With increasing advertising dollars and more contributions from pharmaceutical companies, and a national rollout of their prescription pricing and information app, WebMD is reporting strong third quarter earnings even in with a slight decline in page views.
“In the areas of greatest demand, that our customers value the most, we have been able to grow our traffic and manage our inventory, and expect to be able to continue to do so,” WebMD CEO Steven Zatz said on a call to investors. “We continue to invest in our user experiences and our advertiser products. We are converting our flagship sites to a fully responsive design that provides an optimal user experience regardless of the device used to access our content.”
Zatz pointed to last month’s national rollout of the WebMDRx app, the high engagement on the company’s Medscape site, and advertising efforts to drive direct traffic, plus newsletters and referrals from social platforms that keep visitors engaged on the sites they choose.
Zatz said US monthly visitors to the WebMD Health network across both mobile and desktop was approximately 70 million during the third quarter, and they announced they will be launching a complete redesign of their Symptom Checker. Zatz said WebMD has initiatives underway to make the health information accessible via alternative voice and text interfaces like Amazon Echo, Google Home and Facebook Messenger.
WebMD’s revenue for the quarter was $171.4 million, an increase of 12 percent from last year’s $152.6 in the same period. Net income grew by 64 percent to $21.6 million, and earnings increased by 19 percent of $55.3 million. For the full year, WebMD expects revenue to be in the neighborhood of $698 million to $708 million, representing a 10 percent increase.
Similar to last quarter, WebMD saw a dropoff in search referrals from Google, but Zatz said the company has offset most of that decline with direct sources of traffic. In the third quarter, 57 percent of WebMD’s traffic came from search engines compared with 66 percent last year, but non search- related traffic grew by about 20 percent.
“Of the 3.84 billion page views we served in the third quarter 41 percent of our page view traffic was from a US smart phone, 20 percent was from a US PC, 6 percent was from a US tablet device and 33 percent was international,” Zatz said. “While a leadership position in overall traffic is a reflection of our strong brand and the trust consumers place in us, it is important to note that overall traffic is not a direct driver of our revenue.”
Revenue for WebMD Health Services, the company’s private portal service, increased 3 percent, but the company expects that segment to decline in 2017 by 10 percent to about $100 million. To stave off the decline and develop ways to improve the platform, the company has hired new senior executives for the Health Services segment including a new CTO and CMO, Zatz said.
“We continue to believe that the opportunity for our population health management platform and related services is substantial. And that we are well-positioned in the market as our programs and solutions have demonstrated measurable clinical improvements, including in medication adherence, smoking cessation and weight loss,” Zatz said on the call. “I also believe that our population health services, including our digital and telephonic coaching tools, have applications outside of the employer payer space where we are currently focused. I see potential opportunities in the provider and pharma markets and we will be looking to explore this further as we plan for 2017 and beyond.”
