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Revenue Increases 64%, Adjusted EBITDA Increases 79%, Net Income Increases 45%
WebMD Raises 2007 Financial Guidance
WebMD's Next-Generation Consumer Health Portal Launched Today
NEW YORK, Feb. 21 /PRNewswire-FirstCall/ -- WebMD Health Corp. (Nasdaq: WBMD) today announced financial results for the three months ended December 31, 2006.
Wayne Gattinella, President and Chief Executive Officer of WebMD, said: "I am extremely proud of our strong operating results for the fourth quarter, as WebMD increased its market position as the leading provider of health information for both consumers and physicians. We expect our momentum to continue with the increasing shift to online marketing and the industry trend towards consumer directed healthcare."
Financial Summary
Revenue for the fourth quarter was $80.6 million compared to $49.1 million in the prior year period, an increase of 64%. Earnings before interest, taxes, depreciation, amortization, and other non-cash items ("Adjusted EBITDA") for the fourth quarter increased 79% to $22.3 million or $0.38 per share compared to $12.4 million or $0.22 per share in the prior year period. Net income of $8.9 million or $0.15 per share for the fourth quarter includes $4.4 million of stock compensation expense due to the January 1, 2006 adoption of SFAS 123R. Without this expense, net income would have been $13.3 million or $0.23 per share compared to net income of $6.1 million or $0.11 per share in the prior year period.
Revenue for the year ended December 31, 2006 was $253.9 million compared to $168.9 million a year ago, an increase of 50%. Adjusted EBITDA for the year increased to $53.1 million or $0.91 per share compared to $28.4 million or $0.56 per share a year ago, an increase of 87%. Net income for the year was $4.5 million or $0.08 per share which includes $21.8 million of stock compensation expense due to the January 1, 2006 adoption of SFAS 123R. Without this expense, net income would have been $26.3 million or $0.45 per share, compared to $7.7 million or $0.15 per share a year ago.
As of December 31, 2006, WebMD had approximately $54 million of cash and investments. WebMD received an additional $140 million from its parent company, Emdeon Corporation, on February 6, 2007 in accordance with the tax sharing agreement between the two companies, related to the sale of certain businesses by Emdeon.
Operating Highlights
Online Services segment revenue was $76.1 million for the fourth quarter compared to $45.0 million in the prior year period, an increase of 69%. Advertising and sponsorship revenue increased 79% to $58.1 million. Private portal licensing revenue increased 57% to $17.3 million. Online Services segment Adjusted EBITDA increased 79% to $22.7 million compared to $12.7 million in the prior year period.
The WebMD Health Network continued to expand with the average number of unique users reaching 35.5 million per month and total traffic of 815 million page views during the fourth quarter, increases of 38% and 36%, respectively, from a year ago. In the fourth quarter, 626,000 continuing medical education (CME) programs were completed on the Network, an increase of 48% from the prior year period.
WebMD continued to expand its base of private Health and Benefits portals to large employers and health plans. During the fourth quarter, the Company implemented new online health platforms for large corporations and health plans, including Archer Daniels Midland Co., HealthNet, Inc., Pacific Source Health Plans, APWU Health Plan, Consumers Energy, Dun & Bradstreet, and IAC/Interactive Corp.
Publishing and Other Services segment revenue was $4.5 million for the fourth quarter compared to $4.1 million in the prior year period, an increase of 9%. Publishing and Other Services segment Adjusted EBITDA loss was ($410,000) compared to a loss of ($279,000) in the prior year period.
Increased Financial Guidance for 2007
WebMD has increased its financial guidance for 2007. The company expects:
A schedule outlining the Company's updated financial guidance is attached to this press release.
Next-Generation WebMD Consumer Health Portal Launched Today
After more than 18 months of investment in new technology development, design, data profiling and content integration, WebMD launched its next- generation consumer health portal today. As part of its new portal, WebMD will provide every user with access to a Personal Health Record as part of WebMD Health Manager, a free service that enables consumers to securely store and maintain their personal health history.
Mr. Gattinella said: "The new WebMD health portal introduces the next level of personalization, information, community and care that will dramatically enrich the user experience and further empower people to make more informed health decisions. The new WebMD site creates expanded opportunities for sponsor promotion and is expected to increase overall WebMD traffic through improved external search engine optimization."
Additional highlights of the new site include:
Analyst and Investor Conference Call
As previously announced, WebMD will hold a conference call with investors and analysts to discuss their fourth quarter results at 4:45 pm (eastern) on February 21, 2007. 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. WebMD Health Corp. is a subsidiary of Emdeon Corporation (Nasdaq: HLTH).
The WebMD Health Network reaches more than 35 million visitors a month through its leading owned and operated health sites that include WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList and theHeart.org.
