ELMWOOD PARK, N.J., Nov. 3 /PRNewswire-FirstCall/ -- Emdeon Corporation today announced financial results for the three months ended September 30, 2005.
Key Financial Highlights
Revenue for the third quarter was $323.2 million compared to $299.6 million a year ago, an increase of 7.9%. Income before taxes, non-cash and other items for the third quarter was $48.4 million or $0.13 per share compared to $38.0 million or $0.11 per share a year ago. Net income for the third quarter was $14.1 million or $0.04 per share compared to $8.2 million or $0.02 per share a year ago.
As of September 30, 2005, Emdeon had approximately $832 million in cash and short and long-term marketable debt securities.
“While our financial results were at the low end of our expectations for the third quarter, our goals remain unchanged, we believe our strategies are sound and we remain well positioned to deliver accelerated growth in 2006,” said Kevin Cameron, Chief Executive Officer of Emdeon Corporation.
Segment Operating Results
Emdeon Business Services revenue was $190.5 million for the third quarter compared to $174.6 million in the prior year period, an increase of 9.1%. The increase in Emdeon Business Services revenue was attributable to the acquisition of ViPS as well as growth in our paid-claims communications services and patient statement services. Income before taxes, non-cash and other items was $35.9 million compared to $31.8 million in the prior year. Operating margins increased as a result of decreases in HIPAA related expenses and lower transaction related expenses.
Emdeon Practice Services revenue was $75.5 million for the third quarter compared to $76.9 million in the prior year, a decrease of 1.9%. Income before taxes, non-cash and other items was $7.6 million compared to $5.9 million in the prior year. Operating margins increased from 7.6% in the prior year to 10.1% as a result of revenue mix and improvements in our delivery and service infrastructure.
As previously announced on November 1, 2005, WebMD Health revenue was $45.1 million for the third quarter compared to $37.0 million in the prior year period, an increase of 21.8%, driven by continued growth in our online public and private portals. Income before taxes, non-cash and other items was $9.1 million compared to $8.4 million in the prior year.
Porex revenue was $20.4 million for the third quarter compared to $19.4 million in the prior year period, an increase of 5.3%. Income before taxes, non-cash and other items was $6.4 million compared to $5.8 million in the prior year.
Andrew Corbin Appointed CEO of Emdeon Practice Services
Effective immediately, Andrew Corbin, Emdeon’s Chief Financial Officer, will assume the role of Chief Executive Officer of its Emdeon Practice Services segment. Mr. Corbin will continue to serve as CFO of Emdeon Corporation through the release of its year end financial results and the filing of its Annual Report on Form 10-K in early 2006. The Company expects to name Mr. Corbin’s successor prior to the filing of its Form 10-K. Mr. Corbin served as Interim President of Emdeon Practice Service for the first six months of 2005 and under his leadership, several important initiatives were put in place and the business achieved 10% margins for the first time in several years. Mr. Cameron said, “While I regret the stop and start with Andy, let me just say that I am enthusiastic about having Andy in this position, Andy is excited to be in this position and I am very confident in his ability to continue the good things he started.”
Stock Repurchase Program Increased to $200 Million
Emdeon announced that it has increased the amount available for repurchases under its stock repurchase program to $200 million, an increase of approximately $145 million from the amount previously available. Under its stock repurchase program, Emdeon may purchase shares of its common stock from time to time in the open market, through block trades or in private transactions, depending on market conditions and other factors.
Financial Guidance
A schedule outlining the Company’s financial guidance for the remainder of 2005 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 November 3, 2005. 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 Health 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 strategic initiatives and acquisitions or from deployment of new or updated technologies, products, services or applications; and other potential sources of additional revenue. These statements 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; operational difficulties relating to combining acquired companies and businesses; our ability to form and maintain mutually beneficial relationships with customers and strategic partners; 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); and our ability to attract and retain qualified personnel. 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 accounting principles generally accepted in the United States of America, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures include: our income before taxes, non-cash and other items; and related per share amounts. We believes 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 contain historical GAAP financial measures and a reconciliation between historical GAAP and non-GAAP financial measures. We are filing a Current Report on Form 8-K today furnishing this press release as an exhibit. Exhibit 99.3 furnished with that Current Report includes a reconciliation of certain forward-looking non-GAAP information to 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.
