Updated from 2:37 p.m. EDT
stock chart as a heart monitor, and you see it blipping at about $1.
Shares of the Internet health care company went into cardiac arrest Monday, down 18% after it warned its second-quarter losses would again exceed Wall Street estimates and both its chief operating officer and its chief financial officer had resigned.
The company said it expects a net loss of $1.15 to $1.18 cents a diluted share for the quarter ended June 30 vs. a net loss of $1.28 in the same quarter last year. Analysts polled by
First Call/Thomson Financial
expected the company to post a loss of 30 cents a share. drkoop.com said revenue for the quarter will be $2.5 million to $3 million, compared with $1 million last year.
Dennis Upah, chief operating officer, and Susan Georgen-Saad, chief financial officer, will leave the Austin, Texas-based company and serve as consultants. Georgen-Saad will act as chief financial officer until dr.koop.com finds a replacement.
The news adds to a profile of ailing health for drkoop.com. Once upon a Web site, shares of drkoop.com traded as high as 35. Shares dipped to $1 earlier this year amid reports that the company was a takeover target and that more than a third of the staff had been cut. drkoop.com finished down 5/16, or 20%, at 1 9/32.
In a statement, the company blamed the news in part on bad press -- "These results have been adversely affected by our widely publicized liquidity shortfall" -- and also referred to expenses that are either nonrecurring or will drop sharply in the future, such as employee severance costs and portal expenses. The company estimated portal cost for the quarter to be $18.5 million to $19 million. The company also cited a charge of about $7.4 million in write-off costs related to the end of a joint venture with HealthMagic.
Another diagnosis? dr.koop.com can't break even on its consumer information portal. Co-founded in 1997 by former
U.S. Surgeon General C. Everett Koop
, drkoop.com raised $88.5 million when it made its public debut last June, but had only $35.7 million left at the end of 1999. The company took in $9.4 million last year but lost $56.1 million. "Our capital resources are extremely limited and our operations continue to operate at a loss requiring that additional capital be available," the company said in a
Securities and Exchange Commission
In the filing, drkoop.com said its cash operating expenses are about $2.5 million each month, but operating expenses for financial reporting purposes will "significantly" change this amount as the company amortizes the expense of issuing equities to portal companies to carry drkoop.com. To avoid bankruptcy, Koop recently cut back on multiyear marketing agreements with
drkoop.com also said it is trying to refinance a $1.5 million bridge loan granted in advance of permanent financing, expected to consist of convertible preferred stock and stock purchase warrants. Koop has access to $3 million in standby credit from the bridge lender in exchange for warrants to acquire 6.5 million shares of common stock for 75 cents a share.
drkoop.com disclosed that it had obtained a Nasdaq waiver to allow the company to privately issue stocks at less than market price even if the transaction would mean the creation of common stock shares representing 20% or more of the shares outstanding. drkoop.com attributed the waiver to "liquidity needs" so urgent that stockholder approval would take too long to solicit.
Elsewhere, two law firms,
Finkelstein, Thompson & Loughran
of Washington and
Wolf Haldenstein Adler Freeman & Herz
of New York, said Friday that they filed a class-action lawsuit in the U.S. District Court for the Western District of Texas on behalf of drkoop.com shareholders, alleging violations of federal securities laws. In February, drkoop.com settled a year-old shareholder lawsuit four days before the trial.