Santa Ana-based DocPlanet.com Inc., an online medical products supplier, is facing health problems of its own these days, recently cutting back personnel to a skeleton crew and discontinuing several products on its site.
The troubled dot-com, which sells pharmaceuticals, medical supplies and related software to physicians’ offices, is running out of cash. The company recently indicated it must get a major capital infusion or a buyer or partner for its operations soon, or it may seek bankruptcy protection to continue operations.
The troubles mark a shift in fortunes for DocPlanet, which started in 1973 as Mini-Dose Labs, a maker of diagnostic capsules that evolved into a distributor. In the summer of 1999, the company recast itself as an Internet wholesaler. Now the 28-year-old company is struggling to survive along with a host of online start-ups.
DocPlanet reported a net loss of $8.2 million on net sales of $6.2 million for the nine months ended May 31, the last period for which it has filed with the Securities and Exchange Commission. The company filed an extension in November for subsequent reports.
DocPlanet officials have said they don’t anticipate a turnaround in operating losses any time soon. As of May 31, the company’s liabilities exceeded its assets by about $3 million.
“We had some sales and marketing people who were overly optimistic about what could be generated in terms of volume, and consequently we got ourselves into some financial difficulty,” said John Grant, the company’s chief operating officer. “We’re cutting back operations like, unfortunately, a number of dot-com companies that expanded too fast for the money that was available.”
DocPlanet is changing gears and streamlining in its attempt to get back on track. The company shaved its 75-person staff (which at one point numbered more than 85) down to about eight administrative employees. It is also revamping its site, with certain products being dropped from the offering.
The company will not expand its offering of med-search supplies as previously planned and will discontinue its DocScript prescription management and medical dispensing software, which is tied up in a legal dispute with the product’s co-developer. DocScript is the brain of a wireless palm-size device the company was marketing to physicians, and it too will be dropped.
However, DocPlanet will continue offering its “Q Script” desktop software for prescription management. Physicians’ offices around the country use Q Script, according to Grant.
“We’re not positive how we’re actually going to be operating our Web site in the future, because we have made some mistakes,” Grant said.
DocPlanet provides more than 5,000 physicians with e-prescription management as well as pharmaceutical and medical/surgical supplies in more than 1,500 locations across the U.S. That network was established over the 15 years that DocPlanet has been in business. From the 1970s to 1995, the company was known as Mini-Dose Labs and primarily manufactured and distributed sodium iodide 123 diagnostic capsules. In 1996, it expanded its reach with the purchase of Quality Care Pharmaceuticals, a repackager and distributor of pharmaceuticals and related systems, and in 1999 it diversified its services again by launching an e-commerce arm and Web site, DocPlanet.com, which became its company name.
Since then, DocPlanet has partnered with big technology names including Oracle Corp., Sun Microsystems Inc. and Exodus Communications Inc.
Its business model received high marks last year from industry experts like Ronni T. Marshak, senior vice president of Boston-based Patricia Seybold Group, a consulting firm, and co-author of “Customers.com,” a book on e-commerce strategies. In a case study, she had commended DocPlanet for “targeting the right customers, streamlining business practices that impact the customers and helping customers do their jobs,” among other things.
“DocPlanet.com is doing some very interesting things online, and they provide such a great benefit,” Marshak had stated in a press release.
But the company, which launched its site in December 1999, ran into problems. The biggest: maintaining proper price structuring on a national basis.
“We were trying to do some very standardized pricing across the country and that was probably not a good idea,” Grant said. “This market tends to have some significant regional differences.”
The company may move back to a more customized pricing system once it is able to ramp back up, Grant added.
In the meantime, the clock ticks, DocPlanet’s share price continues to plunge,at about 16 cents last week, down from about 11 in February,and the company continues to pursue investors or buyers.
Grant declined to give names, but said a deal most likely would involve a “strategic investment or business combination from some related healthcare organization.”
In the past, however, talks haven’t gone smoothly. In early December, the company announced that negotiations on a financial transaction originally anticipated for early September had been terminated.
This time, Grant said, he expects to solidify a deal shortly after the New Year. n
