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EXHIBIT 99.2
drkoop.com Announces Completion of Expanded $27.5 Million Financing, New
Management Team, and Proposed New Members to the Board of Directors
AUSTIN, Texas, Aug. 28/PRNewswire/ -- drkoop.com, Inc. (Nasdaq: KOOP), a
leading Internet health network providing information to individuals
worldwide, has completed an expanded $27.5 million equity financing and
appointed a new management team led by new Chief Executive Richard M.
Rosenblatt, former CEO of iMall and SVP of Excite@Home. In addition, the
company is expected to add five new members to its board of directors.
The $27.5 million financing is from a group of investors led by ComVest
Venture Partners (an investment affiliate of Commonwealth Associates),
Internet restructuring fund Eco Associates, Prime Ventures, NetStar Ventures,
JF Shea Ventures, and RMC Capital. The new management team and its investor
group have invested $6 million as part of this financing. Commonwealth
Associates acted as financial advisor and placement agent in connection with
the placement.
"This investment and new management team will enable drkoop.com to
continue to grow in the ever-expanding health industry," said Dr. C. Everett
Koop, who remains as Chairman of the Board. "I am very pleased with the new
team's vision and will actively support its initiatives going forward."
"There is a great misconception in the marketplace as to drkoop.com's
current mission, positioning, and financial status," said Rosenblatt.
"drkoop.com is much more than a consumer health-focused web-site. The
company's strong brand, deep content and flexible technology allows for
recurring revenue streams beyond advertising and sponsorships."
"We intend to expand our relationship with Shared Medical Systems (SMS), a
Siemens Medical Engineering company, with whom we currently have a five-year
agreement to jointly market drkoop.com's content and tools to SMS' expansive
customer base, including 5,000 healthcare organizations with connections to
200,000 physicians," said Rosenblatt. "When ComVest approached us to join
drkoop.com, ComVest had already worked with the company to implement a highly
successful cost cutting plan. The company has worked aggressively to reduce
its monthly cash burn rate and we will continue to do so," he added.
Joining Rosenblatt on the management team are Edward A. Cespedes as
President, and Stephen Plutsky as Chief Financial Officer. The incoming
management team currently leads Prime Ventures, LLC, a venture capital fund
investing primarily in technology and Internet companies.
Rosenblatt co-founded and was the Chairman and Chief Executive Officer of
iMall, Inc, which was acquired in October, 1999 by Excite@Home in a
transaction valuing iMall at $565 million. Until March 2000, Mr. Rosenblatt
served as Excite@Home's Senior Vice President of E-Business Services.
In addition to Rosenblatt, who will serve on the board, and Dr. C. Everett
Koop and Donald Hackett who remain as directors, four new directors are
expected to be added as designees by Commonwealth Associates and the investor
group, and George A. Vandeman is expected to join as a director pending board
approval:
-- Edwin M. Cooperman, former Chairman of the Travelers Bank Group,
former Chairman and CEO of Primerica Financial Services Group and,
former Chairman and Co-Chief Executive of American Express Travel
Related Services Group
-- Marshall S. Geller, former Senior Managing Director for Bear Stearns &
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Co.
-- Scott J. Hyten, Founder of Interfase Capital and CEO of Eco Associates
and former Founder of Perot Systems Healthcare Practice
-- George A. Vandeman, former Senior Vice President Corporate Development
and General Counsel of Amgen Incorporated and formerly a senior
partner at Latham & Watkins
-- Joseph P. Wynne, Chief Financial Officer of Commonwealth Associates
and ComVest Capital Partners, LLC, formerly with Bear Stearns & Co.
and Goldstein, Golub, and Kessler
These directors are expected to be appointed after a mandatory information
statement has been mailed to stockholders.
Scott Hyten and Steve Hicks, founding partners of Austin, Texas, based Eco
Associates, agreed on the strength of the new management team and the company.
"We made a substantial investment in drkoop.com after careful review of its
business going forward," said Hyten. "Richard Rosenblatt has assembled a
strong team that will enable the company to remain focused on building
drkoop.com's core business and adding new revenue streams while creating and
implementing operating efficiencies," he said.
"We feel Richard knows what it takes to build a successful organization
and deliver shareholder value," said Hicks. "This new capable team will
ensure the stabilization of the company's financial position and the
implementation of a more targeted and profitable revenue model."
