WebMD aims to bolster government business

Healthcare IT provider WebMD Corp. strengthened its government business yesterday when it signed a definitive agreement to buy software developer ViPS Inc. for $160 million, the company said.

The all-cash deal includes certain assumed liabilities and will be subject to post-closing adjustments. The acquisition is expected to close within 30 days.

Based in Baltimore, ViPS is a privately held company, which provides healthcare management applications and consulting services to the government, Blue Cross Blue Shield and commercial healthcare payers. Its government solutions group provides technology services and project personnel to federal and state agencies, including the Centers for Medicare and Medicaid Services, and to agency contractors. It employs 400 people and had 2003 revenue of $58.3 million, according to Hoover's Online.

The acquisition will strengthen WebMD's capabilities in the government space, said Jenny Morgan, president and chief executive of ViPS.

WebMD's acquisition of ViPS is the latest in a string of deals. In April, it acquired Dakota Imaging Inc., a Columbia, Md., provider of automated healthcare claims processing technology and business process outsourcing services. WebMD paid approximately $40 million in cash and agreed to pay an additional $25 million in cash over a three-year period beginning in April 2005 if certain conditions are met.

In early 2003, WebMD paid $2 million for the Internet portal resources of Physicians' Online LLC, a subsidiary of Andrx Corp. of Davie, Fla. In December 2003, it bought Medifax-EDI Inc., a Nashville provider of healthcare transactions services and claims management solutions for $28 million.

Based in Elmwood Park, N.J., WebMD provides a range of online health information services and healthcare management applications. The company had more than 5,600 employees at the end of 2003. It reported 2003 revenue of $964 million and a net loss of $17 million.

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