Everyday Health's (EVDY) CEO Benjamin Wolin on Q2 2014 Results - Earnings Call Transcript

Aug.11.14 | About: Everyday Health, (EVDY)

Everyday Health, Inc. (NYSE:EVDY)

Q2 2014 Results Earnings Conference Call

August 11, 2014, 05:00 PM ET


Melanie Goldey - SVP, Strategic Planning & IR

Benjamin Wolin - Co-Founder and CEO

Brian Cooper - EVP and CFO


Douglas Anmuth - JPMorgan

Stephen Ju - Credit Suisse

Mark May - Citigroup

Steven Rubis - Stifel Nicolaus

Sandy Draper – SunTrust


Good afternoon my name is Mike and I will be your conference operator today. At this time I would like to welcome everyone to the Everyday Health Second Quarter 2014 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions).

I will now turn the call over to Melanie Goldey, Senior Vice President, Strategic Planning & Investor Relations. You may begin your conference.

Melanie Goldey

Thank you Mike and good afternoon everyone. Welcome to Everyday Health’s second quarter 2014 earnings call. Joining me today are Ben Wolin, Co-Founder and CEO and Brian Cooper, our CFO.

During the course of this call we may make forward-looking statements, including statements regarding the company’s future financial and operating results, future market conditions and the plans and objectives of the management for future operations. These forward-looking statements are not historical facts but rather are based on our current expectations and beliefs and are based on information currently available to us. The outcome of the events described in these forward-looking statements are subject to known and unknown risk and uncertainties that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including but not limited to those factors contained in the risk factor section of the company’s quarterly report on Form 10-Q for the quarter-ended June 30, 2014, filed with the SEC and in future SEC filing. All information provided in this call is as of today.

Except as required by law we undertake to no obligation to update publicly any forward-looking statements made on this call to conform to statements or actual results or changes in our expectations. Also it is Everyday Health’s policy not to comment on our financial guidance other than in public communications.

I will now turn the call over to Ben Wolin, Everyday Health’s Co-Founder and CEO.

Benjamin Wolin

Thank you Melanie and thank you all for joining us on the call today. We are pleased to update our shareholders and the broader financial community on our strong Q2 performance. Brian Cooper, our CFO will walk you through the financials and provide guidance for the third quarter and the full year momentarily. But let me start by highlighting some key accomplishments from the quarter.

We continued to deliver profitable growth throughout the second quarter exceeding our plan on both revenue and adjusted EBITDA. Total revenue was $41.4 million, an increase of 11% over Q2, 2013. Advertising and sponsorship revenue totaled $36.9 million representing 16% growth over Q2, 2013. We are also pleased to report the continued expansion of our adjusted EBITDA this quarter which totaled $6.9 million, up 72% on a year-over-year basis.

Our progress in the second quarter was propelled by four growth drivers. First, the continued shift to specialty pharma; second our advanced data and technology capabilities; third, our success in mobile; and fourth, our ability to market to healthcare professionals.

Let me provide more detail on each of these trends. First from an advertiser perspective pharma continues to be our fastest growing category. The macro factors affecting pharma, including the shift to specialty drugs and the ongoing reduction in sales force continue to be positive for our business. Our digital solutions, sophisticated targeting and ROI capabilities position us well to help our pharma customers effectively reach and engage highly targeted patient populations and the healthcare professionals who serve them.

Second, our Health Reach Solution also continues to power advertising growth. Health Reach is a programmatic media buying platform that leverages our extensive database and allows advertisers to reach highly targeted health audiences at broad scale off the Everyday Health portfolio across web, video, social and mobile channels. We have been out in the market with this unique solution for approximately 18 months and we continue to see increased interest and momentum from our customers.

In the second quarter revenue from our Health Reach Solution more than doubled on a year-over-year basis. Third, mobile continues to be very important for Everyday Health. In the second quarter 63% of visits to our operated properties were made on mobile devices as compared to 53% in Q2 of last year and revenue from mobile represented over 30% of total revenue in Q2, 2014. Our ability to drive improved ROI in the mobile environment is unique and is evidenced by our 60% mobile revenue growth in the second quarter as compared to Q2 of last year.

