Koop’s ‘Doc-Com’ Company Has Healthy Initial Public Offering
C. Everett Koop, the stern but grandfatherly surgeon general who preached to the masses through the 1980s to practice safe sex and stop smoking, became a multimillionaire Tuesday by riding the hottest sermon of the 1990s--getting wired.
Koop’s 11% stake in a consumer health-care Web site called Drkoop.com suddenly became worth $56 million after the Austin, Tex.-based Internet company went public.
Drkoop.com Inc., which lost $9 million last year, closed at $16.44 on Nasdaq, up $7.44, on a volume of 26.6 million shares changing hands, the most of any stock Tuesday. The company sold 9.4 million shares Monday, or a 34% stake, for $9 each, raising $84.4 million. At the shares’ high price Tuesday, the company’s total value was $509 million.
“Not only do they have a well-known celebrity brand name but also a living, breathing, walking, talking advertisement for their site,” said Gail Bronson, senior analyst for Internet-based financial news service IPO Monitor. “That’s a foolproof prescription for a successful IPO. Celebrity status and making your brand known is everything for marketing on the Internet.”
The Web site, launched in July, has become a popular destination on the Internet, with more than 280,000 registered users now. Media Metrix, which measures online usage, has rated Drkoop.com the No. 1 Internet health network.
Koop, 82, who now lives in New Hampshire, serves as chairman of the board and is active in selecting and editing information on Drkoop.com.
He has agreed to allow the firm to “use his image, name and likeness” during the next five years in exchange for royalties of as much as 4% of sales. Koop received lecture fees of $95,000 last year and director fees of $83,000. He earned $90,934 in fiscal 1989 as surgeon general during the Reagan administration.
The company had just $43,000 in revenue last year but hopes to increase revenue through advertising--with support from companies such as drug maker SmithKline Beecham--licensing agreements and online sales.
Drkoop.com struck a $57.9-million deal in April to be the exclusive provider of health information for Go Network and ABCNews.com.
The site relies on one of Koop’s central beliefs: empowering people through information. It offers a healthy dose of daily news about new drugs or treatments, along with general health information. One report Tuesday focused on how to buy sunglasses with good ultraviolet protection.
Koop’s old crusades against unsafe sex and tobacco are also prominently displayed on the site. What has changed in just the decade since Koop stepped down as surgeon general is this new method of delivering information, known as the Internet.
One of the most popular sections of Drkoop.com is the large collection--more than 130--of interactive communities that meet for an hour or so each week to chat in real time about breast cancer, sleep disorders and numerous other maladies.
Users can refill prescriptions and even order health insurance through the Drkoop.com Web site. Coming soon is a feature that will allow people to keep a personal medical record online, a capability that analysts believe will grow at a rapid pace.
But Bronson warned that the competition will be particularly intense in this field.
“There’s a real tussle now to build up subscribers,” she said. “It is the nature of health care that people build up intense loyalty.”
In this respect, Bronson said that Drkoop.com, while not the first in the field, has an advantage because of Koop’s stature.
“They don’t have first-mover advantage,” she said, “but they can trump that because of Dr. Koop.”
Other health-care Internet sites that have filed to go public since January include Medscape Inc., WebMD Inc. and HealthGate Data Corp.
Times wire services were used in compiling this report.