Hyten concluded, "as the former CEO of iMall and Senior Vice President of
Excite@Home, Richard will marry his invaluable Internet experience to
drkoop.com's existing team of healthcare specialists, positioning the company
to develop a highly successful new media business model."
drkoop.com has aggressively reduced costs, including the successful
renegotiation of portal agreements, a substantial reduction in the company's
workforce, and a reduction in its advertising expenses. Cash expenses from
operations were approximately $12.8 million in the quarter ended June 30, 2000
compared to $18.6 million in the March quarter. The company estimates that
cash expenses from operations will be further reduced to approximately
$6.5 million for the quarter ending September 30, 2000. Expenses for
financial reporting purposes will be significantly higher due principally to
the amortization of deferred non-cash costs related to portal agreements and
employee stock compensation.
"When looking at the financial condition of drkoop.com, it is important to
realize that approximately $28mm of the $40mm loss in the 2nd quarter resulted
from non-cash expenses," according to John Gruber, Senior Healthcare Analyst
at Commonwealth Associates. He went on to explain, "the further reduction of
cash expenses to approx $6.5 million for the 3rd quarter should result in a
cash burn of between $3-4 million for the same quarter. The financing was
designed to provide the company with sufficient funds to execute its business
plan over the next 18 months after giving effect to these expense reductions."
As to the industry in general, Gruber added, "successful eHealthcare
companies in the consumer space will be those that make the transition from
static web site offerings to full-service, personalized web portals.
Healthcare organizations and consumers will look to access specific medical
and health related content, as well as personal data repositories used to
track individual medical histories -- such as medical claims, treatments and
prescriptions." Gruber added, pharmaceutical companies have begun aligning
themselves with organizations such as drkoop.com for direct-to-consumer (DTC)
and direct-to-physician (DTP) marketing. In 1999 alone, industry research
sources estimate more than $8.5 billion and $1.5 billion, respectively, was
spent on DTP and DTC advertising in the healthcare marketplace, of which,
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on-line advertising was the fastest growing segment.
The financing was offered solely to accredited investors in a private
placement of convertible preferred stock, which is convertible into shares of
common stock at $0.35 per share. The newly issued shares will be restricted
securities and, therefore, not freely tradable. The company is not obligated
to register such securities until May 2001. The terms of the financing and
related transactions were described generally in the Form 10-Q filed on
August 21, 2000.
The securities issued in the private placement were issued in a
transaction exempt from registration under the federal securities laws and may
not be offered or sold absent registration or an applicable exemption from
registration. This press release is not intended and shall not be construed
as an offer to sell or a solicitation of an offer to buy any securities of the
company. The offering described in this press release has been completed.
About drkoop.com, Inc.
drkoop.com is a leading global healthcare Network providing measurable
value to individuals worldwide. Its mission is to empower consumers with the
information and resources they need to become active participants in the
management of their own health.
The drkoop.com Network is built from relationships with other Web sites,
healthcare portals and traditional media outlets, and integrates dynamic,
medically reviewed content, interactive communities and consumer-focused tools
into a complete source of trusted healthcare information. Its strategic
alliance with Shared Medical Systems (SMS) makes drkoop.com a leader in
promoting secure online interaction between patients, insurance companies,
physicians and healthcare organizations. With more than 1.4 million
registered users worldwide, drkoop.com has strategic relationships with online
organizations. The Company's content is also featured on the Web sites of
more than 420 healthcare facilities and more than 20 leading television
stations nationwide.
This document contains forward-looking statements relating to, among other
things, expense levels, revenue trends, advertising sales trends, growth
plans, future results of operations and general business conditions relating
to drkoop.com. Specific forward-looking statements include the statements
provided above regarding expense levels, "cash burn" levels and the time
period that the funds raised by drkoop.com will permit it to conduct
operations. These forward-looking statements are based on our current
expectations and are subject to material risks and uncertainties. Actual
results could differ materially from these forward-looking statements
depending on changes in external competitive market factors, the effectiveness
of our marketing and promotion strategies or our ability to execute our
business strategy. In addition, the Company is in the process of appointing a
new management team, which is in the initial stages of implementing its plans.
These matters and other business risks to which drkoop.com is subject are
discussed in our periodic reports and registration statements filed from time
to time with the Securities and Exchange Commission. In particular, investors
are urged to review carefully the information under the caption "Risk Factors"
in the Form 10-K for the year ended December 31, 1999 and the Form 10-Q for
the quarter ended June 30, 2000 and the other information contained in those
reports. The Forms 10-K and 10-Q may be obtained by accessing the database
maintained by the Securities and Exchange Commission at http://www.sec.gov or by
contacting drkoop.com as noted above.
