DRKOOP.COM: Internet Health Company Ails from Heavy Losses
Following months of speculation and warnings about its dire financial situation, the cash-strapped drkoop.com Inc. this week received a grim diagnosis after it reported losses of $24.8 million in the first quarter this year -- marking the first time that sales of advertising and health products fell off from the previous quarter, the Austin American-Statesman reports. The loss, fueled by forebodings from the company's auditors and its plummeting stock price, was about 50% more than Wall Street analysts had predicted. "It's not an indictment of the Internet sector; it's more an indictment of the business model. It was always going to be hard to make money based purely on advertising," analyst Mark Mulcahay said. According to drkoop.com officials, who admitted ad sales have been "disappointing," the Austin-based Internet health company has enough operating cash to last until August and will seek a major investor to save it (Park, 5/16).
A Potential Savior?
Although drkoop.com continues to struggle, help may arrive in the form of Drug Emporium Inc., an Ohio-based drugstore retailer, the Wall Street Journal reports. David Kriegel, chairman and CEO of the company, said talks are taking place about a possible merger or partnership with Emporium's unprofitable Web site subsidiary, DrugEmporium.com. While a spokesperson for drkoop.com declined to comment, a source close to the situation said that "talks have occurred in recent weeks, but ... no deal is imminent" (Spurgeon/Carrns, 5/16). Drkoop.com employees received an e-mail from the company chief operating officer warning them to "expect more rumors to emerge" during the next few weeks regarding potential investors and buyers (Park, Austin American-Statesman, 5/17).