WebMD’s Private Portal Business Continues Slide

WebMD announced first quarter earnings today that showed continued lackluster results for their “Private Portal” division, slipping roughly 5% year over year from $23M to $21.8M.

Now one could argue that the overall decline in employment due to the recession is to blame for the drop in clients from 134 to 131 in Q1-2010, but we see something else at play: high pricing for low value delivered.

Having spoken to a number of existing and former customers of WebMD, one gets the clear sense that the private portal business is no longer core to WebMD’s corporate strategy and frankly why should they as they reported overall growth of an impressive 20%.

Its pretty clear to us that the private portal business of WebMD is a business they intend to milk for all it’s worth. This may create opportunities for newer companies to capitalize on. The challenge for them will be to provide a full suite of solution capabilities as few employers or payers today are seeking niche solutions.

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4 comments on “WebMD’s Private Portal Business Continues Slide
  1. “Private Portal Services” at $21.8 million still seem to be a cornerstone considering Q1-2010 total revenue ($108.0 million). They probably won’t give up too soon on one of their cash cows…

    David

    • John says:

      Yes David, $20+M is nothing to sneeze at but…
      when your division continues to slide, growth is lackluster at best, well you either invest to reinvigorate or you put it out to pasture. In the case of WebMD’s private portal business, they have taken the latter route and their product shows it

  2. Kris Larsen says:

    What current vendors or small players are positioned to “pick up” what they are losing?? And what is it that those potential vendors must do to earn the business of those 3 client organizations that have left?

    • John says:

      Today, Chilmark does not see any vendor in the market today that can provide the breadth of services necessary to serve the employer market. Too many services are from small start-ups that have limited scale and breadth. In recent research we have conducted on the employer market, early results point to employers seeking one stop solution shops. Employers are highly adverse to pulling together a suite of solutions to serve their employees. This may create an opportunity for companies such as Microsoft if they can figure out a way to provide a bundled offering of HealthVault coupled with a few key ISVs now on HealthVault. Another scenario may be that of a roll-up strategy where a company comes in, acquires a number of the small vendors, layers in some analytics and provides a complete solution suite that is competitive with WebMD.

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