ELMWOOD PARK, N.J., May 4 /PRNewswire-FirstCall/ -- Emdeon Corporation today announced financial results for the quarter ended March 31, 2006.
Kevin Cameron, Chief Executive Officer of Emdeon, said: “I am pleased with our results for the quarter. Our execution is improving and many of the process improvements and new product initiatives we recently focused on are beginning to drive results.”
Key Financial Highlights
Revenue for the first quarter was $339.1 million compared to $303.9 million in the prior year period, an increase of 11.6%. Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) for the first quarter was $54.2 million or $0.18 per share compared to $39.3 million or $0.12 per share a year ago, an increase of 37.9%. Net income for the first quarter was $16.4 million or $0.06 per share compared to net income of $9.8 million or $0.03 per share a year ago, an increase of 66.8%. Net income for the first quarter includes $12.5 million of non-cash stock compensation expense, compared to $1.7 million a year ago, reflecting the January 1, 2006 adoption of SFAS 123R.
As of March 31, 2006, Emdeon had approximately $376.8 million in cash and short-term investments on a consolidated basis, including $132.8 million in cash and short-term investments held by WebMD Health Corp., its 85.8% owned subsidiary.
Segment Operating Results
Emdeon Business Services segment revenue was $201.2 million for the first quarter compared to $185.7 million in the prior year period, an increase of 8.3%. The increase in Emdeon Business Services revenue was attributable to strong performance in our remittance and payment, patient statement, provider and ViPS businesses and the impact of the January 8, 2006 US Postal Service rate increase. Segment Adjusted EBITDA was $43.2 million compared to $38.3 million in the prior year period, an increase of 12.9%. Operating margins increased to 21.5% compared to 20.6% a year ago primarily as a result of higher revenue and the continued achievement of operating efficiencies and cost savings.
Emdeon Practice Services segment revenue was $75.7 million for the first quarter compared to $73.0 million in the prior year period, an increase of 3.7%. Segment Adjusted EBITDA was $10.2 million compared to $4.4 million in the prior year period, an increase of 131.4%. Operating margins increased from 6% in the prior year period to 13.4% as a result of changes in revenue mix and improvements in our delivery and service infrastructure.
As previously announced on May 2, 2006, WebMD segment revenue was $50.1 million for the first quarter compared to $33.6 million in the prior year period, an increase of 49.1%, driven by continued growth in online services. Segment Adjusted EBITDA was $6.5 million compared to $3.2 million in the prior year, primarily as a result of the increase in revenues.
Porex segment revenue was $20.6 million for the first quarter compared to $19.9 million in the prior year period. Segment Adjusted EBITDA for the first quarter was $5.6 million compared to $5.4 million in the prior year period.
Financial Guidance
A schedule outlining the Company’s financial guidance is being furnished as an exhibit to a Current Report on Form 8-K being filed by the Company today with the Securities and Exchange Commission.
Analyst and Investor Conference Call
As previously announced, Emdeon will hold a conference call with investors and analysts to discuss these results at 4:45 pm (eastern) on May 4, 2006. The call can be accessed at www.emdeon.com (in the About Emdeon section). A replay of the audio webcast will be available at the same web address.
ABOUT EMDEON
Emdeon is a leading provider of business, technology and information solutions that transform both the financial and clinical aspects of healthcare delivery. At the core of Emdeon’s vision is the commitment to connect providers, payers, employers, physicians and consumers in order to simplify business processes, to provide actionable knowledge at the right time and place and to improve healthcare quality.
Emdeon Business Services provides revenue cycle management and clinical communication solutions that enable payers, providers and patients to improve healthcare business processes. Emdeon Practice Services provides physician practice management and electronic health record software and services that increase practice efficiency and enhance patient care. WebMD provides health information services for consumers, physicians, healthcare professionals, employers and health plans through its public and private online portals and health-focused publications. Porex is a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications.
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; the amount and timing of the benefits expected from acquisitions or other transactions, from deployment of new or updated technologies, products, services or applications or from other potential sources of additional revenue; and explorations regarding possible transactions or other alternatives with respect to Emdeon Business Services and Emdeon Practice Services. These statements speak only as of the date of this 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; our ability to develop and maintain relationships with healthcare industry participants, including healthcare payers and providers and vendors of services to those payers and providers; difficulties in integrating acquired businesses; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries, including matters relating to the Health Insurance Portability and Accountability Act of 1996 (HIPAA); our ability to attract and retain qualified personnel; and uncertainties regarding the outcome of the process of exploring alternatives with respect to Emdeon Business Services and Emdeon Practice Services and its effects on those segments. Further information about these matters can be found in our Securities and Exchange Commission filings. We expressly disclaim any intent or obligation to update these forward-looking statements.
This press release includes 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 include: our company’s earnings before restructuring, interest, taxes, non-cash and other items (which we refer to as “Adjusted EBITDA”); and related per share amounts. We believe that those non-GAAP measures, and changes in those measures, are meaningful indicators of our company’s performance and provide additional information that our management finds useful in evaluating such performance and in planning for future periods. Accordingly, we believe that such additional information may be useful to investors. The non-GAAP financial measures should be viewed as supplemental to, and not as an alternative for, the GAAP financial measures. The tables attached to this press release include a reconciliation of historical non-GAAP financial measures to historical GAAP financial measures. The guidance summary being furnished as an exhibit to a Current Report on Form 8-K we are filing with the SEC today includes a reconciliation of forward-looking non-GAAP information to forward-looking GAAP financial information.
WebMD(R), WebMD Health(R), Emdeon(TM), Emdeon Business Services(TM), Emdeon Practice Services(TM) and POREX(R) are trademarks of Emdeon Corporation or its subsidiaries.
