HLTH CORPORATION 
By Total Revenue Increased 12%; Online Advertising Increased 16%
WebMD Achieves Record Traffic with 61.6 Million Unique Monthly Users and 1.5 Billion Quarterly Page Views
"We are pleased that even in this economic environment WebMD continues to deliver strong results," said
Financial Summary
Revenue for the first quarter was
Income from continuing operations for the first quarter was
WebMD has decided to divest its Little Blue Book print directory business which is not strategic to its business. Accordingly, the Little Blue Book print directory business is now reflected as discontinued operations in the Company's financial statements for current and prior periods. WebMD had anticipated in its previously issued financial guidance that the Little Blue Book print directory business would have contributed
WebMD had approximately
Operating Highlights
As a result of WebMD's decision to divest the Little Blue Book print directory business, WebMD is no longer presenting a stand-alone publishing segment in its financial statements. WebMD the Magazine and other print products are reflected in Print revenue. Content syndication and other revenues are now included in Advertising and Sponsorship revenue.
Advertising and sponsorship revenue was
Private portal licensing revenue was
Print revenue was
Financial Guidance
WebMD reaffirmed its financial guidance for 2009 today and adjusted it to reflect the reclassification to discontinued operations of its Little Blue Book print directory business. WebMD had anticipated that the Little Blue Book print directory business would have contributed
WebMD expects: 2009 revenue to be
For the quarter ending
Additional detail is provided in a schedule attached to this release.
Analyst and Investor Conference Call
As previously announced, WebMD will hold a conference call with investors and analysts to discuss its first quarter results at
About WebMD
WebMD Health Corp. (Nasdaq: WBMD) is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through our public and private online portals and health-focused publications. WebMD Health Corp. is a subsidiary of HLTH Corporation (Nasdaq: HLTH).
The WebMD Health Network includes WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList and theHeart.org.
All statements contained in this press release and the related analyst and investor conference call, other than statements of historical fact, are forward-looking statements, including those regarding: our guidance on WebMD's future financial results and other projections or measures of WebMD's future performance; market opportunities and WebMD's ability to capitalize on them; the benefits expected from new products or services and from other potential sources of additional revenue; and expectations regarding the market for WebMD's investments in auction rate securities (ARS). These statements speak only as of the date of this press release, are based on our current plans and expectations, and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of WebMD's products and services; WebMD's relationships with customers and strategic partners; changes in the markets for ARS; and changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet and information technology industries. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.
This press release, and the accompanying tables, include both financial measures in accordance with accounting principles generally accepted in the
WebMD(R), Medscape(R), eMedicine(R), MedicineNet(R), RxList(R), Subimo(R), Medsite(R), The Little Blue Book(R) and Summex(R), are trademarks of WebMD Health Corp. or its subsidiaries.
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Revenue $90,264 $80,650
Costs and expenses:
Cost of operations 36,565 30,927
Sales and marketing 27,561 25,149
General and administrative 14,726 13,480
Depreciation and amortization 6,937 6,672
Interest income 975 3,453
Impairment of auction rate securities - 27,406
----- ------
Income (loss) from continuing operations
before income tax provision 5,450 (19,531)
Income tax provision 2,211 3,432
----- -----
Income (loss) from continuing operations 3,239 (22,963)
Loss from discontinued operations,
net of tax (423) (372)
---- ----
Net income (loss) $2,816 $(23,335)
====== ========
Basic and diluted income (loss) per
common share:
Income (loss) from continuing operations $0.06 $(0.40)
Loss from discontinued operations (0.01) (0.00)
----- -----
Net income (loss) $0.05 $(0.40)
===== ======
Weighted-average shares outstanding used
in computing basic and diluted net income
(loss) per common share:
Basic 57,575 57,636
====== ======
Diluted 58,109 57,636
====== ======
WEBMD HEALTH CORP.
