ShareCare Equity Opportunity September 25, 2009. -- Confidential --p. 2 Executive Summary SPE has...

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ShareCare Equity Opportunity September 25, 2009

Transcript of ShareCare Equity Opportunity September 25, 2009. -- Confidential --p. 2 Executive Summary SPE has...

ShareCare Equity Opportunity

September 25, 2009

-- Confidential -- p. 2

Executive Summary

• SPE has the opportunity to take equity in ShareCare, which we expect will become a leading online health and wellness platform– Opportunity stems from our relationship with Oprah and Dr. Oz– Success will be driven by strong partners (Jeff Arnold, Dr. Mehmet Oz, Harpo, Discovery, and HSWI)

• ShareCare will have linkages to Dr. Oz; equity stake will better align our interests between the Dr. Oz Show and ShareCare– ShareCare will incorporate input from Dr. Oz in its Q&A section and powers Q&A Section of Doctoroz.com– SPTAS will represent ad inventory for ShareCare and the Dr. Oz web sites– An equity stake puts us on more equal footing with other key partners, particularly Oprah, who are investing

cash and making in-kind contributions

• Our equity would be structured to include equity for in-kind contributions and, at our election, the opportunity to invest cash– 5% in-kind equity in exchange for SPTAS representing ShareCare ad inventory– Cash investment would be $2.5MM on a $50MM valuation for a 5% stake

• We are currently seeking approval to negotiate and close the in-kind equity portion of this deal and an informal indication of support to invest $2.5MM in cash– Goal of closing in kind in the next 2 weeks; prior to site launch while we have greater leverage– Cash deal requires additional diligence and long-form negotiations, estimating 30 to 45 days to close– Prior to closing a cash investment, we will revisit with SPE management

-- Confidential -- p. 3

What is ShareCare

ShareCare is a Web 3.0 platform that enables the “sharing of health care” by connecting users, healthcare professionals, and brands…acting as digital hub of health & wellness

Platform Content ProvidersUsers

• Searchable, dynamic, and portable Q&A environment with multimedia health & wellness content

• Dynamic, editorialized homepage brings popular and timely issues to foreground

• Predictive search delivers answers quickly

• Q&A format allows members to have voice in the experience

• Leverages healthcare professionals as a credible voice to provide answers to common healthcare questions

• Professionals get access to a wide audience and new consumer touch-point

• Examples include Dr. Oz, Cleveland Clinic, and local primary care physicians

• Enables users to share thoughts & experiences and create communities around healthcare issues

• Connects people with information and other users in a safe and easy-to-use environment

• Powerful filtering tools give users ability to find the most relevant answers from credible sources

Knowledge Partners

• Provides brands the opportunity to actively participate in conversations around health

• Generates revenue for ShareCare through sponsorships of Q&A categories and paid search placement

• Example partners include Unilever, pharmaceutical companies, weight loss / fitness, etc.

-- Confidential -- p. 4

ScreenshotsDynamic Homepage

Predictive search driven by comprehensive ontology of health topics organized in the form of questions

Filtered search results

Content Partner linkages

-- Confidential -- p. 5

ShareCare Partners and Contributions

Partner Overview/Relationship Cash In-Kind Contributions (1) Equity %

Harpo Productions (ZoCo)

• Produces The Dr. Oz Show• Launching OWN network with Discovery• Other health & wellness content on

Harpo platforms

$1MM • Marketing and promotional consideration

• Health & wellness content from Harpo platforms (excluding TOWS)

22%

Dr. Oz • The Dr. Oz Show• RealAge.com• You! book series

$1MM • Name/likeness• Linkages to DoctorOz.com• Content for Q&A section of SC (2)

18%

Discovery Communications

• Launching OWN network with Harpo• Purchased HSW from J. Arnold in 2007• Largest shareholder of HSWI

$1MM • Marketing and promotional consideration

• Health & wellness content from Discovery platforms

20%

HSWI • Publicly traded company with int’l rights to HSW content

• Providing development services for SC

$1MM • Assets from DailyStrength.com (healthcare focused social network)

• All work performed to-date on platform

20%

Jeff Arnold • Founder of WebMD and HSW• Sold HSW to Discovery in 2007• Led SC development efforts with HSWI

$1MM • All work performed to date for platform• Founder

20%

• Company initially capitalized with $5MM in cash plus in-kind contributions from five founding partners

• Anticipated that outside investor (Gordon Crawford) will be investing $5-10MM on a $50MM valuation (exact $ amount and timing to be confirmed)

(1) Contribution agreements are still being negotiated and subject to change(2) Current deal would exclude The Dr. Oz Show content and show website would operate independently from SC

-- Confidential -- p. 6

SPE Deal Terms and Rationale

In Kind Equity Cash Based Equity

• 5% equity; likely in Common Stock

• Equity provided in recognition of SPTAS representing ads for ShareCare

• Specific language for in-kind contributions being negotiated and will include performance thresholds on ad sales

• SPE to have option to invest $2.5MM in cash for 5% equity in the form of Common Stock

• Cash invested at $50MM valuation

• Rights, preferences, and privileges to be negotiated but generally assumed to be in line with outside investor

• Potential financial upside without a direct cash investment

• Costs for additional resources at SPTAS will be charged to ShareCare

• Further aligns our interest in the digital strategy for the Dr. Oz Show and brand

• Valuation validated by outside investor, Gordon Crawford (exact $ amount and timing to be confirmed)

-- Confidential -- p. 7

Timing and Next Steps

In KindEquity

Cash BasedEquity

• Negotiate “in kind” long forms → Week of 9/28

• Sign RAD and close →Late week of 9/28; early week of 10/5

• ShareCare launch & press release

Immediately following close of SPE in-kind deal and other partner cash / contribution deals

• Negotiate separate long form docs

30 days• Sign separate RAD

• Close cash based investment