Updated from 11:00 a.m. EST

Healtheon/WebMD

(HLTH)

has agreed to buy rival online health care company

OnHealth Network

(ONHN)

for $265 million.

Shareholders of OnHealth stock will receive 0.189435 share of Healtheon stock for each share of OnHealth stock. That's a 31% premium to OnHealth's closing price Tuesday of 9 15/16, according to Healtheon's closing price of 68 7/8.

The deal is expected to close in the second quarter.

"We believe that this acquisition will increase the direction of consumers to one single portal," said Jeff Arnold, chief executive of Healtheon/WebMD. "We will quickly enhance the breadth and depth of our consumer offerings with OnHealth's quality, original content and tools."

The two companies hope to combine their content, advertising and sponsorship programs.

"They will have access to a whole new base of customers," said analyst Caren Taylor of

E*Offering

. "The more consumers they have, the more they can charge for advertising." She does not officially cover Healtheon.

She added, "They'll also be assembling a critical mass of consumers to roll their services out to." Those services include the automation of every transaction related to an individual getting ill -- checking patient eligibility, processing insurance claims, prescribing medicine and delivering drugs, among others.

The purchase is the latest in a string of acquisitions by the company. Just Monday Healtheon announced its

intention to buy

Medical Manager

(MMGR)

and its publicly traded subsidiary

CareInsite

(CARI)

for about $4.8 billion in stock.

At the beginning of the month, Healtheon completed its $300 million

acquisition of

Kinetra

, which provides e-commerce services to physician. And last month, it said it was

buying

Envoy

, which specializes in electronic transactions of health care industry data and billing, for about $2.5 billion.

The question here is not one of cash. After all, these are all stock deals, and in addition to not having any debt, Healtheon is sitting atop $1.5 billion in cash. The real concern is that "at some point, they are going to have to stop assembling different pieces of real estate and integrate them and make them grow," said Taylor.

"They haven't begun to integrate any of these companies, which is a big task," she added. "And every time they buy another piece it increases the integration and execution risk." In fact, those risks are further increased when investors take into account that the integration of

Healtheon

,

WebMD

,

Mede America

and

Medcast

that formed Healtheon/WebMD, though completed in November, is still ongoing.

Shares of Atlanta-based Healtheon were down 1 3/16, or 2%, to 67 7/16. Meanwhile, shares of Seattle-based OnHealth were up 1 11/16, or 14%, to 11 5/16 in midday Wednesday trading. That's below the 13.04 Healtheon offered, which may suggest that the market is not convinced the deal will happen. "It could be a function of Healtheon having a lot on its plate," Taylor commented. (Healtheon closed down 3/4, or 1.09%, at 67 7/8. OnHealth closed up 1 15/32, or 14.7%, at 11 7/16.)