, six months
after the completion of the offering, may be exercised for shares representing
approximately 6% of our then outstanding common stock. If THINC exercises this
warrant, Cerner has a related warrant entitling it to purchase such additional
shares equal to 19.9% of the shares purchased by THINC in connection with the
exercise of THINC's warrant. In addition, we will issue to Cerner approximately
801,000 shares of our common stock on or after February 15, 2001 at a price of
$.01 per share if we realize a specified level of physician usage of our
services. Synetic will have the ability to control the vote on matters submitted
to a vote of our stockholders and will also be able to elect all of the
directors of our company. Certain of our directors and executive officers own
shares of Synetic common stock. See "Security Ownership of Management."

Conflicts of Interest

Upon completion of the offering, Synetic will retain effective control
of our company and may be in a position to cause us to merge, consolidate,
liquidate or sell all or a substantial portion of our assets on terms determined
by Synetic. Certain of Synetic's executive officers and directors are officers
or directors of our company. Such directors and officers of our company who are
also directors or officers of Synetic are in positions which may expose them to
conflicts of interest. Such conflicts of interest may arise in connection with
transactions involving business dealings between our company and Synetic, the
allocation of acquisition opportunities, the issuance of additional shares of
our common stock or other securities of our company and other matters involving
conflicts that cannot now be foreseen.

It is contemplated that after the offering, officers of our company who
are also directors or officers of Synetic will continue to spend a substantial
amount of their business time as directors or officers of Synetic and its other
subsidiaries and may be engaged in other business activities, consistent with
their other employment agreements, if any.

Certain Agreements

Our company and Synetic have entered into or will enter into a number
of agreements for the purpose of defining the ongoing relationship between the
two companies. Additional or modified agreements, arrangements and transactions
may be entered into by us and Synetic after the completion of the offering. Any
such future agreements, arrangements and transactions will be determined through
negotiations between our company and Synetic, as the case may be. Following the
offering, we will continue to be controlled by Synetic and consequently such
negotiations will not be arm's-length.

The following is a summary of certain existing or proposed agreements
between our company and Synetic. See Note 6 of the Notes to Consolidated
Financial Statements.

Tax Sharing Agreement. Our company and Synetic will enter into a Tax
Sharing Agreement providing for conduct of historical tax audits and the
handling of tax controversies and various related matters. For periods during
which our company and its subsidiaries were included in Synetic's consolidated
federal income tax returns, our company and each of our subsidiaries will be
required to pay to Synetic an amount equal to our respective federal income tax
liabilities, determined as if our company and each of our subsidiaries had filed
separate federal income tax returns.

<PAGE>

Services Agreement. Our company and Synetic have entered into a
Services Agreement, pursuant to which Synetic will provide our company with
services relating primarily to payroll, accounting, tax, office and information
processing and other technical services. Our company will pay the actual costs
of providing these services. Such costs will include an allocable portion of the
compensation and other related expenses of employees of Synetic who serve as
officers of our company. This agreement will be terminable by either party upon
60 days' prior written notice in certain events, or by Synetic, at any time, if
Synetic ceases to own at least 50% of the voting stock of our company. The
Services agreement shall terminate by its terms, if not previously terminated or
renewed, on January 1, 2004.

The following is a summary of certain agreements we have entered into
with THINC and Cerner.

THINC. In January 1999, our company, THINC, and THINC's founding
members, Greater New York Hospital Association, Empire, GHI and HIP entered into
definitive agreements and consummated a transaction for a broad strategic
alliance. Under this arrangement, among other things, our company (i) acquired a
20% ownership interest in THINC in exchange for $1.5 million in cash and a
warrant to purchase shares of common stock of our company (the "Warrant"), (ii)
agreed to extend up to $3.5 million in senior loans to THINC, (iii) entered into
a Management Services Agreement with THINC pursuant to which our company will
manage all operations of THINC, including, as part of our services, providing
THINC with certain content and messaging services, and THINC will provide our
company with the exclusive right to deploy our prescription and laboratory
communication services on the THINC network on behalf of the payers, (iv)
licensed to THINC our content and messaging services for use over the THINC
network and (v) entered into exclusive Clinical Transaction Agreements with each
of Empire, GHI and HIP (the "THINC Payers") to provide online prescription and
laboratory communication services. Our Clinical Transaction Agreement with GHI
specifies that we do not have the exclusive right to provide prescription
communication services to GHI unless either we enter into an agreement with
GHI's PBM outlining a methodology for the implementation of such services or GHI
elects to proceed without such an agreement. GHI's current PBM is Merck-Medco.
To date, we have not entered into any such agreement with Merck-Medco and GHI
has not made such election. See "Risk Factors -- Litigation by Merck & Co., Inc.
and Merck-Medco Managed Care, L.L.C. against our company."

As part of this arrangement, THINC entered into Managed Care
Transaction Contracts with each of the THINC Payers whereby the THINC Payers
agreed to use the THINC network for their online medical claims submission,
eligibility, benefit plan detail, roster distribution, remittance advice
distribution, claims inquiry, referral/pre-certification and authorization, and
encounter submission transactions. In connection with our entering into a
strategic relationship with Cerner, we sold Cerner the economic rights to 2% of
THINC, although we retain registered ownership and voting control over that
interest.

We issued the Warrant to THINC, an entity in which our company holds a
20% ownership interest. The Warrant is exercisable 180 days following the
occurrence of an initial public offering of CareInsite's common stock ("IPO")
or, if an IPO has not occurred, at the end of term of the Warrant, into
approximately 6% of the then outstanding equity of our company. The exercise
price of the Warrant is the lesser of (i) the IPO price of our common stock, if
an IPO has occurred, and (ii) the price based on a $200 million enterprise value
of our company. The Warrant expires on January 1, 2006, subject to certain
exceptions. The Warrant and the shares of our common stock issuable upon the
exercise of the Warrant are subject to certain restrictions on transfer.

Cerner. In January 1999, our company also entered into definitive
agreements and consummated a transaction with Cerner for a broad strategic
alliance. Cerner, a publicly traded corporation, is a supplier of clinical and
management information systems for healthcare organizations. Under this
arrangement, our company, among other things, obtained a perpetual, royalty-free
license to the Cerner Technology in exchange for a 19.9% equity interest in our
company (such equity interest is subject to certain restrictions on transfer and
other adjustments). In addition, we will issue to Cerner approximately 801,000
shares of our common stock on

<PAGE>

or after February 15, 2001 at a price of $.01 per share if we realize a
specified level of physician usage of our services. Our company and Cerner have
entered into a non-competition agreement and, as a result, agreed that our
company will be their exclusive vehicle for providing a full suite of
prescription, laboratory and managed care transaction and messaging services
that connect physician's offices with managed care organizations, pharmacy
benefit managers, clinical laboratories, pharmacies and other providers. We also
entered into a Marketing Agreement that allows for the marketing and
distribution of our services to the physicians and providers associated with
more than 1,000 healthcare organizations who currently utilize Cerner's clinical
and management information system. Our company and Cerner also agreed to promote
each other's services to their respective customers. In addition, Cerner
committed to make available to our company engineering and systems architecture
personnel and expertise to accelerate the deployment of CareInsite's services,
as well as ongoing technical support and future enhancements to the Cerner
Technology.

<PAGE>

DESCRIPTION OF CAPITAL STOCK

Our authorized capital consists of 100,000,000 shares of common stock,
par value $.01 per. Immediately prior to the offering, 20,000,000 shares of our
common stock were issued and outstanding. Immediately following the offering,
shares of our common stock will be issued and outstanding.

Common Stock

Holders of record of common stock are entitled to one vote per share on
all matters upon which shareholders have the right to vote. There are no
cumulative voting rights or preemptive rights. All issued and outstanding shares
of our common stock are, and the common stock to be sold in the offering, when
issued and paid for, will be, validly issued, fully paid and non-assessable.
Holders of our common stock are entitled to such dividends as may be declared
from time to time by our Board of Directors out of funds legally available for
that purpose. We do not anticipate paying any cash dividends in the foreseeable
future. See "Dividend Policy." Upon dissolution, holders of our common stock are
entitled to share pro rata in the assets of our company remaining after payment
in full of all of our liabilities and obligations, including payment of the
liquidation preference, if any, of any preferred stock then outstanding.

Section 203 of the Delaware General Corporation Law

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless (i) prior to such
date, the board of directors approved either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder,
(ii) upon consummation of the transaction that resulted in such person becoming
an interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding, for purposes of determining the number of shares
outstanding, shares owned by certain directors or certain employee stock plans),
or (iii) on or after the date the stockholder became an interested stockholder,
the business combination is approved by the board of directors and authorized by
the affirmative vote (and not by written consent) of at least two-thirds of the
outstanding voting stock excluding that stock owned by the interested
stockholder. A "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who (other than the corporation and any
direct or indirect majority-owned subsidiary of the corporation), together with
affiliates and associates, owns (or, as an affiliate or associate, within three
years prior, did own) 15% or more of the corporation's outstanding voting stock.
The application of Section 203 could have the effect of delaying or preventing a
change of control of our company.

Indemnification

Our by-laws require us to indemnify each of our directors and officers
to the fullest extent permitted by law and limits the liability of our directors
and stockholders for monetary damages in certain circumstances.

Article Six of our certificate of incorporation provides that no
director shall have any personal liability to the Company or its stockholders
for any monetary damages for breach of fiduciary duty as a director, provided
that such provision does not limit or eliminate the liability of any director
(i) for any breach of such director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law (involving certain unlawful dividends or
stock repurchases) or (iv) for any transaction from which such director derived
an improper personal benefit. Any amendment to such article will not affect the
liability of any director for any act or omission occurring prior to the
effective time of such amendment.

