Everyday Health said advertising and sponsorship revenue grew 11% to $36.3 million in the first quarter as the company expanded new services to its pharma customers, including data tools to help optimize TV buys.
TV is generally considered an inefficient way to market therapies that target rare or orphan diseases, which by definition affect very small patient populations. Using the company’s data and analytics to better understand consumer viewing habits as well as develop a cross-screen approach are two ways that may help pharma companies maximize the billions of dollars they spend on TV each year, Everyday Health CEO Ben Wolin told investors.
“These are budget dollars that we have not historically competed for,” he said on a call reviewing the quarterly results.
Indeed, as two of the company’s recent deals show, Everyday Health has sought to blur the line between media companies and marketing agencies. It purchased Cambridge BioMarketing, an agency focused on rare-disease treatments, in March and the DoctorDirectory, a marketing services firm that targets physicians, late last year.
“We can now service orphan, specialty and mass-market brands and provide solutions during the pre-launch growth years and even beyond patent exclusivity,” Wolin said.
Revenue from top-spending customers grew 16% in the first quarter and generated 75% of total advertising and sponsorship revenue.
The digital health company beat expectations in the first three months of the year and updated its guidance. It now expects to generate between $222 million and $230 million in advertising and sponsorship revenue in 2015.
But some analysts expressed concern about revenue expectations for the year despite Everyday Health’s strong quarterly financial performance.
“We believe uncertainty remains around the ability of both Everyday Health and WebMD to drive the significant advertising revenue growth ramp” for 2015, Stifel analyst Steven Rubis wrote in a research note. Both need to evolve beyond providing physician and patient educational content, he wrote.
The record number of pharma acquisitions in the first quarter and the uncertainty surrounding the biosimilars market—the launch of Zarxio, the first biosimilar to be approved by the FDA, was temporarily halted by a federal judge earlier this month—may limit pharma spending on advertising this year, Rubis added.
Still, he noted there may be a potential boost in advertising spend if cholesterol-lowering PCSK9 inhibitors receive FDA approval this year. The FDA is expected to approve or reject Sanofi/Regeneron’s Praluent and Amgen’s Repatha later this summer.
Everyday Health’s total revenue rose 10% to $41.2 million in the first quarter of 2015, up from $37.5 million in the same quarter a year ago. The company reported a net loss of $8.1 million.