I last wrote about WebMD (WBMD) as Bull of the Day in late February when the stock was trading under $55. Their recent "trifecta" of top and bottom line beats plus raised guidance made the stock a prime candidate for the post-earnings announcement "drift" higher that the Zacks Rank is based on.
WebMD is a $2.5 billion provider of online health information services to consumers, physicians, employers, health plans, and other healthcare professionals. The company connects with its customers through both public and private portals.
Through its public portals consisting of desktop and mobile offerings, the company provides personalized online healthcare information to consumers on its flagship site, WebMD.com. Revenue is generated primarily through advertisements and sponsorship agreements from pharmaceutical and health and wellness companies.
Through its private portals, like Medscape.com, WebMD offers health management applications for employers and health plans, and generates revenue typically on a per participant basis.
Here's what I wrote on February 25...
The Trifecta: Sales Beat, EPS Beat, Guidance Raised
Last week, WebMD reported 4Q15 results above expectations and provided strong guidance that compelled analysts to raise earnings estimates and price targets.
Management guided 2016 revenue, adjusted EBITDA and EPS above the Street as they are seeing strong ad demand from biopharma and are realizing operating leverage. The expected acceleration of biopharma ad revenue growth to 15% was what impressed analysts the most as it confirms the shift in pharma ad spend from traditional print and TV (offline) to online where WebMD has a leading position in this market.
Back to #1 With Q2 Results
On May 4, WebMD posted earnings of 36 cents per diluted share, beating the Zacks consensus estimate of 33 cents per share by 9%.
Revenue rose by 11% to $158.6 million year-over-year and was above Wall Street's projections of $156.6 million.
"WebMD continues to attract larger, higher-quality and more deeply engaged audiences than any of our competitors. Our strong first quarter results reflect our market leadership and position as a key digital partner to leading health advertisers," CEO David Schlanger said in the company press release. "We are pleased to be making a modest increase to our financial expectations for the full year 2016 as the positive momentum we are experiencing with our advertisers continues."
Traffic to the WebMD Health Network during the first quarter of 2016 reached an average of 210.8 million unique users per month generating 4.40 billion page views for the quarter, increases of 1% and 4%, respectively, from the prior year period.
In 2016, the company sees EPS in the range of $1.81 to $1.93 on revenue of $695 million to $708 million.
Accordingly, analysts raised the full-year 2016 profit consensus from $1.80 to $1.87, representing over 26% EPS growth. They also bumped up 2017 projections from $2.03 to $2.18, for 16.5% growth.
These actions moved WBMD back to the coveted Zacks #1 Rank which only about 200 stocks can share at any one time. Below are the Detailed EPS Tables which show the agreement and magnitude of analyst moves...
Taking Expertise & Access to a New Level
On May 17, WebMD announced a new initiative. ColumbiaDoctors and Medscape, the leading source of medical news and information for physicians, would create a partnership that gives physicians using Medscape Consult access to the expertise of ColumbiaDoctors, Columbia University Medical Center's faculty practice.
More than 25 health professionals from ColumbiaDoctors representing specialties including oncology, hematology, endocrinology, and surgery will serve as Medscape chief editors and associate editors on Medscape Consult, Medscape's innovative peer-to-peer, point-of-care digital platform. Accessible to physicians worldwide, the Medscape Consult editors will respond to questions, share best practices, and offer expert perspectives.
Renowned experts in their respective specialties, ColumbiaDoctors will provide the Medscape Consult community with evidence-and practice-based insights into patient care, closely aligning with their basic and clinical research.
"Our new partnership with Medscape enables ColumbiaDoctors to share their insights and perspective with a global physician community facing rapidly shifting clinical concerns," said John Chabot, MD, chief of the Division of GI/Endocrine Surgery, Columbia University Medical Center, and vice president of ColumbiaDoctors.
It sounds like WebMD intends to maintain and grow its superior platforms for health professionals and consumers. That should spell healthy profits for shareholders as well.
Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money portfolio.