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Health website flies the Koop at $9 a share

Drkoop.com Inc. (Proposed ticker: KOOP) priced its initial public offering at $9 a share on Monday night. Shares will begin trading later today.

The company, a Web-based health information service, is offering 9,375,000 shares to the public. The price range was $7 to $9 a share. Bear Stearns is the lead underwriter with Hambrecht & Quist assisting. Wit Capital is distributing shares online.

As the name of the company would imply, C. Everett Koop, M.D., former U.S. Surgeon General, is chairman of the board. Given Koop's well-known name, the massive market for healthcare services and Healtheon's (Nasdaq: HLTH) $5.5 billion acquisition of WebMD, drkoop.com should garner Wall Street's attention.

Drkoop.com, the company, pays Koop, the doctor, royalties for use of his likeness. Koop gets 2 percent of the company's sales for current products and up to 4 percent of sales from new products over the agreement's 5-year term. Koop also makes six figures in consulting fees and has options to purchase 713,437 shares with an average price of 11 cents.

Drkoop.com, which calls itself a consumer healthcare portal, is looking to broaden its consumer distribution through portal agreements and content syndication.

In April, drkoop.com penned a three-year pact to be the exclusive content provider for the Go.com Health Center. According to regulatory filings, drkoop.com is paying Infoseek (Nasdaq: SEEK) and Disney (NYSE: DIS) $57.9 million over the life of the deal. Drkoop.com will also provide content to ESPN and The Family Channel. The company also has a distribution deal with At Home (Nasdaq: ATHM).

The company plans on making money by enabling e-commerce transactions such as prescription refills and and advertising. The drkoop.com launched its site in July 1998 and has 280,000 registered users and 6 million unique users, the company said in regulatory filings.

Drkoop.com will need to grow its traffic to grow revenue, which is currently a bleak number. For 1998, drkoop.com reported sales of $43,000 and a loss of $9 million. For the quarter ending March 31, the company reported sales of $404,000 and a loss of $4.1 million. As of March 31, 1999, drkoop.com had an accumulated deficit of about $24.2 million.

The company cites drweil.com, mayohealth.org, onhealth.com, thriveonline.com and webmd.com among its main competitors. Drkoop.com also cites affinity groups and traditional medical information providers as competition.