Citing poor market conditions, medical software firm WebMD Corp. has decided not to spin off Porex Holdings Inc., its plastics processing unit.
WebMD announced July 17 that, for now at least, it would keep Fairburn, Ga. -based Porex inside the company. But WebMD said it would continue to look at other ways of disposing of Porex, including through an initial public offering.
WebMD declined to comment beyond the announcement.
WebMD sells software and Internet services to the health-care industry, and acquired Porex in 2000 when it bought Medical Manager Corp., a firm that had been developing its own medical electronic commerce business and also investing in plastics processing firms. WebMD has been trying since then, without success, to sell or dispose of Porex to focus on its core business.
An analyst who follows WebMD, Scott Wieland with W.R. Hambrecht & Co. Inc. in San Francisco, said the company hoped to raise between $250 million and $300 million by selling Porex, but the poor market conditions had lowered those estimates to between $200 million and $250 million.
One plastics industry analyst said a price exceeding $200 million could be high in the current market. Tom Blaige, managing director of Lincoln Partners LLP, said a sale price of between $150 million and $200 million would make the unit more attractive.
Porex generated about $4.8 million in profit for WebMD in the first quarter, according to filings with the Securities and Exchange Commission. The plastics unit had sales of about $120 million in its fiscal year ended June 30, 2001.
WebMD had sales of $706 million in 2001. Its stock, however, is down dramatically from its high of $105 in mid-1999, to about $5 July 18.
Porex includes medical injection molders Point Plastics, in Petaluma, Calif., and KippGroup, in Ontario, Calif., which Medical Manager purchased in 1998 and 1999, respectively.
Porex also makes porous plastics filters. Medical makes up about 70 percent of its business.
