Last week, rumors circulated that WebMD was getting acquired, shopping its business around to Walgreens Boots Alliance and UnitedHealthcare. The company later denied that it was negotiating the sale of any parts of its business.
But why did the sale rumor have legs? How is WebMD, one of the first online health destination sites, faring as digital health trends up?
To answer that question, MobiHealthNews pored through seven years of SEC filings as well as our own sizeable archive. What we found is that WebMD is a company that’s managing -- so far -- to maintain steady growth in the face of a rapidly changing competitive environment.
Over the last few years, the company has had a slightly rocky time financially. The company appears to have weathered the sea-change from desktop to mobile, but recovered only recently from a steep 2012 drop in earnings.
It would be hard to argue that WebMD wasn’t an early adopter of mobile. The first WebMD Symptom Checker app went live on Halloween in 2008, according to App Annie. That’s just a scant three months after the App Store opened. In July 2009, the company launched Medscape Mobile.
At the end of 2009, WebMD’s app had been downloaded 1.5 million times. By the end of 2014, all WebMD apps had been downloaded 25 million times. But as the chart below shows, that growth rate declined sharply between 2013 and 2014 and is showing signs of leveling out.
Even with its quick uptake, mobile posed a problem at first for WebMD’s advertising-driven business strategy, because mobile ads are smaller and have less space for the fine print that some medical advertisers, like pharmaceutical companies, are legally required to include. But the company took the initiative to develop strategies for meeting these regulatory requirements and share them with their pharma companies.
This chart shows WebMD’s page views and unique visits per month across their sites, as reported in their annual reports to investors. Despite everything, those numbers have grown every year for WebMD, and had their biggest jump fairly recently, between 2013 and 2014.
But the nature of those page views has changed. Almost immediately after WebMD began tracking mobile, tablet and PC pageviews separately, like everyone working in media, they started to see mobile usurp PC. And that trend has been continuing incrementally over the last year.
The migration of WebMD users to mobile platforms shows that it’s increasingly becoming a mobile content platform, and this does open it up to an ever-widening landscape of competition.
Certainly the number of options for both patients and physicians seeking online health information have increased over the years. It used to be that Googling a medical problem would return WebMD as the top result. Now it’s often found underneath a Knowledge Graph, a small display of relevant information provided by Google that gives that information without users having to click a link. On the app side, other content providers like iTriage on the patient side and Aptus Health (formerly Physicians Interactive) on the provider side have gained some marketshare over the years.
Even insomuch as WebMD still leads that pack, it’s susceptible to a “death by a thousand cuts” from the rise of many new ways to learn about health online. For that reason, the company has expanded beyond content over the years. It has a robust patient portal business and was, in the past, experimenting with bridging its consumer- and physician-facing sides, to help facilitate physicians “prescribing” educational materials to their patients. It added the Healthy Targets feature to its app to get WebMD involved in the health tracking space. And last year, with Medscape Consult, it got into the physician crowdsourcing business to compete with apps like Figure1. By branching out from its core content business, WebMD gives itself good odds in staying relevant, even if web and mobile traffic start to drop off.
Read on below for a comprehensive walk through of the history of WebMD over the last seven years, as seen through the lens of the company’s public filings, as well as our own archive here at MobiHealthNews.
2008 Annual Report
In the summer of 2008, the iPhone's AppStore launched. These were the early days of mobile health and WebMD would soon face a whole new set of competitors, but the company did not anticipate the dawn of smartphone apps as being a noteworthy event worth mentioning as an important trend in its 10-K that year. It did, however, announce that it was among the few healthcare companies to launch iPhone apps within months of the store's opening: "WebMD has launched iPhone mobile versions of WebMD’s Symptom Checker, Pill Identifier and First Aid applications," the company wrote. "These WebMD applications are among the most downloaded health applications in the iTunes Store."
Under the "Trends influencing the use of our services" section of its 10-K that year, WebMD focused on physician and consumer internet use, consumer health education, physician professional education, online marketing, and changes to health plan design.
The company explained at the time that the internet was a prominent method of communication for both consumers and physicians, who are changing the way they find healthcare information. Consumers are using the internet to access interactive content that helps them check symptoms, assess health risks, understand diseases, find providers, and evaluate their treatment options. Meanwhile, providers are using the internet to access a growing archive of primary source professional materials that were previously only found at conferences, medical meetings, and in offline journals.