The final growth driver to highlight is the acceleration of our professional business. Our professional revenue in the second quarter grew double-digits over Q2 of last year and we also made significant strides in further scaling our audience of healthcare professionals which I will touch on momentarily.

Let me now highlight the key audience engagement metrics for our portfolio during the second quarter. Visits to our three flagship properties Everyday Health, What To Expect and MedPage Today increased 29% year-over-year. This increase in visits is coupled with deeper engagement by our users, particularly in our online education centers which provide our users with a highly engaging way to research and manage specific health conditions on a daily basis. Time spent by our users in these online education centers grew 68% from Q2, 2013 to Q2, 2014.

The growth in our audience engagement is a testament to our focus on delivering high quality content and tools tailored to the specific needs of our users, anchored by highly respected authentic personalities, including Dr. Sanjay Gupta, Meredith Vieira and our newest contributor Randy Jackson.

We also track the number of new registrations on our portfolio as they are very important in enhancing the value of our database. During the second quarter and consistent with our expectations, new registrations totaled 1.2 million. These registrations will enable our continued success in the monetization of our interactive brands sponsorships, Health Reach and mobile. These healthy engagement metrics demonstrate the value that our platform provides to our users. Our multi-brand, multi-channel portfolio strategy is clearly working, and the direct result of this strategy is the strong financial performance that we are happy to report today.

Let me now focus on some business highlights. An important and highly differentiated feature of our company is our ability to partner in innovative ways with prominent brands and institutions in the health and wellness ecosystem. As I mentioned last quarter the healthcare landscape is fragmented and our partnership model allows us to take advantage of that fragmentation, grow our core marketing solutions business and to create new revenue opportunities with other constituents such as payers and providers. With regard to our core marketing solutions business we formed several new strategic partnerships in the second quarter that allow us to continue to curate the best content for our consumers and healthcare professionals while further enhancing the highly targetable audience engagement platform our customers rely on.

On the consumer side as we announced earlier in the second quarter we launched the diabetes step-by-step initiative. Diabetes is one of the biggest health crises in America and an important area of focus for Everyday Health. We are now taking a broader, multi-pronged approach to addressing the diabetes crisis from prevention to diagnosis to disease management. The diabetes step-by-step platform will offer users’ content, tailored to their personal interest and needs and will feature Randy Jackson, a long time music industry veteran American Idol Judge and Diabetes Advocate.

On the healthcare professional side we augmented our content and tools in the very important category of oncology. Cancer will surpass cardiovascular disease as the number one cause of death in the U.S. and with continued shift towards specialized therapies oncology has become a huge growth area for pharma. To help tackle this challenge we launched a partnership with the American Society of Clinical Oncology or ASCO for short. The partnership will provide editorial coverage of their numerous conferences and a platform to distribute and communicate with their physicians. There are fewer than 20,000 oncologists and hematologists in the U.S. The ability to reach this very important audience through a digital channel and value-added tools is paramount.

Everyday Health now reaches approximately 90% of all oncologists and hematologists in the U.S. Finally we recently announced our partnership with SERMO, the number one social network for physicians. Through this partnership we will provide our MedPage Today content to the SERMO physician audience facilitating high level discussion and analysis of important medical and healthcare issues and enable us to provide sponsorship opportunities on SERMO.

In addition, today we are pleased to announce that we have also entered into a new agreement to deliver select Mayo Clinic content resources and tools on MedPage Today. This is the first collaboration in the healthcare professional market between Everyday Health and Mayo Clinic, which has been an important relationship for us over the past few years across several areas. We currently provide advertising sales representation for the consumer health content section on mayoclinic.org, technology expertise for Mayo Clinic Healthy Living Online and administer the newly launched Mayo Clinic diet online subscription service for consumers.

Through this new collaboration MedPage Today will distribute Mayo Clinic knowledge to a broad audience of healthcare professional. These initiatives will expand our physician reach to approximately half of all verified U.S. physicians across 75 different specialties. We continue to see the professional space which we entered at the end of 2010 as an important growth area for us and this well-scaled physician audience makes us a critical partner for any company or brand trying to engage with doctors.

