NEW YORK, May 2 /PRNewswire-FirstCall/ -- WebMD Health Corp. today announced financial results for the three months ended March 31, 2006.
Wayne Gattinella, President and Chief Executive Officer of WebMD, said: “I am enthusiastic about the momentum that is building in our business. We delivered strong revenue and earnings growth this quarter while continuing to invest in our technology and other distribution. We are beginning to see the financial leverage in our business model and are well positioned to capitalize on the fast emerging trends in the healthcare industry.”
Financial Summary
Revenue for the first quarter was $50.1 million compared to $33.8 million in the prior year period, an increase of 48%. Earnings before interest, taxes, depreciation, amortization, and other non-cash items (“Adjusted EBITDA”) for the first quarter increased 83% to $6.5 million or $0.11 per share compared to $3.6 million or $0.07 per share in the prior year period. The net loss of ($4.2) million or $(0.07) per share for the first quarter includes $5.7 million in stock compensation expense due to the adoption of SFAS 123R. Without this, net income would have been $1.5 million or $0.03 per share compared to last year’s net loss of $(956,000) or $(0.02) per share.
As of March 31, 2006, WebMD had approximately $133 million of cash and investments.
Operating Highlights
Online Services segment revenue was $45.1 million for the first quarter compared to $31.2 million in the prior year period, an increase of 45%. Advertising and sponsorship revenue increased 44% to $32.8 million. Private portal licensing revenue increased 97% to $11.4 million. Online Services segment Adjusted EBITDA increased 106% to $7.9 million compared to $3.8 million in the prior year.
The WebMD Health Network averaged 29.2 million unique monthly users with total traffic of 746 million page views during the first quarter, increases of approximately 23% and 27%, respectively, from a year ago. During the first quarter a record total of 479,000 continuing medical education (CME) programs were completed on the network, an increase of 71% over the prior year period.
Publishing and Other Services segment revenue was $5.0 million for the first quarter compared to $2.6 million in the prior year period, an increase of 91%, primarily due to the launch of WebMD the Magazine in April 2005 and offline medical education provided by Conceptis which was acquired in December 2005. Publishing and Other Services segment Adjusted EBITDA was a loss of ($1.3) million compared to a loss of ($247,000) in the prior year period primarily due to expected losses from WebMD the Magazine and offline medical education.
Launch of Health Savings Account (HSA) Decision Support Tools
WebMD today announced the planned launch of its new healthcare retirement planning tools that will help consumers project their healthcare costs both in the near-term and in retirement in order to maximize use of their HSA funds. The new tools will combine WebMD’s personal health profile with regional healthcare cost and provider quality data to provide a highly personalized view of an individual’s healthcare planning needs.
“As consumers are required to assume greater responsibility for their healthcare decisions, the decision support applications delivered on the WebMD health and benefits platform will be essential,” said Mr. Gattinella. “Our new suite of HSA-related services leverages our platform to integrate both financial and healthcare planning tools in order to take advantage of the emerging consumer directed healthcare market.”
In addition, WebMD announced today that it has expanded its marketing agreement with Fidelity Investments to incorporate WebMD’s new HSA decision support tools into Fidelity’s HSA offering that will be marketed to their largest 401k, pension and payroll customers. The new, integrated HSA offering will help employees make important healthcare and financial planning decisions by combining Fidelity’s core financial management services with WebMD’s healthcare cost planning tools.
Planned Acquisition of Summex Will Further Strengthen WebMD’s Health and Benefits Platform
As announced on April 17th, WebMD entered into a definitive agreement to acquire Summex Corporation, a provider of comprehensive health and wellness programs that include online and offline health risk assessments, lifestyle education and personalized telephonic health coaching. With a significant amount of health care costs attributable to modifiable lifestyle factors, the Summex programs will complement WebMD’s online health and benefits platform and will be marketed to both new and existing employer and payer customers.
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, WebMD will hold a conference call with investors and analysts to discuss these results at 4:45 pm (eastern) on May 2, 2006. 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. is a leading provider of health information services to 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 .
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; 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. We expressly disclaim any intent or obligation to update these forward-looking statements.
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 non-GAAP financial measures. The non-GAAP financial measures include: our company’s earnings before interest, taxes, depreciation, amortization and other non-cash items (which we refer to as “Adjusted EBITDA”) and related per share amounts; Adjusted Cost of Operations; Adjusted Sales and Marketing Expense; and Adjusted General and Administrative Expense. We believe that those non-GAAP measures, and changes in those measures, provide additional information that our management finds useful in evaluating our company’s performance and in planning for future periods and/or provide additional detail on the components of amounts reported in our financial statements in accordance with GAAP. 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 99.4 furnished with that Current Report includes a reconciliation of certain forward-looking non-GAAP information to GAAP financial information.
