OnHealth Nabs Crown in War for Eyeballs Richard McCaffery (TMF Gibson)
December 21, 1999
Online health website OnHealth Network (Nasdaq: ONHN) got the nod in the Internet battle for eyeballs today as it logged more Internet traffic in November than any other health-related destination on the Web, according to Media Metrix (Nasdaq: MMXI).
The Seattle-based company jumped more than 20% on the news.
OnHealth's coronation as the number one site represented a coup over rival drkoop.com (Nasdaq: KOOP), which held the position of top-ranked health-related website for eight consecutive months.
OnHealth now has 3 million unique users in November, up 108% from 1.4 million in October, and page views jumped 22% to 15.9 million, up from 13 million in October. According to Media Metrix, OnHealth is the 82nd most frequently visited site on the Web, which gives you an idea of how successful the company has been with increasing its online community.
Both OnHealth and drkoop trade in the same ball park, with OnHealth closing last night at $10 1/8 and drkoop at $14 5/8. OnHealth is off about 55% from its 52-week high, while drkoop is down about 65%.
Investors may wonder why OnHealth and drkoop trade at such a discount to rivals like Healtheon/WebMd (Nasdaq: HLTH), which closed last night at $38 1/16 and has a $2.6 billion market value. OnHealth has a $244 million market value and drkoop has a $450 million market cap.
The big difference between the companies is their business model, and investors shouldn't get caught up in the idea that all Internet business are created equal.
OnHealth is a content provider, which means the bulk of its revenue comes from advertisers. No one's really sure how this business model will pan out, and analysts that follow the company are eager to see it diversify its revenue stream with e-commerce offerings, syndication of content, and other services that bring in cash. The company has made strong moves in some of these areas, but investors need to ask tough questions -- is it a content provider with a business model that will last?
OnHealth's strength so far has been its consumer-oriented website, which provides user-friendly content on a wide range of health topics. It's recently spiced up its offerings with provoking interactive tools that let readers recommend doctors, check symptoms, quit smoking, and address other personal health issues. Its site has won a string of awards that attest to its appeal and ease of use.
Healtheon, on the other hand, has a business-to-business and business-to-consumer model. The company is working to connect patients, physicians, and
healthcare institutions through its partnerships, content, and Web-based information network. The goal is to reduce costs and improve efficiencies, as well as the quality of care, by building a network. It also has loads of cash.
Another top-shelf rival is CareInsite (Nasdaq: CARI), which is developing a Web-based e-commerce system to be used by doctors, suppliers, and patients. Medical Manager (Nasdaq: MMGR), which provides a range of medical information services and makes medical plastics and filtration systems, owns 72% of CareInsite's stock. Analysts like CareInsite because it already has a customer base.
And the competition doesn't stop there. New health-related websites are cropping up every day. The latest rage is so-called extreme vertical sites, which offer surfers in-depth focus on one topic, like cancer research (Oncology.com) or mental disorders (Depression.com).
Any further look at OnHealth should focus on ways the company will earn money to compete with information technology companies that have an installed user base and now offer content and other community-based information services.