<PAGE>

Transfer Agent and Registrar

We have appointed Registrar and Transfer Company as the transfer agent
and registrar for our common stock.

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the offering, there has been no public market for our common
stock. No information is currently available and no prediction can be made as to
the timing or amount of future sales of shares, or the effect, if any, that
market sales of shares or the availability of shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of substantial
amounts of our common stock (including shares issuable upon exercise of stock
options or warrants) in the public market after the lapse of the restrictions
described below, or the perception that such sales may occur, could materially
and adversely affect the prevailing market prices for our common stock and our
ability to raise equity capital in the future. See "Risk Factors -- Shares
Eligible for Future Sale."

After completion of the offering, we will have shares of common stock
outstanding ( shares if the Underwriters' over-allotment options are exercised
in full). All of the shares of our common stock offered in the offering ( shares
if the Underwriters' over-allotment options are exercised in full), will be
freely tradeable without restriction or further registration under the
Securities Act, unless purchased by "affiliates" of our company, as that term is
defined in Rule 144, described below. The remaining shares of common stock
outstanding upon completion of the offering and held by existing stockholders
will be "Restricted Securities," as that term is defined in Rule 144, and may
not be sold in the absence of registration other than in accordance with Rule
144 or another exemption from registration under the Securities Act. As a result
of the contractual restrictions described below and the provisions of Rules 144
and 144(k), additional shares will be available for sale in the public market as
follows: (i) no shares of common stock (other than those sold hereby and not
held by affiliates) will be available for immediate sale in the public market on
the date of this prospectus, (ii) shares of common stock will be eligible for
sale 90 days after the date of this prospectus, subject to the volume, manner of
sale and reporting requirements of Rule 144 and (iii) approximately shares of
common stock will be eligible for sale upon expiration of the lock-up agreements
days after the date of this Prospectus, subject to the volume, manner of sale
and reporting requirements of Rule 144.

The Company plans to file registration statements to register Common
Shares reserved for issuance under its stock option plans. See "Management --
Compensation Pursuant to Plans and Arrangements of the Company -- Stock Option
Plan." Once registered, persons acquiring such shares, whether or not they are
affiliates, will be permitted to resell their shares in the public market
without regard to the Rule 144 holding period.

Upon completion of this offering, the holders of shares of common
stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. Registration of such
shares under the Securities Act would result in such shares (except for shares
purchased by affiliates) becoming eligible for sale immediately upon the
effectiveness of such registration.

In general, under Rule 144 as currently in effect, any affiliate of our
company or any person (or group of persons whose shares are aggregated in
accordance with the Rule) who has beneficially owned shares of our common stock
which are treated as Restricted Securities for at least one year would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the outstanding shares of our common stock
(approximately shares based upon the number of shares outstanding after the
offering (or shares if the Underwriters' over-allotment options are exercised
in full)) or the reported average weekly trading volume in our common stock
during the four weeks preceding the date on which notice of such sale was filed
under Rule 144. Sales under Rule 144 are also subject to certain manner of sale
restrictions and notice requirements and to the availability of current public
information concerning our company. In addition, affiliates of our company must
comply with the restrictions and requirements of Rule 144 (other than the
one-year holding period requirement) in order to sell common stock that are not
Restricted Securities (such as shares of our common stock acquired by affiliates
in market transactions). Further, if a period of at least two years has elapsed
from the date Restricted Securities were acquired from our company or an
affiliate of our company, a holder of such Restricted Securities who is not an
affiliate at the time of the sale and who has not

<PAGE>

been an affiliate for at least three months prior to such sale would be entitled
to sell the shares immediately without regard to the volume, manner of sale,
notice and public information requirements of Rule 144.

Upon consummation of the offering, Synetic will own approximately %
of our outstanding common stock. Synetic has advised us that it currently has no
plans to reduce its ownership interest following the offering. However, Synetic
is not subject to any contractual obligation to retain its controlling interest,
except that Synetic has agreed not to sell or otherwise dispose of any shares of
our company for a period of days after the date of the prospectus without the
prior written consent of Merrill Lynch. In addition, subject to certain
exceptions, we have agreed not to sell or otherwise dispose of any shares of our
common stock for such -day period without the prior written consent of
Merrill Lynch. See "Underwriting."

<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement
(the "Purchase Agreement") between our company and each of the underwriters
named below, we agreed to sell to each of the underwriters, and each of the
underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") is acting as representative, have agreed to purchase from us,
the number of shares of common stock set forth opposite its name below:

Number
Underwriter of Shares
----------- ---------
Merrill Lynch, Pierce Fenner & Smith
Incorporated.............................................

--------
Total.................................................... ========

The Purchase Agreement provides that the obligations of each of the
underwriters are subject to certain conditions and that when all those
conditions are satisfied each of the underwriters will be obligated to purchase
all of the shares of common stock offered in this offering. In the event of
default by an underwriter, under the Purchase Agreement the commitments of
non-defaulting underwriters may be increased.

Merrill Lynch has advised us that the underwriters propose initially to
offer the shares of common stock to the public at the initial public offering
price set forth on the cover page of this prospectus, and to certain dealers at
such price less a concession not in excess of $__ per share of common stock. The
underwriters may allow, and those dealers may reallow, a discount not in excess
of $__ per share of common stock on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.

The following table shows the per share and total public offering
price, underwriting discount to be paid by us to the underwriters and the
proceeds of the sale of shares to the underwriters before expenses to us. This
information is presented assuming either no exercise or full exercise by the
underwriters of their over-allotment option.

<TABLE>
<CAPTION>
Total
--------------------------
Without With
Per Share Option Option
--------- -------- ------

<S> <C> <C> <C>
Public offering price......................................... $ $ $
Underwriting discount......................................... $ $ $
Proceeds, before expenses, to our company ................... $ $ $
</TABLE>

We have granted to the underwriters an option, exercisable for up to 30
days after the date of this prospectus, to purchase up to an aggregate of
additional shares of common stock at the initial public offering price set forth
on the cover of this prospectus less the underwriting discount to cover
over-allotments, if any, made on the sale of the common stock offered hereby. If
the underwriters exercise the over-allotment option, the underwriters have
agreed, subject to certain conditions, to purchase approximately the same
percentage of the additional shares that the number of shares of common stock to
be purchased by each of them

<PAGE>

as shown in the foregoing table bears to the shares of common stock offered in
this offering. The underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of common stock
offered hereby.

At our request, the underwriters have reserved for sale, at the initial
public offering price, of the shares offered hereby to be sold to certain
directors, officers and employees of our company, of Synetic and of Cerner. The
number of shares of our common stock available for sale to the general public
will be reduced to the extent these persons purchase the reserved shares. Any
reserved shares which are not orally confirmed for purchase within one day of
the pricing of the offering will be offered by the underwriters to the general
public on the same terms as the other shares offered in this offering.

Cerner has agreed to purchase directly from us in connection with this
offering, shares of our common stock at the initial public offering price per
share less the underwriting discount.

Our company and each of our directors, officers and stockholders have
agreed that, for a period of days after the date of this prospectus, subject to
certain exceptions, they will not without the prior written consent of Merrill
Lynch, directly or indirectly:

o offer, pledge, sell, agree to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer,
any shares of our common stock or securities convertible into
or exchangeable or exercisable for our common stock, whether
now owned by them or acquired by them in the future, or over
which they now have or acquire power of disposition, or file a
registration statement under the Securities Act with respect
to the offering of any shares of our common stock; or

o enter into any swap or other agreement that transfers, in
whole or in part, the economic consequence of ownership of our
common stock whether any such swap or transaction is to be
settled by delivery of common stock or other securities, in
cash or otherwise.

The foregoing restrictions shall not apply to the shares of our common
stock to be sold hereunder or, with respect to our company, any shares of our
common stock issued or options to purchase shares of our common stock granted
pursuant to existing employee benefit or our stock option plan referred to in
this prospectus or any shares of our common stock or any such securities or
rights issued in connection with investments in, acquisitions of, or mergers or
other combinations with, other companies.

Before this offering, there has been no public market for our common
stock. The initial public offering price will be determined through negotiations
between our company and Merrill Lynch. The factors considered in determining the
initial public offering price, in addition to prevailing market conditions, are

o price-to-revenues ratios of publicly traded companies that
Merrill Lynch believes to be comparable to our company,

o certain financial information of our company,

o the history of, and the prospects for, our company and the
industry in which it competes, and

o an assessment of our management, our past and present
operations, the prospects for, and timing of, future revenues
of our company,

o the present state of our development, and

<PAGE>

o the above factors in relation to market values and various
valuation measures of other companies engaged in activities
similar to our company.

We expect our common stock to be approved for listing on the Nasdaq
National Market, subject to notice of issuance, under the symbol " ." However,
there can be no assurance that an active trading market will develop for our
common stock or that our common stock will trade in the public market subsequent
to the offering at or above the initial public offering price.

The underwriters do not expect sales of the common stock to any
accounts over which they exercise discretionary authority to exceed 5% of the
number of shares of common stock being offered in this offering.

We have agreed to indemnify the underwriters against, or to contribute
to payments the underwriters may be required to make in respect of certain
liabilities, including certain liabilities under the Securities Act.

Until the distribution of the shares of common stock is completed,
rules of the Securities and Exchange Commission may limit the ability of the
underwriters and certain selling group members to bid for and purchase our
common stock. As an exception to these rules, Merrill Lynch is permitted to
engage in certain transactions that stabilize the price of our common stock.
These transactions may include bids or purchases for the purpose of pegging,
fixing or maintaining the price of our common stock.

