NEW YORK, May 4, 2010 /PRNewswire via COMTEX News Network/ -- WebMD Health Corp. (Nasdaq: WBMD), the leading source of health information, today announced financial results for the three months ended March 31, 2010.
For the three months ended March 31, 2010:
"Our strong first quarter results demonstrate WebMD's continued leadership in the online health and wellness market," said Wayne Gattinella, President and CEO. "The significant scale and strong engagement of our consumer and physician audience is attracting more of the spending from traditional marketing channels as the transformation of healthcare marketing is accelerating."
Revenue for the first quarter was $108.0 million, compared to $90.3 million in the prior year period, an increase of 20%. Specifically:
Adjusted EBITDA for the first quarter was $25.7 million, compared to $15.3 million in the prior year period, an increase of 68%.
As of March 31, 2010, WebMD had $808 million in cash and investments which included $286 million in auction rate securities investments and $65.5 million of senior secured notes. WebMD had approximately $412 million in aggregate principal amount of convertible notes outstanding.
Transactions Subsequent to March 31, 2010
The following transactions were completed subsequent to the quarter ending on March 31, 2010:
After giving effect to these transactions on amounts in the March 31, 2010 balance sheet, WebMD would have had $566 million in cash and cash equivalents and approximately $357 million in aggregate principal amount of convertible notes outstanding.
WebMD Launches New Health Social Networking Platform on WebMD.com
During the quarter, WebMD launched a new health social networking platform. WebMD Health Exchange gives consumers the ability to connect with world-class health experts and the large community of WebMD members to exchange real experiences, discuss personal challenges and receive direct answers and support. WebMD Health Exchange also enables third party sponsors to create branded exchanges and to host consumer discussions on specific health and wellness topics most important to them.
WebMD Releases New Version of Free Mobile Application for Physicians
Medscape Mobile for physicians has attracted over 300,000 iPhone® and iPod touch® users since its launch less than one year ago, quickly becoming the premier clinical reference tool at the point of care and eclipsing most other hand held medical applications. The new release of Medscape Mobile launched this quarter adds in-depth clinical reference data on diseases, conditions and procedures that include medical images and videos. In April, Medscape Mobile was launched for Blackberry® users in addition to the iPhone®.
WebMD Named Most Trusted Brand in U.S. in New Study
The latest Millward Brown global consumer brand study finds WebMD is the most trusted consumer brand. The WebMD brand ranked #1 in the United States ahead of Tylenol®, Amazon® and FedEx®. Millward Brown, a WPP-owned research company, has been conducting brand leadership studies for the consumer industry for more than 12 years.
WebMD reaffirmed its 2010 guidance, which was issued on February 18, 2010, for revenue and Adjusted EBITDA today. Attached to this press release is an updated financial guidance schedule which reflects the impact on interest income, interest expense and share counts resulting from the Company's recently completed tender offer and the repurchases and conversions of its convertible notes discussed above.
For the second quarter of 2010, WebMD expects:
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 4:45 p.m. (Eastern) today. The call can be accessed at www.wbmd.com (in the Investor Relations section). A replay of the audio webcast will be available at the same web address.
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. Approximately 80 million unique visitors access the WebMD Health Network each month.
The WebMD Health Network includes WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList, theHeart.org and drugs.com.
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: guidance on our future financial results and other projections or measures of our future performance; market opportunities and our ability to capitalize on them; the benefits expected from new or updated products or services and from other potential sources of additional revenue; and expectations regarding the market for 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 our products and services; our 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 United States of America, or GAAP, as well as certain non-GAAP financial measures. The tables attached to this press release include reconciliations of these non-GAAP financial measures to GAAP financial measures. In addition, an "Explanation of Non-GAAP Financial Measures" is attached to this press release as Annex A.
