WebMD Health (WBMD) Exploring WebMD/Medscape Split, In Addition to Outright Sale

In February, WebMD Health (NASDAQ: WBMD) announced it hired J.P. Morgan to explore strategic alternatives, including a sale of the company. While the company is continuing to look for a buyer, it is also exploring a split of WebMD/Medscape. Some options under such a scenario would be for the company to sell Medscape or spin it off as an IPO.

On last night's quarterly earnings call, when asked about a potential WedMB/Medscape split, the CFO said: "And then the last point, relative to the separation, there are some costs that are clearly leveraged across the business, which is why we don't break out the EBITDA separately, but we've been working closely with JPMorgan as part of our strategic review, and we're looking at all the alternatives there."

Medscape is a web resource for physicians and health professionals, while WebMD is a consumer-facing web portal for health and medical news.

Cowen analyst, Charles Rhyee, who asked about a potential split on the call, said breaking up the business could make a sale easier.

"We think there would be clear interest in Medscape given the reach it has with physicians, which we think was further bolstered by management's comments that its financial adviser was looking at options for dis-aggregating the business," he commented in a note to clients this morning.

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