Neoforma.com saves Novation deal

Healthcare Purchasing News, July, 2000

E-commerce procurement company Neoforma.com laid off 80 employees -- roughly 15% of its work force -- after dissolving its planned acquisition of Eclipsys Corp. and affiliate HealthVision Inc., Irving, TX, in late May.

The prominent dot-coin, however, managed to salvage a 10-year contract to provide e-commerce services to Novation, the largest group purchasing organization in the country. To consummate that deal, however, Novation's stake in Neoforma.com rose to 450/0, with warrants that could take it to 55% in four years, pending purchasing levels.

When the proposed deal was first announced in March, Novation was in line to receive only 30% of the e-commerce company. But just as technology stocks overall were experiencing a big drop, investors reacted negatively to Neoforma.com's proposed purchase of Eclipsys, a Delray Beach, FL-based software maker, and both companies' stock values plummeted, forcing a restructuring.

A Novation spokesman said a Neoforma-Novation agreement was never in doubt.

With Neoforma.com's proposed $2.7 billion Eclipsys deal negated, the companies will still form strategic marketing and distribution agreements with HealthVision.

Neoforma.com said the job cuts will help the company focus on healthcare delivery networks and doctors' offices.