EMDEON CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited) Three Months Ended March 31, 2006 2005 Revenue $339,119 $303,934 Costs and expenses: Cost of operations 195,267 172,163 Development and engineering 14,914 14,640 Sales, marketing, general and administrative 88,832 82,137 Depreciation and amortization 18,928 16,504 Legal expense 542 4,160 Loss on investments - 3,832 Interest income 4,419 4,321 Interest expense 4,691 4,781 Income before income tax provision and minority interest 20,364 10,038 Income tax provision 4,562 189 Minority interest in WebMD Health Corp., net of tax (629) - Net income $16,431 $9,849 Net income per common share: Basic and diluted $0.06 $0.03 Weighted-average shares outstanding used in computing net income per common share: Basic 287,195 325,334 Diluted 295,492 335,689 EMDEON CORPORATION CONSOLIDATED SEGMENT INFORMATION (In thousands, except per share data, unaudited) Three Months Ended March 31, 2006 2005 Revenues Emdeon Business Services $201,154 $185,733 Emdeon Practice Services 75,706 73,018 WebMD 50,051 33,575 Porex 20,587 19,856 Inter-segment eliminations (8,379) (8,248) $339,119 $303,934 Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) Emdeon Business Services $43,193 $38,253 Emdeon Practice Services 10,173 4,397 WebMD (a) 6,527 3,230 Porex 5,554 5,397 Corporate (a) (11,274) (12,005) $54,173 $39,272 Adjusted EBITDA per basic common share (b) $0.19 $0.12 Adjusted EBITDA per diluted common share (b) $0.18 $0.12 Interest, taxes, non-cash and other items (c) Depreciation and amortization $(18,928) $(16,504) Amortization of non-cash advertising (1,605) (2,627) Non-cash stock-based compensation (d) (12,462) (1,651) Legal expense (542) (4,160) Loss on investments - (3,832) Interest income 4,419 4,321 Interest expense (4,691) (4,781) Minority interest in WebMD Health Corp., net of tax 629 - Income tax provision (4,562) (189) Net income $16,431 $9,849 Net income per common share: Basic and diluted $0.06 $0.03 Weighted-average shares outstanding used in computing net income per common share: Basic 287,195 325,334 Diluted 295,492 335,689 (a) Adjusted EBITDA during prior periods, for the Corporate and WebMD segments, has been reclassified to conform to the current period presentation. (b) Adjusted EBITDA per basic and diluted common share is based on the weighted-average shares outstanding used in computing net income per common share (basic and diluted). (c) Reconciliation of Adjusted EBITDA to net income. (d) Reflects the adoption of SFAS 123R effective January 1, 2006. EMDEON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) March 31, December 31, 2006 2005 Assets (Unaudited) Cash and cash equivalents $137,145 $159,510 Short-term investments 239,653 267,387 Accounts receivable, net 236,057 233,070 Inventory 13,852 14,251 Prepaid expenses and other current assets 33,605 34,615 Total current assets 660,312 708,833 Marketable equity securities 4,265 4,481 Property and equipment, net 120,791 116,032 Goodwill 1,087,731 1,075,549 Intangible assets, net 240,095 240,510 Other assets 49,116 50,278 Total Assets $2,162,310 $2,195,683 Liabilities and Stockholders’ Equity Accounts payable $10,525 $11,611 Accrued expenses 172,179 186,381 Deferred revenue 125,705 115,840 Total current liabilities 308,409 313,832 Convertible notes 650,000 650,000 Other long-term liabilities 15,372 15,353 Minority interest in WebMD Health Corp. 48,005 43,229 Convertible redeemable exchangeable preferred stock 98,591 98,533 Stockholders’ equity 1,041,933 1,074,736 Total Liabilities and Stockholders’ Equity $2,162,310 $2,195,683 EMDEON CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Three Months Ended March 31, 2006 2005 Cash flows from operating activities: Net income $16,431 $9,849 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,928 16,504 Minority interest in WebMD Health Corp., net of tax (629) - Amortization of debt issuance costs 728 726 Non-cash advertising 1,605 2,627 Non-cash stock-based compensation 12,462 1,651 Bad debt expense 1,050 2,283 Loss on investments - 3,832 Reversal of income tax valuation allowance applied to goodwill 2,157 - Changes in operating assets and liabilities: Accounts receivable (2,245) (14,122) Inventory 446 253 Prepaid expenses and other, net (710) 2,812 Accounts payable (1,133) (8,631) Accrued expenses and other long-term liabilities (9,886) (106) Deferred revenue 7,557 5,279 Net cash provided by operating activities 46,761 22,957 Cash flows from investing activities: Proceeds from maturities and sales of available-for-sale securities 166,228 45,846 Purchases of available-for-sale securities (137,815) (2,550) Purchases of property and equipment (14,168) (11,892) Proceeds received from sale of property and equipment - 400 Cash paid in business combinations, net of cash acquired (27,328) (70,775) Net cash used in investing activities (13,083) (38,971) Cash flows from financing activities: Proceeds from issuance of common stock 10,565 13,170 Purchases of treasury stock (66,633) - Payments of notes payable and other (94) (63) Net cash (used in) provided by financing activities (56,162) 13,107 Effect of exchange rates on cash 119 (358) Net decrease in cash and cash equivalents (22,365) (3,265) Cash and cash equivalents at beginning of period 159,510 46,019 Cash and cash equivalents at end of period $137,145 $42,754
Emdeon Corporation
CONTACT: Investors: Risa Fisher, +1-201-414-2002, or rfisher@emdeon.com;or Media: Jennifer Newman, +1-212-624-3912, jnewman@emdeon.com
Web site: http://www.webmd.com//
