Drkoop.com Secures $89 Million Deal with AOL, Becoming Premier Health Content Partner

Strategic Insights -

Austin-based internet health information site drkoop.com has agreed to a four-year deal with America Online (AOL), worth $89 million, to become the main health content supplier for 19 million AOL and CompuServe members. The deal grants drkoop access to AOL's 600-person sales force and positions the company as a leader in the fast-growing health information site market.

Key Takeaways:

  • Drkoop.com has secured a four-year deal with AOL worth $89 million, with backloaded payments that will increase over time as the company expects to generate revenue from the deal.
  • The deal provides drkoop.com with access to AOL's 19 million members across its various brands, including AOL, CompuServe, AOL.com, Netscape Netcenter, and Digital Center.
  • Drkoop.com plans to roll out its content across the AOL sites this fall, providing consumer-focused resources on hundreds of health topics.
  • The company will earn revenue from advertising and e-commerce transactions, including sales of prescription refills, vitamins, and insurance services offered by third parties.
  • Despite increasing competition from other health information sites, including Healtheon Corp. and News America Digital Publishing, drkoop.com is well-positioned to capitalize on its partnership with AOL.

Statistics:

  • Drkoop.com's stock soared 66 percent to $39.50 on Tuesday, up $15.75.
  • The company's stock has increased by more than four times its offering price in the month since it went public.
  • Drkoop.com has about 100 employees in Austin and lost $24.4 million on revenues of $404,000 for the three months ended March 31.
  • The company plans to earn revenue from advertising and e-commerce transactions, including sales of prescription refills, vitamins, and insurance services offered by third parties.

Sources:

  • Drkoop.com Inc. press release, dated June 8 (no specific date provided)
  • Wall Street Journal article, dated June 8 (no specific date provided)
  • Interview with Dennis Upah, Chief Operating Officer of drkoop.com, as referenced in the article.