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MEDICAL MANAGER-CAREINSITE-HEALTHEON/WEBMD INVESTOR CALL SCRIPT
MONDAY FEBRUARY 14, 2000
JOHN RUNNINGEN:
Good morning. Thank you operator. Before we begin this morning, I would like to
briefly comment on forward-looking statements you may hear during this call.
Other than historical information set forth herein, this announcement contains
and this conference call may contain forward-looking statements that involve
risks and uncertainties, including those relating to the ability of
Healtheon/WebMD, Medical Manager and CareInsite's services to decrease costs and
improve patient care. Actual results could be materially different from those
discussed in this announcement. Factors that could cause actual results to
differ include, among others, the limited operating history of the three
companies, continued growth in the use of the Internet and acceptance of the
Internet as a secure medium over which to conduct transactions. Additional risks
associated with the companies' business can be found in their recent
registration statements and other periodic filings with the SEC.
Also, this conference call will be available for replay at 1-888-203-1112, pass
code 903755. Let me repeat that the replay number is 1-888-203-1112, pass code
903755, and it will be available through 8:00 PM on Feb. 21st.
I would also like to mention that Healtheon/WebMD plans to release earnings by
the end of February, upon completion of our annual audit, which is more complex
this year because of the purchase accounting of our three mergers which closed
in November. As a result, today we can only respond to questions about this
transaction and not the fourth quarter or year-end results. We will notify you
when a specific date and time has been set. But for today please confine your
questions to this transaction and its relation to the company's long-term
strategies.
I'd now like to turn the conference over to Mike Long, Chairman & Chief
Operating Officer of Healtheon/WebMD.
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MIKE LONG:
Thank you John. Joining me on the call today are:
- - Marty Wygod, founder and chairman of Medical Manager and Care InSite
- - Jeff Arnold, CEO of Healtheon/WebMD
The plan on this call is for me to outline the terms of the deal, Marty will
review the synergies of the combined companies and Jeff will highlight our
vision for Healtheon/WebMD after completion of the acquisition. We will then
open it up to Q&A for the balance of the hour.
So, let me begin by saying how extremely excited we are on behalf of
Healtheon/WebMD to announce the acquisition of Medical Manager and Care InSite.
As most of you know, our companies have taken two different, yet complementary,
approaches to making the health care industry more efficient. Healtheon/WebMD
has been focused on improving connectivity with administrative transactions
through WebMD Practice and on increasing access to information for consumers
through our websiteWebMD.com. Medical Manager and CareInsite have a strong focus
on physicians office workflow, including clinical decision-making and
interaction between MDs and payers. These two complementary approaches create a
strong offering that will provide tangible benefits to all components of the
healthcare industry.
I know you all want the details so let me briefly highlight the key deal points
of the transactions:
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As most of you know, Care InSite is a publicly traded subsidiary of Medical
Manager which currently holds approximately 68% of the fully converted shares of
Care InSite.
- - Healtheon/WebMD will acquire the outstanding stock of Medical Manager and
the CareInsite stock that Medical Manager doesn't already own, for
approximately 95 million shares of its stock.
- - The exchange ratio will be 1.65 shares of H/W's stock for each share of
Medical Manager
For Care InSite, the exchange ratio will be 1.30 shares of H/W's stock for each
share of Care InSite.
- - Primary shares outstanding after the deal closes, will be roughly 332
million shares.
For reference
only
<TABLE>
<CAPTION>
HEALTHEON| ISSUED TO
WEBMD MD MGR & COMBINED
CURRENT(1) CAREINSITE PRO FORMA
---------- ---------- ---------
<S> <C> <C> <C>
Primary Shares 237 95 332
Options and Warrants 67 43 110
---- ---- ---
Fully-Converted Shares 304 138 442
Fully-Converted Ownership of NEWCO 68.9% 31.1%
</TABLE>
- - There is no cash involved in the transaction, but let me say that the cash
position of the combined companies exceeds $1.5 billion today.
