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HLTH Corporation Announces Fourth Quarter Financial Results
Date:2/19/2009

ELMWOOD PARK, N.J., Feb. 19 /PRNewswire-FirstCall/ -- HLTH Corporation (Nasdaq: HLTH) today announced financial results for the three months ended December 31, 2008.

"We are pleased with WebMD's fourth quarter results announced today," said Martin J. Wygod, Chairman and Acting Chief Executive Officer of HLTH Corporation. "During the quarter, HLTH completed a large tender offer which reduced its shares outstanding by 45% and provided an effective way to address the interests of HLTH shareholders by providing near-term liquidity to those who desired it, while simultaneously creating long-term value for continuing shareholders. HLTH and WebMD are well positioned financially in this uncertain economy."

Consolidated Financial Highlights

Revenue for the fourth quarter was $111.5 million compared to $96.6 million in the prior year period, an increase of 15%. Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") for the fourth quarter was $29.3 million compared to $27.4 million in the prior year period, an increase of 7%. Income from continuing operations for the fourth quarter was $8.8 million or $0.06 per share. Income from discontinued operations was $0.3 million or $0.00 per share and net income was $9.1 million or $0.06 per share.

At December 31, 2008, HLTH had approximately $918 million in cash and investments, of which $325 million is attributable to WebMD.

Segment Operating Results

Online Services segment revenue was $108.8 million for the fourth quarter compared to $92.3 million in the prior year period, an increase of 18%. Advertising and sponsorship revenue increased 21%, from the prior year period, to $85.3 million. Private portal licensing revenue increased 8%, from the prior year period, to $23.2 million. Online Services segment Adjusted EBITDA was $34.1 million compared to $31.6 million in the prior year period.

Traffic to the WebMD Health Network continued to grow strongly, reaching a record average of 54 million unique users per month and total traffic of 1.3 billion page views during the fourth quarter, increases of 21% and 30%, respectively, from a year ago. In the fourth quarter, 1.5 million continuing medical education (CME) programs were completed on the WebMD Professional Network, an increase of 60% from the prior year period.

The base of large employers and health plans utilizing WebMD's private Health and Benefits portals during the fourth quarter was 134 as compared to 117 a year ago. The installed base of customers licensing the WebMD private portal platform now includes: Blue Cross Blue Shield of North Carolina, Hewlett Packard Company, International Union of Operating Engineers and Ohio State University.

Publishing and Other Services segment revenue was $2.8 million for the fourth quarter compared to $4.3 million in the prior year period, a decrease of $1.5 million primarily related to a decline in advertising in WebMD's Little Blue Book print products. Publishing and Other Services segment Adjusted EBITDA was a loss of $(338) thousand compared to a profit of $1.5 million in the prior year period.

Discontinued Operations

HLTH's financial results present ViPS, Porex and WebMD's offline professional medical reference and textbook publication business as discontinued operations in the current and prior year periods, reflecting business divestitures and the decision to divest Porex.

Financial Guidance

WebMD reaffirmed its financial guidance for the year ending December 31, 2009 in a separate press release issued by WebMD today.

HLTH's corporate segment expense is expected to be $14 million to $15 million in 2009. Additional detail is provided in a schedule attached to this release.

Analyst and Investor Conference Call

As previously announced, HLTH and WebMD will host a conference call at 4:45 pm (Eastern) today to discuss their respective fourth quarter results. Investors can access the call via webcast at www.hlth.com (in the Investor Relations section). A replay of the call will be available at the same web address.

About HLTH

HLTH Corporation (Nasdaq: HLTH) owns approximately 84% of WebMD Health Corp. (Nasdaq: WBMD). WebMD is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through its public and private online portals and health-focused publications. HLTH also owns Porex, 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 and the related analyst and investor conference call, other than statements of historical fact, are forward-looking statements, including those regarding: our guidance on HLTH's and WebMD's future financial results and other projections or measures of their future performance; market opportunities and WebMD's ability to capitalize on them; the benefits expected from new products or services and from other potential sources of additional revenue; expectations regarding the market for WebMD's and HLTH's investments in auction rate securities (ARS); and the potential sale transaction with respect to Porex (the "Potential Porex Transaction"). These statements speak only as of the date of this press release, are based on HLTH's and WebMD's 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 WebMD's products and services; WebMD's relationships with customers and strategic partners; changes in the markets for ARS; and changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries. Further information about these matters can be found in our other Securities and Exchange Commission filings. In addition, there can be no assurances regarding whether HLTH will be able to complete the Potential Porex Transaction or as to the timing or terms of such transaction. 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(R), and POREX(R) are trademarks of HLTH Corporation or its subsidiaries.

