DrKoop.com, the online health information provider, once a darling of Wall Street and stellar stock of the dotcom boom, has been sold to online vitamin retailer Vitacost.com for $186,000.
During the dotcom boom DrKoop was at one stage valued at more than $1 billion. Founded in 1997 by the eponymous former US Surgeon General Dr C. Everett Koop, the company hit bankruptcy as it struggled to generate siginificant revenue from providing consumer health information.
Vitacost’s $186,000 cash acquisition covers Dr.Koop’s assets including the brand name, trademarks, domain names, Web site and perhaps most valuably the database of more than two million registered users of DrKoop.com.
Founded as Empower Health in 1997 the company survived a cash crisis a year later, but subsequently secured enough backing to continue and eventually floated itself in an Initial Public Offering (IPO) in 1999 as DrKoop.com.
The float brought in about $88 million even though the company had very small revenues and heavy debts.
Following the IPO the firm signed extremely expensive portal deals with Disney’s Internet operation, and America Online, in which Dr.Koop.com paid the portals $57.9 and $89 millions respectively to be their preferred supplier of health content in order to drive traffic to the Dr.Koop.com site.
Confidence in the company evaporated following a March 2000 audit report in which the firm’s auditors cast serious doubts on its financial viability. Following the report Drkoop shares plummeted to eventually be worth less than one cent per share from a high of $45 per share in the summer of 1999.
In the course of its operating history, the company had run up cumulative losses of $207 million. In its last quarter of operation, Drkoop reported $3.2 million in revenue and a net loss of $4.5 million.
Vitacost, by contrast, is a privately held company with no venture capital backing, that has built a successful operation specialising in selling vitamins, nutritional supplements and health products over the Web at a heavy discount.