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Revenue
Advertising and sponsorship $65,428 $56,482
Licensing 22,975 21,923
Print 1,861 2,245
----- -----
$90,264 $80,650
======= =======
Earnings before interest, taxes, non-cash and
other items ("Adjusted EBITDA") (a) $18,688 $16,332
Adjusted EBITDA per basic and diluted ----- -----
common share $0.32 $0.28
----- -----
Interest, taxes, non-cash and other items (b)
Interest income 975 3,453
Depreciation and amortization (6,937) (6,672)
Non-cash advertising (1,753) (1,558)
Non-cash stock-based compensation (5,523) (3,680)
Impairment of auction rate securities - (27,406)
Income tax provision (2,211) (3,432)
------ ------
Income (loss) from continuing operations 3,239 (22,963)
Loss from discontinued operations, net of tax (423) (372)
---- ----
Net income (loss) $2,816 $(23,335)
====== ========
Basic and diluted income (loss) per common share:
Income (loss) from continuing operations $0.06 $(0.40)
Loss from discontinued operations (0.01) (0.00)
----- -----
Net income (loss) $0.05 $(0.40)
===== ======
Weighted-average shares outstanding used in computing
basic and diluted net income (loss) per common share:
Basic 57,575 57,636
====== ======
Diluted 58,109 57,636
====== ======
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to net income (loss)
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
March 31, 2009 December 31, 2008
-------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $204,803 $191,659
Accounts receivable, net 90,835 93,082
Current portion of prepaid
advertising - 1,753
Other current Assets 11,319 11,358
Assets of discontinued operations 11,839 12,575
------ ------
Total current assets 318,796 310,427
Investments 127,033 133,563
Property and equipment, net 54,132 54,165
Goodwill 208,967 208,967
Intangible assets, net 24,520 26,237
Other assets 21,269 22,573
------ ------
$754,717 $755,932
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $20,355 $31,241
Deferred revenue 84,574 79,613
Due to HLTH 199 427
Liabilities of discontinued operations 3,256 2,599
----- -----
Total current liabilities 108,384 113,880
Other long-term Liabilities 8,081 8,334
Stockholders' equity 638,252 633,718
------- -------
$754,717 $755,932
======== ========
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $2,816 $(23,335)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Loss from discontinued operations, net
of tax 423 372
Depreciation and amortization 6,937 6,672
Non-cash advertising 1,753 1,558
Non-cash stock-based compensation 5,523 3,680
Deferred and other income taxes 2,097 2,372
Impairment of auction rate securities - 27,406
Changes in operating assets and
liabilities:
Accounts receivable 2,247 10,449
Other assets (689) (164)
Accrued expenses and other
long-term liabilities (11,140) (8,791)
Due to HLTH (228) 1,329
Deferred revenue 4,961 11,231
----- ------
Net cash provided by
continuing operations 14,700 32,779
Net cash provided by
discontinued operations 1,062 1,912
----- -----
Net cash provided by operating
activities 15,762 34,691
Cash flows from investing activities:
Proceeds from maturities and sales of
available-for-sale securities 600 40,350
Purchases of available-for-sale securities - (127,900)
Purchases of property and equipment (5,290) (2,626)
Cash received from sale of business, net
of fees 250 985
--- ---
Net cash used in continuing
operations (4,440) (89,191)
Net cash used by discontinued
operations (5) (11)
-- ---
Net cash used in investing
activities (4,445) (89,202)
Cash flows from financing activities:
Proceeds from issuance of common stock 1,827 589
----- ---
Net cash provided by financing
activities 1,827 589
Net increase (decrease) in cash and cash
equivalents 13,144 (53,922)
Cash and cash equivalents at beginning of
period 191,659 213,753
------- -------
Cash and cash equivalents at end of period $204,803 $159,831
======== ========
FINANCIAL GUIDANCE SUMMARY
2009 Preliminary Financial Guidance
(in millions, except per share amounts)
Year Ended Year Ending
December 31, 2008 December 31, 2009
Unaudited (c) Range (c)
------------------ ------------------
Revenue $373.5 $410.0 $440.0
====== ====== ======
Earnings before interest, taxes,
non-cash and other items
("Adjusted EBITDA") (a) $94.1 $105.0 $120.0
Adjusted EBITDA per diluted
common share $1.60 $1.69 $1.94
----- ----- -----
Interest, taxes, non-cash and
other items (b)
Interest income 10.4 4.0 4.0
Depreciation and amortization (27.9) (33.0) (30.0)
Non-cash advertising (5.1) (1.8) (1.8)
Non-cash stock-based compensation (13.3) (26.0) (23.0)
Impairment of auction rate securities (27.4) - -
Restructuring (2.9) - -
Income tax provision (2.2) (19.8) (28.4)
----- ----- -----
Income from continuing operations $25.7 $28.4 $40.8
===== ===== =====
Income from continuing operations per
common share:
Basic $0.45 $0.48 $0.69
===== ===== =====
Diluted $0.44 $0.46 $0.66
===== ===== =====
Weighted-average shares outstanding used
in computing income from continuing
operations per common share:
Basic 57.7 59.0 59.0
Diluted 58.9 62.0 62.0
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to income from continuing
operations
(c) Results for the year ended December 31, 2008 and the guidance for
the year ending December 31, 2009 have been adjusted to exclude the
discontinued operations of the Little Blue Book print directory business.
