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WebMD Announces First Quarter Financial Results

NEW YORK, May 1, 2012 /PRNewswire/ -- WebMD Health Corp. (NASDAQ: WBMD), the leading source of health information, today announced financial results for the three months ended March 31, 2012.

For the three months ended March 31, 2012:

"Our financial results for the first quarter are consistent with our financial guidance," said Anthony Vuolo, Interim Chief Executive Officer and Chief Financial Officer, WebMD. "We continue to focus on the initiatives that best position the Company to capture future growth opportunities."

Traffic Highlights
Traffic to the WebMD Health Network during the first quarter continued to grow strongly, reaching an average of 107 million unique users per month and 2.52 billion page views for the quarter, increases of 37.5% and 34.9%, respectively, from the prior year period.  The prior year comparisons exclude traffic from WebMD's former affiliate partner sites, which were phased out at the end of 2011.

Balance Sheet Highlights
As of March 31, 2012, WebMD had $1.1 billion in cash and cash equivalents and $800 million in aggregate principal amount of convertible notes outstanding.

Subsequent to March 31, 2012, the company utilized $150 million of cash to purchase 5.8 million shares of its common stock in a tender offer which was completed in early April.

Financial Guidance 
WebMD updated its financial guidance for 2012 to reflect the purchase of 5.8 million shares of its common stock through its recent tender offer and the gain on investments realized during the first quarter. A detailed schedule is attached to this press release.

In summary, for 2012, WebMD expects:

For the second quarter of 2012, WebMD expects:

"Our Board of Directors and management team are committed to creating value for all of our stakeholders," said Martin J. Wygod, Chairman, WebMD. "While we manage through this tough operating environment, we are focused on improving factors within our control. As we strategically deploy our unparalleled portfolio of assets and invest in the future of our business, we will continue to build upon our leadership status and be well positioned for future growth."

Analyst and Investor Conference Call      
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, mobile platforms and health-focused publications.

The WebMD Health Network includes WebMD Health, Medscape, MedicineNet, emedicineHealth, RxList, theheart.org and Medscape Education.

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; and the benefits expected from new or updated products or services and from other potential sources of additional revenue. 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; 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® 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,




2012


2011








Revenue


$ 106,947


$ 131,609


Cost of operations


53,471


48,449


Sales and marketing


30,103


32,294


General and administrative


29,022


22,821


Depreciation and amortization


6,930


6,424


Interest income


11


16


Interest expense


5,836


3,141


Gain on investments


8,074


14,060


Other expense


1,200


53


(Loss) income before income tax (benefit) provision


(11,530)


32,503


Income tax (benefit) provision


(3,753)


12,958


Net (loss) income


$ (7,777)


$ 19,545








Net (loss) income per common share:






Basic


$ (0.14)


$ 0.33


Diluted


$ (0.14)


$ 0.32








Weighted-average shares outstanding used in






computing (loss) income per common share:






Basic


55,769


58,184


Diluted


55,769


67,173










 

WEBMD HEALTH CORP.

CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, unaudited)


















Three Months Ended





March 31,





2012


2011


Revenue







Public portal advertising and sponsorship


$ 87,776


$ 110,363



Private portal services


19,171


21,246





$ 106,947


$ 131,609









Earnings before interest, taxes, non-cash







and other items ("Adjusted EBITDA") (a)


$ 11,251


$ 37,858









Interest, taxes, non-cash and other items (b)







Interest income


11


16



Interest expense


(5,836)


(3,141)



Income tax benefit (provision)


3,753


(12,958)



Depreciation and amortization


(6,930)


(6,424)



Non-cash stock-based compensation


(16,900)


(9,813)



Gain on investments


8,074


14,060



Other expense


(1,200)


(53)


Net (loss) income


$ (7,777)


$ 19,545









(a)

See Annex A-Explanation of Non-GAAP Financial Measures.






(b)

Reconciliation of Adjusted EBITDA to net (loss) income.













 

WEBMD HEALTH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)
















March 31, 2012


December 31, 2011

Assets





Cash and cash equivalents


$ 1,142,066


$ 1,121,217

Accounts receivable, net


97,445


121,335

Prepaid expenses and other current assets


15,442


12,690

Deferred tax assets


21,316


20,482

Total current assets


1,276,269


1,275,724







Property and equipment, net


53,621


57,139

Goodwill


202,104


202,104

Intangible assets, net


19,343


19,999

Deferred tax assets


51,953


55,017

Other assets


29,957


31,042

Total Assets


$ 1,633,247


$ 1,641,025







Liabilities and Stockholders' Equity





Accrued expenses


$ 44,076


$ 55,238

Deferred revenue


90,321


88,055

Liabilities of discontinued operations


1,506


1,506

Total current liabilities


135,903


144,799







2.25% convertible notes due 2016


400,000


400,000

2.50% convertible notes due 2018


400,000


400,000

Other long-term liabilities


21,503


21,790







Stockholders' equity


675,841


674,436







Total Liabilities and Stockholders' Equity


$ 1,633,247


$ 1,641,025

 

