Health information provider WebMD Health Corp. (WBMD) said Monday morning that it has struck a deal with activist investor Carl Icahn and certain of his affiliates to repurchase shares of the company that they hold. WebMD will use cash on hand to pay $32.08 per share, which was the closing price on Friday of WBMD, to buy back 5.5 million shares from Icahn and company for an aggregate transaction of $177.3 million. In September Icahn’s group held approximately a 12 percent stake in WebMD, down from a 13 percent stake in June.
New York-based WebMD expects to complete the deal today.
The transaction with Icahn is outside of the existing share repurchase plan approved by WebMD’s board. That plan still has about $54 million in repurchases available. Including the latest buy-back, the company will have repurchased approximately 10.8 million shares of its stock and $148 million principal amount of convertible notes outstanding in less than three months.
"Our decision to repurchase these shares reflects our belief that, as the healthcare landscape continues to evolve, the combination of WebMD's trusted brand, industry-leading scale, high-quality consumer and professional audiences and customer relationships provides us with a strong foundation to deliver long-term growth," said David Schlanger, chief executive at WebMD, in a statement today.
WebMD will have roughly 40.4 million shares outstanding after the transaction. After the buyback, WebMD expects to have about $550 million in cash and cash equivalents and $652 million in convertible notes outstanding.
Shares of WBMD have been uptrending for nearly one year now after finding a low of $13.13 last November.
The company drives revenue by providing information to consumers, physicians, health plans and more through its public and private online portals and mobile apps. Its websites include its flagship brand as well as Medscape, MedicineNet, eMedicineHealth, RxList, Medscape Education and theheart.org. After implementing a restructuring plan late in 2012, including corporate job cuts, WebMD swung its first quarterly profit in the second quarter after five straight quarterly losses.
During the quarter ended June 30, WebMD posted revenue of $125.3 million, up from $112.7 million in the year prior quarter. Net income was $2.6 million, or 5 cents per share, versus a net loss of $5.6 million, or 11 cents per share, in the second quarter of 2012. The company also affirmed its full-year guidance, expecting revenue of $485 million to $505 million (up 3% - 7% from 2012) and net income in the range of $3 million to $11 million. In 2012, WebMD recorded a net loss of $20.3 million.
Shares of WBMD are trading ahead by 2 percent just after Monday’s opening bell and have more than doubled so far in 2013.
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