If the underwriters create a short position in our common stock in
connection with the offering, i.e., if they sell a larger number of shares of
common stock than are set forth on the cover page of this prospectus, Merrill
Lynch may reduce that short position by purchasing common stock in the open
market. Merrill Lynch may also elect to reduce any short position by exercising
all or part of the over-allotment option described above.

Merrill Lynch may also impose a penalty bid on certain underwriters and
selling group members. This means that if Merrill Lynch purchases shares of
common stock in the open market to reduce the underwriters' short position or to
stabilize the price of our common stock, Merrill Lynch may reclaim the amount of
the selling concession from the underwriters and selling group members who sold
those shares as part of the offering.

If Merrill Lynch purchases the common stock to stabilize the price or
to reduce the underwriters' short position, the price of our common stock could
be higher than it might be in the absence of such purchases. The imposition of a
penalty bid might also have an effect on the price of our common stock to the
extent that it discourages resales of our common stock.

Neither our company nor any of the underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
any of the transactions described above may have on the price of the common
stock. In addition, neither our company nor any of the underwriters makes any
representation that Merrill Lynch will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.

Merrill Lynch, from time to time, performs investment banking and other
financial services for our company, Synetic and affiliates of each of these
companies.

We will pay all of the expenses of the offering, excluding underwriting
discounts, and we estimate that these expenses will be approximately $ .

<PAGE>

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be
passed upon for us by Shearman & Sterling, New York, New York. Certain legal
matters in connection with the offering will be passed upon for the Underwriters
by Brown & Wood LLP. Shearman & Sterling is a limited partner in SN Investors,
L.P., a limited partnership the general partner of which is SYNC, Inc., whose
sole stockholder is Martin J. Wygod, Chairman of our company and Synetic, which
currently holds 5,061,857 shares of Synetic common stock.

EXPERTS

The audited financial statements of CareInsite, Inc. and Avicenna
Systems Corporation included in this Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

The statements of law under the caption "Risk Factors -- Government
regulation of the Internet and/or healthcare e-commerce services could adversely
affect our business" and under the caption "Business --Government Regulation" in
this prospectus are based upon the opinion of Kegler, Brown, Hill & Ritter Co.,
L.P.A., Columbus, Ohio, special regulatory counsel to the Company. Robert D.
Marotta, Esq., of counsel to such firm, holds 75,000 options to purchase Synetic
common stock.

ADDITIONAL INFORMATION

We have filed with the Commission a registration statement on Form S-1
(the "Registration Statement") under the Securities Act with respect to the
shares of common stock offered hereby. For the purposes hereof, the term
"Registration Statement" means the original registration statement and any and
all amendments thereto. This prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to our company and such common stock,
reference is hereby made to such Registration Statement, including exhibits
thereto, which can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Regional Offices of the Commission at Seven World Trade Center, New
York, New York 10048 and 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can also be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov.

Statements contained in the prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.

We are not currently subject to the informational requirements of the
Exchange Act. As a result of the offering of our common stock, we will become
subject to the reporting requirements of the Exchange Act. We intend to furnish
our stockholders with annual reports containing consolidated financial
statements audited by independent certified public accountants.

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

CareInsite, Inc.

Report of Independent Public Accountants..................................F-2

Consolidated Balance Sheets at June 30, 1997 and 1998
and December 31, 1998 (unaudited).........................................F-3

Consolidated Statements of Operations for the Period from Inception
(December 24, 1996) through June 30, 1997, the Year Ended June 30, 1998
and the Six Months Ended
December 31, 1997 and 1998 (unaudited)....................................F-5

Consolidated Statements of Changes in Stockholder's Equity for the
Period from Inception (December 24, 1996) through June 30, 1997, the
Year Ended June 30, 1998 and the Six
Months Ended December 31, 1998 (unaudited)................................F-6

Consolidated Statements of Cash Flows for the Period from Inception
(December 24, 1996) through June 30, 1997, the Year Ended June 30, 1998
and the Six Months Ended
December 31, 1997 and 1998 (unaudited)....................................F-7

Notes to Consolidated Financial Statements................................F-8

Avicenna Systems Corporation (acquired on December 24, 1996)

Report of Independent Public Accountants..................................F-18

Statements of Operations for the Year Ended December 31, 1995
and the Period from January 1, 1996 through December 23, 1996.............F-19

Statements of Changes in Stockholder's Deficit for the Year Ended
December 31, 1995 and the Period from January 1, 1996
through December 23, 1996.................................................F-20

Statements of Cash Flows for the Year Ended December 31, 1995
and the Period from January 1, 1996 through December 23, 1996.............F-21

Notes to Financial Statements.............................................F-22

F-1

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

After the amendment of the Certificate of Incorporation of the Company
in the State of Delaware increasing the number of shares authorized for issuance
and reflecting a 16.02-for-1 stock split and legally renaming the company
CareInsite, Inc., we expect to be in a position to render the following audit
report.

ARTHUR ANDERSEN LLP

Roseland, New Jersey
March 17, 1999

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CareInsite, Inc.:

We have audited the accompanying consolidated balance sheets of
CareInsite, Inc. (a Delaware corporation) and subsidiary (formerly Synetic
Healthcare Communications, Inc.) as of June 30, 1997 and 1998, and the related
consolidated statements of operations, changes in stockholder's equity and cash
flows for the period from Inception (December 24, 1996) through June 30, 1997
and for the year ended June 30, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CareInsite, Inc. and
subsidiary as of June 30, 1997 and 1998, and the results of their operations and
their cash flows for the period from Inception (December 24, 1996) through June
30, 1997 and for the year ended June 30, 1998 in conformity with generally
accepted accounting principles.

F-2

<PAGE>

CareInsite, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)

ASSETS

<TABLE>
<CAPTION>
June 30, December 31,
------------------------- ------------
1997 1998 1998
-------- -------- ----
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................... $ 246 $ 315 $ 635
Note receivable.............................. - 2,000 2,000
Other current assets......................... 72 220 362
-------- -------- ---------
Total current assets...................... 318 2,535 2,997
-------- -------- --------

PROPERTY, PLANT AND EQUIPMENT:
Leasehold improvements....................... 366 681 685
Machinery and equipment...................... 1,244 2,826 2,900
Furniture and fixtures....................... 171 371 388
-------- -------- --------
1,781 3,878 3,973
Less: Accumulated depreciation.............. (184) (1,025) (1,538)
-------- -------- --------
Property, plant and equipment, net........... 1,597 2,853 2,435
-------- -------- --------

CAPITALIZED SOFTWARE DEVELOPMENT COSTS........... 348 4,972 10,354

OTHER ASSETS:
Intangible assets, net of accumulated
amortization of $405, $1,214 and
$1,618 at June 30, 1997 and 1998
and December 31, 1998, respectively....... 1,213 404 -
Other........................................ - 69 54
-------- --------- ---------
Total other assets........................ 1,213 473 54
-------- --------- ---------
$3,476 $10,833 $15,840
======== ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-3

<PAGE>

CareInsite, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

LIABILITIES AND STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
June 30, December 31,
------------------------- ------------
1997 1998 1998
-------- -------- ----
(unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable........................ $ 265 $ 594 $ 301
Accrued liabilities..................... 1,645 1,166 1,272
------- ------- ------
Total current liabilities............ 1,910 1,760 1,573
------- ------- ------

DEFERRED INCOME TAXES....................... - 1,275 1,275

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY:
Common stock, $.01 par value;
authorized 100,000,000 shares;
16,020,000 shares issued and outstanding
at June 30, 1997 and 1998
and December 31, 1998................ 160 160 160
Paid-in capital......................... 53,763 70,330 84,330
Stock subscription receivable........... (10,000) (10,000) (10,000)
Accumulated deficit..................... (42,357) (52,692) (61,498)
-------- ------- -------
Total stockholder's equity........... 1,566 7,798 12,992
--------- -------- -------
$ 3,476 $10,833 $15,840
======== ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-4

<PAGE>

CareInsite, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
Period From Inception Year
(December 24, 1996) Ended Six Months Ended
Through June 30, June 30, December 31,
1997 1998 1997 1998
------ ------ ------ ------
(unaudited)
<S> <C> <C> <C> <C>
Costs and expenses:
Research and development........................ $ 7,652 $ 4,762 $ 2,546 $ 5,999
Sales and marketing............................. 1,150 1,733 850 919
General and administrative...................... 1,379 3,887 1,639 1,979
Other income, net............................... (9) (47) - (91)
Acquired in-process research and
development................................... 32,185 - - -
----------- ----------- ----------- ---------
42,357 10,335 5,035 8,806
----------- ----------- ----------- ---------

Net loss ............................................ $ (42,357) $ (10,335) $ (5,035) $ (8,806)
========== ========== ========== ========

Net loss per share - basic and diluted............... $ (2.64) $ (.65) $ (.31) $ (.55)
=========== =========== =========== =========
Weighed average shares
outstanding - basic and diluted.................... 16,020 16,020 16,020 16,020
=========== =========== =========== =========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-5

<PAGE>

CareInsite, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(in thousands)

<TABLE>
<CAPTION>
Common Stock
------------
Number Stock Total
of Paid-In Subscription Accumulated Stockholder's
Shares Amount Capital Receivable Deficit Equity
------ ------ ------- ---------- ------- ----------

<S> <C> <C> <C> <C> <C> <C>
Capitalization at Inception, December 24, 1996.. 16,020 $ 160 $ 9,840 $ (10,000) $ - $ -

Pushdown of Avicenna acquisition.............. - - 28,817 - - 28,817
Pushdown of CareAgents acquisition............ - - 3,250 - - 3,250

Net loss........................................ - - - - (42,357) (42,357)

Capital contributions from parent............... - - 11,856 - - 11,856
--------- ------- --------- ---------- ---------- ---------

Balance, June 30, 1997.......................... 16,020 160 53,763 (10,000) (42,357) 1,566