Our mission is to provide the most valuable tools and content to help patients and physicians make better health decisions everyday and our strategic partnership model enables us to effectively fulfill this mission while generating meaningful revenue growth at the same time. What is particularly exciting to me is that our platform and approach to partnering with leaders in healthcare will allow us to seek new growth opportunities across the broader health landscape.

During last quarter’s call I talked about the sweeping changes in the healthcare system and how Everyday Health content tools and data and analytics capabilities are becoming increasingly valuable to entities beyond just marketers and advertisers. Employers, payers, providers and other risk takers in the healthcare ecosystem are focusing on consumers now more than ever.

Everyday Health has the ability to help these constituents effectively reach and communicate with consumers. In many ways our opportunity here is simply a continuation of our core capabilities but with new customer channels. For example as we noted last quarter we collaborated with the Mayo Clinic to redeploy our existing health engagement platform to enter the corporate wellness marketplace. We are now in the process of rolling this platform out to clients and we are excited about the potential impact we can have with employers and their employees.

Taking advantage of this large new opportunity in the broader healthcare ecosystem will require dedicated focus. We are pleased to announce today that we have hired a Senior Executive to join Everyday Health to run our Healthcare Solutions business. This individual is an incredibly accomplished healthcare executive who has held operations, strategy, advisory, finance and policy positions at premier institutions in the healthcare industry. He will be responsible for directing our strategy across the broader healthcare landscape, determining our areas of focus, leading our product strategy and generating meaningful revenue growth from a new customer set. We are excited about our opportunity with payers and providers and we will be publicly announcing more details about this hire shortly.

Before I turn it over to Brian, let me wrap up by saying that I’m very pleased with our progress this quarter. We continue to provide market leading solutions and real results for our customers, consumers, and healthcare professionals. We achieved profitable growth in the first half of 2014, and in our second quarter as a public company and through partnerships and new executive hires we have set the company up nicely for future growth across the existing business and in new exciting areas.

Now our CFO, Brian Cooper will walk you through the financial highlights in more detail.

Brian Cooper

Thanks, Ben and thank you all for joining us today. I am pleased to walk you through our strong Q2 financial performance. These results demonstrate our continued ability to deliver profitable growth to our shareholders. After I walk you through our second quarter financials I will share our outlook on the third quarter and the rest of 2014.

Starting with Q2 revenue, the company's total revenue was $41.4 million in the second quarter, which represented an increase of 11% over the same period last year. Advertising and sponsorship revenue was $36.9 million in the second quarter, which represented an increase of 16% on a year-over-year basis. Consistent with our plan, premium services revenue totaled $4.6 million in the quarter, down from $5.4 million in the same period last year.

Before addressing our revenue growth drivers I want to highlight that the first half of the year advertising sponsorship revenue growth was approximately 22% on a year-over-year basis. As our advertising sponsorship revenues are typically generated as part of annual campaigns the cumulative growth is an important way for us to measure our progress against our full year guidance.

Let me now provide some color on the growth drivers underlying the company's advertising and sponsorship revenue. During the quarter we worked with over 150 advertisers. The average revenue per advertiser was $238,000, representing an increase of 39% on a year-over-year basis. For the first half of the year we worked with over 200 advertisers. Average revenue per advertiser was approximately $331,000, representing an increase of approximately 41% on a year-over-year basis.

Our customer base includes some of the largest pharmaceutical and CPG companies in the world and our strategy to go deeper with these customers, both in terms of bigger deals with existing brands and expanding the number of brands we work with at these companies is a key catalyst for the company's continued growth. For example in Q2 and in the first half of the year we grew revenues from our top 30 advertisers approximately 31% and 45% respectively, highlighting the great success of this strategy. As Ben mentioned pharma is our fastest growing category of advertisers, now representing over 70% of advertising and sponsorship revenue in Q2.

We are benefiting from pharma, moving more marketing budgets to digital and by having highly targeted data driven offerings. Finally, mobile continues to drive growth. Revenue was up 60% in the second quarter on a year-over-year basis. The continued strong performance in mobile is a testament to how our investment in data and analytics allows us to offer marketing solutions that monetize equally well in a mobile or desktop environment.

