E-HEALTH: Explosive Success Wins Wall Street’s Interest
Yahoo! Inc. announced Wednesday a contract with Healtheon Corp. to carry its medicine and health information over the Web, Reuters reports. Healtheon, which will be an "integrated presence on Yahoo's health pages (health.yahoo.com), will advertise and promote its wares throughout Yahoo! properties (Los Angeles Times, 6/23).
Investors are closely watching the multibillion-dollar merger pending between WebMD Inc. and Healtheon Corp., which some say is an overhyped promise "to deliver goods and services" as well as turn a profit, the Atlanta Journal-Constitution reports. In just one year, WebMD has logged tremendous growth and now boasts a board of prestigious trustees, a seasoned management team and Microsoft's interest in investing $250 million. Once merged with Healtheon, WebMD will be worth $6 billion -- an amount comparable to Atlanta-based Delta Air Lines. However, while Delta raked in $14 billion last year, WebMD brought in a mere $408,000 and ended the year with a $23 million loss. At one time planning to sell services to doctors, the company has since switched strategy to emphasize "consumers and advertising as a revenue source," leaving critics to allege, "Gravity will have its way." Jupiter Communications analyst David Restrepo concluded, "WebMD has a lot of competition. The WebMD-Healtheon merger was really the kick-off of the hype about the sector. It's going to be a while until we can assess that hype" (Kanell, 6/23).
Getting in on the Act
Sensing a good thing, Pleasantville, NY-based Reader's Digest Association plans to co-develop a Web site with WebMD Inc., as well as to invest $13 million in the company, the Baltimore Sun reports. Reader's Digest's site "will feature health care articles, products and services and a question-and- answer column run by WebMD" (6/24).
Looking Over Its Shoulder
WebMD may need to keep an eye, however, on drkoop.com, which was ranked the number one dedicated healthcare Web site for both April and May, according to Media Metrix. Drkoop.com logged more visitors in April and May than any other health care site in the news/information/entertainment category, totaling 1.4 million visits, or 2.3% of all Internet users -- a sum nearly double the "number of visitors attributed to any other dedicated healthcare site." Drkoop.com was the only health care site named to the PC Data Top 100 web sites of May. It ranked number 72 based on unique users from the U.S. and Canada, with a reach of 4.4%. "The mission of drkoop.com is to empower people to take charge of their health via the Internet, and these numbers indicate our success," said Donald Hackett, president and CEO, adding, "This reinforces our view that consumers want and need trusted health care information to empower them to take charge of their health" (drkoop.com release, 6/23).