WebMD(R), WebMD Health(R), Medscape(R) and eMedicine(R), 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, 2006 2005 Revenue $50,051 $33,761 Costs and expenses: Cost of operations 24,710 14,895 Sales and marketing 15,537 10,988 General and administrative 11,890 6,540 Depreciation and amortization 3,529 2,233 Interest income 1,448 - Loss before income tax provision (4,167) (895) Income tax provision - 61 Net loss $(4,167) $(956) Net loss per common share: Basic and diluted $(0.07) $(0.02) Weighted-average shares outstanding used in computing basic and diluted net loss per common share: 56,054 48,100 WEBMD HEALTH CORP. CONSOLIDATED SEGMENT INFORMATION (In thousands, except per share data, unaudited) Three Months Ended March 31, 2006 2005 Revenue Online Services: Advertising and sponsorship $32,760 $22,787 Licensing 11,442 5,805 Content syndication and other 876 2,563 Total Online Services 45,078 31,155 Publishing and Other Services 4,973 2,606 $50,051 $33,761 Earnings before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) Online Services $7,861 $3,819 Publishing and Other Services (1,334) (247) 6,527 3,572 Adjusted EBITDA per diluted common share (a) $0.11 $0.07 Interest, taxes, depreciation, amortization and other non-cash items (b) Interest income 1,448 - Depreciation and amortization (3,529) (2,233) Non-cash advertising (1,605) (1,751) Non-cash stock-based compensation (7,008) (483) Income tax provision - (61) Net loss $(4,167) $(956) Net loss per common share: Basic and diluted $(0.07) $(0.02) Weighted-average shares outstanding used in computing basic and diluted net loss per common share: Basic and diluted 56,054 48,100 (a) Three months ended March 31, 2006 Adjusted EBITDA is calculated based on 57,717 diluted shares (b) Reconciliation of Adjusted EBITDA to net loss WEBMD HEALTH CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) March 31, December 31, 2006 2005 ASSETS Current assets: Cash and cash equivalents $38,347 $75,704 Short-term investments 94,456 78,073 Accounts receivable, net 54,914 57,245 Current portion of prepaid advertising 6,524 7,424 Other current assets 5,178 3,977 Total current assets 199,419 222,423 Property and equipment, net 26,796 21,014 Prepaid advertising 11,399 12,104 Goodwill 117,495 100,669 Intangible assets, net 27,065 20,503 Other assets 130 176 $382,304 $376,889 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accrued expenses $23,499 $30,400 Deferred revenue 48,665 36,495 Due to Emdeon 1,130 3,672 Total current liabilities 73,294 70,567 Other long-term liabilities 7,008 7,010 Stockholders’ equity 302,002 299,312 $382,304 $376,889 WEBMD HEALTH CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Three Months Ended March 31, 2006 2005 Cash flows from operating activities: Net loss $(4,167) $(956) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 3,529 2,233 Non-cash advertising 1,605 1,751 Non-cash stock-based compensation 7,008 483 Changes in operating assets and liabilities: Accounts receivable 4,048 5,724 Other assets (1,722) (488) Accrued expenses and other long-term liabilities (5,287) (1,449) Due to Emdeon (2,521) - Deferred revenue 9,784 (1,124) Net cash provided by operating activities 12,277 6,174 Cash flows from investing activities: Proceeds from maturities and sales of available-for-sale securities 23,650 - Purchases of available-for-sale securities (39,650) - Purchases of property and equipment (6,757) (932) Cash paid in business combinations, net of cash acquired (26,877) (30,308) Net cash used in investing activities (49,634) (31,240) Cash flows from financing activities: Net cash transfers from Emdeon - 25,450 Net cash provided by financing activities - 25,450 Net (decrease) increase in cash and cash equivalents (37,357) 384 Cash and cash equivalents at beginning of period 75,704 3,456 Cash and cash equivalents at end of period $38,347 $3,840 WEBMD HEALTH CORP. SUPPLEMENTAL STATEMENTS OF OPERATIONS DATA (In thousands, except percentages, unaudited) Three Months Ended March 31, 2006 2005 Cost of operations $24,710 $14,895 Less: Non-cash stock-based compensation (2,317) (102) Adjusted cost of operations 22,393 14,793 % of revenue 44.7% 43.8% Sales and marketing $15,537 $10,988 Less: Non-cash advertising (1,605) (1,751) Non-cash stock-based compensation (1,488) (155) Adjusted sales and marketing 12,444 9,082 % of revenue 24.9% 26.9% General and administrative $11,890 $6,540 Less: Non-cash stock-based compensation (3,203) (226) Adjusted general and administrative 8,687 6,314 % of revenue 17.4% 18.7%
WebMD Health Corp.
CONTACT: Investors - Risa Fisher, +1-212-624-3817, rfisher@webmd.net,Media - Jennifer Newman, +1-212-624-3912, jnewman@webmd.net, both of WebMDHealth Corp.
Web site: http://www.webmd.com/
