DrKoop.com takes its turn at the IPO feeding trough
DrKoop.com takes its turn at the IPO feeding trough
Combine a well-known name with hot stock action, and the result can be big dollars. It also doesn’t hurt to throw healthcare into the mix.
These elements produced big profits for former U.S. Surgeon General Dr. C. Everett Koop as a result of strong response to the public offering of DrKoop.com on Tuesday. The company’s stock was initially priced at $9 but a volume of 26.5 shares pushed that price up more than 80% on Nasdaq trading. As a result, the company reaped a total of $84.4 million, representing a 34% share of DrKoop.com with 27.5 million shares outstanding. The offering was a personal bonanza for Koop, since his 7% stake in the company now translates to around $31.5 million.
Now two years old, the company was formerly known as Empower Health. Koop then changed the name, thus exploiting his seven-year, high-profile run as U.S. Surgeon General in the Reagan and Bush administrations.
Like many other Internet companies, Dr.Koop.com is a real company with "virtual" profits meaning, they haven’t appeared yet. The company lost $4.1 million on revenue of $404,000 in the three months ended March 31, compared with a loss of $709,000 on no revenue during the same period a year earlier. For all of last year, the company lost $9 million on revenue of $43,000. Given this balance sheet, many analysts said they felt the company’s IPO had come too early, but then granted that Koop’s name provided unusually strong marketing support.
DrKoop.com’s financial coup was sandwiched be tween two other company announcements. On Tuesday, the firm reported that its Community Partner Program had linked up with the Cleveland Clinic Foundation, a non-profit medical group practice combining clinical and hospital care with research and education. DrKoop.com will provide its health information, news and interactive communities to complement the Cleveland Clinic’s own Web content at www.clevelandclinic.org. On Thursday, Koop announced that he was launching a fitness campaign and will seek to make this a national health priority. He said that inactivity by Americans has reached "crisis proportions." As part of the campaign, DrKoop.com will be launching an online guide to help individuals develop their personal exercise regimen.
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