Online marketing is another important trend in WebMD’s annual report. The company had identified a number of industries including pharmaceutical, biotechnology, and medical device that only put a small amount of money into online marketing, but were becoming aware of the effectiveness of this still emerging channel.
The final two trends WebMD mentions in its 2008 report are the shift of healthcare costs and decision making to the consumer as well as the rise of healthcare information technology, like personal health records, that help consumers make these decisions.
At the time, the company’s online offerings included an advertising supported site for consumers to learn more about their health and one for providers to improve their clinical knowledge and earn CME credits. WebMD also offered private online services to employers and payers, including patient portals.
2009 Annual Report
One important trend that WebMD stressed this year was the growth of social media, video, and multimedia tools. The company found that consumers now expected online companies to offer these kinds of features. WebMD also pointed out that consumers use social media to communicate with others about a number of issues, including their own health.
The newer digital products that WebMD offered this year included Physician Connect, an online social network physicians can use to discuss patients, drug information, and practice management; Medscape Mobile, an app with provider news that is specialty-specific; and WebMD Mobile, a consumer app that offers a symptom checker and pill identifier, among other features.
One new offering the company said it planned to launch was the WebMD Health Exchange, a social network that consumers can use to learn about specific health and wellness topics. These communities would be private and invite only or moderated by an expert. The company also said that in the next year, it planned to expand outside the United States. WebMD referenced its partnership with UK-based pharmacy Boots, which was acquired by Walgreens years later, in 2014, as its first consumer portal outside the US.
2010 Annual Report
Starting in 2010, WebMD’s embrace of mobile became more apparent -- it replaced its mentions of "handheld devices" in the 2010 report with the word "mobile". The company started to share its broader mobile strategy this year, pointing out that although mobile wasn’t a significant revenue source at the time, they expected this to change in the future.
WebMD also released download numbers for its mobile apps. In 2010, Medscape downloads reached 700,000 and WebMD’s consumer apps, called WebMD for iPhone and WebMD for iPad, reached 3.5 million downloads together.
WebMD pointed to one trend during 2010 that could lead to a new revenue source -- pharmaceutical companies had started to decrease their in-person, field sales teams. As a result, WebMD predicted that pharmaceutical companies would start to increase online marketing spend in order to reach physicians. This would include marketing via WebMD’s online products.
For the year ahead, WebMD explained that the company planned to increase ad revenue from wellness-focused companies. WebMD reported that a majority of consumer traffic from 2010 went to health and wellness posts that were not related to diseases. As a result, the company signed a number of advertisers outside of the pharma, biotech, and medical device space, including ads from companies focused on health, wellness, diet, fitness, lifestyle, safety, and illness prevention. Some of these were Johnson & Johnson, Proctor & Gamble, Nestle, Wal-Mart, and Target.
The only launch WebMD noted this year was the WebMD Community, which is likely a rebranded version of the Health Exchange that the company mentioned in its 2009 annual report. The offering provided consumers with a social network that they can use to connect with health experts as well as other consumers. The WebMD Community would allow sponsors to create branded communities within the offering where they could host discussions about a number of health topics.
WebMD also discussed some opportunities it would have as a result of the Affordable Care Act. In particular, the company believed health reform changes could bouy its personal health record offering as well as its health and benefits decision support tools. In October 2010, WebMD CEO Wayne Gattinella announced that the company would enhance its WedMD Mobile application to include the user's personal health record data in order to personalize that application's symptom navigator and other functions. The company said the app would use the user's symptoms, medications and pre-existing conditions to personalize those features.
2011 Annual Report
The 2011 annual report was the first in recent years to include warnings about expected, upcoming troubles for the company.
Although just a year before, WebMD had pointed to pharmaceutical companies as a source of future revenue, the company explained that reduced revenue in 2011 was in part a result of the expiration of drug patents on highly profitable drugs. WebMD's business, like many that depended on pharma marketing spend, was feeling the effects of that softening. When a patent ends, WebMD explained in its report, and generic versions enter the market, the pharma company that owned the patent drops its marketing efforts around that offering. The company added that in 2012 and 2013 other pharma companies expect their drug patents to end.
