WebMD makes changes to plug revenue drain

A deal with Microsoft is being revised, and the company is now focusing on bundling its products with handheld devices.

By Tyler Chin, AMNews staff. April 9, 2001.

The free ride for doctors using WebMD Corp.'s physician portal seems to be coming to an end.

The Elmhurst, N.J.-based health company announced on March 22 that it and Microsoft Corp. had signed a nonbinding letter of intent revising their 1999 deal, under which Microsoft had agreed to invest up to $250 million in WebMD over five years, including underwriting $150 million worth of physician subscriptions. The new financial terms have not been disclosed.

Because the agreement hasn't been finalized, WebMD declined to comment on whether Microsoft would stop subsidizing the cost of physician subscriptions. But in a March 22 conference call, the company said it was migrating from subscription-based sponsorships as a source of revenue.

In a telephone interview later, Tony Vuolo, WebMD's chief financial officer, said the physician portal would be bundled with wireless handheld products the company plans to roll out later this year. Those products will enable doctors to access WebMD's portal as well as its Medical Manager practice management system via handheld devices. Doctors would be expected to pay for that, rather than having a large corporation underwriting the cost.

WebMD said it had a net loss of $3.1 billion for the year ended Dec. 31, 2000, up from $288 million the year before. Revenue for 2000 was $517 million, up from $102 million in 1999. Revenue for the fourth quarter was $199 million, up from $33 million for the same period a year earlier. [...]