Waterfront: The Conde Nast of Web Health
The Internet is the primary source of health information for 70% of U.S. adults, with much of the traffic going to giants such as WebMD (WBMD), Google (GOOG), Yahoo! (YHOO), and Microsoft (MSFT). Yet the most heavily trafficked health destination is one most people have never heard of. Everyday Health, owned by Waterfront Media in Brooklyn, N.Y., is a conglomeration of diet, pregnancy, and disease-specific sites. It bumped WebMD out of the top position last October when it swallowed a much larger site, RevolutionHealth.com, for about $100 million.
The deal was a coup, since RevolutionHealth was founded in 2005 with much hoopla by AOL (TWX) founder Steve Case. He wanted to give consumers the information they craved while letting them store their medical data on the site. But Revolution ran into trouble in part because few people have access to records kept by their doctors and hospitals—if these even exist in digital form.
Waterfront Chief Executive Benjamin Wolin, 34, and President Michael Keriakos, 33, took a much different approach when they teamed up in 2002. Starting in the kitchen of Wolin's apartment in the scruffy Brooklyn building where they both lived, they decided to make Everyday Health a network linking a broad assortment of small, popular brands, some of which already had their own Web sites. These include South Beach Diet, alternative medicine guru Dr. Andrew Weil, and What to Expect—based on the pregnancy book read by 93% of first-time mothers in the U.S. Each brand has legions of fans, and Wolin and Keriakos correctly wagered that many of them would click on linked Web sites once they arrived at their destination.
Waterfront pays each site a royalty, aggregates them under the Everyday Health umbrella, then offers advertisers a package deal in which they pay one price to place ads across a range of targeted sites. "They are almost like the Condé Nast of online health information," says Jane Sarasohn-Kahn, founder of health-care consultant Think-Health. "They publish a lot of different online 'magazines,' all with different brands that appeal to different groups of consumers." With the Revolution deal completed, Everyday Health boasts 24.7 million unique visitors a month. Wolin says revenues are running "north of $100 million" and that Waterfront will be profitable this year. He and Keriakos have raised $63 million in venture capital.
Stashing patient records could still end up being part of the equation, since President Barack Obama has earmarked $19 billion in stimulus money for the creation of digital health records. Steve Case, now Waterfront's largest shareholder, says he's confident this commitment to information technology will transform health care: "That's why there is so much interest and investment in this sector."