One subtle change to the report was that WebMD altered its description of health-conscious consumer demand. In the new framing, WebMD said that the company “expects demand will continue to grow”, instead of saying that demand was “growing significantly”.
The company also removed its mention of its wellness clients that it disclosed in 2010, which, as noted above included Johnson & Johnson, Proctor & Gamble, Nestle, Wal-Mart, and Target. This omission may be because WebMD lost some of them. The company also added to this section that the services they offer their clients are subject to competition from other sources including traditional media, search engines, and social networking sites.
Some positive news in this year’s report included a few app launches. In May, WebMD launched its consumer-facing app for Android devices and in January 2012, WebMD launched WebMD Baby, an app that gives parents access to health and wellness information for babies and toddlers. It reported usage numbers for some of its existing digital offerings. Physician Connect, the online social network it launched in 2010, attracted 164,000 physician members. And Medscape Mobile had 1.9 million registered users, up from 700,000 in 2010.
This year, in the risks section of the report, WebMD added a note about how recent and pending management changes could disrupt the company’s operations. WebMD’s CEO, Wayne T. Gattinella, left in January 2012, though this was shared in the 2011 report. While WebMD looked for another CEO, the company’s CFO, Anthony Vuolo, served as interim CEO.
According to a report from the Wall Street Journal, at the time, WebMD was considering a sale, but ended those discussions in part because of its turbulent year and also because of its management changes.
2012 Annual Report
The pharma marketing budget softening that WebMD began to experience due to patent losses in 2011 continued in 2012. WebMD added that they expect these same troubles to continue in 2013.
This year, WebMD began to disclose website traffic data. The company reported that in 2012, the WebMD Health Network, which includes most if not all of WebMD’s online properties, saw 110 million unique visitors, 29 percent more than 2011, and a little over 10.2 billion page views, 26 percent more than the year prior. The company’s provider-facing websites that year received an average of about 2.7 million visits per month.
The company also began to see a lot more traffic coming from mobile devices. The percentage of page views that were viewed from a mobile device jumped from 13 percent in 2011 to 25 percent in 2012.
One customer win for WebMD in 2012 was Independence Blue Cross. The Pennsylvania insurance company announced the launch of a WebMD Digital Health Assistant to their member's portal. The software provided IBC members with an interactive wellness program, combining an online health risk assessment with a digital coach that will give daily tips, and also allowed the user to set personal goals and track their progress in achieving them.
2013 Annual Report
In 2013, WebMD reported that it hit 138 million monthly unique visitors and delivered approximately 11.55 billion page views during the year. But it also added an extra note about some reasons that led to reduced traffic. The note highlights a particularly telling incident for WebMD and its reliance on search engine traffic.
“One factor that significantly reduced traffic, in the first half of 2013, to some of the consumer sites in The WebMD Health Network (other than WebMD.com, our flagship site) was changes in Google’s algorithms and other processes that lowered the ranking of those sites in Google search results,” the company wrote. “Starting in July 2013, we began to see a reversal of that trend, with improvement continuing through the rest of the year.”
In 2013 WebMD reported increasing traction selling mobile advertising on both their physician and consumer products, though they noted that “advertisements for biopharmaceutical products are subject to various regulatory requirements, including requirements to include certain specified information, that are more challenging to meet on the smaller smartphone screen size.”
Finally, the company’s 2013 report reflected an increased emphasis on the population health management space.
“In a healthcare market where a greater share of the responsibility for healthcare costs and decision-making has been shifting to consumers, use of information technology to assist consumers in making informed decisions about healthcare has also increased,” they wrote. “We believe that, through our WebMD Health Services private portals and related coaching services, we are well positioned to play a role in this environment.”
WebMD also made a number of big strategic announcements this year including a major partnership with Qualcomm, a new version of its flagship app, and the acquisition of Avado to bolster its provider-facing suite.
At HIMSS in March, WebMD announced a partnership with Qualcomm Life wherein WebMD's consumer sites and apps serving as a place to collect data from the health devices and services that connect to Qualcomm Life's 2net platform. WebMD CTO Bill Pence told MobiHealthNews that in the future, the consumer-facing WebMD and physician-facing Medscape will come together to enable physician recommendations or prescriptions of mobile apps and wireless health devices.