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)























Three Months Ended







March 31,







2012


2011

Cash flows from operating activities:






Net (loss) income


$ (7,777)


$ 19,545


Adjustments to reconcile net (loss) income to net cash provided by






operating activities:







Depreciation and amortization


6,930


6,424



Non-cash interest, net


1,082


516



Non-cash stock-based compensation


16,900


9,813



Deferred income taxes


(3,971)


4,798



Gain on investments


(8,074)


(14,060)



Changes in operating assets and liabilities:








Accounts receivable


23,890


5,688




Prepaid expenses and other, net


(4,023)


622




Accrued expenses and other long-term liabilities


(11,694)


(7,642)




Deferred revenue


2,266


(219)





Net cash provided by continuing operations


15,529


25,485





Net cash used in discontinued operations


-


(142)





Net cash provided by operating activities


15,529


25,343










Cash flows from investing activities:






Proceeds received from ARS option


9,269


5,240


Purchases of property and equipment


(3,377)


(4,849)





Net cash provided by investing activities


5,892


391










Cash flows from financing activities:






Proceeds from exercise of stock options


754


10,220


Cash used for withholding taxes due on stock-based awards


(911)


(3,172)


Net proceeds from issuance of the 2.50% Notes and 2.25% Notes


-


774,745


Purchases of treasury stock


(415)


(150,000)


Excess tax benefit on stock-based awards


-


7,355





Net cash (used in) provided by financing activities


(572)


639,148

Net increase in cash and cash equivalents


20,849


664,882

Cash and cash equivalents at beginning of period


1,121,217


400,501

Cash and cash equivalents at end of period


$ 1,142,066


$ 1,065,383










 













WebMD Health Corp.


Financial Guidance for the Year Ending December 31, 2012


(in millions, except per share amounts)














Year Ending




December 31, 2012




Guidance Range








Revenue


$ 500.0


$ 535.0








Earnings before interest, taxes, non-cash






and other items ("Adjusted EBITDA") (a)


$ 100.0


$ 125.0








Interest, taxes, non-cash and other items (b)






Interest expense, net


(23.0)


(23.0)


Depreciation and amortization


(28.0)


(27.0)


Non-cash stock-based compensation


(48.0)


(46.0)


Gain on investments


8.1


8.1


Other expense


(1.2)


(1.2)


Pre-tax income


7.9


35.9








Income tax provision


(5.1)


(16.0)








Net income


$ 2.8


$ 19.9














Net income per share






Basic


$ 0.05


$ 0.38


Diluted


$ 0.05


$ 0.37








Weighted-average shares outstanding used in computing per share amounts:






Basic


53.0


53.0


Diluted


54.0


54.0














(a) See Annex A - Explanation of Non-GAAP Financial Measures


(b) Reconciliation of Adjusted EBITDA to net income


Additional information regarding forecast for the quarter ending June 30, 2012:

- Revenue is forecasted to be between $110 million and $115 million

- Adjusted EBITDA as a percentage of revenue is forecasted to be approximately 10% to 12%.

- Net loss as a percentage of revenue is forecasted to be approximately 4% to 6%.


Additional information regarding full year forecast:

- The distribution of the annual revenue is expected to be approximately 84% public portals advertising and sponsorship

and 16% private portal licensing. Quarterly revenue distributions may vary from this annual estimate.

- 2012 guidance includes actual gains on investments during three months ended March 31, 2012, but excludes any gains or losses

related to investments or convertible notes for the nine-months ending December 31, 2012.

- Convertible notes are not expected to be dilutive for the full year or any quarter.

ANNEX A

Explanation of Non-GAAP Financial Measures
(All dollar amounts in thousands)

The accompanying WebMD Health Corp. press release and the attached financial information and guidance 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, net income (or net loss) calculated in accordance with GAAP (which we refer to in this Annex A as "net income"). The financial information and guidance accompanying the press release 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 net income. In addition, we use Adjusted EBITDA in the incentive compensation programs applicable to some 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 net income, 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 net income that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the accompanying press release attachments.

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 net income, 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 net income. 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 net income:






Three Months Ended

March 31,













2012


2011








Non-cash stock-based compensation included in:






Cost of operations

$ 2,757


$ 2,103



Sales and marketing

2,161


2,391



General and administrative

11,982


5,319














Three Months Ended

March 31,





2012


2011








Non-cash interest expense






2.50% Convertible Notes


$ 452


$ 397



2.25% Convertible Notes


$ 630


$ 119


Cash interest expense







2.50% Convertible Notes


$ 2,500


$ 2,194



2.25% Convertible Notes


$ 2,250


$ 425


 

SOURCE WebMD Health Corp.

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