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All statements contained in this press release, 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; our expectations concerning market opportunities and our ability to capitalize on them; and the amount and timing of the benefits expected from acquisitions, from new products or services and from other potential sources of additional revenue. These statements speak only as of the date of this press release and are based on our current plans and expectations, and they 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; relationships with customers and strategic partners; difficulties in integrating acquired businesses; 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.
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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.
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WebMD®, WebMD Health®, Medscape®, eMedicine®, MedicineNet®, RxList®, Subimo®, Medsite®, The Little Blue Book® and Summex®, 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 Year Ended December 31, December 31, 2006 2005 2006 2005
Revenue $80,573 $49,104 $253,881 $168,938
Costs and expenses: Cost of operations 29,016 19,007 106,387 70,538 Sales and marketing 23,248 15,093 76,189 51,756 General and administrative 14,407 7,763 52,338 29,550 Depreciation and amortization 5,020 2,668 17,647 10,653 Interest income 962 1,780 5,099 1,790 Income before income tax provision 9,844 6,353 6,419 8,231 Income tax provision 965 222 1,873 486 Net income $8,879 $6,131 $4,546 $7,745
Net income per common share: Basic $0.16 $0.11 $0.08 $0.15 Diluted $0.15 $0.11 $0.08 $0.15
Weighted-average shares outstanding used in computing basic and diluted net income per common share: Basic 56,411 56,054 56,145 50,132 Diluted 58,367 57,627 58,075 50,532
WEBMD HEALTH CORP. CONSOLIDATED SEGMENT INFORMATION (In thousands, except per share data, unaudited)
Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005© Revenue Online Services: Advertising and sponsorship $58,113 $32,480 $170,626 $109,977 Licensing 17,306 11,016 55,621 34,113 Content syndication and other 703 1,513 3,518 8,210 Total Online Services 76,122 45,009 229,765 152,300 Publishing and Other Services 4,451 4,095 24,116 16,638 $80,573 $49,104 $253,881 $168,938 Earnings (loss) before interest, taxes, depreciation, amortization and other non-cash items ("Adjusted EBITDA")(a) Online Services $22,730 $12,725 $52,324 $28,313 Publishing and Other Services (410) (279) 755 88 22,320 12,446 53,079 28,401
Adjusted EBITDA per basic common share $0.40 $0.22 $0.95 $0.57 Adjusted EBITDA per diluted common share $0.38 $0.22 $0.91 $0.56
Interest, taxes, depreciation, amortization and other non- cash items (b) Interest income 962 1,780 5,099 1,790 Depreciation and amortization (5,020) (2,668) (17,647) (10,653) Non-cash advertising (2,961) (3,871) (7,415) (8,992) Non-cash stock-based compensation (5,457) (1,334) (26,697) (2,315) Income tax provision (965) (222) (1,873) (486) Net income $8,879 $6,131 $4,546 $7,745
Net income per common share: Basic $0.16 $0.11 $0.08 $0.15 Diluted $0.15 $0.11 $0.08 $0.15
Weighted-average shares outstanding used in computing basic and diluted net income per common share: Basic 56,411 56,054 56,145 50,132 Diluted 58,367 57,627 58,075 50,532
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to net income
© The year ended December 31, 2005 results include a $3,150 charge primarily related to severance expense incurred during the quarter ended June 30, 2005.
WEBMD HEALTH CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited)
December 31, December 31, 2006 2005 ASSETS Current assets: Cash and cash equivalents $44,660 $75,704 Short-term investments 9,490 78,073 Accounts receivable, net 89,652 57,245 Current portion of prepaid advertising 2,656 7,424 Due from Emdeon 143,153 - Other current assets 5,360 3,977 Total current assets 294,971 222,423
Property and equipment, net 44,709 21,014 Prepaid advertising 9,459 12,104 Goodwill 225,028 100,669 Intangible assets, net 45,268 20,503 Other assets 530 176 $619,965 $376,889
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accrued expenses $32,846 $30,400 Deferred revenue 77,731 36,495 Due to Emdeon - 3,672 Total current liabilities 110,577 70,567
Other long-term liabilities 7,912 7,010
Stockholders' equity 501,476 299,312 $619,965 $376,889
WEBMD HEALTH CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited)
Year Ended December 31, 2006 2005 Cash flows from operating activities: Net income $4,546 $7,745 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,647 10,653 Non-cash advertising 7,414 8,992 Non-cash stock-based compensation 26,697 2,315 Reversal of income tax valuation allowance applied to goodwill 94 - Changes in operating assets and liabilities: Accounts receivable (25,430) (13,974) Other assets (800) (567) Accrued expenses and other long-term liabilities 6,699 10,721 Due (from) to Emdeon (1,568) 3,672 Deferred revenue 17,502 (952) Net cash provided by operating activities 52,801 28,605
