WebMD Health Corp Logo

Print Print page   Email Email page   PDF Download PDF    Add to Briefcase
« Previous Release | Next Release »



WebMD Announces First Quarter Financial Results

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."

Financial Summary

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.

Financial Guidance

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.

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. 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

SOURCE WebMD

Copyright © 2010 PR Newswire. All rights reserved

Close window | Back to top