The transaction is subject to regulatory and shareholder the approval.
We expect this acquisition to close by mid-year.
Well, those are the basic deal terms that we believe are beneficial to all
concerned. But we have another reason to be excited. This combination brings
together a senior management team that we look forward to working with. Our
management teams have complementary skills and a mutual history of innovation in
both the Internet and health services industries. The addition of Marty Wygod,
Marv Rich and Mickey Singer to the team brings extraordinary depth to our
organization. These are health care executives
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with track records of leadership and success in execution. Marty virtually
invented the PBM industry. Marv re-engineered the managed care industry, and
Mickey created a physician office automation business that is second to none.
That's why I am delighted that Marty Wygod will join me as co-chairman of the
company and Jeff Arnold will remain CEO of Healtheon/WebMD, while Mickey Singer
will continue as CEO of Medical Manager Health Systems. Including Marty, three
Medical Manager directors will join our Board of Directors.
So, that's what we are doing. But let me discuss why we are doing this. The
combination of the product and service offerings will empower, and Internet
enable, all of the important constituencies in healthcare. CareInsite has a
robust clinical product offering which will enhance the suite of services
offered through WebMD Practice. Medical Manager is the trusted partner and de
facto IT department to 185,000 physicians nationwide, including the pending
acquisition of PCN. Taking advantage of the innovative tools, robust content and
broad connectivity that Healtheon/WebMD brings to the table, we expect to
rapidly launch an enhanced and fully integrated set of services to Medical
Manager's physicians. By doing so, we should accelerate the migration of these
physicians to an Internet platform that can handle all of the various
transactions necessary to run their practice.
With that said, I would now like to turn the call over to Marty .
MARTY WYGOD:
Thanks Mike. I agree with you that the strengths of the combined companies will
enable us to be a very positive force in this industry.
There are over 20,000 web sites competing to reach physician and consumers
today. Our desire is to unite, not further fragment the healthcare system.
Working together we can eliminate the fragmentation that characterizes the
current healthcare environment, by unifying physicians, patients and health
plans. By ensuring that consumers and physicians have access to the information
they need to make informed care decisions - we can help
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our business partners - health plans, hospitals, pharmacies and labs, lower
their operating costs, and improve the quality of care delivered.
We too believe that Medical Manager's base of physicians will be advantaged by
the enhanced Web-based portal and transaction services we will be introducing
together. We believe our expertise in the practice management system industry
should help accelerate Healtheon/WebMD's own efforts to integrate their services
with other practice management system partners.
Importantly, we also believe that this merger will enable us to provide our
health plan partners with an unparalleled opportunity to execute their web
strategies and help them build relationships with their members and physicians.
Together, we can bring them the content, technology, distribution and
connectivity that would be too costly to develop on their own.
And now, I'd like to turn the call over to Jeff Arnold.
JEFF ARNOLD:
Thanks, Marty. First let me say I have always admired Marty's reputation in the
healthcare industry and his proven success in building value for shareholders,
and I look forward to gaining the benefit of his experience and insights.
We are very excited about what this deal represents in helping realize our
vision of connecting and empowering consumers and physicians and all
participants in healthcare to fundamentally improve healthcare, to make it more
affordable, convenient and accessible.
Let's look at what we've accomplished. Our CVS relationship, our acquisition of
Kinetra, our relationships with IDX, Medic and Infocure, our relationship with
Humana, HealthSouth and Medtronics, our pending acquisition of Envoy and our
relationship with NewsCorp are a few of the recent partnerships that have helped
establish
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Healtheon/WebMD as the leading brand in healthcare on the internet.
In fact, we have assembled a comprehensive combination of partnerships, content,
e-commerce and B2B services, combined with the broadest distribution, both
on-line through our exclusive relationships with Excite, Lycos, MSN, and others,
and offline with Readers Digest, CNN, and News Corp. These all complement our
extensive and unequaled array of partnerships with healthcare and technology
industry leaders, such as Microsoft, DuPont, UnitedHealth Group,
SmithKlineBecham, Dell, Tenet and many others.