Net loss........................................ - - - - (10,335) (10,335)

Capital contributions from parent............... - - 16,567 - - 16,567
--------- ------- ------ ----------- ---------- ------

Balance, June 30, 1998.......................... 16,020 160 70,330 (10,000) (52,692) 7,798

Net loss (unaudited)............................ - - - - (8,806) (8,806)

Capital contributions from parent (unaudited)... - - 14,000 - - 14,000
--------- ------- --------- ----------- ---------- ---------

Balance, December 31, 1998 (unaudited).......... 16,020 $ 160 $ 84,330 $ (10,000) $ (61,498) $ 12,992
========= ======= ========= =========== =========== =========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-6

<PAGE>

CareInsite, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Period From Inception Year
(December 24, 1996) Ended Six Months Ended
Through June 30, June 30, December 31,
1997 1998 1997 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $ (42,357) $ (10,335) $ (5,035) $ (8,806)

Adjustments to reconcile net loss to
net cash used in operating activities:
Write-off of acquired in-process
purchased research and
development costs.................................. 32,185 - - -
Write-off of acquired intellectual
property and software technologies................. 5,228 - - -
Depreciation and amortization...................... 589 1,650 709 917
Write-off of capitalized software costs............ - - - 2,381
Changes in operating assets and liabilities, net of
the effects of acquisitions:
Other assets ................................... 61 (217) (27) (127)
Accounts payable................................ (241) 329 (142) (293)
Accrued liabilities............................. (476) (479) (396) 106
---------- ---------- ---------- ----------
Net cash used in operating activities....... (5,011) (9,052) (4,891) (5,822)
---------- ---------- ---------- ----------

Cash flows used in investing activities:
Purchases of property, plant & equipment.............. (1,023) (2,097) (1,045) (95)
Software development costs............................ (348) (4,624) (1,032) (7,763)
---------- ---------- ---------- ----------
Net cash used in investing activities....... (1,371) (6,721) (2,077) (7,858)
---------- ---------- ---------- ----------

Cash flows provided by financing activities:
Capital contribution from parent...................... 6,628 15,842 7,189 14,000
----------- ----------- ----------- -----------

Net increase in cash and cash equivalents.................. 246 69 221 320
Cash and cash equivalents, beginning of period............. - 246 246 315
----------- ----------- ----------- -----------
Cash and cash equivalents, end of period................... $ 246 $ 315 $ 467 $ 635
=========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-7

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Operations and Summary of Significant Accounting Policies:

The Company--

On December 24, 1996, Synetic, Inc. ("Synetic" or the "Parent")
acquired Avicenna Systems Corporation ("Avicenna" -- See Note 2), a privately
held company that marketed and built Intranets for managed healthcare plans,
integrated healthcare delivery systems and hospitals. The acquisition of
Avicenna marked the Inception of Synetic's healthcare communications business.
On January 23, 1997, Synetic acquired CareAgents, Inc. ("CareAgents" -- See Note
2), a privately held company engaged in developing Internet-based clinical
commerce applications. On November 24, 1998, Synetic formed Synetic Healthcare
Communications, Inc., which was subsequently renamed CareInsite, Inc. (the
"Company"). On January 2, 1999, Synetic contributed the stock of CareAgents to
Avicenna. Concurrently, Avicenna contributed the stock of CareAgents and
substantially all of Avicenna's other assets and liabilities to the Company (the
"Formation"). Synetic also agreed to contribute $10,000,000 in cash to the
Company, which amount was subsequently funded. The Formation has been accounted
for using the carryover basis of accounting and the Company's financial
statements include the accounts and operations of Avicenna and CareAgents for
all periods presented from the date each entity was acquired. Upon Formation,
the Certificate of Incorporation provided for authorized capital stock
consisting of 10,000,000 shares of common stock, $.01 par value and 1,000,000
shares were subsequently issued. The Company intends to amend its Certificate of
Incorporation increasing the number of shares authorized for issuance to
100,000,000 shares of common stock, reflect a 16.02-for-1 stock split and
legally renaming the Company. The shares issued in connection with the Formation
reflect the 16.02-for-1 stock split of the common stock to be effected in the
form of a stock dividend to be declared and paid immediately prior to the
closing of the initial public offering ("IPO") of the Company's common stock.

The Company intends to provide a broad range of healthcare electronic
commerce services which will leverage Internet technology to improve
communication among physicians, payers, suppliers and patients. The provision of
products and services using Internet technology in the healthcare communications
industry is a developing business and is subject to risks, including but not
limited, to those associated with competition from existing companies offering
the same or similar services, uncertainty with respect to market acceptance of
its products and services, rapid technological change, management of growth,
availability of future capital and minimal previous record of operations or
earnings.

In October 1998, the Company entered into agreements in principle with
two strategic partners -- The Health Information Network Connection LLC
("THINC") and Cerner Corporation ("Cerner").

THINC--

In January 1999, the Company, THINC, and THINC founding members,
Greater New York Hospital Association, Empire Blue Cross and Blue Shield, Group
Health Incorporated ("GHI") and HIP Health Plans entered into definitive
agreements and consummated a transaction for a broad strategic alliance. Under
this arrangement, among other things, the Company (i) acquired a 20% ownership
interest in THINC in exchange for $1.5 million in cash and a warrant to purchase
shares of common stock of the Company, representing approximately 6% of the
equity of the Company (assuming exercise of the THINC warrant and considering
the shares issued to Cerner), (ii) agreed to extend up to $3.5 million in senior
loans to THINC, (iii) entered into a Management Services Agreement with THINC
pursuant to which the Company will manage all operations of THINC, including
providing THINC with certain content and messaging services, (iv) licensed to
THINC content and messaging services for use over the THINC network and (v)
entered into exclusive Clinical Transaction Agreements with each of Empire, GHI
and HIP (the "THINC Payers") to provide online prescription and laboratory
transaction services. The Company's Clinical Transaction Agreement with GHI
specifies that it does not have the exclusive right to provide prescription
communication services to GHI unless either the Company enters into an agreement
with GHI's PBM outlining a methodology for the implementation of such services
or GHI elects to proceed without such an agreement. GHI's current PBM is
Merck-Medco. To date, the Company has not entered into any such agreement with
Merck-Medco and GHI has not made such election.

As part of this arrangement, THINC entered into Managed Care
Transaction Contracts with each of the THINC Payers whereby the THINC Payers

F-8

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Operations and Summary of Significant Accounting Policies:
(continued)

agreed to use the THINC network for their online medical claims submission,
eligibility, benefit plan detail, roster distribution, remittance advice
distribution, claims inquiry, referral/pre-certification and authorization, and
encounter submission transactions.

The warrant issued to THINC is exercisable 180 days following the
occurrence of an IPO of the Company's common stock or, if an IPO has not
occurred, at the end of term of the warrant. The exercise price of the warrant
is the lesser of (i) the IPO price, if an IPO has occurred, and (ii) the price
based on a $200 million enterprise value of the Company. The warrant expires on
January 1, 2006, subject to certain exceptions. The warrant and the shares of
our common stock issuable upon the exercise of the warrant are subject to
certain restrictions on transfer.

Cerner--

In January 1999, the Company also entered into definitive agreements
and consummated a transaction with Cerner for a broad strategic alliance.
Cerner, a publicly traded corporation, is a supplier of clinical and management
information systems for healthcare organizations. Under this arrangement, the
Company, among other things, obtained a perpetual software license to the
functionality embedded in Cerner's Health Network Architecture ("HNA") including
HNA Millennium Architecture and Cerner in exchange for a 19.9% equity interest
in the Company (such equity interest is subject to certain restrictions on
transfer and other adjustments). In addition, the Company will issue to Cerner
801,000 additional shares of our common stock on or after February 15, 2001 at
$.01 per share in the event the Company has achieved a stated level of physician
participation by 2001. Additionally, the Company and Cerner entered into a
Marketing Agreement that allows for the marketing and distribution of the
Company's services to the physicians and providers associated with more than
1,000 healthcare organizations who currently utilize Cerner's clinical and
management information system. In addition, Cerner committed to make available
engineering and systems architecture personnel and expertise to accelerate the
deployment of the Company's services, as well as ongoing technical support and
future enhancements to HNA. The Company intends to record the perpetual license
acquired from Cerner in exchange for the equity interest issued to Cerner as
capitalized software development costs. Such capitalized software costs are
estimated to be $20-25 million.

Principles of Consolidation--

The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, CareAgents, after elimination of
all significant intercompany accounts and transactions.

Interim Financial Information--

Information for the six months ended December 31, 1997 and 1998 is
unaudited and has been prepared on the same basis as the audited financial
statements and includes all adjustments, consisting only of normal recurring
adjustments that management considers necessary for a fair presentation of the
Company's operating results for such periods. Results for the six months ended
December 31, 1998 are not necessarily indicative of results to be expected for
the full fiscal year 1999 or for any future period.

Fair Value of Financial Instruments--

The carrying amounts of cash and cash equivalents and note receivable
approximate fair value because of the short-term maturity of these instruments.

F-9

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Operations and Summary of Significant Accounting Policies:
(continued)

Cash and Cash Equivalents--

The Company considers all investment instruments with a maturity of
three months or less from the date of purchase to be the equivalent of cash for
purposes of balance sheet presentation and for the consolidated statements of
cash flows.

Property, Plant and Equipment--

Property, plant and equipment are stated at cost. For financial
reporting purposes, depreciation is provided principally on the straight-line
method over the estimated useful lives of the assets. Annual depreciation rates
range from 20% to 33% for leasehold improvements and from 10% to 33% for
machinery and equipment and furniture and fixtures. Expenditures for
maintenance, repair and renewals of minor items are charged to operations as
incurred. Major betterments are capitalized.