Additional information regarding forecast for second quarter of 2009:
- Revenue is forecasted to be approximately $97 to $99 in quarter ending
June 30, 2009
- Adjusted EBITDA as a percentage of revenue is forecasted to be
approximately 22% in quarter ending June 30, 2009
- Income from continuing operations as a percentage of revenue is
forecasted to be approximately 5% to 6% in quarter ending June 30, 2009
Additional information regarding full year forecast:
- Income tax rate for 2009 is forecasted to be approximately 41% of pretax
income. The income tax provision excludes any benefit relating to any
reversal in 2009 of the valuation allowance against deferred tax assets.
- The distribution of the annual revenue is expected to be approximately
76.5% advertising and sponsorship, 21.5% licensing and 2% print.
Quarterly revenue distributions may vary from this annual estimate.
ANNEX A
Explanation of Non-GAAP Financial Measures
(All dollar amounts in thousands)
The accompanying WebMD Health Corp. press release and financial tables include both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, non-cash and other items (which we refer to as "Adjusted EBITDA") and related per share amounts. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, "income (loss) from continuing operations" or "net income (loss)" calculated in accordance with GAAP. The tables attached to the accompanying press release include reconciliations of non-GAAP financial measures to GAAP financial measures.
Adjusted EBITDA is used by WebMD's management as an additional measure of WebMD's performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help WebMD's management identify additional trends in WebMD's financial results that may not be shown solely by period-to-period comparisons of income (loss) from continuing operations or net income (loss). In addition, WebMD uses Adjusted EBITDA in the incentive compensation programs applicable to many of its employees in order to evaluate WebMD's performance. WebMD management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in income (loss) from continuing operations or net income (loss), as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to income (loss) from continuing operations or to net income (loss) that accompany our press releases containing non-GAAP financial measures, including the reconciliations contained in the tables attached to the accompanying press release.
WebMD believes that the presentation of Adjusted EBITDA is useful to investors in their analysis of WebMD's results for reasons similar to the reasons why WebMD's management finds it useful and because it helps facilitate investor understanding of decisions made by WebMD's management in light of the performance metrics used in making those decisions. In addition, as more fully described below, WebMD believes that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to income (loss) from continuing operations or to net income (loss), helps investors make comparisons between WebMD and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITDA is intended to provide a supplemental way of comparing WebMD with other public companies and is not intended as a substitute for comparisons based on "income (loss) from continuing operations" or "net income (loss)" calculated in accordance with GAAP. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.
The following is an explanation of the items excluded by WebMD from Adjusted EBITDA but included in income (loss) from continuing operations:
-- Depreciation and Amortization. Depreciation and amortization expense is
a non-cash expense relating to capital expenditures and intangible
assets arising from acquisitions that are expensed on a straight-line
basis over the estimated useful life of the related assets. WebMD
excludes depreciation and amortization expense from Adjusted EBITDA
because it believes (i) the amount of such expenses in any specific
period may not directly correlate to the underlying performance of
WebMD's business operations and (ii) such expenses can vary
significantly between periods as a result of new acquisitions and full
amortization of previously acquired tangible and intangible assets.
Accordingly, WebMD believes this exclusion assists management and
investors in making period-to-period comparisons of operating
performance. Investors should note that use of tangible and intangible
assets contributed to revenue in the periods presented and will
contribute to future revenue generation and should also note that such
expenses will recur in future periods.