And lets look at the results. Today, we have over 3.8 million unique consumers
visiting our web site every month producing 56 million page views per month; we
have 800,000 enrolled in our on-line communities, and are the fastest growing
site in healthcare. With our recently announced acquisitions, we will reach over
400,000 physicians, 4,000 hospitals, 50,000 pharmacies, 900 payers, providing
100% payer connectivity in 42 states, and with all major national labs. We will
process more than 2 billion healthcare transactions per year.
Two years ago we were a pioneer in bringing healthcare to the internet. Today,
we are a market leader, transforming the way individuals will access and receive
healthcare services. With these mergers, we are well-positioned to succeed in
executing our business model and realizing our vision, with over 5,000 employees
and 1.5 billion in cash. We have robust revenue growth from multiple recurring
sources.
Let's look at how the combination of Healtheon/WebMD, CareInsite and Medical
Manager helps us execute our strategy of creating world-class partnerships,
building quality content, providing connectivity, creating distribution
relationships and building the WebMD brand.
Medical Manager is a leading provider of practice management systems in the U.S.
and provides us with access and distribution to 185,000 physicians in 33,000
sites, including the pending acquisition of PCN, leveraging
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an existing sales force of 2,500 people. This will accelerate our ability to
drive physician adoption, and grow our transaction volumes significantly.
CareInsite has developed web-based services, which enable physicians to perform
clinical transactions, such as ordering lab tests and prescriptions, aided by
patient-specific information and best-practice guidelines that help them render
more appropriate and affordable care. CareInsite's functionality and tight
integration with the Medical Manager, when combined with Healtheon/WebMD's
physician portal, which provides comprehensive content, e-commerce, transactions
and extensive connectivity to healthcare institutions, will result in an
offering of value to physicians, payers, labs and pharmacies.
For example, physicians will be able to interact online with payers to confirm
patient eligibility, process referrals and claims in a more timely manner. This
will reduce costs, frustration, red tape and waste. They will also be able to
obtain clinical information about their patients, order lab tests and check
results, as well as order and renew prescriptions - these features will all be
supported by up-to-date information and best practice guidelines that help them
make better decisions and deliver more appropriate and higher quality care.
In addition, the merger will give us technology to enable consumers to interact
with their health plan and physician for convenient access to healthcare
services and information. These services will greatly enhance Healtheon/WebMD's
consumer portal, which today provides industry-leading content, healthcare news,
communities, e-commerce and consumer-to-business transactions; the result is
outstanding and unequaled value to consumers.
For example, consumers will be able to schedule appointments with their
physician, request medication refills, check their benefits and the status of
claims, and obtain and manage their own medical information.
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Another benefit from this transaction, is in the people who will join
Healtheon/WebMD. We welcome extensive clinical, physician practice and office
workflow expertise, along with their deployment resources and seasoned
operations capabilities. These will enable us to manage our growing business
most efficiently as we focus on execution.
Healtheon/WebMD is transforming healthcare, by empowering consumers to become
informed and engaged in their own health, by enabling physicians to deliver
higher quality care with greater efficiency, by bringing all participants in the
healthcare industry together to reduce the fragmentation, drive out waste and
make healthcare more accessible, convenient and affordable for everyone.
We are excited about this transaction with CareInsite and Medical Manager and
how it will accelerate our ability to execute our business model and realize our
vision for healthcare.
ANALYST Q & A FOLLOWS
After Questions (conclusion is turned over to Jeff):
JEFF ARNOLD:
Thank you all for your comments and questions. We believe that today we've
announced a watershed transaction that has important strategic and financial
benefits for all parties as well as for the healthcare system. Over the weeks
and months ahead, we look forward to demonstrating the measurable results that
you have come to expect from us. Thank you again. We appreciate your interest
in Healtheon/WebMD, Medical Manager and CareInsite.
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