Focusing now on profitability, our revenue growth is accompanied by continued profitability. We continue to see leverage from our partnership business model, resulting in second quarter gross profit and gross margin of $30.5 million and 74% respectively representing improvements of 16% and 266 basis points respectively.

The company's Q2 adjusted EBITDA and adjusted EBITDA margin totaled $6.9 million and 17% respectively, representing improvements of 72% and 590 basis points respectively. As I’ve mentioned before we look closely at our adjusted EBITDA flow-through as a key metric of leverage in the business model. For the first half of the year our adjusted EBITDA flow-through was approximately 53%.

With respect to earnings per share, in the second quarter our weighted average common shares outstanding per basic and diluted calculations was approximately 29.8 million and 32.7 million shares respectively, and our non-GAAP earnings per share on a basic and diluted basis was $0.08 and $0.07 respectively. On a GAAP basis, our Q2 basic and diluted loss per share was $0.02. The earnings release we issued today provides a detailed reconciliation of GAAP to non-GAAP EPS as well as a detailed reconciliation of net income to adjusted EBITDA.

Regarding the company’s balance sheet we closed the quarter with approximately $55 million in cash and $40 million of term debt. As some of you may remember upon completing the IPO in April we paid down approximately $32 million that was outstanding under the company’s revolver facility, significantly improving the company’s interest expense while still preserving the company’s ability to draw upon the full $35 million revolver should the circumstances warrant.

Turning now to our financial outlook, we are pleased with our Q2 results and are optimistic about the second-half of this year. We expect the favorable market trends to continue and we believe we have good momentum in our core marketing solutions business as we also seek significant opportunities in the broader health landscape.

Let me start with guidance for the full year 2014. Total revenue growth is expected to be approximately 16% at the midpoint of the range provided in today’s earnings press release. Advertising and sponsorship revenue is expected to be approximately 21% at the midpoint and adjusted EBITDA growth is expected to be approximately 58% at the midpoint. With respect to Q3, we expect total revenue growth to be approximately 19% at the midpoint of the range, advertising and sponsorship revenue growth of approximately 26% at the midpoint, and adjusted EBITDA growth of approximately 104% at the midpoint, representing an adjusted EBITDA flow-through rate of approximately 52%.

On our last earnings call I mentioned that advertising and sponsorship revenues for the first half of the year have historically represented between 42% and 44% of the company’s annual advertising and sponsorship revenues and based on today’s guidance. 2014 will be consistent with that historical pattern.

Finally, we are very pleased that based on our Q2 results and our overall optimism around the business we are able to raise our revenue and adjusted EBITDA guidance for the full year as compared to what we announced back in May. We remain thrilled about our opportunity and our position in the market and we are confident in our ability to continue to march towards our long-term adjusted EBITDA margin goal of 30% to 35%.

With that let me hand it back over to Ben.

Benjamin Wolin

Thanks, Brian. We are executing well on our business objectives and we are committed to delivering profitable growth to our shareholders. We successfully and strategically leveraged our partnership business model in Q2 to create meaningful, value-add offerings for our consumers, professionals and advertisers and we are excited about what this partnership model will allow us to do going forward.

The digital health marketplace is an exciting place to be and we believe we are very well positioned to make a real difference. With that we will open up the call for questions.

Question-and-Answer Session


(Operator Instructions). Your first question is from Douglas Anmuth with JPMorgan.

Douglas Anmuth - JPMorgan

Great, thanks for taking the question. Guys I was just hoping if you can talk about 3Q and the outlook there specifically for advertising and sponsorship revenue and if we look at 2Q to 3Q over the last two years we have seen sequential drops in revenue here. You are guiding to an increase in advertising revenue sequentially. So just hoping you can comment a little bit more on that and the kind of confident that you have their based on perhaps the booking, the pipeline you are seeing and also the way the annual spend comes in. And then if there are any particular anecdotes or stories that you can help us with around getting deeper with some of your largest clients that will be helpful as well, thanks.

