DRKOOP.COM: Running Out of Cash, Barron’s Says
A report in Monday's Barron's magazine predicting that drkoop.com is "close to running out of cash" incited investors' fears, dropping the company's stock to an all-time low, the Austin American- Statesman reports. The report, which sent a "host of other Internet stocks downward," spurred shares in drkoop.com to close on Monday at $7.06 -- a 16% decline. Noting that the company has just three months worth of cash on hand, Barron's analysis ranked drkoop.com's "burn rate" seventh among the 207 Internet firms surveyed. Executives at drkoop.com, however, indicated that the findings were "no news." Through a spokesperson, drkoop.com CEO Donald Hackett said, "On the Internet as such, you've got to spend money to make money. It's the nature of the beast." He also noted that the report failed to consider the $50 million of backlog revenue that the company expects to secure in future quarters from advertising, sponsorships and content licensing. The company, which raised $84.4 million in its June IPO, reported having $35 million in cash at the end of the year. In recent months, the Austin American-Statesman reports that drkoop.com has been "upstaged" by both Healtheon/WebMD, which has "gobbled up smaller Internet health companies in an attempt to become the industry's biggest force," and OnHealth, which is currently the top health-related Web site (Park, 3/21).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.