WebMD®, Medscape®, eMedicine®, MedicineNet®, RxList®, Subimo®, Medsite®, Summex®, WebMD® Health Exchange and Medscape® Mobile 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, --------- 2010 2009 ---- ---- Revenue $108,030 $90,264 Cost of operations 42,994 36,565 Sales and marketing 28,407 27,561 General and administrative 18,809 21,848 Depreciation and amortization 7,015 7,103 Interest income 3,409 2,262 Interest expense 5,139 6,536 (Loss) gain on convertible notes (3,727) 6,647 Loss on auction rate securities 28,848 - Other expense, net 298 269 --- --- Loss from continuing operations before income tax benefit (23,798) (709) Income tax benefit 20,008 1,217 ------ ----- Consolidated (loss) income from continuing operations (3,790) 508 Consolidated income from discontinued operations, net of tax - 517 --- --- Consolidated net (loss) income inclusive of noncontrolling interest (3,790) 1,025 Income attributable to noncontrolling interest - (610) --- ---- Net (loss) income attributable to Company stockholders $(3,790) $415 ======= ==== Amounts attributable to Company stockholders: Loss from continuing operations $(3,790) $(194) Income from discontinued operations - 609 --- --- Net (loss) income attributable to Company stockholders $(3,790) $415 ======= ==== Basic and diluted (loss) income per common share: Loss from continuing operations $(0.07) $(0.00) Income from discontinued operations - 0.01 --- ---- Net (loss) income attributable to Company stockholders $(0.07) $0.01 ====== ===== Weighted-average shares outstanding used in computing income per common share: Basic and diluted 52,191 45,217 ====== ====== WEBMD HEALTH CORP. CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION (In thousands, except per share data, unaudited) Three Months Ended March 31, --------- 2010 2009 ---- ---- Revenue Public portal advertising and sponsorship $86,257 $67,289 Private portal services 21,773 22,975 $108,030 $90,264 ======== ======= Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") (a) $25,657 $15,261 ------- ------- Interest, taxes, non-cash and other items (b) Interest income 3,409 2,262 Interest expense (5,139) (6,536) Income tax benefit 20,008 1,217 Depreciation and amortization (7,015) (7,103) Non-cash stock-based compensation (7,837) (9,154) Non-cash advertising - (1,753) (Loss) gain on convertible notes (3,727) 6,647 Loss on auction rate securities (28,848) - Other expense, net (298) (333) ---- ---- Consolidated (loss) income from continuing operations (3,790) 508 Consolidated income from discontinued operations, net of tax - 517 --- --- Consolidated net (loss) income inclusive of noncontrolling interest (3,790) 1,025 Income attributable to noncontrolling interest - (610) --- ---- Net (loss) income attributable to Company stockholders $(3,790) $415 ======= ==== (a) See Annex A-Explanation of Non-GAAP Financial Measures. (b) Reconciliation of Adjusted EBITDA to consolidated income from continuing operations. WEBMD HEALTH CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) March 31, December 31, 2010 2009 ---------- ------------- Assets ------ Cash and cash equivalents $450,214 $459,766 Accounts receivable, net 120,584 118,155 Prepaid expenses and other current assets 15,697 11,419 Investments 357,342 9,932 Total current assets 943,837 599,272 Investments - 338,446 Property and equipment, net 49,369 52,194 Goodwill 202,104 202,104 Intangible assets, net 24,943 26,020 Deferred tax asset 75,477 50,789 Other assets 18,567 19,723 Total Assets $1,314,297 $1,288,548 ========== ========== Liabilities and Equity ---------------------- Accrued expenses $48,173 $63,721 Deferred revenue 120,139 98,474 1.75% convertible notes 264,583 264,583 Deferred tax liability 6,731 12,955 Liabilities of discontinued operations 25,965 34,197 Total current liabilities 465,591 473,930 3-1/8% convertible notes, net of discount of $12,151 at March 31, 2010 and $22,641 at December 31, 2009 134,915 227,659 Other long-term liabilities 21,931 22,191 Stockholders' equity 691,860 564,768 Total Liabilities and Equity $1,314,297 $1,288,548 ========== ========== WEBMD HEALTH CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Three Months Ended March 31, --------- 2010 2009 ---- ---- Cash flows from operating activities: Consolidated net (loss) income inclusive of noncontrolling interest $(3,790) $1,025 Adjustments to reconcile consolidated net (loss) income inclusive of noncontrolling interest to net cash provided by (used in) operating activities: Consolidated income from discontinued operations, net of tax - (517) Depreciation and amortization 7,015 7,103 Non-cash interest 2,090 2,799 Non-cash advertising - 1,753 Non-cash stock-based compensation 7,837 9,154 Deferred income taxes (21,463) (2,604) Loss (gain) on convertible notes 3,727 (6,647) Loss on auction rate securities 28,848 - Changes in operating assets and liabilities: Accounts receivable (2,429) 2,247 Prepaid expenses and other, net (1,829) (1,224) Accrued expenses and other long-term liabilities (14,224) (20,741) Deferred revenue 21,665 4,961 ------ ----- Net cash provided by (used in) continuing operations 27,447 (2,691) Net cash (used in) provided by discontinued operations (8,233) 2,001 ------ ----- Net cash provided by (used in) operating activities 19,214 (690) Cash flows from investing activities: Proceeds from sales of available-for- sale securities 4,500 600 Purchases of property and equipment (3,114) (5,309) Finalization of sale price of discontinued operations (1,430) 250 Net cash used in continuing operations (44) (4,459) Net cash used in