Benjamin Wolin

Okay, all right, thank you Doug. So a couple of things on the third quarter. I think first of all as Brian mentioned in his script, percentage of revenue in the first-half of the year versus the full year being about up 43% versus the 57% in the back half of the year. So that is pretty consistent, and as I think we’ve talked about in the past, we really look at it on a full year basis rather than on a quarter-to-quarter to really mark the progress.

In terms of the acceleration in Q3, I think it's really driven by the same trends that I mentioned in the call, so continued penetration of our core customers, progress in Health Reach and progress in our professional offering. So all of the same drivers in Q2 would be applicable in Q3, and I think the last thing, just in terms of the concentration of where that progress is coming from, it really will come again from the top 30, if you saw on some of the highlights, our top 30 advertisers are up 31% on a year-over-year basis in Q2, average revenue per advertisers up 39%. And so I think that we expect the growth to happen in the same places going deeper with our core customer set.

Douglas Anmuth - JPMorgan

Great thanks.

Benjamin Wolin

Thank you.


Next question is from Stephen Ju with Credit Suisse.

Stephen Ju - Credit Suisse

Hey, thanks. Ben it seems like from a product standpoint you are starting to take content that used to exist in silos and connecting them to boost engagement. Is there an opportunity to make content on MedPage Today richer by opening it more generally for greater contribution from the physicians who use the site? And I guess sticking with this theme, is there any appetite to connect the consumer facing domains with the physicians on MedPage into more of a Q&A platform? Thanks.

Benjamin Wolin

All right. So in terms of your first question about the content offering on MedPage we highlighted a couple of the offerings that we've added to MedPage or expect to add, ASCO and Mayo were the two ones that we highlighted. And we will continue to definitely do that in the future. I think in the professional space it's very common for key opinion leaders to be used as content creators in specific therapeutic categories and we expect to do that more and more.

So many of those key opinion leaders are also users of MedPage Today, and we want to tap in to them for their expertise. So, I think those type of deals that we announced are just going to keep coming and you will look to see MedPage become an even more robust offering for the healthcare professionals that are using it.

In terms of connecting the two assets, the pro and the consumer assets I think you can look to see a couple of different pushes from us. First on -- from a consumer facing standpoint I think what you will see us do is take much of the patient education materials that we produce on the consumer side and provide those as tools for our professional audience to then distribute to their own consumers or patients.

So, if we are, as an example investing in diabetes and we are improving the diabetes app that we have in market, we want to give that to endocrinologists and PCPs to then turnaround to give to their patients. So, I think the content creation can become very symbiotic. Additionally on the back end we're more and more selling our 360 solutions for both consumers and professionals in which our brand will be simultaneously marketing both to a PCP and the consumer audience. And we have seen that when we do that we see real lift in those programs and we see more and more traction for that offering in the marketplace. So in many ways I think those two assets are going to continue to fuse together over time.

Stephen Ju - Credit Suisse

Thank you.


The next question is from Mark May with Citi.

Mark May - Citigroup

Hi, thanks, I had two. One as the mix of ad revenue shifts a bit towards these larger fewer but larger relationships, wonder if you could talk a little bit about how that has changed, if at all in a meaningful way, kind of the visibility that you have and the diversity of your revenue.

I’m just trying to understand the trade-off between what is going deeper and certainly much bigger wallet opportunities, which seems like a very obvious and positive strategy but also in terms of creating less visibility or diversity in your revenue because I believe that you're counting brands or customers -- sorry advertisers - with their multiple brands. Just kind of if you can talk to us about the real diversity of revenue within those metrics and then kind of how this mix shift has changed your visibility into the revenue?

Benjamin Wolin

Yeah, sure thing. So maybe I’ll start at the top with kind of the market. If you look at our top 30 customers it’s important to note as you did here that these are corporations not the brands within those corporations. So within those top 30 customers we estimate that there are probably 1,500 to 2,000 different brands. So, there is a wide diversity of brands that we are doing business with within that top 30 and the business that is being done is really done on a brand-by-brand basis. It’s quite rare that our relationship is with the corporation rather than the individual brand.

