|
drkoop gets some cash
|
 |
June 23, 2000: 3:55 p.m. ET
Beleaguered health-care Web firm in financing deal with unidentified bank
|
NEW YORK (CNNfn) - drkoop.com Inc., an online medical Web site that's rapidly running out of money, received a modest cash infusion from an unidentified merchant bank Friday under a deal that could lead to the bank taking control of the company's board.
The Austin, Texas-based Internet company will receive $1.5 million in bridge financing immediately to help keep it afloat. The company and the merchant bank "are also pursuing the placement of permanent financing which the parties expect to put in place over the next several weeks," drkoop.com said.
When contacted by CNNfn.com, the company declined to elaborate.
 drkoop.com (KOOP: Research, Estimates), named for one of its founders -- popular former Surgeon General C. Everett Koop -- has been searching for outside funding amid widening losses and rapidly dwindling cash reserves. The health information company has laid off about 35 percent of its work force since April 1.
In a simultaneous announcement, C. Everett Koop said he had extended his contract with the company to seven years, two more years than originally planned.
Koop licenses his name to the firm and serves as chairman of its board of directors, but he does not have a role in day-to-day operations.
The company is "taking action to operate its business more efficiently and reduce its expense levels," Koop said. "In support of this effort and my strong belief in the long-term future of the company, I have agreed to extend my contract to seven years."
The deal appears to set up the undisclosed merchant bank to take over management of the company - at least temporarily.
If the "permanent financing" is completed, "the merchant bank and new investors will likely obtain the right to designate a majority of the board of directors for a period of time," the company said.
In the short term, the bank will have the right to appoint a director to the drkoop board and has been retained to provide financial advisory services to the company.
The bank received warrants to purchase 4 million shares of drkoop.com common stock at roughly 75 cents per share.
 In afternoon trading, drkoop shares jumped 1-1/16 to 2-11/16. But that's a far cry from the stock's 52-week high of 45-3/4.
The stock has traded as low as $1 earlier this year.
It's unclear who would want to take over the beleaguered drkoop, said Sheryl Skolnick, an online health care analyst at Robertson Stephens. She said the company, which went public only a year ago, has a shaky business model and has little to offer that sets it apart from its rivals.
"There really wasn't anything all that different about what drkoop had, and all the other 20-odd thousand online health sites offer," she said. "Most of the content is licensed from someone else."
drkoop isn't the only online health care venture that's struggling to stay alive. Companies including PlanetRx.com Inc. (PLRX: Research, Estimates), an online pharmacy, and OnHealth.com Inc. (ONHN: Research, Estimates), another consumer-oriented health portal, also are struggling with low share prices and financial troubles. 
|
|
|
|
|
|
drkoop.com
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