Capitalized Software Development Costs--

The Company capitalizes certain costs incurred for the production of
computer software for use in the sale of its services. Costs capitalized include
direct labor and related overhead for software produced by the Company and the
costs of software licensed from third parties. All costs in the software
development process which are classified as research and development are
expensed as incurred until technological feasibility has been established. Once
technological feasibility has been established, such software development costs
are capitalized until the software is commercially available. Such costs are
recorded at the lower of unamortized cost or net realizable value. As of June
30, 1997, June 30, 1998 and December 31, 1998, capitalized internally generated
costs were $348,000, $4,368,000 and $4,353,000, respectively. As of June 30,
1998 and December 31, 1998, capitalized costs for software components licensed
from third party vendors were $604,000 and $6,001,000, respectively. There were
no capitalized costs for software components licensed from third party vendors
as of June 30, 1997.

As a result of the Company entering into a license agreement with
Cerner under which the Company obtained a perpetual license to Cerner's HNA,
certain elements of previously capitalized software costs were made duplicative.
Consequently, approximately $2,381,000 of capitalized software was written off
and included in research and development expenses in the six months ended
December 31, 1998.

For the period from inception (December 24, 1996) through June 30,
1997, $5,228,000 of costs associated with the acquisitions of certain
intellectual property and software technologies was expensed as research and
development as technological feasibility had not been reached.

Long-Lived Assets --

In accordance with Statement of Financial Accounting Standard ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," the Company continually evaluates whether events and
circumstances have occurred that indicate the remaining estimated useful life of
long-lived assets requires revision or that all or a portion of the remaining
balance may not be recoverable. Management does not believe that any such events
or changes in circumstances have occurred.

F-10

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Operations and Summary of Significant Accounting Policies:
(continued)

Accrued Liabilities--

Accrued liabilities consisted of the following (in thousands):

June 30,
----------------------
1997 1998

Accrued payroll and benefit costs.............. $ 233 $ 408
Accrued software costs......................... - 400
Accrued acquisition costs...................... 1,256 109
Accrued consulting............................. 25 154
Other.......................................... 131 95
-------- ---------
Total................................... $ 1,645 $ 1,166
======= =======

Income Taxes--

The Company accounts for income taxes pursuant to SFAS 109, "Accounting
for Income Taxes", which uses the liability method to calculate deferred income
taxes.

The Company is included in the consolidated Federal income tax return
of Synetic. The accompanying consolidated statements of operations reflect
income taxes as if the Company filed a separate tax return.

Net Loss Per Share--

Basic net loss per share and diluted net loss per share are presented
in conformity with SFAS No. 128, "Earnings per Share" and SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under SFAS No. 128 and SAB 98, basic net loss per
share is computed by dividing net income by the weighted-average number of
common shares outstanding for the period. In accordance with SAB 98, the Company
has determined that there were no nominal issuances of the Company's common
stock prior to the proposed IPO. The calculation of diluted net loss per share
excludes shares of common stock issuable upon exercise of employee stock options
as the effect of such exercises would be anti-dilutive. Common shares
outstanding and per share amounts reflect the Formation and are considered
outstanding from inception.

Accounting for Stock-Based Compensation--

The Company accounts for its stock-based employee compensation
agreements in accordance with the provisions of Accounting Principles Board
Opinion No. 25.

Use of Estimates--

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-11

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Operations and Summary of Significant Accounting Policies:
(continued)

Recently Issued Accounting Standards--

In June 1997, the Financial Accounting Standards Board, (FASB), issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The Company is required to adopt SFAS No. 131 for its year ending
June 30, 1999. SFAS No. 131 requires disclosure of certain information regarding
operating segments, products and services, geographic areas of operation and
major customers. Adoption of SFAS No. 131 is expected to have no material impact
on the Company's financial condition or results of operations.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Company is required to adopt SFAS No.
133 for its year ending June 30, 2000. SFAS No. 133 establishes methods of
accounting for derivative financial instruments and hedging activities related
to those instruments as well as other hedging activities. Because the Company
currently holds no derivative financial instruments and does not currently
engage in hedging activities, adoption of SFAS No. 133 is expected to have no
material impact on the Company's financial condition or results of operations.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position, or "SOP," 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires
that entities capitalize certain costs related to internal-use software once
certain criteria have been met. The Company is required to implement SOP 98-1
for the year ending June 30, 2000. Adoption of SOP 98-1 is expected to have no
material impact on the Company's financial condition or results of operations.

In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position or "SOP" 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires that entities expense start-up costs as incurred.
The Company is required to implement SOP 98-5 for the year ending June 30, 2000.
Adoption of SOP 98-5 is expected to have no material impact on the Company's
financial condition or results of operations.

(2) Acquisitions:

Avicenna--

On December 24, 1996, Synetic acquired the outstanding equity and
indebtedness (including employee stock options) of Avicenna, a privately-held
company located in Cambridge, Massachusetts, for 428,643 shares of Synetic's
common stock and 161,015 shares of Synetic's common stock to be issued in
connection with the exercise of employee stock options. The acquisition was
accounted for using the purchase method with the purchase price being allocated
to assets acquired and liabilities assumed based on their fair values.

A summary of the purchase price allocation is as follows (in
thousands):

Cash $ 42
Short-term investments 240
Other assets 216
Property, plant and equipment 759
Purchased research and development 28,600
Intangible assets 1,502
Goodwill 116
Accounts payable (507)
Accrued liabilities (2,151)
---------
$28,817
=========
F-12

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Acquisitions: (continued)

The amount allocated to purchased research and development of
$28,600,000 was determined using established valuation techniques. Remaining
amounts have been allocated to intangible assets and goodwill and are amortized
over a two-year period.

CareAgents--

On January 23, 1997, Synetic acquired CareAgents for 106,029 shares of
Synetic's common stock. CareAgents was an early development stage company
focused on Internet-based clinical commerce applications. The acquisition was
accounted for using the purchase method with the purchase price being allocated
to the assets acquired, purchased research and development of $3,585,000 and
liabilities assumed of $335,000, based on their fair values. The amount
allocated to purchased research and development of $3,585,000 was determined
using established valuation techniques.

Acquired In-Process Research and Development--

In connection with the acquisitions of Avicenna and CareAgents, each
purchase price was allocated to acquired in-process research and development.
These amounts have been expensed on the respective acquisition dates as the
in-process research and development had not reached technological feasibility
and had no alternative future use. A description of the acquired in-process
research and development and the estimates made are as follows:

Avicenna--

The amount allocated to acquired in-process research and development of
$28,600,000 was determined based on an income approach valuation methodology.
The valuation projected revenue and costs over a nine year period with
profitability commencing in three years and increasing steadily through year
nine. Avicenna was in the early stages of its development and the systems under
development had not yet reached technological feasibility. There was no
alternative future use for the technology then developed.

Avicenna had incurred approximately $1,238,000 in research and
development costs to develop the technology to its then current status.
Significant costs remained to complete the technological capabilities of its
product line and then migrate those capabilities to a new business model
envisioned by Synetic.

CareAgents--

Given the small size of the workforce and the lack of any substantive
tangible assets, the entire purchase price of $3,585,000 was assigned to
acquired in-process purchased research and development.

F-13

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Acquisitions: (continued)

To value the acquired in-process research and development, the Company
used the income approach based on a nine-year projection of revenues and costs.
Profitability was forecasted to occur in the third year with operating margins
in the low twenty percent range for the balance of the forecast period.

(3) Stockholder's Equity:

Included in capital contributions from parent for the period from
Inception (December 24, 1996) through June 30, 1997 is $5,228,000 of rights to
certain intellectual property and software technologies purchased by Synetic to
be utilized in the development of the Company's healthcare communications
business.

Included in capital contributions from parent for the year ended June
30, 1998 is an assignment by Synetic of rights to an 8% Senior Convertible Note
for $2,000,000 from a privately held company (See Note 7).

(4) Income Taxes:

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. At June 30,
1998 and December 31, 1998, deferred tax liabilities of $1,275,000 primarily
relate to software development costs capitalized for financial reporting
purposes and expensed for tax purposes.

For the period from inception (December 24, 1996) through January 2,
1999, the tax benefits associated with net operating losses generated by the
Company were retained by Synetic. Capital contributions from Parent in the
consolidated statements of changes in stockholder's equity have been reduced by
the tax benefit of net operating losses recognized by the Company.

(5) Stock Options:

The Company expects to adopt a stock option plan covering its
employees, officers and directors, and certain consultants, agents and key
contractors. The Company intends to grant stock options under this plan to
certain employees, officers and directors in connection with an IPO of the
Company's common stock. The Company intends to grant such stock options at fair
market value.

Historically, the employees of the Company have participated in the
stock option plans of Synetic. These plans provide for both non-qualified and
incentive stock options. Generally, options granted under these plans become
exercisable at a rate of 20% on each annual anniversary of the grant and expire
within ten to fifteen years from the date of the grant and have an exercise
price equal to 100% of the fair market value of Synetic's common stock on the
date of grant.

Synetic has elected to follow APB No. 25 in accounting for its employee
stock options. Accordingly, no compensation cost has been recognized for option
plans. Had the determination of compensation costs for employees of the Company
who participated in the stock option plans of Synetic been based on the fair
value at the grant dates for awards under these plans, consistent with the
method of SFAS No. 123, the Company's net loss would have been $(45,570,000) and
$(20,340,000) and basic and diluted loss per share would have been $(2.84) and
$(1.27) for the period from Inception (December 24, 1996) through June 30, 1997
and for the year ended June 30, 1998, respectively. At June 30, 1998, the
Company's employees had 4,173,444 and 717,739 of Synetic's stock options
outstanding and exercisable, respectively.

