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WebMD Health (WBMD)Stock (Internet Industry, Internet Information Providers Industry)
 WebMD owns websites that gives is visitors information on a wide variety of medical conditions, overviews of available treatment options, and general information on lifestyle and preventative care. WebMD provides most of its services for free and makes money by charging other companies, particularly pharmaceutical companies, to advertise on its sites. Healthcare costs have increased an average of 7.6% a year since 2000.[1] [2] This has resulted in a growing effort by employers and healthcare plans to manage expense growth by encouraging plan members to take a greater share of responsibility for managing their own health. For these corporate clients WebMD creates a private version of its web portal. WebMD then stores a detailed health record for each employee and offers customized content on preventative care based on the employee's health profile. It also uses this information to match the employee with the best healthcare plan. WebMD charges both setup and monthly fees for its corporate services. While the company has benefited from growing corporate demand for its products, it also faces growing competition in this area. Both Google (GOOG) [3] and Microsoft (MSFT) [4] have launched their own health services with a particular focus on the corporate market. The companies are targeting health insurance companies in the hopes that the insurance companies offer their own clients medical information and records services. In June of 2008, Microsoft struck a deal with Kaiser to offer Microsoft health record service to Kaiser's 8MM members. [5] WebMD's dependence on advertising (69% of 2007 revenue) also makes it vulnerable to general economic conditions. [6] In Q3 of 2007 a weakening of the U.S. economy caused WebMD to revise their 2008 revenue forecasts downward.
[edit] Company OverviewWebMD has three primary revenue streams: online advertising at its public network of sites, its licensing of private portals and it's small but growing print and publishing group. The company generated $331 million in revenue in 2007 up from $253 million in 2006 on which it earned $214 million in gross profit and $65 million in net income.[9] The company has zero debt. [edit] Public Network of Sites:WebMD's public network includes WebMD.com, rxlist.com, emedicine.com, emedicinehealth.com, and others. These sites offer a variety of health information on diagnosing illnesses, treatment, and wellness advice. [edit] Private Portal licensingWebMD licenses its service to over 82 partners. These portals are licensed to corporations and health insurance providers helping employees and health plan members make more informed decisions about optimal health plans and physician choice. Employees or health insurance customers submit electronic health records into the system and WebMd’s portal will help the user find the optimum health plan, treatment, and physicians for their needs. The portals also help users estimate health care costs for retirement. [edit] PublishingWebMD publishes The Little Blue Book , WebMD The Magazine and a variety of other offerings sent to doctors offices targeting both the consumer and professional health care markets. Publishing is the fastest growing part of WebMD's business. [edit] Trends[edit] Increasing Competition in Digital Health Records MarketThe market for digital health records is becoming increasingly competitive with Google (GOOG) [10] launching Google Health in February 2007 and Microsoft (MSFT) [11] launching Healthvault in September 2007. Digital health record offerings from WebMD, Google Health, and Microsoft Healthvault require participation from the hospitals, health plan companies, and pharmacies. The use and value of WebMD, Google Health, HealthVault or other online health services is correlated to the number and size of the participating health service companies. In June, 08, HealthVault signed on Kaiser Permanente as a partner,[12] and Google Health announced a partnership with Blue Cross/Blue Shield. [13] WebMD has existing partnerships with health care companies and large corporations such as Verizon, Starbucks, and IBM. [edit] A Weakening U.S. Economy and its Effect on WebMD's Online Ad RevenueWebMD sells two primary forms of advertising: text based ads that pop up on searches in WebMd's network, and larger picture based banner ads on the top and sides of the pages.. A growing economy increases the demand (and price) for both types of advertising on WebMD's sites increasing revenue. A weakening economy negatively effects the ad revenue received by WebMD. In Q3 of 2007 WebMD had to reduce its revenue projection for 2008 due to the weakening economy. [14] More information can be found at Impact of Internet Advertising. [edit] Aging Baby Boomersin 2008 people between the ages of 50-65 are most likely to search for health care information online. A lower percentage above 65 use the internet for finding health care information. This discrepancy will decrease as this demographic gets older and move into the over 65 category having already learned and had success using online search for health information. Younger demographics already use online search at a high rate given their lower need and desire for health information. [15] [edit] CompetitionWebMD's public network of sites competes with portals such as yahoo.com, msn.com and aol.com offering health and wellness advice as well as from other niche and specialty health sites. Below is a market analysis of the niche/specialty sites. The market for online health services and digital health records is becoming increasingly competitive with Google (GOOG) [16] launching Google Health in February 2007 and Microsoft (MSFT) [17] launching Healthvault in September 2007. Analytics from compete.com[18]
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