WebMD Acquires Avado For $20-$30M To Help Drive Its Evolution From Media Company To Patient Engagement Platform


Seventeen years after its inception, WebMD remains one of the go-to resources for basic health and diagnostic information (and hypochondria enablement) on the Web. Born at the height of the Dot-com Boom, WebMD is on a very short list of companies that were able to not only endure the ensuing crash, but go on to achieve profitability, a billion-dollar market cap and maintain their position as a market leader — even today.

It’s been a bumpy road for WebMD, however, and the potholes ahead aren’t getting any smaller. As the transformation of the healthcare industry accelerates, the threats to WebMD’s business and its position atop the food chain have begun to multiply. Though WebMD announced today that its health network saw 138 million unique visitors per month and total traffic of 2.95 billion page views during the third quarter — after reporting its first profit in six quarters in July — its popularity has wavered over the last decade. At times, WebMD has been more punchline than pioneer.

Adapt Or Die

Today, WebMD is primarily known for its consumer-facing health and diagnostic web portal and mobile apps. When you think of WebMD, you think of its classic symptom checker, where you can enter in keywords like “runny nose,” whereupon it will serve you with possible diagnostic matches. However, over the years, the company has been quietly diversifying, adding services that allow it to reach new audiences.

Through Medscape, for example, the company offers medical news and information to healthcare providers through its registration-based portal and apps. In turn, WebMD has also begun to target employers and health plans with its subscription-based patient engagement platform and private online health portals, which give employees a secure gateway through which they can access their personal health information, plan data and insurance claims.

WebMD 2.0: From Media To Tech

Screen Shot 2013-10-30 at 6.50.16 AMWhile WebMD has build a solid foundation around its flagship health information site, each of these services still live apart from each other. As people continue to adopt and become comfortable using a wide range of digital health tools, the opportunities for patients and healthcare providers to connect and communicate, for patients to take control of (and better monitor) their healthcare will increase exponentially.

If WebMD is going to continue to be a part of the conversation in the emergent HealthCare 2.0 Era, it’s going to have to step up its game and adapt to these changes.

What’s more, WebMD has business model that’s very much centered on advertising. Where the pharmaceutical industry goes — its primary source of advertising dollars — so goes WebMD. But, as the company looks to close the gap between its consumer-facing apps and services and its provider-facing portal by allowing doctors to push content to their patients’ phones, for example, opportunities begin to present themselves. By giving doctors the ability to prescribe educational material and content across apps, stepping into personalized healthcare information services and behavior change, WebMD could be able to reduce its reliance on advertising.

Looking forward, WebMD will continue to deliver its core media services, but perhaps more critical to its survival will be the process of redefining itself as a health technology company. To do so, WebMD took its first step in that direction today with the announcement that it will be acquiring TechCrunch Disrupt finalist and the maker of “Patient Relationship Management” (or “PRM”) software, Avado.

Avado And Patient-Focused Healthcare

Like healthcare itself, WebMD has historically tailored its products to address the two very distinct “worlds” within the system: The consumer world and the professional world. Traditionally, it was as if these two divisions were separated by 30+, New York City blocks. With its first acquisition in five years, WebMD is looking for Avado to both metaphorically and physically become the connective tissue between its offices and between its customers — consumers, patients and doctors.

Screen Shot 2013-10-29 at 6.36.22 PMSince launching in 2011, Avado founders and Microsoft veterans Dave Chase, Bassam Saliba and John Yii have sought to do for healthcare and personal health records what Salesforce has done for Customer Relationship Management (CRM). [Disclosure: Dave Chase has contributed a number of articles on the HealthTech space to TechCrunch over the years.] The idea, Chase says, has been to increase the level of connectivity between healthcare providers and consumers to make the delivery of care more efficient and improve patient outcomes.

“The timing is right,” WebMD CTO and COO Bill Pence tells us. “Traditionally, patients and healthcare providers have lived in separate silos, but with the growing adoption of electronic health records and mobile devices, coupled with the advance in sensor technology, there are now more opportunities than ever before to connect the two and offer personalized, direct-to-consumer services.”

The Road Ahead

While the companies aren’t yet ready to talk about the new products that are on the roadmap in the wake of the acquisition, Pence did say that these products will directly integrate Avado’s technology. Beyond that, as to what will become of Avado once it’s folded into the WebMD ecosystem, Chase says that Avado will take up residence within WebMD’s technology team, currently a small but growing portion of the company’s 1,600 employees.

Avado founders Chase and Saliba will be staying on after the acquisition, and will be reporting to Pence. The other members of the Avado team will also join WebMD’s tech team and will remain at their company headquarters in Seattle.

Screen Shot 2013-10-29 at 6.27.01 PM While the two companies declined to share details in regard to the terms of the acquisition, TechCrunch sources close to the deal said that the price fell in the $20 million to $30 million range and was a positive outcome both for the founders and for its investors. Avado raised $1 million back in March from investors that include The Partnership Fund for New York City and healthcare angels like Andy Palmer and QxMD founder Dr. Daniel Schwartz.

Though Avado managed to secure outside investment and attract “hundreds” of healthcare provider customers and “many thousands” of consumers, its traction is minuscule in juxtaposition with WebMD. While WebMD may not be the sexiest brand in healthcare, it reaches the largest audience of health-focused consumers and healthcare providers in the U.S., Chase said.

And therein lies the real value of this outcome for Avado — the opportunity to not only help WebMD in its plans to build the “Health Graph” and integrate its technology into a larger suite of connectivity and patient-empowerment services, but reach an audience of (hundreds of) millions.

On the other hand, while WebMD finds itself back in the black and holding fast to its position in the market, the online consumer healthcare pioneer is at a crossroads. Yes, they have a long reach, but without talent that can help it build third party ecosystems, WebMD risks missing a big opportunity.

WebMD is eager to reposition itself and transform itself from a digital media company to a health technology company, and, in particular, become a true patient engagement platform. Avado believes it can help WebMD shave two years off of that transition. Integrating Salesforce-like patient empowerment software (and APIs) into its portfolio and infrastructure are the first real step in that new direction.

For more, find the acquisition announcement here.

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo