WebMD to swing to profit in second quarter on increased ad sales
(Reuters) - Shares of WebMD Health Corp (WBMD.O) soared as much as 31 percent after it said it would report its first profit in six quarters due to higher advertising revenue from its public websites.
The health information provider, which has struggled with falling advertising revenue in recent quarters, also raised its 2013 earnings and revenue forecast.
Shares of WebMD, which operates medical websites providing information on health and diseases, were at $33.91 in midday trade on the Nasdaq, an 18-month high.
Over 2.9 million shares had changed hands by 1200 ET, about 3 times the stock's 10-day average volume.
"The results show that business is improving quicker than we expected, which we attribute to increasing pharma spending and the company's new selling strategy bearing fruit," Raymond James analyst Alexander Draper wrote in a note to clients.
The analyst raised his price target on the stock by $3 to $36.
Two months ago, WebMD said Chief Executive Cavan Redmond would leave the company, less than a year after he was appointed.
Revenue from the company's public portals advertising and sponsorship services fell 18 percent in 2012. (link.reuters.com/vec69t)
WebMD said that an average of 125.5 million unique users used its health network during the quarter, a rise of 17 percent since a year ago.
The company, which had earlier forecast a net loss for the second quarter, now sees net income of 5 cents per share, outperforming the expectations of analysts who had estimated a break even.
WebMD said it expects revenue for the quarter ended June 30 to be between $124 million and $125 million, much ahead of its previous view of above $115 million and analysts' average estimate of $117 million.
The company, whose shares are valued at $1.7 billion, also raised its full-year revenue forecast by $35 million to between $485 million and $505 million.
The company said it expects full-year net income of $3 million to $11 million, compared to its previous forecast for a net loss of $1.5 million to $13 million.
(Reporting By Vrinda Manocha in Bangalore; Editing by Sreejiraj Eluvangal)
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