Profit Warning Shreds WedMD Stock Price

Online medical content vendor WebMD Health Corp. issued a profit warning and announced it’s looking for a new CEO, and maybe a buyer. Its stock price was subsequently down 28 percent in morning trading on Jan. 10.

Wayne Gattinella has resigned as CEO and president, with CFO/COO Anthony Vuolo serving as interim CEO. WebMD announced it had discussions in late 2011 with several potential buyers but has terminated the talks.

The past year was challenging; WebMD in July lowered financial expectations for the rest of the year and possibly beyond. Now, the company expects 2012 revenue to drop 2 percent to 8 percent, with improvement in the second half. The drop results from loss of patent exclusivity for certain drug products, which lowers sponsorship and advertising opportunities. The company expects an increase of new branded drugs by pharmaceutical firms in the second half of 2012, too late for marketing commitments to significantly contribute to revenue in 2012.

Online social sites and advertising networks also are creating a more competitive environment, according to WebMD, even as it expects expenses to increase this year. Consequently, the company is warning of “significantly lower” earnings this year.

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