-Tables Follow- EMDEON CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Revenue $323,153 $299,615 $949,643 $852,710 Costs and expenses: Cost of operations 182,910 168,571 537,023 495,174 Development and engineering 14,681 14,392 43,778 38,479 Sales, marketing, general and administrative 82,386 84,762 248,056 245,054 Depreciation and amortization 18,895 15,189 52,940 40,922 Legal expense 5,904 2,325 14,347 6,577 Restructuring and integration charge - 4,535 - 4,535 Interest income 5,125 4,512 13,382 14,506 Interest expense 2,996 4,843 11,672 14,429 Other expense (income), net 1,863 (94) 7,407 (578) Income before income tax provision 18,643 9,604 47,802 22,624 Income tax provision 4,536 1,435 7,680 2,979 Net income $14,107 $8,169 $40,122 $19,645 Net income per common share: Basic $0.04 $0.03 $0.12 $0.06 Diluted $0.04 $0.02 $0.11 $0.06 Weighted-average shares outstanding used in computing net income per common share: Basic 356,091 323,004 339,576 318,978 Diluted 370,313 333,978 351,875 333,048 EMDEON CORPORATION CONSOLIDATED SEGMENT INFORMATION (In thousands, except per share data, unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Revenues Emdeon Business Services $190,502 $174,643 $567,749 $504,459 Emdeon Practice Services 75,499 76,924 227,113 219,703 WebMD Health 45,094 37,017 119,134 95,178 Porex 20,410 19,385 60,663 58,543 Inter-segment eliminations (8,352) (8,354) (25,016) (25,173) $323,153 $299,615 $949,643 $852,710 Income before restructuring, taxes, non-cash and other items Emdeon Business Services $35,926 $31,750 $114,599 $90,514 Emdeon Practice Services 7,632 5,856 20,212 8,978 WebMD Health (c) 9,077 8,441 15,100 17,572 Porex 6,385 5,823 17,846 17,140 Corporate (c) (12,738) (13,571) (36,485) (38,067) Interest income 5,125 4,512 13,382 14,506 Interest expense (2,996) (4,843) (11,672) (14,429) $48,411 $37,968 $132,982 $96,214 Basic income per common share before restructuring, taxes, non-cash and other items (a) $0.14 $0.12 $0.39 $0.30 Diluted income per common share before restructuring, taxes, non-cash and other items (a) $0.13 $0.11 $0.38 $0.29 Restructuring, taxes, non-cash and other items (b) Depreciation and amortization $(18,895) $(15,189) $(52,940) $(40,922) Amortization of non-cash advertising and distribution services (included in cost of operations) (74) (104) (291) (705) Amortization of non-cash advertising and distribution services (included in sales, marketing, general and administrative) (1,912) (3,505) (6,708) (14,188) Non-cash stock-based compensation (included in sales, marketing, general and administrative) (1,120) (2,800) (3,487) (7,241) Legal expense (5,904) (2,325) (14,347) (6,577) Restructuring and integration charge - (4,535) - (4,535) Other (expense) income, net (1,863) 94 (7,407) 578 Income tax provision (4,536) (1,435) (7,680) (2,979) Net income $14,107 $8,169 $40,122 $19,645 Net income per common share: Basic $0.04 $0.03 $0.12 $0.06 Diluted $0.04 $0.02 $0.11 $0.06 Weighted-average shares outstanding used in computing net income per common share: Basic 356,091 323,004 339,576 318,978 Diluted 370,313 333,978 351,875 333,048 (a) Basic and diluted income per common share before restructuring, taxes, non-cash and other items is based on the weighted-average shares outstanding used in computing basic and diluted income per common share. (b) Reconciliation of income before restructuring, taxes, non-cash and other items to net income. (c) Income before restructuring, taxes, non-cash and other items during prior periods, for the Corporate and WebMD Health segments, has been reclassified to reflect Corporate’s services charge to WebMD Health. EMDEON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2005 2004 Assets (Unaudited) Cash and cash equivalents $82,047 $46,019 Stock subscription receivable 129,142 - Short-term investments 603,360 61,675 Accounts receivable, net 230,174 204,447 Inventory 13,183 13,978 Prepaid expenses and other current assets 42,168 40,613 Total current assets 1,100,074 366,732 Marketable debt securities 147,060 511,864 Marketable equity securities 4,873 4,017 Property and equipment, net 112,786 89,677 Goodwill 1,026,998 1,010,564 Intangible assets, net 242,702 260,509 Other assets 52,257 48,871 Total Assets $2,686,750 $2,292,234 Liabilities and Stockholders’ Equity Accounts payable $10,669 $17,366 Accrued expenses 168,363 201,528 Deferred revenue 111,672 99,543 Total current liabilities 290,704 318,437 Convertible notes 650,000 649,999 Other long-term liabilities 5,226 1,283 Minority interest in WebMD Health Corp. 41,506 - Convertible redeemable exchangeable preferred stock 98,474 98,299 Stockholders’ equity 1,600,840 1,224,216 Total Liabilities and Stockholders’ Equity $2,686,750 $2,292,234 EMDEON CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net income $40,122 $19,645 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,940 40,922 Amortization of debt issuance costs 1,856 2,255 Non-cash advertising and distribution services 6,999 14,893 Non-cash stock-based compensation 3,487 7,241 Bad debt expense 4,876 3,726 Loss (gain) on investments 3,642 (457) Loss on redemption of convertible debt 1,902 - Non-cash reversal of income tax valuation allowance 4,330 - Gain on sale of property and equipment - (121) Changes in operating assets and liabilities: Accounts receivable (28,861) (6,869) Inventory 795 (303) Accounts payable (6,387) (874) Accrued expenses 7,913 (8,189) Deferred revenue 7,815 4,426 Prepaid expenses and other, net (2,328) 2,905 Net cash provided by operating activities 99,101 79,200 Cash flows from investing activities: Proceeds from maturities and sales of available-for-sale securities 336,014 1,387,614 Purchases of available-for-sale securities (516,109) (1,267,726) Purchases of property and equipment (49,325) (24,889) Proceeds received from sale of property and equipment 400 417 Cash paid in business combinations, net of cash acquired (74,410) (225,375) Net cash used in investing activities (303,430) (129,959) Cash flows from financing activities: Redemption of convertible debt (86,694) - Proceeds from issuance of common stock 43,384 30,528 Net proceeds from issuance of preferred stock - 98,115 Net proceeds from issuance of convertible debt 289,875 - Payments of notes payable and other (495) (433) Purchases of treasury stock (4,596) (22,267) Net cash provided by financing activities 241,474 105,943 Effect of exchange rates on cash (1,117) (28) Net increase in cash and cash equivalents 36,028 55,156 Cash and cash equivalents at beginning of period 46,019 39,648 Cash and cash equivalents at end of period $82,047 $94,804
Emdeon Corporation
CONTACT: Investors: Risa Fisher, +1-201-414-2002, rfisher@emdeon.com, orMedia: Jennifer Meyer, +1-212-624-3912, jmeyer@emdeon.com
Web site: http://www.webmd.com//
