ViPS software of Towson sold for $160 million

Buyer WebMD is similar vendor of health services

No firings expected here

July 13, 2004|By M. William Salganik | M. William Salganik,SUN STAFF

ViPS Inc., a Towson health software firm, is being sold to WebMD Corp. for $160 million, the New Jersey firm announced yesterday.

While WebMD said it could not discuss its plans in detail until the deal closes, the sale is expected to have minimal impact on privately held ViPS' management and its nearly 400 employees.

The purchase is expected take 30 days, including an antitrust review.

The acquisition would join two companies in the business of processing and analyzing medical claims for insurers and doctors.

"Part of the reason we wanted to acquire ViPS was its very seasoned management team," said Jennifer Meyer, a WebMD spokeswoman. "We look forward to bringing ViPS into the WebMD fold."

The acquisition is not a huge one for WebMD - the acquirer had $964 million in revenue in 2003, compared with $59 million for ViPS - but is "their most strategically important acquisition to date," said Ryan T. Stewart, an analyst for Piper Jaffray & Co. in New York.

ViPS' strong reputation with those who pay for health care services - private insurers, Blue Cross plans and government health agencies - will help with WebMD's strategy of "trying to make itself as relevant as possible to the payer community," Stewart said.

Since ViPS provides consulting services to payers as well as software, he continued, "ViPS has got boots on the ground walking the hallways of the payer."

Consulting and marketing to private insurers are relatively new areas for ViPS.

The company, launched in 1979 as Viable Information Processing Systems, exclusively produced software to process Medicare claims.

The founder, Wilson T. Gildea, had worked as a software developer for the federal agency that runs Medicare. He started his own company after Medicare began to buy software rather than writing its own.

Gildea sold the company in 1993 and retired in 1997. At that point, products related to government programs still represented most of the company's revenue, then $24.5 million.

Jenny G. Morgan, who came to the company as a programmer in 1984, became chief executive officer and began expanding ViPS business lines, developing fraud-detection and other analysis tools for private insurers.

In 1998, ViPS huge owner, First Data Corp., which ran Western Union and TeleCheck, sold it off, and it became a freestanding company with management remaining in place.

Most of its employees work at the Towson headquarters. A biotech division, acquired last year, is in Exton, Pa.

WebMD of Elmwood Park, N.J., was founded in 1996, and launched a health information Web site in 1999, the year it became a public company.

At the height of the dot-com mania that year, its share price briefly topped $100, but quickly plummeted. (Its shares closed yesterday at $8.59, up a penny.)

The company reshaped itself through acquisitions. Now 60 percent of its revenue comes from its transactions unit and only about 12 percent from providing health information on the Web to consumers and physicians, said Stewart, the Piper Jaffray analyst.

The company, which expanded through acquiring a number of health data companies, now processes, records of 2 1/2 billion medical transactions a year, said Meyer of WebMD.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.