F-14

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Stock Options: (continued)

The pro forma results are not intended to be indicative
of or a projection of future results.

The fair value of each option grant is estimated on the date of grant
by using the Black-Scholes option-pricing model. The following weighted average
assumptions were used:

1997 1998
-------- --------
Expected dividend yield 0% 0%
Expected volatility .2722 .2986
Risk-free interest rates 6.5% 6.3%
Expected option lives (years) .083-1.74 .50-2.00

Weighted average fair
value of options granted
during the year $10.11 $13.10

(6) Related Party Transactions:

Tax Sharing Agreement--

The Company and Synetic will enter into a Tax Sharing Agreement
providing for the conduct of tax audits and the handling of tax controversies
and various related matters. For periods during which the Company is included in
Synetic's consolidated federal income tax returns, the Company will be required
to pay to Synetic an amount equal to its federal income tax liability,
determined as if the Company had filed a separate federal income tax return.

Services Agreement--

On January 2, 1999 the Company and Synetic have entered into a Services
Agreement, pursuant to which Synetic will provide the Company with services
relating primarily to payroll, accounting, tax, office and information
processing and other technical services as required. The Company will pay the
actual costs of providing these services. Such costs will include an allocable
portion of the compensation and other related expenses of Synetic employees
providing such services to the Company. This agreement may be terminated by
either party upon 90 days prior written notice, at the end of any quarter.
Allocations from Synetic to the Company were $230,000, $836,000, $346,000 and
$475,000 for the period from Inception (December 24, 1996) through June 30,
1997, for the fiscal year ended June 30, 1998 and for the six months ended
December 31, 1997 and 1998, respectively. Synetic and the Company believe that
these amounts are appropriate and adequately reflect the costs of these
services.

F-15

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7) Note Receivable:

On March 24, 1998 Synetic loaned a privately held company ("Debtor")
$2,000,000 under an 8% Senior Convertible Note due March 23, 1999 (the "Note").
In connection with the formation of the Company, Synetic assigned its rights
under the Note to the Company. In January, 1999, Debtor was acquired by another
privately held company ("Successor"). In connection with this acquisition, the
Company elected to convert the Note into 291,952 shares of Successor's Series B
Preferred Stock ("Preferred"). The Preferred is convertible into common stock
(i) at the Company's option any time after the annual anniversary date of
issuance, and (ii) automatically immediately prior to an IPO of Successor. In
1999, the Successor filed a registration statement for an IPO.

(8) Commitments and Contingencies:

Legal Proceedings --

On February 18, 1999, Merck & Co., Inc. and Merck-Medco Managed Care,
L.L.C. filed a complaint in the Superior Court of New Jersey against the
Company, Synetic, Martin J. Wygod, Chairman of the Company and Synetic, and
three officers and/or directors of the Company and Synetic, Paul C. Suthern,
Roger C. Holstein and Charles A. Mele. The plaintiffs assert that the Company,
Synetic and the individual defendants are in violation of certain
non-competition, non-solicitation and other agreements with Merck and
Merck-Medco, and seek to enjoin the Company and them from conducting the
Company's healthcare e-commerce business and from soliciting Merck-Medco's
customers. The Synetic and Wygod agreements provide an expiration date of May
24, 1999. Mr. Suthern's, Mr. Mele's and Mr. Holstein's agreements expire in
December 1999, March 2000 and September 2002, respectively. A preliminary
injunction hearing was held on March 22, 1999. Following the hearing, the Court
took the matter under submission.

The Company believes that Merck's and Merck-Medco's positions in
relation to the Company and the individual defendants are without merit, and
intends to vigorously defend the litigation. If the Company is unsuccessful in
defending this litigation, the Company could be prevented indefinitely from
pursuing the development and deployment of its healthcare e-commerce services.
Any unanticipated adverse result could have a material adverse effect on the
Company's business.

F-16

<PAGE>

CareInsite, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Commitments and Contingencies: (continued)

Leases--

The Company leases office space and equipment under various
noncancellable operating leases. Rental expense was $270,000 and $1,241,000 for
the period from Inception (December 24, 1996) through June 30, 1997 and for the
fiscal year ended June 30, 1998, respectively. The minimum aggregate rental
commitments under noncancellable leases, excluding renewal options, are as
follows (in thousands):

Years Ending June 30,
1999...................................................... $1,270
2000...................................................... 1,229
2001...................................................... 1,207
2002...................................................... 805
Thereafter................................................ -

F-17

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Avicenna Systems Corporation:

We have audited the accompanying statements of operations, redeemable
convertible preferred stock and stockholder's deficit and cash flows of Avicenna
Systems Corporation (a Massachusetts corporation) for the year ended December
31, 1995 and for the period from January 1, 1996 through December 23, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Avicenna Systems Corporation for the year ended December 31, 1995 and for the
period from January 1, 1996 through December 23, 1996 in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Roseland, New Jersey
February 22, 1999

F-18

<PAGE>

AVICENNA SYSTEMS CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
Period from
January 1, 1996
Year Ended through
December 31, 1995 December 23, 1996
----------------- -----------------
<S> <C> <C>
Revenue....................................... $ - $ 20
---------- ----------

Operating expenses
Research and development................... 86 1,136
Sales and marketing........................ 12 1,297
General and administrative................. 69 885
---------- ----------

Total operating expenses...................... 167 3,318
---------- ----------

Net loss $ (167) $(3,298)
========== ==========

Preferred stock dividends..................... - (241)
---------- ----------

Net loss applicable to common stockholder..... $ (167) $(3,539)
========== ==========

Net loss per share applicable to common
stockholder - basic and diluted............... $ (.44) $ (9.34)
========== ==========

Weighted average common shares
outstanding - basic and diluted............... 379 379
========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-19

<PAGE>

AVICENNA SYSTEMS CORPORATION
STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDER'S DEFICIT
(in thousands)

<TABLE>
<CAPTION>
Redeemable Convertible
Preferred Stock Stockholder's Deficit
---------------------- ------------------------------------------------
Common
Stock Additional Total
Number of Carrying Number Carrying Paid-In Accumulated Stockholder's
Shares Value of Shares Value Capital Deficit Deficit
---------- ----------- ----------- ---------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial capitalization....................... - $ - $ 379 $ 4 - (4) -
Net loss..................................... - - - - (32) (32)
------- ------- ------- ------- ------- -------
Balance, December 31, 1994................... - - 379 4 - (36) (32)
Sales of Series A redeemable convertible
preferred stock, net of issuance costs....... 450 1,350 - - - (38) (38)
Capital contributed in connection with
repayment of stockholder loans............... - - - - 32 - 32
Net loss..................................... - - - - - (167) (167)
------- ------- ------- ------- ------- ------- -------

Balance, December 31, 1995................... 450 1,350 379 4 32 (241) (205)
Sales of Series A redeemable convertible
preferred stock.............................. 583 1,750 - - - - -
Preferred stock dividends.................... - 241 - - - (241) -
Net loss..................................... - - - - - (3,298) (3,298)
------- ------- ------- ------- ------- ------- -------

Balance, December 23, 1996................... 1,033 $ 3,341 $ 379 $ 4 32 (3,780) (3,503)
======= ======= ======= ======= ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-20

<PAGE>

AVICENNA SYSTEMS CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Period from
January 1, 1996
Year Ended through
December 31, 1995 December 23, 1996
--------------------------- ----------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................. $ (167) $ (3,298)
Adjustments to reconcile net loss to net cash used in
operating activities--
Depreciation..................................... 2 136
Changes in current assets and liabilities
Accounts payable............................ - 496
Accrued expenses............................ 45 35
Accounts receivable......................... - (84)
Customer deposits........................... - 79
Other....................................... (8) (21)
--------- ---------
Net cash used in operating activities (128) (2,657)
--------- ---------

Cash flows used in investing activities:
Purchase of property and equipment................... (136) (760)
Increase in other assets............................. (11) (99)
--------- ---------
Net cash used in investing activities............ (147) (859)
--------- ---------

Cash flows from financing activities:
Proceeds from stockholder loans...................... 111 -
Payments of stockholder loans........................ (100) -
Proceeds from issuance of 7% demand note............. - 1,000
Proceeds from sale of redeemable convertible
preferred stock, net................................. 1,312 1,750
--------- ---------
Net cash provided by financing activities........ 1,323 2,750
--------- ---------

Net increase/(decrease) in cash and cash equivalents.......... 1,048 (766)

Cash and cash equivalents, beginning of period................ - 1,048
--------- ---------

Cash and cash equivalents, end of period...................... $ 1,048 $ 282
--------- ---------

Supplemental Disclosure of Noncash Investing and
Financing Activities:
Contribution of loan payable to stockholder to capital $ 32 $ -
========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-21

<PAGE>

AVICENNA SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS

(1) Nature of Operations and Summary of Significant Accounting Policies:

The Company --

Avicenna Systems Corporation (the "Company") was incorporated on
September 20, 1994 to develop Internet technology based systems for
healthcare organizations. Prior to December 15, 1995, the Company
operated as an S Corporation for federal and state income tax purposes.
On December 24, 1996, all of the outstanding equity and indebtedness
(including employee stock options) of the Company were acquired by
Synetic, Inc.

The accompanying financial statements reflect the application of
certain accounting practices as described in this note and elsewhere in
the notes to the financial statements. Financial statements prepared in
conformity with generally accepted accounting principles require the
use of estimates.
Actual results could vary from estimates.

Depreciation --

The Company provides for depreciation by charges to operations in
amounts that allocate the cost of property and equipment on a
straight-line basis over their estimated useful lives of 3 years for
computers and equipment and 5 years for furniture and fixtures.