-- Stock-Based Compensation Expense. Stock-based compensation expense is a
non-cash expense arising from the grant of stock-based awards to
employees. WebMD believes that excluding the effect of stock-based
compensation from Adjusted EBITDA assists management and investors in
making period-to-period comparisons in its operating performance because
it believes (i) the amount of such expenses in any specific period may
not directly correlate to the underlying performance of WebMD's
business operations and (ii) such expenses can vary significantly
between periods as a result of the timing of grants of new stock-based
awards, including grants in connection with acquisitions. Additionally,
WebMD believes that excluding stock-based compensation from Adjusted
EBITDA assists management and investors in making meaningful comparisons
between WebMD's operating performance and the operating performance
of other companies that may use different forms of employee compensation
or different valuation methodologies for their stock-based compensation.
Investors should note that stock-based compensation is a key incentive
offered to employees whose efforts contributed to the operating results
in the periods presented and are expected to contribute to operating
results in future periods. Investors should also note that such
expenses will recur in the future.
-- Non-Cash Advertising Expense. This expense relates to the usage of
non-cash advertising obtained from News Corporation
("Newscorp") in exchange for equity securities issued by our
parent, HLTH Corporation in 2000. The advertising is available only on
various Newscorp properties, primarily its television network and cable
channels, without any cash cost to WebMD and will expire later this
year. WebMD excludes this expense from Adjusted EBITDA (i) because it is
a non-cash expense, (ii) because it is incremental to other
non-television cash advertising expense that WebMD otherwise incurs and
(iii) to assist management and investors in comparing its operating
results over multiple periods. Investors should note that it is likely
that WebMD derives some benefit from such advertising. Non-cash
advertising expenses included in the Consolidated Statement of
Operations in Sales and Marketing expense were $1,753 and $1,558 for the
three months ended March 31, 2009 and 2008.
-- Interest Income. Interest income is associated with the level of
marketable debt securities and other interest bearing accounts in which
WebMD invests. Interest income varies over time due to varying levels
of securities available for investment. Transactions that WebMD has
entered into in recent periods that have impacted securities available
for investment include the initial public offering of equity in WebMD
and acquisitions of other companies for varying amounts of cash since
our initial public offering. Additional financing transactions as well
as potential acquisitions that WebMD may enter into in the future could
impact the levels and timing of securities available for investment.
WebMD excludes interest income from Adjusted EBITDA (i) because it is
not directly attributable to the performance of WebMD's business
operations and, accordingly, its exclusion assists management and
investors in making period-to-period comparisons of operating
performance and (ii) to assist management and investors in making
comparisons to companies with different capital structures. Investors
should note that interest income will recur in future periods.
-- Income Tax (Benefit) Provision. WebMD maintains a valuation allowance
on a portion of its net operating loss carryforwards, the amount of
which may change from quarter to quarter based on factors that are not
directly related to WebMD's results for the quarter. The valuation
allowance is either reversed through the statement of operations or
additional paid-in capital. The timing of such reversals has not been
consistent and as a result, WebMD's income tax expense can
fluctuate significantly from period to period in a manner not directly
related to WebMD's operating performance. WebMD excludes the
income tax (benefit) provision from Adjusted EBITDA (i) because it
believes that the income tax (benefit) provision is not directly
attributable to the underlying performance of WebMD's business
operations and, accordingly, its exclusion assists management and
investors in making period-to-period comparisons of operating
performance and (ii) to assist management and investors in making
comparisons to companies with different tax attributes. Investors
should note that income tax (benefit) provision will recur in future
periods.
-- Other Items. WebMD engages in other activities and transactions that
can impact WebMD's overall income (loss) from continuing
operations. WebMD excludes these other items from Adjusted EBITDA when
it believes these activities or transactions are not directly
attributable to the performance of WebMD's business operations and,
accordingly, their exclusion assists management and investors in making
period-to-period comparisons of operating performance. Investors should
note that these other items may recur in future periods. In the
accompanying press release and financial tables, WebMD has excluded loss
on the impairment of auction rate securities and a restructuring charge
from Adjusted EBITDA.
SOURCE WebMD
