In the second quarter, WebMD began testing a new app and, in the face of declining traffic in the form of Google-referrals, increased its focus on driving internal traffic. While there was a slight decline in the number of users, page views were actually up, which WebMD attributed to efforts to engage users to spend more time on the site with increased programming and social media. The company ended up with a 33 percent year over year increase in profit, and a 13 percent increase in revenue.
Last week, the company began testing WebMDRx, an app-based tool for consumers and physicians to better understand the cost of medications. During an earnings call with investors, WebMD CEO David Schlanger said the company will be focused on creating tools for consumers to solve “real problems”, including where additional transparency is needed in healthcare. In many cases, Schlanger said, consumers could actually save money at pharmacy retailers with the app.
“WebMDRx is a logical extension to our services,” said Schlanger, who said the company anticipates marketing to begin later this year after initial testing period. “We’ll have additional features and functionality planned for the 2017 release, which will further differentiate our offering from other tools in marketplace.”
There were 199 million unique users in the second quarter, a 6 percent decline, but page views for the quarter increased by 3 percent, or 4.23 billion. Highly targeted advertising helped keep revenue up in spite of the decline in uniques. For example, 60 percent of the revenue comes from advertising to the company’s Medscape audience. Medscape, which also has an app, provides information for physicians and healthcare professionals on clinical trials, point of care tools and medical news.
Schlanger said the drop off in traffic isn’t tied to revenue because that hyper-specific advertising aims to increasingly engage user interaction. Additionally, WebMD continues to update and enhance the user experience by investing in new video and social capabilities.
“Users can more easily discover, share and interact with content,” Schlanger said on the call. "We continue to successfully navigate changing engagement patterns and user preferences and to raise the bar in digital health.”
WebMD’s content and educational tools are accessible to consumers on whatever platform they prefer, and the company has worked to monetize all advertising possibilities, including mobile. Of the 4.23 billion page views in the second quarter, 41 percent of traffic was from US smartphones, 21 percent from US personal computers, 6 percent from a US tablet device and 32 percent from international formats.
“Consistent with industry trends, desktop and tablet utilization is being replaced by smartphones,” said Schlanger. “With respect to sources of traffic to our consumer properties, we have seen declines in number the of referrals we receive from Google, and this has impacted rate of growth in overall traffic. However, we have been successful in offsetting the majority of the decline with targeted internal traffic growth initiatives.”
Total revenue for the second quarter was $167.6 million, compared with $148.3 million in the prior year period. Net income increased 33 percent to $17.8 million. Advertising and sponsorship revenue was $131.7 million, compared with $116.2 million in last year’s second quarter.
Schlanger said the results were driven by the 17 percent growth increase in the WebMD’s biopharma advertising business.
Looking forward, WebMD expects revenue to be approximately $695 million to $708 million, representing an increase of nine percent to 11 percent from the prior year. Of that revenue, $559 million to $570 million is expected to be from advertising and sponsorship, with growth in that revenue stream to be driven by biopharma customers. Income is expected to be approximately $82 million to $89.5 million.