So, there is, while the advertiser number is fairly stable the number of brands that we work with continues to increase and improve over time. In terms of going deeper with those guys, it’s definitely the right strategy for us. Those top 30 customers represent almost 80% of the $35 billion a year that is spent in the health and wellness category. So it makes a tremendous amount of sense to just go deeper with those customers. And I would say in terms of visibility, visibility is less driven by the number of advertisers and probably more driven by the length of contract and the extensive relationship that we have with those customers and as the company rolls out more and more offerings it allows us to have an even more holistic solution for our customers and that should improve our visibility over time. And I think, if you look back over the last couple of years of the business, the length of the contract has gotten longer, our relationships have gotten deeper, and as a result, our visibility has improved.

Mark May - Citigroup

And a question on some of the partnerships that you talked about like diabetes, the oncology, the ASCO deal, etc. How much would you characterize some of these new partnerships adding content and impression and traffic and audience in categories where you already have pretty healthy advertiser demand, where you will be able to see some pretty immediate positive impact in terms of monetization from these partnerships?

Benjamin Wolin

Yeah, so I think all the partnerships are really driven by two fundamental strategies. One is to go deeper with our consumers and healthcare professionals that we are providing content and second is to go deeper with the existing advertisers or customers that we have. So, in the case of the two partnerships that you mentioned, the one with Randy Jackson and diabetes and with ASCO, it really allows us to do both. So in diabetes we’re rolling out new content and tools for people who are living with and managing their diabetes. Randy Jackson will be a core component of that. He is a huge diabetes advocate and we look for him to inspire consumers, to take control of their disease as best as they can.

Same thing with ASCO, but on the professional side, by having this unique relationship with them we’re able to cover that conference in depth and provide great content to now an increased audience of oncologists and hematologists. In both cases also there is a lot of marketer excitement about having access to this new content, association with these new brands, and allows us to really penetrate them deeper.

So, I think our view is very much that there are a lot of different important voices in healthcare coming from both individuals and institutions and it is our responsibility to partner with those brands, those organizations, bring them to our consumers and allow marketers to take advantage of that capability and market in and around those relationships.


The next question is from Steve Rubis with Stifel.

Steven Rubis - Stifel Nicolaus

Hi, guys, hi Ben, hi, Brian, hi, Melanie. I apologize first if there is an echo, since I am travelling today but congratulations on a great quarter and what seems to be a really catalyst-rich environment. First, can you talk about the importance of mid-campaign optimization and how it continues to drive your performance and how you may be differentiated from your competitors?

Benjamin Wolin

Sure thing. Yes, so mid-campaign optimization is really, Steven I think you are referencing our strong focus on ROI and our ROI capabilities. For the longest time we have used our database and our rich data assets to prove out the efficacy of the marketing solutions that we offer to the marketplace, specifically the prescription drug lift that our marketers are trying to achieve when they market with us.

Over the last year we've really improved that capability and now have the ability in real time to monitor the effect of those campaigns and optimize, based both on script lift and other leading indicators of outcomes that we might want to manage that campaign against, and what we're seeing, as you can imagine, is that there is a huge difference between optimizing after a month than versus six or 12 months and that is allowing us to provide better results to our customers as well as manage our own asset more efficiently.

Steven Rubis - Stifel Nicolaus

Thanks, that's really great color. As a follow-up what role do your analytics capabilities play in sort of the value proposition with the Mayo clinic corporate opportunity?

Benjamin Wolin

Yeah, so I think kind of cutting across the entire asset is the ability to use data to optimize the delivery of both content as well as marketing to our consumers. It's actually the same fundamental technology that does both. So our relationship with Mayo is about bringing great content and tools that are personalized to employees, in this case, and trying to drive an outcome, in this case a health outcome or a cost of care reduction. And again, just like on the pharma side we are looking at the data on a regular basis and trying to improve the content offering with the hopes of driving a better outcome.

I also think that, that's the exact same foundation that we're going to look to use as we expand our opportunities with payers and providers. If you think of things from their perspective, what are they trying to do, they're also trying to drive an outcome or reduce their cost of care. And so, if our company can bring solutions that allows them to acquire and then retain consumers and optimize those programs with a specific goal in mind, I think our company is well situated to bring that type of offering to marketplace.