"That will be the first connectivity solution to allow consumers and Medscape doctors to connect," Pence said. "That platform will include a lot of different use cases, including the ability to prescribe apps."
In September, WebMD launched the fourth generation of its flagship consumer app, marking the first time the company had bridged its popular consumer-facing app with its also popular healthcare provider facing app, Medscape.
Physicians could now "prescribe" patient education materials to their patients by pushing that content to the patient's phone. After getting their permission, the physician sends the patient a message with a link to a mobile-enabled website that features the educational material. Once loaded, that page invites visitors to download the WebMD app where they could also view (and save) the material for later viewing. Or, the patient can just view it on the mobile site and save the link for later viewing.
"This is going to be a long road," Todd Zander, WebMD's VP of Mobile and Emerging Media, told MobiHealthNews at the time. "We want to connect healthcare professional experiences on mobile with patient experiences on mobile and the first step is to allow doctors to prescribe educational materials to their patients from app to app. They will prescribe from their Medscape app patient education materials and the patient can access that from the WebMD web page or if they have the WebMD app then they can access it from the app."
In October, WebMD acquired EHR-neutral patient portal Avado for between $20 and $30 million, a purchase which will accelerate the company's plans to enhance the connectivity between its recently relaunched WebMD patient app and its physician-facing MedScape app.
Avado supported personalized, targeted patient education and the use of trackers to promote treatment adherence.
FInally, at the end of the year WebMD announced plans to launch, in the first quarter of 2014, the fifth major iteration of its mobile app, which will include a marketplace for buying personal health devices and some FDA-cleared medical devices, thanks to a major partnership with Qualcomm Life and its 2net ecosystem.
2014 Annual Report
In WebMD’s 2014 annual report, the company repeated a line that had been in its annual reports for years about pharma, biotech, and med device companies being relatively stingy spenders on online advertising, but added an interesting datapoint: that 73 percent of their advertising and sponsorship revenue in 2014 was from these sources.
“In addition, we expect that the pipeline of new pharmaceutical products will be strong in the next year and that a significant portion of those products will be ones for which our digital platforms are particularly effective in providing communications to the target audiences that pharmaceutical companies want to reach about specific therapies,” they added.
In 2014 the percentage of the company’s advertising and sponsorship revenue delivered on a mobile device jumped 28 percent to $156 million, or 34 percent of the company’s total advertising and sponsorship revenue.
WebMD’s internet traffic continued to grow in 2014, with 183 million monthly unique visitors and 14 billion page views, 33 and 23 percent increases over 2013, respectively. Physician visits to Medscape hit 6.2 million, 13 percent higher than the previous year.
The company’s partnership with Qualcomm 2net is absent from the annual reports as of 2014, and appears to have been scaled back if not dropped completely.
Finally, WebMD added an interesting new paragraph to its business summary in 2014, saying that it had begun dealing in de-identified data. The company explained that they generate revenue from selling specific products using de-identified data that they license from small third party data sources.
MobiHealthNews also covered a lot of action in 2014 from WebMD.
On a first quarter earnings call, the company announced a new provider app, Medscape MedPulse, a news reader app designed to give physicians quick and easy access to the latest medical news. It includes original content from Medscape including business, legal, and ethical news and commentary, as well as breaking drug and device news from the FDA along with the latest notable clinical trials. Doctors can personalize the content delivered to them by specialty.
On the consumer side, the company discussed an upcoming feature for a revamped version of WebMD's flagship mobile app. The feature, called Healthy Targets, would be aimed at helping patients, especially those with diabetes, manage their weight. It would connect the app to the user's glucometers, connected weight scales, and other wearable sensors.
"Given our position at the intersection of the largest, most engaged communities of consumers and professionals, we are continuing to invest in 2014 to position WebMD as a central place where consumers can go to manage all their health information and relationships and share that information with their various health providers in a private and secure manner," CEO David Schlanger said on the call.
In June, WebMD followed through, updating its consumer-facing health app to add the Healthy Targets feature: it now integrates a user's biometric data from certain activity trackers, wireless scales, and glucose meters. While the app tracks steps, sleep, weight and blood glucose data from devices, if users have an iPhone 5s, they can also track steps passively from their phone. The company says it still plans to add features that connect patients to their physicians.
