(Reuters) - WebMD Health Corp WBMD.O warned it was sliding into losses as drug companies cut their advertising budgets, sending the shares down 25 percent to an all-time low even as the website reported sharply higher readership.
WebMD, one of the best-known medical websites for information on everything from cancer to eating habits, said advertisers facing patent expiries and unexpected delays in new product approvals had reduced spending on the site.
The company estimated a second-quarter loss of $5.8 million, or 12 cents per share, on revenue of about $112 million.
Analysts, on average, expect a loss of 10 cents per share on revenue of $115.1 million, according to Thomson Reuters I/B/E/S.
The company also warned of a 2012 loss of between $12.4 million and $23.4 million, down from its earlier forecast of a profit of between $2.8 million and $19.9 million.
The healthcare information Website’s shares slid to $13.52 on Tuesday afternoon on the Nasdaq on turnover of about 4.3 million shares, nearly 10 times their 10-day average volume.
Former Pfizer Inc (PFE.N) executive, Cavan Redmond, who WebMD hired as its chief executive in June, is seen as the key to turning around its fortunes.
“With a new Sheriff in town, we believe there is hope,” Stifel Nicolaus analyst George Askew said in a note to clients, but he expressed skepticism about the pace of change as long as Chairman Martin Wygod maintained a firm grip.
Martin Wygod, 72, has been WebMD’s chairman since May 2005.
In the second quarter, WebMD traffic rose 29 percent to about 107 million unique users per month, and page views grew 25 percent to 2.5 billion, WebMD said in a statement.
But with advertising under pressure, it forecast a drop in 2012 revenue to $455 million-$480 million, down from its earlier forecast of $500 million to $535 million.
The recently appointed chief executive on Tuesday promised a full review of the company, saying he was already looking at advertiser needs and would also turn his gaze internally.
“I am reevaluating the company’s infrastructure across the board to drive operational improvements and cost efficiencies,” Redmond said in a statement.
The company, in which activist investor Carl Icahn holds a 13.3 percent stake, in January warned investors of lower 2012 profits as it struggled to attract advertisers.
The company, which has a market capitalization of about $900 million, is expected to report its quarterly results after the market close on July 31.
Reporting by Balaji Sridharan in Bangalore; Editing by Roshni Menon and Rodney Joyce