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Drkoop latest dot-com to run low on cash

The health site files regulatory documents that raise "substantial doubt" about its business, sending its stock plummeting 41 percent.

Health site Drkoop.com has filed regulatory documents that raise "substantial doubt" about its business, news that sent its stock plummeting 41 percent.

In an annual report with the Securities and Exchange Commission released yesterday, the company said it has "sustained losses and negative cash flows from operations since its inception," posing a threat to its future as a business. PricewaterhouseCoopers is the company's auditor.

Drkoop's shares dropped $2.56, or 41 percent, to $3.69 by the 1 p.m. PST close of regular trading.

PricewaterhouseCoopers said in the filing that the company's financial data has raised "substantial doubt about its ability to continue as a going concern." In its defense, management said it intends to raise working capital through additional equity or debt financing in the upcoming year, according to the filing.

The Austin, Texas-based company was not immediately available for comment.

Drkoop is the latest Internet company to report that it is running low on cash. Earlier this week, online music seller CDNow said its auditor, Arthur Andersen, has also expressed "substantial doubt" about whether the company can continue to stay in business, according to an SEC filing.

Yesterday, online grocer Peapod said it is soliciting takeover offers from a range of suitors as the company continues to face cash flow problems. Sources close to Peapod said the company is looking for an immediate $20 million infusion of cash.

In recent months, Drkoop has seen its stock wane, down to the $5 to $6 per share range, far from its 52-week high of $45.75. Competitors Healtheon/WebMD and Drugstore.com have also experienced falling stock prices. Both are trading near their 52-week lows of $25 and $12.38, respectively.

Drkoop, which posted a much wider 1999 year-end loss of $2.27 per share compared with the previous year's loss of 75 cents per share, has also been battling a number of legal issues in the past few months. Adam.com, a provider of online medical and health information, recently settled its licensing lawsuit against Drkoop, which it had accused of improperly selling Adam.com's medical encyclopedia over the Internet.

The company ran into other legal troubles involving securities regulators. One Drkoop director was charged with violating corporate insider trading rules, while other executives were charged with breaching federal security regulations that prohibit directors from selling company stock within six months of purchasing shares, the company confirmed at the time.