Loan Payable to Stockholder --

Through December 31, 1994, a stockholder of the Company advanced the
Company approximately $21,000 for operating expenses incurred in 1994.
During 1995, this stockholder advanced the Company an additional amount
of approximately $111,000. These advances were non-interest-bearing.
Upon the closing of the sale of the Series A redeemable convertible
preferred stock, $100,000 of these advances was repaid, and the
remaining balance of approximately $32,000 was contributed to capital.

Research and Development --

The Company has evaluated the establishment of technological
feasibility of its products in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 86, Accounting for the Costs of
Computer Software To Be Sold, Leased or Otherwise Marketed. All costs
in the software development process which are classified as research
and development are expensed as incurred until technological
possibility has been established. The Company defines the technological
feasibility as the completion of a working model. The time period
during which costs could be capitalized from the point of researching
technological feasibility until the time of general product release is
very short, and consequently, the amounts that could be capitalized are
not material to the Company's financial position or results of
operations. Therefore, the Company has charged all such costs to
research and development in the period incurred.

Net Loss Per Share --

Basic and diluted net loss per share is based on the average number of
shares outstanding during the year. Diluted loss per share is the same
as basic as the inclusion of common stock equivalents would be
antidilutive.

Accounting for Stock-Based Compensation --

The Company accounts for its stock-based employee compensation
agreements in accordance with the provisions of Accounting Principles
Board Opinion No. 25.

F-22

<PAGE>

AVICENNA SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS

(2) Income Taxes:

The Company provides for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. Under the liability method specified by
SFAS No. 109, a deferred tax asset or liability is determined based on
the difference between the financial statement and the tax bases of
assets and liabilities, as measured by the enacted tax rates assumed to
be in effect when those differences reverse.

Prior to December 15, 1995 the Company elected to be taxed as an S
Corporation for federal and state income tax purposes.

As of December 23, 1996 the Company had a net operating loss
carryforward of approximately $1.2 million. A full valuation allowance
has been recorded against the Company's deferred tax asset as of
December 23, 1996, as the ultimate realization of this asset is not
assured.

(3) Convertible Demand Notes:

In October 1996, the Company entered into an agreement with the
majority of the holders of the Series A Preferred Stock (the
Purchasers) to sell to the Purchasers, on a pro rata basis and from
time to time over a period of six months, up to $3,000,000 of the
Company's Convertible Demand Notes (the Demand Notes). The interest
rate for each of these notes is 7%. In conjunction with the issuance of
each note, the Company has agreed to issue to each of the Purchasers a
warrant to purchase additional Equity Securities. The aggregate
exercise price of the warrant is equal to 25% of the principal amount
of each note sold to the Purchasers. As of December 23, 1996, the
Company has issued a total of $1,000,000 of Demand Notes with
accompanying warrants. The warrants expire at the earliest to occur of
(i) either the sale of the Company, (ii) the effective date of an
initial public offering of any stock or security of the Company, or
(iii) the third anniversary of the closing date of the Additional Sale.

(4) Redeemable Convertible Preferred Stock:

The Company has 1,066,667 authorized shares of preferred stock, all of
which have been designated as Series A Redeemable Convertible Preferred
Stock (Series A Preferred Stock). The Company has reserved 1,066,667
shares of common stock related to the conversion of Series A Preferred
Stock. On December 15, 1995 the Company sold 450,000 shares of Series A
Preferred Stock for $3.00 per share. The issuance resulted in gross
proceeds to the Company of $1,350,000. The holders of the Series A
Preferred Stock were also given the right to purchase up to an
additional 583,333 shares of Series A Preferred Stock. In February
1996, the Company issued an additional 15,000 shares of Series A
Preferred Stock at $3.00 per share, and in June 1996 the Company issued
an additional 568,334 shares of Series A Preferred Stock at $3.00 per
share. These issuances resulted in gross proceeds to the Company of
approximately $1,750,000. The rights, preferences and privileges of the
holders of the Series A Preferred Stock are as follows:

Dividends --

Each holder of Series A Preferred Stock is entitled to receive, when
and if declared by the Board of Directors, quarterly dividends at the
annual rate of $0.24 per share. These dividends, whether or not earned
or declared, are cumulative. At December 23, 1996, total dividends in
arrears were $240,900.

Conversion --

Each share of Series A Preferred Stock is convertible at any time into
common stock at the exchange rate in effect at the time of the
conversion, currently a one-to-one exchange rate, and is subject to
appropriate adjustments, as defined. In addition, any accumulated
dividends are convertible into common stock at the then current
conversion rate. Conversion is automatic upon the closing of a public
stock offering of

F-23

<PAGE>

AVICENNA SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS

(4) Redeemable Convertible Preferred Stock: (continued)

common stock in which the aggregate proceeds to the Company are at
least $10,000,000 and the price per share is at least $15.00.

Voting --

Each holder of Series A Preferred Stock is entitled to the number of
votes equal to the number of shares of common stock into which such
preferred stock is then currently convertible.

Liquidation --

In the event of liquidation, the holders of the Series A Preferred
Stock are entitled to receive a liquidation preference equal to $3.00
per share plus any amount of declared but unpaid dividends, including
the cumulative dividends. Any remaining assets will be distributed on a
pro rata basis among the holders of common stock, as defined.

Redemption --

The Company is required to offer to redeem, on a pro rata basis, the
shares of Series A Preferred Stock at the rate of 25% per annum
beginning December 31, 2000 and on each succeeding anniversary date
until all shares are redeemed, at the rate of $3.00 per share plus all
declared but unpaid dividends, excluding the cumulative dividends. The
redemption requirement is waived if less than 60% of the holders of
Series A Preferred Stock accept the offer. If the Company has
insufficient funds to redeem the shares at the redemption date, then
the Company is required to use available funds at the end of each
succeeding quarter or quarters to meet redemption requirements.

(5) Stockholder's Deficit:

Restricted Stock Agreement --

The Company's founder and sole common stockholder and the holders of
the Series A Preferred Stock have entered into a restricted stock
agreement whereby the Company has the right to repurchase all of the
founder's common stock unless certain length of employment conditions
are met. The restriction provides that as of December 31, 1995, 25% of
the shares have become unrestricted under the agreement. The lapsing of
the restriction of an additional 25% occurred in June 1996, at the time
of the second closing of the Series A Preferred Stock. The lapsing of
the restriction will continue under the agreement at the rate of 3.125%
per quarter for the next 16 quarters following December 31, 1995,
unless employment is terminated for any reason. The lapsing of the
restriction will accelerate by 75% of unrestricted shares in the event
of a sale or merger of the Company involving a change of more than 50%
of the Company's voting stock or a sale of substantially all of the
Company's assets.

(6) Stock Options:

In 1995, the Company adopted the 1995 Stock Option Plan (the 1995
Plan). Under the 1995 Plan, stock options, consisting of either
incentive stock options or non qualified stock options, may be granted
to directors, officers, employees and consultants of the Company to
purchase shares of the Company's common stock at no less than the fair
market value of the Company's common stock at the grant date. Options
become exercisable at the rate of 25% per year on the anniversary date
of the grant and generally expire 10 years from the date the option is
granted. In the event of (i) a sale or merger of the Company involving
a change of more than 50% of the voting stock, (ii) a sale of
substantially all of the Company's assets, or (iii) a liquidation of
the Company, as defined, unvested options shall be subject to
accelerated vesting. Upon the occurrence of such an event, 75% of all
unvested options shall

F-24

<PAGE>

AVICENNA SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS

(6) Stock Options: (continued)

immediately vest, provided that the Series A Preferred Stockholders
receive a certain minimum rate of return on their investment, as
defined. As of December 23, 1996, the Company had reserved 716,800
shares of common stock for issuance under its 1995 Plan. A summary of
activity under the 1995 Plan is as follows:

Number of Exercise Price
Shares Per Share
--------- --------------

Balance, December 31, 1994 - $ -

Granted 106,176 0.30
------- ---------

Balance, December 31, 1995 106,176 $ 0.30

Granted 566,396 0.30
------- ---------

Balance, December 23, 1996 672,572 $ 0.30
------- --------

Exercisable, December 23, 1996 50,244 $ 0.30
------ --------

The Company has elected to follow APB No. 25 in accounting for its
employee stock options. Accordingly, no compensation cost has been
recognized for its stock option plan. Had compensation costs been based
on the fair value method of SFAS No. 123, the Company's net loss would
have been $(181,000) for the year ended December 31, 1995 and
$(3,580,000) for the period from January 1, 1996 through December 23,
1996 and basic and diluted net loss applicable to common stockholder
would have been $(.48) for the year ended December 31, 1995 and $(9.45)
for the period from January 1, 1996 through December 23, 1996.

The proforma results indicated above are not intended to be indicative
of or a projection of future results.

The fair value of each option grant is estimated on the date of grant
by using the Black-Scholes Option Pricing model using the following
weighted average assumptions: risk free interest rate of 6.5% and an
expected option life (in years) of 5 years.

F-25

<PAGE>

AVICENNA SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS

(7) Commitments:

The Company began conducting its operations in leased facilities in
1996. The operating lease on this facility expires in January 1999.
However, in October 1996, the Company entered into an operating lease
for additional office space, and sublet it's original leased facility
in its entirety at full cost. The new lease expires in July 2001. The
future minimum rental payments are approximately as follows:

Gross Net
Minimum Sublease Minimum
Rental Income Rental
---------- --------- -----------

1997 $ 66,000 $ 50,000 $ 16,000
1998 251,000 54,000 197,000
1999 201,000 4,000 197,000
2000 197,000 - 197,000
2001 197,000 - 197,000
Thereafter 115,000 - 115,000
---------- --------- ---------

$1,027,000 $ 108,000 $ 919,000
---------- --------- ---------

F-26

<PAGE>

================================================================================

CAREINSITE, INC.

