With its healthcare Internet business not going so well, drkoop.com is getting into healthcare delivery business.
Last week, drkoop.com, founded in 1997 by former Surgeon General C. Everett Koop, M.D., announced plans to acquire IVonyx, a Livonia, Mich.-based home infusion therapy company, for
$7.1 million in cash. The deal is subject to shareholder approval and is expected to close within 90 days.
The combined company "will not be an online company and not an offline company but a medical company," said Richard Rosenblatt, drkoop.com's chief executive officer.
Rosenblatt said he expects the acquisition to boost his company's revenue by some $30 million per year. In 2000, drkoop.com took in a total of $10.4 million while losing $121 million. Santa Monica, Calif.-based drkoop.com provides consumer-focused health information on the Web, including explanations of medical conditions and drugs as well as wellness centers and online patient support groups.
As of last week, shares of drkoop.com traded at approximately 12 cents. Although the two companies may seem like odd bedfellows, drkoop.com will add value to IVonyx's infusion services by providing information and health management services to patients who use intravenous equipment in their homes, Rosenblatt said.
Believing the companies would be a good fit for each another, a former IVonyx director with contacts at drkoop.com brought the two organizations together to negotiate the acquisition, said Peter Molloy, IVonyx's CEO.
By joining up with drkoop.com, Molloy said, "We can make the company more profitable by leveraging some of the resources (drkoop.com) can bring to bear in terms of technology and sophistication."
Steve Rushing, senior vice president of Superior Consultant Co., a Southfield, Mich.-based healthcare consulting firm, said, "It would be foolish if drkoop.com was taking a pure diversification approach, but if they're trying to roll out a new set of services, that could make sense."
One Wall Street analyst who has
followed the company said that drkoop.com's acquisition is not entirely out of left field because the emerging trend is for online businesses to connect themselves with bricks-and-mortar businesses to gain traction the Internet alone cannot offer.
The company said it is pursuing other unspecified acquisitions in the offline arena.
In connection with the acquisition, drkoop.com President Ed Cespedes will become vice chairman of the company, which will keep the drkoop.com brand name. Ivonyx's Molloy will take Cespedes' place as president.
A 14-year-old privately owned, for-profit company, IVonyx has eight regional IV service centers and treats about 700 patients monthly.