                                    -Tables Follow-



                                  HLTH CORPORATION
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data, unaudited)


                                  Three Months Ended     Years Ended
                                      December 31,       December 31,
                                   -----------------  ------------------
                                     2008     2007      2008      2007
                                   --------  -------  --------  --------

    Revenue                        $111,512  $96,581  $382,697  $331,693

    Costs and expenses:
      Cost of operations             38,708   29,645   138,363   117,281
      Sales and marketing            30,585   26,387   108,316    93,645
      General and administrative     22,250   23,210    89,503   104,321
      Depreciation and
       amortization                   7,312    7,302    28,780    28,256
      Interest income                 5,916   11,397    35,300    42,035
      Interest expense                4,642    4,608    18,513    18,593
      Restructuring                   7,416        -     7,416         -
      Gain on sale of EBS Master
       LLC                                -        -   538,024         -
      Impairment of auction rate
       securities                         -        -    60,108         -
      Other (expense) income, net      (142)  (1,462)   (5,949)    3,805
                                   --------  -------  --------  --------
    Income from continuing
     operations before income
     tax (benefit) provision          6,373   15,364   499,073    15,437
      Income tax (benefit)
       provision                     (4,372) (13,145)   30,251    (8,741)
      Minority interest in WHC        1,961    7,909     1,032    10,667
      Equity in earnings of EBS
       Master LLC                         -    5,887     4,007    28,566
                                   --------  -------  --------  --------
    Income from continuing
     operations                       8,784   26,487   471,797    42,077
      Income (loss) from
       discontinued operations,
       net of tax                       333   16,582    93,492   (22,198)
                                   --------  -------  --------  --------
    Net income                       $9,117  $43,069  $565,289   $19,879
                                   ========  =======  ========  ========

    Basic income (loss) per
     common share:
      Income from continuing
       operations                     $0.06    $0.15     $2.70     $0.24
      Income (loss) from
       discontinued operations         0.00     0.09      0.53     (0.13)
                                   --------  -------  --------  --------
    Net income                        $0.06    $0.24     $3.23     $0.11
                                   ========  =======  ========  ========

    Diluted income (loss) per
     common share:
      Income from continuing
       operations                     $0.06    $0.13     $2.19     $0.21
      Income (loss) from
       discontinued operations         0.00     0.07      0.43     (0.12)
                                   --------  -------  --------  --------
    Net income                        $0.06    $0.20     $2.62     $0.09
                                   ========  =======  ========  ========

    Weighted-average shares
     outstanding used in computing
     income (loss) per common
     share:
      Basic                         151,199  181,280   174,928   179,330
                                   ========  =======  ========  ========
      Diluted                       175,274  212,335   220,127   188,763
                                   ========  =======  ========  ========



                                  HLTH CORPORATION
                          CONSOLIDATED SEGMENT INFORMATION
                  (In thousands, except per share data, unaudited)


                                      Three Months Ended     Years Ended
                                          December 31,       December 31,
                                       -----------------  ------------------
                                         2008      2007     2008      2007
                                       --------  -------  --------  --------
    Revenue
      WebMD Online Services:
        Advertising and sponsorship     $85,296  $70,389  $275,790  $229,333
        Licensing                        23,198   21,556    89,126    81,471
        Content syndication and other       280      351     1,434     2,378
                                       --------  -------  --------  --------
      Total WebMD Online Services       108,774   92,296   366,350   313,182
      WebMD Publishing and Other
       Services                           2,758    4,346    16,427    18,772
      Inter-segment eliminations            (20)     (61)      (80)     (261)
                                       --------  -------  --------  --------
                                       $111,512  $96,581  $382,697  $331,693
                                       ========  =======  ========  ========
    Earnings before interest,
     taxes, non-cash and other items
     ("Adjusted EBITDA") (a)
      WebMD Online Services             $34,148  $31,612   $95,435   $80,594
      WebMD Publishing and Other
       Services                            (338)   1,460     1,147     4,103
      Corporate                          (4,534)  (5,628)  (19,845)  (24,502)
                                       --------  -------  --------  --------
                                        $29,276  $27,444   $76,737   $60,195

      Adjusted EBITDA per diluted
       common share (b)                   $0.17    $0.13     $0.35     $0.32
                                       --------  -------  --------  --------

