Healthline on a roll: new funding, Yahoo! deal

Healthline has been a company that we’ve been looking at since we very first started talking about Health 2.0. Check out the very first podcast about Health 2.0 on THCB with Healthline’s Dean Stephens back in late 2006. In fact its roots go back to Yourdoctor.com in the halcyon days of the late 1990s, but these days Healthline uses its taxonomy based search to provide search and content for not only Healthline.com, but also enterprise software for Aetna & UnitedHealth Care, as well as powering health search on several media sites like Ask.com, US News & World Report and AOL. It’s been a hectic couple of weeks for Healthline and I spoke with CEO West Shell about several new developments.

Matthew: First off, tell me about the new funding, and tell me about the state of the business.

West: Healthline just raised another $14M led by new lead Investor Growth Capital. Several previous investors including GE/NBC and Reed Elsevier also were in this round. We doubled the scale of the business last year and this round is designed to add some incremental investment in our R&D for the network services business. We’re doubling down to accelerate the growth of the company. The total capital we raised is now $50m, and this follows on from our last round about 2.5 years ago. We’re already cash-flow positive and profitable, and although we’re not releasing figures, but we have about 100 people—so you can make your own educated guess.

Matthew: You run your own web site, you provide software for enterprise clients, and you have your own advertising network. Where do you aim to spend the money?

West: Essentially we’re investing heavily in expanding R&D. We’re hiring more engineers, more medical informatics staff. We think that this combination is why the big partners are choosing us. Taking on new partners means we need to build out our network services business. We need to support customers and we need to keep delivering the search, content and advertising that they’re looking for.

We’re also investigating some M&A opportunities; we looking both at some technology and content assets. We think that there are some interesting Health 2.0 technologies that would make a good addition to our current portfolio. Lots of small companies have built innovative tools but they don’t have the scale that we have—now over 100 million visits across all our network—so we can help monetize what they’ve built.

We also want to syndicate more content, so we’re looking at more interesting niche health content. Of course it would be nice to add profitable revenue too, but content and technology are the two primary focuses.

Matthew: In addition you’ve signed a deal with Yahoo!. I’ve called them the sleeping giant of Health 2.0, in that they have tens of thousands of health groups, and have spent very little time building out any focus on them. Tell us how the deal came about?

West: You are right, Yahoo! was the sleeping giant. But (Yahoo! CEO) Carol Bartz wants to leverage the Yahoo! brand. They are now very serious about health care and want to build a world class health care destination. But its a difficult category to build. They went on a long due diligence process—it took nearly a year. They did a huge amount of diligence on us and everyone else, and literally made the decision within the last several weeks. All of us at Healthline are very excited about it and we now have a large team working on designing, building and hosting Yahoo Health!

Matthew: For Yahoo! are you an enterprise software provider or are you also selling advertising—I assume they’ve got some of that covered already.

West: It’s a multi-tiered multi-year contract—it’s a true partnership. We are working together as partners, they are licensing software, there are also added value revenue streams to us from advertising and we are working with their ad sale teams. In our partnership, Yahoo! will be leveraging their powerful brand, large loyal audience, insightful original content and extensive programming expertise.

Matthew: Do they then become your biggest client?

West: They will be one of the largest but not the largest client—if you look at our partners today we believe that Healthline platform is becoming the standard for delivering health information. We hope to replicate this relationship with Yahoo! in many ways with other companies.

Matthew: What about tools (like the dreaded PHR) and other data related services? You’re working with health plans (especially Aetna) to improve the quality of search by incorporating the user’s data from their sources. Are you going to build some of those tools too?

West. The distinction between EMR/PHR is blurring—we want to be the intelligent decision support layer for both of those tools. We don’t want to manage and store the data. We want to help those companies that do that use our taxonomy to make that information make sense. We want to provide the user interface and the transaction tools that allow the consumer use their own data to make sense. What are my instructions? When should I take my meds? All that allows the consumer to make better decisions with that information. Most PHRs require easy to use consumer support information; otherwise it’s just a scrapbook of data that consumers don’t know what to do with. We want to make it useful. We’re of course talking to many of the leading players in the EMR world who haven't focused about the consumer component as it’s clearly going to be a big part of meaningful use.

Matthew: What do you think of Google’s current search and health strategy, and what it means for health care content

West: Google is continuing to figure out the health space. I don’t think that people nor Google itself really understands where they’re going in health. They realize that the PHR market is a ways away in terms of adoption, but they’re making progress in the efficacy of their health search platform. But it’s still based on keywords, which we think is not as effective as a taxonomy approach which is what we do. They don’t understand the concepts and semantic relationships between health terms and that’s a challenge for them.

But we all live in a Google ecosystem so they’re everyone’s competitor and everyone’s partner and that’ll will continue into the future.

Matthew: And your closing thoughts?

West: This series of major new announcements—now that we’re at 100m uniques—gets us to the scale that we think makes us a really interesting company. Now with the new money it gives us more flexibility to accelerate the growth of the company, and I’m very excited.

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