Common Stock

--------------
PROSPECTUS
--------------

Merrill Lynch & Co.

, 1999

================================================================================

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

SEC registration fee........................................... $ 17,236
NASD filing fee................................................ 6,700
Nasdaq listing fee............................................. *
Blue Sky fees and expenses..................................... *
Printing and engraving expenses................................ *
Attorneys' fees and expenses................................... *
Accountants' fees and expenses................................. *
Transfer agent's and registrar's fees and expenses............. *
Miscellaneous.................................................. *
---------

Total................................................. *
=========

- ------------------
* To be supplied by amendment

The amounts set forth above are estimates except for the SEC
registration fee and the NASD filing fee.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law provides, in
summary, that directors and officers of Delaware corporations are entitled,
under certain circumstances, to be indemnified against all expenses and
liabilities (including attorney's fees) incurred by them as a result of suits
brought against them in their capacity as a director or officer, if they acted
in good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal action
or proceeding, if they had no reasonable cause to believe their conduct was
unlawful; provided that no indemnification may be made against expenses in
respect of any claim, issue or matter as to which they shall have been adjudged
to be liable to the Company, unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, they are fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper. Any such indemnification may be made by the
Company only as authorized in each specific case upon a determination by the
shareholders or disinterested directors that indemnification is proper because
the indemnities has met the applicable standard of conduct.

Article Six of the registrant's Certificate of Incorporation provides
that no director of the registrant shall be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) in respect of certain unlawful dividend payments or stock redemptions
or purchases; or (iv) for any transaction from which the director derived an
improper personal benefit.

The Company's Certificate of Incorporation and By-Laws provide for
indemnification of its directors and officers to the fullest extent permitted by
Delaware law, as the same may be amended from time to time.

In addition, the Company maintains liability insurance for its
directors and officers.

II-1

<PAGE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following information reflects sales by the registrant of
unregistered securities within the past three years. The issuance by the
registrant of the securities sold in the transactions referenced below were not
registered under the Securities Act of 1933, as amended pursuant to Section 4(2)
thereof, as such transactions did not involve a public offering.

In January 1999, the registrant issued to The Health Information
Network Connection LLC (i) a warrant (the "THINC Warrant") exercisable for
1,298,917 shares of the registrant's common stock (subject to adjustment),
representing approximately 6% of the registrant's common stock outstanding after
giving effect to the exercise of the THINC Warrant and (ii) $1.5 million in
cash, in exchange for a 20% ownership interest in THINC.

In January 1999, the registrant issued to Cerner Corporation (i)
3,980,000 shares of its common stock, representing 19.9% of its common stock
outstanding after such issuance, and (ii) a warrant exercisable for a number of
shares of common stock of the registrant equal to 19.9% of the shares issuable
upon exercise of the THINC Warrant, each in consideration for Cerner Corporation
entering into non-competition, marketing, license and master servicing and
outsourcing agreements with the registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

Exhibit
Number Description of Exhibit
------ ----------------------

1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation of the Registrant.*
3.2 By-laws of the Registrant.*
4.1 Specimen Certificate representing Common Stock.*
5.1 Opinion of Shearman & Sterling as to the legality of the Common Stock.*
10.1 Agreement and Plan of Merger among Synetic, Inc., Synternet Acquisition
Corp., a subsidiary of Synetic, Inc., Avicenna Systems Corp., and the
individuals and entities listed on the signature pages thereof, dated as
of December 23, 1996.*
10.2 Agreement and Plan of Merger among Synetic, Inc., Synternet Acquisition
Corp., CareAgents Inc. and the individuals listed on the signature pages
thereof, dated as of January 23, 1997.*
10.3 Subscription Agreement dated as of January 2, 1999 between Synetic
Healthcare Communications, Inc. ("SHC"), Synetic, Inc., Avicenna Systems
Corporation and Cerner Corporation.*
10.4 License Agreement dated as of January 2, 1999 between SHC and Cerner
Corporation.*
10.5 Stockholders' Agreement, dated as of January 2, 1999,
among SHC, Synetic, Inc., Avicenna Systems
Corporation and Cerner Corporation.*
10.6 Non-Competition Agreement, dated as of January 2, 1999, among SHC,
Synetic, Inc., Avicenna Systems Corporation and Cerner Corporation.+*
10.7 Marketing Agreement, dated as of January 2, 199, between SHC and Cerner
Corporation.+*
10.8 Clinical Transaction Agreement, dated as of January 1, 1999, between SHC
and Empire Blue Cross and Blue Shield, Empire Healthchoice, Inc., Empire
Healthchoice Assurance Inc. and Empire Health Plans Assurance, Inc.+*
10.9 Clinical Transaction Agreement, dated as of January 1, 1999, between SHC
and Group Health Incorporated.+*
10.10 Clinical Transaction Agreement, dated as of January 1, 1999, between SHC
and Health Insurance Plans of Greater New York.+*
10.11 Management Services Agreement, effective as of January 1, 1999, between
SHC and The Health Information Network Connection LLC ("THINC").+*

II-2

<PAGE>

10.12 Warrant dated as of January 1, 1999 (entitling THINC to purchase from
SHC 81,081 shares of common stock).*
10.13 Amended and Restated Operating Agreement, dated as of January 1, 1999,
among The Health Information Network Connection LLC, Empire Blue Cross
and Blue Shield, GNYHA Management Corporation, Group Health
Incorporated, Health Insurance Plan of Greater New York and SHC.+*
10.14 Form of Tax-Sharing Agreement between the Registrant and Synetic, Inc.*
10.15 Form of Services Agreement between the Registrant and Synetic, Inc.*
10.16 CareInsite, Inc. Stock Option Plan.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Shearman & Sterling (included in its opinion in Exhibit 5.1).
23.3 Consent of Kegler, Brown, Hill & Ritter Co., L.P.A.
24.1 Powers of Attorney (included on the signature page of this Registration
Statement).
27.1 Financial Data Schedule for fiscal year ended June 30, 1998 (for SEC
use only).
27.2 Financial Data Schedule for six months ended December 31, 1998 (for
SEC use only).

- -------------------
* To be filed by amendment.
+ Exhibits for which Registrant is seeking confidential treatment for
certain portions.

(b) Financial Statement Schedules.

The schedules have been omitted because of the absence of circumstances
under which they would be required.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

The undersigned registrant hereby undertakes to provide to the
Underwriters at the closing specified in the U.S. Underwriting Agreement and the
International Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

II-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has duly caused this Registration Statement on Form
S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the Borough of Elmwood Park in the State of New Jersey on March 26, 1999.

CAREINSITE, INC.

By: /s/ Paul C. Suthern
-------------------------------
Name: Paul C. Suthern
Title: President and
Chief Executive Officer

POWER OF ATTORNEY

The undersigned Directors and Officers of CareInsite, Inc. hereby
constitute and appoint James R. Love, Charles A. Mele and David C. Amburgey, and
each of them acting singly, as true and lawful attorneys-in-fact for the
undersigned, with full power of substitution and resubstitution, for and in the
name, place and stead of the undersigned, to sign and file with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), any and all amendments (including post-effective amendments)
and exhibits to this Registration Statement, any related registration statement
and its amendments and exhibits filed pursuant to Rule 462(b) under the
Securities Act and any and all applications and other documents to be filed with
the Securities and Exchange Commission pertaining to the registration of the
securities covered hereby or under any related registration statement or any
amendment hereto or thereto, with full power and authority to do and perform
each and every act and thing requisite and necessary or desirable, hereby
ratifying and confirming all that each of such attorneys-in-fact or their
substitutes shall lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

Signature Title Date
--------- ----- ----

/s/ Paul C. Suthern
- ------------------------------- Director and Principal March 26, 1999
Paul C. Suthern Executive Officer

/s/ Paul M. Bernard
- ------------------------------- Principal Financial and March 26, 1999
Paul M. Bernard Accounting Officer

/s/ Roger C. Holstein
- ------------------------------- Director March 26, 1999
Roger C. Holstein

/s/ James R. Love
- ------------------------------- Director March 26, 1999
James R. Love

/s/ David M. Margulies
- ------------------------------- Director March 26, 1999
David M. Margulies

/s/ Charles A. Mele
- ------------------------------- Director March 26, 1999
Charles A. Mele

/s/ Martin J. Wygod
- ------------------------------- Director March 26, 1999
Martin J. Wygod

II-4

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report dated March 17, 1999 related to the consolidated financial statements of
CareInsite, Inc. and our report dated February 22, 1999 related to the financial
statements of Avicenna Systems Corporation included in or made part of this
registration statement and to all references to our Firm included in this
registration statement.

ARTHUR ANDERSEN LLP

Roseland, New Jersey
March 23, 1999

EXHIBIT 23.3

CONSENT OF KEGLER, BROWN, HILL & RITTER CO., L.P.A.

We hereby consent to the reference to our firm made under the caption
"Experts" in the prospectus which forms part of this registration statement.

/s/ Kegler, Brown, Hill & Ritter Co., L.P.A.
--------------------------------------------
Kegler, Brown, Hill & Ritter Co., L.P.A.

Columbus, Ohio
March 22, 1999

<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001082000
<NAME> CareInsite, Inc.
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 315
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,535
<PP&E> 3,878
<DEPRECIATION> 1,025
<TOTAL-ASSETS> 10,833
<CURRENT-LIABILITIES> 1,760
<BONDS> 0
0
0
<COMMON> 160
<OTHER-SE> 7,638
<TOTAL-LIABILITY-AND-EQUITY> 10,833
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,335)
<INCOME-TAX> 0
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<NAME> CareInsite, Inc.
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