WebMD sells to private equity firm KKR

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Internet Health Brands, a company owned by private equity firm KKR, said it plans to acquire WebMD in a deal worth roughly $2.8 billion.

The news of the acquisition comes less than six months after WebMD CEO Steven Zatz told investors that the company was exploring strategic options, including an acquisition. WebMD's board has approved the deal, which is expected to close by the end of the year.

Internet Brands, based in El Segundo, Calif., owns a number of media websites, spanning the automotive, health, legal, home, and travel industries. Its health properties include consumer health sites like DentalPlans.com and HealthBoards.com. KKR, which has also acquired stakes in consumer technology companies like GoDaddy and Sonos and healthcare firms like Panasonic Healthcare, acquired Internet Brands in 2014.

See also: Some brands thought to shift online ad dollars, creating uncertainty for WebMD

The well-known WebMD site — the top-ranked health site in the U.S., according to ComScore — has struggled with its footing in recent years, as have competitors like Everyday Health. In December J2 Global, which owns sites like IGN and PCMag.com, acquired Everyday Health and later said it planned to sell off less profitable parts of that business. The company last week announced that it had sold Cambridge BioMarketing, a rare disease marketing agency previously owned by Everyday Health, to UDG Healthcare for $35 million.

Analysts and other experts noted that drugmakers have started to move portions of their marketing budgets to other media platforms as banner ads have waned in popularity and other consumer media sites and social media platforms have sought to attract pharma dollars. “In the realm of digital, WebMD is very much considered a traditional outlet. So maybe [brands are] being experimental with social media or other channels on the internet,” Mark Kelley, an analyst at Citigroup, told MM&M in April.

See also: J2 Global considers divesting parts of Everyday Health

WebMD said revenue rose 5% to $176 million in the second quarter of 2017, compared to the same period a year ago. Net income also increased — by 6%, to $18.9 million — in the second quarter of 2017.

Despite that growth, WebMD said earlier this year that it anticipates a faster decline in the volume of pharma ads in 2017, with Zatz telling investors in February that the company didn't have “a fix on what their marketing budgets will be for the year.”

A spokesperson for WebMD declined to comment on questions about Zatz's ongoing status with the company or the possibility of layoffs.

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