    Interest, taxes, non-cash and
     other items (c)
      Interest income                     5,916   11,397    35,300    42,035
      Interest expense                   (4,642)  (4,608)  (18,513)  (18,593)
      Income tax benefit (provision)      4,372   13,145   (30,251)    8,741
      Depreciation and amortization      (7,312)  (7,302)  (28,780)  (28,256)
      Non-cash stock-based
       compensation                      (5,816)  (6,406)  (24,790)  (32,652)
      Non-cash advertising               (3,361)  (2,775)   (5,097)   (5,264)
      Minority interest in WHC           (1,961)  (7,909)   (1,032)  (10,667)
      Restructuring                      (7,416)       -    (7,416)        -
      Equity in earnings of EBS
       Master LLC                             -    5,887     4,007    28,566
      Gain on sale of EBS Master LLC          -        -   538,024         -
      Impairment of auction rate
       securities                             -        -   (60,108)        -
      Other expense, net                   (272)  (2,386)   (6,284)   (2,028)
                                       --------  -------  --------  --------
    Income from continuing
     operations                           8,784   26,487   471,797    42,077
      Income (loss) from discontinued
       operations, net of tax               333   16,582    93,492   (22,198)
                                       --------  -------  --------  --------
    Net income                           $9,117  $43,069  $565,289   $19,879
                                       ========  =======  ========  ========

    Basic income (loss) per
     common share:
      Income from continuing
       operations                         $0.06    $0.15     $2.70     $0.24
      Income (loss) from discontinued
       operations                          0.00     0.09      0.53     (0.13)
                                       --------  -------  --------  --------
    Net income                            $0.06    $0.24     $3.23     $0.11
                                       ========  =======  ========  ========

    Diluted income (loss) per
     common share:
      Income from continuing
       operations                         $0.06    $0.13     $2.19     $0.21
      Income (loss) from discontinued
       operations                          0.00     0.07      0.43     (0.12)
                                       --------  -------  --------  --------
    Net income                            $0.06    $0.20     $2.62     $0.09
                                       ========  =======  ========  ========

    Weighted-average shares
     outstanding used in
     computing income (loss) per
     common share:
      Basic                             151,199  181,280   174,928   179,330
                                       ========  =======  ========  ========
      Diluted                           175,274  212,335   220,127   188,763
                                       ========  =======  ========  ========


    (a) See Annex A-Explanation of Non-GAAP Financial Measures.
    (b) Adjusted EBITDA per diluted common share is based on the
        weighted-average shares outstanding used in computing diluted
        income (loss) per common share.
    (c) Reconciliation of Adjusted EBITDA to income from continuing
        operations.



                             HLTH CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                         (In thousands, unaudited)

                                                   December 31,
                                              ----------------------
                                                 2008        2007
                                              ----------  ----------
    Assets
    ------
    Cash and cash equivalents                   $629,848    $536,879
    Short-term investments                           371     290,858
    Accounts receivable, net                      94,140      86,081
    Due from EBS Master LLC                            -       1,224
    Prepaid expenses and other current assets     40,811      71,090
    Assets of discontinued operations            118,775     262,964
                                              ----------  ----------
          Total current assets                   883,945   1,249,096

    Investments                                  288,049       2,383
    Property and equipment, net                   56,731      49,554
    Goodwill                                     213,148     217,323
    Intangible assets, net                        32,690      36,314
    Investment in EBS Master LLC                       -      25,261
    Other assets                                  24,465      71,466
                                              ----------  ----------
    Total Assets                              $1,499,028  $1,651,397
                                              ==========  ==========

    Liabilities and Stockholders' Equity
    ------------------------------------
    Accrued expenses                             $54,708     $49,598
    Deferred revenue                              80,489      76,401
    Liabilities of discontinued operations        98,212     123,131
                                              ----------  ----------
          Total current liabilities              233,409     249,130

    Convertible notes                            650,000     650,000
    Other long-term liabilities                   22,664      21,137

    Minority interest in WHC                     134,223     131,353

    Stockholders' equity                         458,732     599,777

                                              ----------  ----------
    Total Liabilities and Stockholders'
     Equity                                   $1,499,028  $1,651,397
                                              ==========  ==========



                                 HLTH CORPORATION
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (In thousands, unaudited)



                                                              Years Ended
                                                              December 31,
                                                          -------------------
                                                            2008       2007
                                                          --------   --------
    Cash flows from operating activities:
      Net income                                          $565,289    $19,879
      Adjustments to reconcile net income to net cash
       provided by operating activities:
        (Income) loss from discontinued operations,
         net of tax                                        (93,492)    22,198
        Depreciation and amortization                       28,780     28,256
        Minority interest in WHC                             1,032     10,667
        Equity in earnings of EBS Master LLC                (4,007)   (28,566)
        Non-cash interest expense, net                       1,944      2,916
        Non-cash advertising                                 5,097      5,264
        Non-cash stock-based compensation                   24,790     32,652
        Deferred income taxes                               10,617    (10,136)
        Gain on sale of EBS Master LLC                    (538,024)         -
        Gain on 2006 EBS Sale                                    -       (399)
        Impairment of auction rate securities               60,108          -
        Changes in operating assets and liabilities:
          Accounts receivable                               (8,059)     3,840
          Prepaid expenses and other, net                    1,892      5,329
          Accrued expenses and other long-term
           liabilities                                       5,908    (44,318)
          Deferred revenue                                   4,088        314
                                                          --------   --------
            Net cash provided by continuing operations      65,963     47,896
            Net cash provided by discontinued
             operations                                     31,151     27,497
                                                          --------   --------
            Net cash provided by operating activities       97,114     75,393