Cash flows from investing activities: Proceeds from maturities and sales of available-for-sale securities 304,184 87,450 Purchases of available-for-sale securities (229,410) (165,178) Purchases of property and equipment (28,452) (18,126) Cash paid in business combinations, net of cash acquired (130,167) (50,752) Net cash used in investing activities (83,845) (146,606)
Cash flows from financing activities: Proceeds from issuance of common stock 5,257 125,392 Net cash transfers with Emdeon (5,257) 64,857 Net cash provided by financing activities - 190,249 Net (decrease) increase in cash and cash equivalents (31,044) 72,248 Cash and cash equivalents at beginning of period 75,704 3,456 Cash and cash equivalents at end of period $44,660 $75,704
FINANCIAL GUIDANCE SUMMARY
2007 Financial Guidance (in millions, except per share amounts)
Year Ended December 31, 2007 Range Revenue $336.0 $352.0
Earnings before interest, taxes, depreciation, amortization and other non-cash items ("Adjusted EBITDA") (a) 77.0 84.0
Adjusted EBITDA per diluted common share $1.28 $1.40
Interest, taxes, depreciation, amortization and other non-cash items (b) Interest income 10.0 10.5 Depreciation and amortization (31.5) (30.5) Non-cash advertising (5.5) (5.0) Non-cash stock-based compensation (24.0) (23.0) Income tax provision (5.0) (7.0)
Net income $21.0 $29.0
Net income per common share: Basic $0.37 $0.51 Diluted $0.35 $0.48
Weighted-average shares outstanding used in computing net income per common share: Basic 57.0 57.0 Diluted 60.0 60.0
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to net income
Supplementary 2007 Quarterly Guidance (in millions, except percentages and per share amounts)
Quarter Ended Quarter Ended March 31, 2007 June 30, 2007 Range Range
Revenue $69.0 $71.0 $76.0 $78.0
Net income (loss) (3.8) (2.0) 2.5 3.7 % of revenue -5.5% -2.8% 3.3% 4.7%
Net income (loss) per common share: Basic $(0.07) $(0.04) $0.04 $0.06 Diluted $(0.06) $(0.03) $0.04 $0.06
Weighted-average shares outstanding used in computing net income (loss) per common share: Basic 57.0 57.0 57.0 57.0 Diluted 60.0 60.0 60.0 60.0
% of revenue Earnings before interest, taxes, depreciation, amortization and other non-cash items ("Adjusted EBITDA") (a) 14.5% 16.0% 18.5% 19.0%
Stock-based compensation expense -8.3% -7.7% -7.9% -7.4%
Non-cash advertising -3.3% -2.8% 0.0% 0.0%
Interest, taxes, depreciation and amortization -8.4% -8.3% -7.3% -6.8%
Net income (loss) -5.5% -2.8% 3.3% 4.7%
Quarter Ended Quarter Ended September 30, 2007 December 31, 2007 Range Range
Revenue $89.0 $94.0 $102.0 $109.0
Net income (loss) 7.7 9.3 14.6 18.0 % of revenue 8.7% 9.9% 14.3% 16.5%
Net income (loss) per common share: Basic $0.14 $0.16 $0.26 $0.32 Diluted $0.13 $0.16 $0.24 $0.30
Weighted-average shares outstanding used in computing net income (loss) per common share: Basic 57.0 57.0 57.0 57.0 Diluted 60.0 60.0 60.0 60.0
% of revenue Earnings before interest, taxes, depreciation, amortization and other non-cash items ("Adjusted EBITDA") (a) 23.5% 24.5% 31.0% 32.0%
Stock-based compensation expense -7.9% -7.1% -5.2% -4.6%
Non-cash advertising 0.0% 0.0% -3.1% -2.8%
Interest, taxes, depreciation and amortization -7.0% -7.5% -8.4% -8.1%
Net income (loss) 8.7% 9.9% 14.3% 16.5%
(a) See Annex A - Explanation of Non-GAAP Financial Measures
ANNEX A
Explanation of Non-GAAP Financial Measures
The accompanying WebMD Health Corp. press release, financial tables and financial guidance summary 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" calculated in accordance with GAAP. The tables and the financial guidance summary 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 overall performance and its reporting segments' 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 and its reporting segments' financial results that may not be shown solely by period-to-period comparisons of net income. 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 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 included in the tables and the financial guidance summary 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 net income, 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 "net income" 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 net income/(loss):
(amounts in thousands)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Non-cash stock-based compensation
included in:
Cost of operations $(1,633) $(167) $(8,744) $(394)
Sales and marketing $(1,260) $(116) $(5,870) $(368)
General and administrative $(2,564) $(1,051) $(12,083) $(1,553)
SOURCE WebMD Health Corp.
CONTACT: Investors - Risa Fisher, +1-212-624-3817, rfisher@webmd.net,
Media - Jennifer Newman, +1-212-624-3912, jnewman@webmd.net/
Web site: http://www.webmd.com
http://www.wbmd.com /
(WBMD HLTH)