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Time to Buy WebMD

Posted on Friday, Apr 4th 2008

WebMD (WBMD), ranked by Time as one of the 25 sites we can’t live without, rated by Forbes as the best of online health information portal and recognized by Trustee as one of the top 20 most trusted companies on the web, announced their Q4 financials and their merger with HLTH Corporation in February.

Q4 revenues of $96.6 million were 22% higher than previous year revenue and a tad lower than market expectations of $97.1 million. Their EPS recorded a substantial 126% increase to $0.34 from $0.15 earned the previous year. EPS also beat market expectations of $0.28.

Segment wise, 73% of their revenue came from Advertising and sponsorship. Private portal licensing brought in 22% and the balance 5% was earned from publishing and other sources.

For the year, they clocked revenues of $332 million, representing a 31% increase over previous year revenue of $254 million. For the year, revenues were short of market expectations of $336 million. Their annual earnings stood at $0.64, substantially higher than $0.08 of the year before. Analysts were expecting earnings of $0.58.

WebMD’s reach can be gauged by the fact that during the quarter, they recorded an increase of 26% in unique users per month to reach 44.8 million users. They reach one in every two U.S. adults, three of every four women, and 95% of all adults seeking health information online.

Their vast viewership is thanks to their new portal technology platform which has helped increase their search engine optimization, and their ability for their articles to be ranked higher in natural search results. Their content ranks on the first pages of Google and Yahoo for 50% of frequently searched health terms.

Their partnerships with organizations like Medcenter have helped them expand their Medscape brand of health information into Spanish and Portugese speaking nations. I had mentioned in my Web 3.0 analysis of the online health industry, how “niche positioning, premium and highly targeted content and strong demand” will lead to revenues for health portals. WebMD is a living and breathing example of that.

With products such as their private health care portals, drug search and symptom checker tool they tackle the niche positioning. Their quality content takes care of both online and offline competing media. Their interfaces with hospitals, physicians, pharmacy labs help them retain satisfied customers. I stand by what I said earlier, WebMD has tremendous growth ahead.

The stock, however, hit its record 52 week low of $23.15 early March this year and is still trading at $23.77. This might just be the right time to buy WBMD.

1yr WMBD

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The chart is horrible, even for bottom fishers.

mark Saturday, April 5, 2008 at 7:53 AM PT

[…] Part of WebMD has been to tie up with strategic partners. Earlier in the year they partnered with Yahoo! to market a proprietary behaviorally targeted product that uses WebMD profiles for WebMD visitors when they are on Yahoo’s network. Late last year, they teamed with Medcenter to sell their online services in Latin America, Spain and Portugal. […]

Consumer Internet Roundup: WebMD, Blue Nile - Sramana Mitra on Strategy Wednesday, August 20, 2008 at 8:53 AM PT