discontinued operations - (829) --- ---- Net cash used in investing activities (44) (5,288) Cash flows from financing activities: Proceeds from issuance of common stock, net of cash used for employee withholding taxes 5,775 7,041 Repurchases of convertible notes (22,565) (78,183) Purchase of treasury stock under repurchase program (6,527) - Payment for shares tendered in 2009, delivered in 2010 (6,818) - Tax benefit on stock-based awards 1,413 - ----- --- Net cash used in financing activities (28,722) (71,142) Effect of exchange rates on cash - (245) --- ---- Net decrease in cash and cash equivalents (9,552) (77,365) Cash and cash equivalents at beginning of period 459,766 629,848 ------- ------- Cash and cash equivalents at end of period $450,214 $552,483 ======== ======== FINANCIAL GUIDANCE SUMMARY WebMD Health Corp. 2010 Financial Guidance (in millions, except per share amounts) Year Ended December 31, 2010 Guidance Range -------------- Revenue $510.0 $525.0 ====== ====== Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") (a) $150.0 $158.0 Interest, taxes, non-cash and other items (b) Interest income 4.0 4.0 Interest expense (13.0) (12.0) Depreciation and amortization (30.0) (28.0) Non-cash stock-based compensation (33.0) (31.0) Loss on convertible notes (3.7) (3.7) Loss on auction rate securities (28.8) (28.8) Other expenses, net (0.3) (0.3) ---- ---- Consolidated pre-tax income from continuing operations 45.2 58.2 Income tax provision (9.0) (15.0) Consolidated income from continuing operations $36.2 $43.2 ===== ===== Income from continuing operations per share: Basic $0.64 $0.76 ===== ===== Diluted $0.56 $0.66 ===== ===== Weighted-average shares outstanding used in computing income from continuing operations per common share: Basic 57.0 57.0 Diluted 65.0 65.0 (a) See Annex A - Explanation of Non-GAAP Financial Measures (b) Reconciliation of Adjusted EBITDA to consolidated income from continuing operations Additional information regarding forecast for second quarter of 2010: - Revenue is forecasted to be in excess of $115 in quarter ending June 30, 2010, an increase in excess of 16% from last year. Public portal advertising and sponsorship revenue is expected to grow in excess of 23%. - Adjusted EBITDA as a percentage of revenue is forecasted to be in excess of 26% in quarter ending June 30, 2010 - Income from continuing operations as a percentage of revenue is forecasted to be in excess of 6% in quarter ending June 30, 2010 Additional information regarding full year 2010 forecast: - Income tax rate is forecasted to be approximately 43% of pretax income for the second, third and fourth quarters of 2010. - The distribution of the annual revenue is expected to be approximately 83% public portal advertising and sponsorship and 17% private portal services. Quarterly revenue distributions may vary from this annual estimate. - 2010 guidance excludes any gains or losses related to: - Additional conversion and / or repurchases of convertible notes - Sales of Porex Senior Secured Notes and / or other investments 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, "consolidated income (loss) from continuing operations" or "net income (loss) attributable to Company stockholders" calculated in accordance with GAAP. The accompanying financial tables include reconciliations of non-GAAP financial measures to GAAP financial measures.
Adjusted EBITDA is used by our management as an additional measure of our company'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 our management identify additional trends in our company's financial results that may not be shown solely by period-to-period comparisons of consolidated income (loss) from continuing operations or net income (loss) attributable to Company stockholders. In addition, we use Adjusted EBITDA in the incentive compensation programs applicable to many of our employees in order to evaluate our company's performance. Our 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 consolidated income (loss) from continuing operations or net income (loss) attributable to Company stockholders, 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 consolidated income (loss) from continuing operations or to net income (loss) attributable to Company stockholders that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the accompanying financial tables.
We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to consolidated income (loss) from continuing operations or to net income (loss) attributable to Company stockholders, helps investors make comparisons between our company 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 our company with other public companies and is not intended as a substitute for comparisons based on "consolidated income (loss) from continuing operations" or "net income (loss) attributable to Company stockholders" 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 us from Adjusted EBITDA but included in consolidated income (loss) from continuing operations:
Three Months Ended March 31, --------- 2010 2009 ---- ---- Non-cash stock-based compensation included in: Cost of operations $1,789 $1,623 Sales and marketing $2,193 $1,550 General and administrative $3,855 $5,981 Income from discontinued operations $-- $317
Three Months Ended March 31, --------- 2010 2009 ---- ---- Non-cash interest expense 1.75% Convertible Notes $305 $364 3-1/8% Convertible Notes $2,072 $2,435 Cash interest expense 1.75% Convertible Notes $1,158 $1,413 3-1/8% Convertible Notes $1,604 $2,321
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