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Michael Burry

Healtheon/WebMD
NASDAQ:HLTH
2000-2005
Industry: Healthcare Software
Category:

Context
Healtheon/WedMD shares are bouncing along it's yearly lows, off 85% it's high at roughly $12/sh.

Why the Company was Mispriced
Healtheon is not profitable, burning through 200m a year.
It is also a serial acquirer, acquiring a ridiculous amount of businesses in a short time period (Quintile's Envoy EDI, Carelnsite, OnHealth, MedE America, MedCast, Kinetra, and Medical Manager).

Alternative View
Technology stocks are in a trough, attracting Burry's contrarian nature.
Healtheon has no earnings, but it has a margin of safety in Burry's framework.
This is a best-of-breed company, with competitors going bankrupt, and 1.1b in cash and no debt.
Healtheon/WebMD is best positioned to bringing physicians online and drive efficiencies in the 250b US health care system.
Based on the company's burn rate, it has 4.5 years to work things out.
The company will start with 900m in revenue, growing at over 200%.
Sequential revenue growth is up 68% and margins will improve with higher sales.
The market capitalization of the company is 4b, half of what it cost to put all the companies together.

Yes, the company as no proven ability to turn a profit, and Burry is no fan of co-CEOs.
Moreover, one has to be wary of integration challenges after an acquisiton, the seller always knows the business better than the buyer.
Still the company has the human and financial capital to build a successful operation.

Result
Burry's sell date is unknown.
Furthermore, I couldn't find a price chart from pre-2005.
The share price historically has been very volatile, being at $25 in 2005 and $70 in 2007.
The company was acquired in 2017 but KKR for $66.50/sh (a 10% CAGR from Burry's $12/sh).
Assuming Burry held and sold in 2005 at a share price of $25, this would imply roughly a 15% CAGR.