Steven Rubis - Stifel Nicolaus

Nice, that’s really a thoughtful view and very good foresight. My last question you think of the biometric data aggregation, it's a really hot topic what we've seen with Apple's HealthKit, considering Mayo Clinic as one of the announced partners along with Epic, can you talk about any possible opportunities this might pose to you guys?

Benjamin Wolin

Yeah I think any companies that are focused on helping a consumer manage their health and generating data that we can take action on, are companies that we’re excited about and interested in doing business with. So if Apple's HealthKit allows the consumer to better manage their various devices, whether they be part of the phone or other biometric devices that, that consumer has access to, it's going to create more data that then allows us to create more personalized content and intervention.

So we're excited about the proliferation of devices and apps that allow consumers to take control of their health.

Steven Rubis - Stifel Nicolaus

Thanks, I look forward to hearing more as the quarters go on. Thank you so much.

Benjamin Wolin

Thank you, Steve.


(Operator Instructions). The next question is from Sandy Draper with SunTrust.

Sandy Draper – SunTrust

Thanks very much. Hopefully you can hear me guys, I am travelling as well. So my first question is sort of a broader one in terms of sales approach or may be when you're actually working with the customers, how often are they going across broad, "okay, we want mobile and desktop, we want physician and consumer" or they are really coming to you saying "okay, we want to do our physician campaign for mobile, physician campaign for desktop."

I’m just trying to understand the crossover, obviously tremendous growth in mobile, good strong growth on the professional side. Is it coming sort of in silos or are customers really wanting that broad approach, say okay we're going to take pieces of all this stuff?

Benjamin Wolin

Yeah, so Sandy I think it really depends on which customer you are talking to and I would really distinguish here between the agencies and clients, the end clients. When you are at the agency level and selling into that constituency, you are spending a lot of time on media mix, desktop versus mobile, off-network versus on-network, customer center versus broad reach etc., and that’s where a lot of time is spent, selling and trying to come up with solutions.

As you walk the halls of pharma and spend time with brand managers, while media mix certainly comes into play, you are spending a lot more time talking about ROI and the overall outcome that you are trying to effect. And so, in many cases, with some of the deepest relationships, the conversation really isn't say mobile versus desktop. It’s how many oncologists do you have, for example, and what is your ability to reach and influence them. How many diabetics do you have and what environment can I communicate my message to them in. And so it really varies; you obviously need to be able to have those conversations, since most of our customers are working with agencies but it really varies again depending on who you talk to.

Sandy Draper – SunTrust

Okay, great, that’s really helpful. And my follow-up question is, when you made the comment earlier about specialty and that being a driver. Can you give us any type of quantification? Is this you are getting more interest? Are you really starting to see progress? What type of growth is specialty versus the traditional? Just trying to understand. We are hearing that a lot but just trying to understand the actual ROE is it just starting or we are actually starting to see real business starting to come in on the specialty side, thanks.

Benjamin Wolin

Yeah, sure thing. So I think as you look at our business we have frankly always been focused on specialty and that’s where we have gotten the most traction. Our biggest business if you look over a five year period, was not with the broad based brands that were trying to reach every man in America over the age of 35. We were looking for -- what we were providing really our niche audiences and the ability to reach out to this audience and measure the effect. So I think what really happened is we always had the same capability, the capability has obviously improved but the market is coming towards us as pharma focuses more and more specialty.

So you see these large patient population, products going off patent, becoming less of a focus for the major pharma and biotech companies and as they replace that revenue with drugs that are focused on half a million consumers, 250,000 patients, our offering just becomes that much more critical to those providers. So I think in general I would say we have always had stronger business in categories like MS and Crohn’s and hep C, and it’s only in the last couple of years that pharma has really started to swing in that direction.

Sandy Draper – SunTrust

Great, that’s helpful, and congrats on a good quarter.

Benjamin Wolin

Thank you, Sandy.


That was our final question. Thank you for joining the Everyday Health second quarter 2014 earnings call. This concludes today’s conference. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.


If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Everyday Health (NYSE:EVDY): Q2 EPS of $0.07 in-line. Revenue of $41.4M (+11.3% Y/Y) beats by $0.64M.