At the time, MobiHealthNews also caught up with WebMD Director of Product Management David Ziegler to pick his brain about Apple’s just-announced HealthKit, which seemed like it might be a competitor for WebMD’s new feature.
"Obviously HealthKit is very new and everyone is still trying to wrap their heads around exactly what HealthKit is, but from our perspective it's about storage and making it more accessible for users to have control over their personal biometrics," Ziegler said at the time. "And right now our mobile strategy is to leverage personalized data and layer contextual information and actionable insights on top of that. So if it makes it easier for users to connect this first wave of biometrics, the steps, sleep, weight and blood glucose, [HealthKit's] just another silo of data for us. As we learn more and we play with the newly released SDK, we're figuring out the best way to integrate.”
During its quarterly call with investors in August, WebMD teased a small acquisition it made in July. The company later told MobiHealthNews the subject of the acquisition was patient simulation company TheraSim.
“TheraSim offers patient simulation technology that replicates physicians’ real-world experiences in clinical decision making and drives application of learning into clinical practice. The acquisition allows Medscape to further evolve and enhance the Medscape experience for healthcare professionals participating in continuing education," WebMD VP of Corporate Communication Michael Heinley wrote at the time.
In October, WebMD and Walgreens announced that they would each integrate some of the other's digital health services into their online and mobile offerings. Walgreens customers that have a WebMD account will now be able to refill prescriptions and make clinic appointments at Walgreens through the WebMD website or app. Walgreens digital offerings will also now include some of WebMD's health content and also help promote WebMD's app-supported healthy behavior change programs.
2015 Quarterly Reports
The annual report isn’t out for 2015 yet, but working off of last year’s third quarter report we can see that WebMD continued to track the migration of their customers from desktop to mobile platforms.
In Q3 2015, 39 percent of WebMD page views came from a US smartphone, 23 percent came from a US PC and 7 percent came from a US tablet (31 percent came from outside the US).
“However, we expect to have more than enough PC and tablet page view inventory on the WebMD Health Network to meet the expected demand from advertisers and sponsors through 2015 and believe that, with our significant scale in both desktop and mobile audience engagement, we are well positioned to meet the needs of our advertising and sponsorship clients,” the company wrote.
The company also noted that advertiser demand on mobile platforms was higher for physician-facing products like Medscape than for consumer-facing products, owing to the particular needs of pharma advertisers as well as “additional regulatory requirements applicable to advertising directed to consumers”.
At MobiHealthNews, we tracked a number of goings on at WebMD over the course of the last year.
In March, Blue Cross Blue Shield of Michigan inked a deal with WebMD's Health Services to offer members a digital health and wellness program. Blue Cross and Blue Care Network members will also have access to a portion of this new program. WebMD's Health Services program helps employers and health plans provide employees and members with information about their benefits, biometric screenings powered by BioIQ, health assessments, a digital assistant, and health-related content. These tools will be added to BCBS of Michigan's wellness program, which allows members to check their coverage, monitor claims activity, and shop for doctors as well as health care services.
WebMD was also in the first round of companies offering an app for the Apple Watch. WebMD's Apple Watch app helps users remember to take their medication. The app will interface with the flagship WebMD iPhone app, which will be updated to include support for Apple Watch and these new medication adherence features. Each reminder will show users a customizable picture of the medication as well as dosing and timing information.
On an earnings call in August, CEO David Schlanger touted the growing importance of mobile to the company and said the next big step for WebMD would be to start to move WebMD and Medscape content beyond their home websites and out onto social media sites, through partnerships like the Walgreens deal and a new partnership with Sports Illustrated.
"In the digital ecosystem it's become clear that people are using social platforms as means to do more than just connect with their friends and family, but really as destinations to find information and consume information," CEO David Schlanger said. "So we want to make sure that WebMD content is discoverable and can be consumed on the social platforms. That’s an important strategy to make sure that we grow deeper engagment with our existing users and bring in more users to using WebMD and Medscape as content sources."
Finally, in October WebMD's Medscape team announced a new clinical reference app called Medscape Consult that will include an option for doctors to "crowdsource" clinical advice from their colleagues. WebMD CEO David Schlanger announced the app at the company's annual stockholder meeting, where he also spoke about plans for international expansion and a renewed focus on the company's private portal division.