Last month Emdeon put together a pretty decent IPO for its Web MD Health spin-off. Wall Street liked what it heard about the company's potential in the consumer health segment. But on Saturday the Associated Press ran a long investigative story on the company--the kind CEOs have nightmares about. It detailed an ongoing Justice Department investigation into the company and parent Emdeon (which changed its name from WebMD last month) surrounding accounting questions at Medical Manager, a practice management software vendor which WebMD bought in 2000, and payment from chairman Martin Wygod to the company for services that the company provided for him.
The AP article is a little strange, given that the Medical Manager accounting story is old news. Emdeon responded that the Medical Manager investigation involved a time period before WebMD bought it and that Wygod was reimbursing the company for travel and staff expenses that most CEOs get for free.