WebMD to Purchase Dakota Imaging

April 6, 2004

WebMD Corporation announced that it has entered into a definitive agreement to acquire Dakota Imaging Inc., a privately held provider of automated healthcare claims processing technology and Business Process Outsourcing (BPO) services.

Dakota’s scalable software and BPO services provide automation for mailroom, document processing, scanning, data capture, advanced data scrubbing, automated workflow and on-line secure document management. Dakota’s solutions reportedly reduce costly manual processing of healthcare documents and increase auto-adjudication and auto-payment of medical claims through advanced data scrubbing.

Through its technology, Dakota can provide a domestic outsourcing solution as an alternative to most competitors’ offshore services.

The acquisition of Dakota reportedly strengthens WebMD’s position as a single-source vendor of all-payer, all-transaction service offerings to the healthcare marketplace.

With the acquisition of Dakota, WebMD becomes a major supplier of paper, electronic and web based medical transaction processing solutions for both commercial and government payers.

WebMD has agreed to pay $40 million in cash at closing and has agreed to pay up to an additional $25 million in cash over a three year period beginning in April 2005 if certain milestones are achieved. The transaction is subject to Dakota shareholder approval and other customary closing conditions and is expected to be completed in April 2004.

For the 12 months ended Dec. 31, 2003, Dakota recorded revenues of approximately $17.5 million, and earnings before interest, taxes, depreciation and amortization of approximately $2.8 million. Dakota’s customer base currently includes 24 of the 41 BlueCross and/or BlueShield plans in the U.S. as well as Medicare claims processors in 21 states.

Dakota’s financial advisor in the transaction was England & Company.

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