Get me a CEO, stat!
WebMD, whose shares have lost more than half their value in the past year, is under pressure to find a new chief executive as it struggles with an ad slump and with rivals growing at its expense.
In January, WebMD abruptly announced that CEO Wayne Gattinella had resigned and that it had stopped searching for a potential buyer.
The health site also slashed its forecast for the year, blaming a pullback in drug advertising. The news sent the shares tumbling nearly 30 percent.
The stock, which traded as high as $58.17 just last May, fell 21 cents yesterday to close at $25.29.
WebMD, which has launched a $150 million stock buyback, is also feeling the heat from billionaire activist investor Carl Icahn, who owns a 9.5 percent stake. Icahn has called on WebMD to spend as much as $1 billion buying back shares.
Analysts and investors say the New York-based company needs to find the right leader who can send a clear message to Wall Street.
Right now WebMD is suffering from “an identity crisis” and needs to decide whether it is focused on financial engineering or rebuilding the ad business, according to Stifel Nicolaus Analyst George Askew.
“We believe it is essential that WebMD hire a CEO with a corporate background with an eye toward innovating and focused on rebuilding the high profile of the WebMD brand,” Askew wrote in a recent note to clients.
Skeptics also question WebMD’s reasons for its weakening results. The company blames lower drug advertising on patent expirations for blockbuster drugs.
But that explanation doesn’t quite fit with what competitors are reporting. Its close rival, privately held Everyday Health, said its ad and sponsorship revenue grew 32 percent last year.
“Clearly, the competition has outperformed WebMD,” said one major shareholder.
WebMD did not return calls for comment.