WebMD, arguably still the go-to source for medical information on the Internet, today announced that it would be implementing strong expenditure control measures after revealing disappointing Q3 results at the beginning of November. The cuts include 250 positions, representing around 14 percent of WebMD’s total workforce, as well as operating expenditure cuts of $45 million. Layoffs are expected to mostly take place effective the end of 2012, but will also continue throughout the first quarter of 2012, the company said in a press release explaining the move.
During its most recent quarterly results, the company saw revenue decline from $135 million during the year ago period to $117 million, with sponsorship and advertising income especially taking a downward turn. WebMD reported a net loss of $900K on the quarter, compared to positive income of $14.2 million during the same quarter last year. Still, its site traffic continues to grow, according to its quarterly financials, with 22 and 24 percent increases for unique visitors per month and page views between Q3 2011 and Q3 2012. So what’s behind the losses and the resulting need for budget cuts?
Despite a growing audience, it seems like advertisers are either less interested or less able to create campaigns on WebMD. That may in part be because of patents being up for a number of brand-name drugs put out by major pharmaceutical brands like Pfizer and others which happened in 2012, reports the Atlanta Business Chronicle, and it could also have to do with new, tighter regulations on how those companies are allowed to advertise their wares introduced this past year.
WebMD CEO Cavan Redmond defended the decision in a statement in today’s press release, alluding only to greater competition in the space, but not offering any firm explanation of what exactly led to the losses and subsequent decision:
WebMD’s value proposition for users continues to be very strong. Becoming leaner and more nimble will enable the Company to extend our leadership in this highly dynamic and increasingly demanding marketplace. In addition, anticipated changes in U.S. healthcare will provide meaningful new opportunities to link the needs of patients, consumers and healthcare professionals to enable them to navigate their care. We are moving swiftly to implement these operational changes and new market initiatives.
The company is “streamlining sales and delivery” as part of this initiative, and reallocating resources to areas with the greatest future growth potential. We’ve reached out to WebMD to find out more about the planned cuts, and any additional info about their plans they can provide, so we’ll update if and when we hear back.
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