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WebMD Provides Preliminary Second Quarter Results and Updates Financial Guidance for 2012

NEW YORK, July 24, 2012 /PRNewswire/ -- WebMD Health Corp. (NASDAQ: WBMD), the leading source of health information, today announced preliminary financial results for the three months ended June 30, 2012 and updated financial guidance for 2012. 

Preliminary Results for the Three Months Ended June 30, 2012
WebMD expects that its second quarter revenue, Adjusted EBITDA and net loss will be in line with previously stated financial guidance for the quarter.

This information is preliminary. WebMD is completing its normal closing process and, as previously announced, will provide second quarter financial results on July 31, 2012 and host a conference call to discuss those results at 4:45 PM, Eastern time, on that day.

Balance Sheet Highlights
As of June 30, 2012, WebMD had $964 million in cash and cash equivalents and $800 million in aggregate principal amount of convertible notes outstanding. During the second quarter, the Company utilized $150 million of cash to purchase 5.8 million shares of its common stock in a tender offer. Additionally, during the quarter, the Company utilized $22.8 million of cash to purchase approximately 1 million shares of its common stock under its buyback program. The Company has approximately $66 million remaining in its authorized buyback program.

Traffic Highlights
Traffic to the WebMD Health Network during the second quarter continued to grow, reaching an average of 106.9 million unique users per month and 2.50 billion page views for the quarter, increases of 29% and 25%, 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.

Updated 2012 Financial Guidance
Based on current visibility into the second half of this year, WebMD has updated its financial guidance for 2012 and expects the following:

WebMD's prior financial guidance for 2012, as last disseminated on May 1, 2012, was:

For the third quarter of 2012, WebMD expects:

The Company adjusted its financial guidance after its review of actual sales for the second quarter and its sales expectations and related revenue contribution for the third and fourth quarters of 2012.  The updated guidance assumes lower sales commitments and related revenue for the balance of 2012 than was previously anticipated.  The Company anticipates that many of its customers will reevaluate expenditures in various areas, including marketing expenditures across their entire product portfolios, as they deal with both the ongoing and anticipated impact of patent expirations across their businesses as well as greater than expected delays in new product launches as a result of unanticipated delays in FDA approvals. 

Cavan M. Redmond, Chief Executive Officer of WebMD, said:  "As shown by the usage of the WebMD Health Network in the June quarter, WebMD continues to be the most trusted and credible brand of healthcare information today and is truly at the crossroads of patient, physician and consumer engagement.  My immediate focus has been to review the business and to prioritize the steps necessary to meet our clients' needs.  Of equal importance, I am reevaluating the company's infrastructure across-the-board to drive operational improvements and cost efficiencies.  The challenges are clear.  However, I believe the opportunities are considerable and I look forward to leading the organization in our efforts to realize them."

A schedule outlining WebMD's updated 2012 financial guidance is attached to this press release.

Annual Meeting of Stockholders
As previously announced, a live audio webcast of the Annual Meeting of Stockholders of WebMD will be available over the Internet beginning at 9:30 A.M., Eastern time, today. To listen to the audio webcast of the meeting, investors can go to www.wbmd.com (in the Investor Relations section) at that time. 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 presentation at the Annual Meeting of WebMD, other than statements of historical fact, are forward-looking statements, including those regarding:   our preliminary second quarter results (which reflect what WebMD currently expects to report and are subject to adjustment); 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 other factors affecting their use of our products and services, including regulatory matters affecting their products; 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

Preliminary Financial Information for the Quarter Ended June 30, 2012

and Financial Guidance Summary

(in millions, except per share amounts)














Quarter Ended


Year Ending


June 30, 2012


December 31, 2012


Preliminary


Guidance Range







Revenue

$   112.0


$   455.0


$    480.0







Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") (a)

$     14.0


$     60.0


$      75.0







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






   Interest expense

(5.8)


(23.2)


(23.2)

   Depreciation and amortization

(6.7)


(28.0)


(27.0)

   Non-cash stock-based compensation

(9.4)


(48.0)


(46.0)

   Gain on investments

-


8.1


8.1

   Other expense

(1.1)


(2.3)


(2.3)

Pre-tax loss from continuing operations

$     (9.0)


$   (33.4)


$    (15.4)







Income tax benefit

2.7


10.0


3.0







Loss from continuing operations

$     (6.3)


$   (23.4)


$    (12.4)







Income from discontinued operations, net of tax

0.5


0.5


0.5







Net loss

$     (5.8)


$   (22.9)


$   (11.9)







Loss from continuing operations per share:






   Basic and diluted

$   (0.13)


$   (0.45)


$   (0.24)







Net loss per share:






   Basic and diluted

$   (0.12)


$   (0.44)


$   (0.23)







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






  Basic and diluted

49.6


52.0


52.0













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











(b) Reconciliation of Adjusted EBITDA to loss from continuing operations











Additional information regarding preliminary results for the quarter ended June 30, 2012: 

     -    Other expense represents one time expenses related to recruitment of the Company's CEO

     -    Income from discontinued operations represents a tax refund related to a business the Company

          divested in 2006







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

     -     Revenue is forecasted to be between $115 million to $120 million 

     -     Adjusted EBITDA as a percentage of revenue is forecasted to be approximately 13% to 15%

     -     Loss from continuing operations as a percentage of revenue is forecasted to be approximately 3% to 5%







Additional information regarding full year forecast: 

     -     The distribution of the annual revenue is expected to be approximately 83% public portals advertising

           and sponsorship and 17% private portal licensing. Quarterly revenue distributions may vary from this

           annual estimate.

     -     2012 guidance includes actual gains on investments and income from discontinued operations during

           the six months ended June 30, 2012 but excludes any estimate for these items during the six 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

The accompanying WebMD Health Corp. press release and attachment 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 or loss from continuing operations calculated in accordance with GAAP (referred to below as "income from continuing operations"); or net income or loss calculated in accordance with GAAP (referred to below as "net income").  The attachment to the press release includes 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 income from continuing operations or net income.  In addition, we may 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 income from continuing operations or 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 income from continuing operations or 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 attachment.

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 income from continuing operations or 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 income from continuing operations or 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 income from continuing operations and net income:

SOURCE WebMD Health Corp.

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