DRKOOP.COM: Investor Group Adds $7.5M to $20M Infusion
The investor group that recently pumped $20 million into financially ailing drkoop.com last week expanded its allocation by $7.5 million, the Wall Street Journal reports. The investor group consists of venture-capital firms such as Prime Ventures LLC, ComVest Venture Partners and Eco Associates. Richard Rosenblatt, the new CEO of drkoop.com Inc., said that the funds should keep the Web site operating for at least 18 months (8/29). But, in an interview with the Los Angeles Times, Rosenblatt said that the 18-month estimate does not take into account changes the management team has planned and added that he "clearly expect[s] that the company is not going to run out of capital in 18 months." Rosenblatt explained that drkoop.com's "problem" was that it "made a lot of very bad deals and the company was not run like a business. They got caught up in: Spend as much money as you can, ... don't worry about any financial ramifications and Wall Street will applaud you" (Dunn, 9/4). Part of the management team's turnaround strategy is to focus on selling more ads and providing content to other companies for a fee (USA Today, 8/29). Other planned changes include appointing five new members to the company's board of directors and expanding the company's customer base (drkoop.com release, 8/28). But one of the largest changes is a new cost-cutting plan that will lay off 42 of the company's employees, about one-third of its work force. Recently appointed drkoop.com President Ed Cespedes said that the layoffs were "not easy decisions," but added that the company needs to "move forward" and boost shareholder value (Godinez, Dallas Morning News, 8/31). The recent layoffs mark the second time drkoop.com has cut jobs in three months; in May the company laid off 30 employees (AP/Baltimore Sun, 8/31).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.