WebMD calls off sales plans, CEO steps down amid ugly forecast for 2012

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Wayne Gattinella, WebMD President & CEO
Wayne Gattinella, WebMD President & CEO
WebMD scrapped plans for a possible sale and announced that president and CEO Wayne Gattinella is stepping down after 11 years in that role.

The digital health giant said it had “terminated” talks with “several potential acquirers” having opened its books for them and, presumably, received disappointing offers. The company issued a grim preliminary outlook for 2012, forecasting revenues down 2%-8% year-on-year due to decreased ad spending from pharmas as a raft of well-advertised brands lose patent protection.

“WebMD's fourth quarter sales activity for advertising and sponsorship products was less than anticipated and reflects a challenging business environment for certain pharmaceutical company customers and a more competitive landscape in the consumer products markets,” said a company statement, which added that loss of patent protection on key drugs was “having a greater than previously anticipated impact on marketing expenditures across entire product portfolios of some pharmaceutical companies.”

Fourth quarter sales of advertising and sponsorship products were disappointing, the company said, and the slump is expected to continue through the first half of the year, with spending picking up in the second half as a number of new brands launch.

Also cutting into WebMD's revenues is increased competition for consumer products advertising “from a variety of ad networks and social sites,” the firm said.

“While we face near-term challenges, I am confident that there is significant growth opportunity ahead for WebMD,” said board chair Martin Wygod in a statement. “I believe that the pressures facing the pharmaceutical industry will ultimately prove to be the strong catalyst for a meaningful shift by them to digital marketing solutions. WebMD offers a cost-effective, efficient and highly measurable alternative to traditional detailing to physicians and mass media to consumers.”

CFO and COO Anthony Vuolo is standing in as interim CEO pending a board search for that post, and he will be aided by a new management committee consisting of: EVP, consumer services Gregory Mason; EVP, chief technology officer William Pence; EVP, professional services Steven Zatz, MD; and SVP, sales Dorothy Gemmell.

WebMD's stable of brands includes the eponymous consumer portal as well as Medscape, MedicineNet, emedicineHealth, RxList, theheart.org and Medscape Education.

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