    Cash flows from investing activities:
      Proceeds from maturities and sales of
       available-for-sale securities                       118,339    670,326
      Purchases of available-for-sale securities          (177,150)  (927,038)
      Purchases of property and equipment                  (24,335)   (19,053)
      Purchase of investment in preferred stock             (6,471)         -
      Cash paid in business combinations, net of cash
       acquired                                             (2,633)         -
      Purchase of minority interest in subsidiary          (12,818)         -
      Proceeds related to the sale of EBS Master LLC       574,617          -
      Proceeds from the sale of discontinued operations    247,491     11,667
      Proceeds from the 2006 EBS Sale, net                       -      2,898
      Proceeds from advances to EBS Master LLC               1,224     18,792
                                                          ---------  ---------
            Net cash provided by (used in) continuing
             operations                                    718,264   (242,408)
            Net cash used in discontinued operations        (4,782)    (4,741)
                                                          --------   --------
            Net cash provided by (used in) investing
             activities                                    713,482   (247,149)

    Cash flows from financing activities:
      Proceeds from issuance of HLTH and WHC common
       stock                                                21,683    133,054
      Tax benefit on stock-based awards                        748      6,601
      Purchases of treasury stock under repurchase
       program                                                   -    (47,123)
      Purchases of treasury stock in tender offer         (737,324)         -
      Other                                                   (700)       (20)
                                                          --------   --------
            Net cash (used in) provided by continuing
             operations                                   (715,593)    92,512
            Net cash used in discontinued operations           (76)      (175)
                                                          --------   --------
            Net cash (used in) provided by financing
             activities                                   (715,669)    92,337
    Effect of exchange rates on cash                        (1,958)     1,607
                                                          --------   --------
    Net increase (decrease) in cash and cash equivalents    92,969    (77,812)
    Cash and cash equivalents at beginning of period       536,879    614,691
                                                          --------   --------
    Cash and cash equivalents at end of period            $629,848   $536,879
                                                          ========   ========



    FINANCIAL GUIDANCE SUMMARY

                        HLTH CORPORATION
             2009 Preliminary Financial Guidance
           (in millions, except per share amounts)

                                             Year Ending
                                         December 31, 2009
                                                Range
                                         -----------------
    Revenue                              $420.0     $450.0
                                         ======     ======

    Earnings before interest, taxes,
     non-cash and other items
     ("Adjusted EBITDA") (a)
      WebMD                              $107.0     $122.0
      Corporate                           (15.0)     (14.0)
                                         ------     ------
                                          $92.0     $108.0

    Adjusted EBITDA per diluted common
     share                                $0.85      $1.00
                                         ------     ------

    Interest, taxes, non-cash and
     other items (b)
      Interest income                       9.0       10.0
      Interest expense (c)                (18.5)     (18.5)
      Depreciation and amortization       (34.0)     (31.0)
      Minority interest in WHC             (5.0)      (7.0)
      Non-cash advertising                 (1.5)      (1.5)
      Non-cash stock-based compensation   (39.0)     (35.0)
      Income tax provision (d)             (1.2)     (10.3)

                                         ------     ------
    Income from continuing operations      $1.8      $14.7
                                         ======     ======

    Income from continuing operations
     per common share:
      Basic                               $0.02      $0.14
                                         ======     ======
      Diluted                             $0.02      $0.14
                                         ======     ======

    Weighted-average shares outstanding
     used in computing income from
     continuing operations per
     common share:
      Basic                               103.0      103.0
      Diluted                             108.0      108.0


    (a) See Annex A - Explanation of Non-GAAP Financial Measures.
    (b) Reconciliation of Adjusted EBITDA to income from continuing
        operations.
    (c) Interest expense does not consider any additional non-cash
        interest expense that may result from the January 1, 2009
        adoption of APB Opinion No. 14-1, "Accounting for Convertible
        Debt Instruments That May Be Settled in Cash Upon Conversion."
    (d) Income tax rate for 2009 is forecasted to be approximately 41%
        of pretax income from continuing operations. The income tax
        provision excludes any benefit relating to any reversal in 2009
        of the valuation allowance against deferred tax assets.

ANNEX A

Explanation of Non-GAAP Financial Measures

The accompanying HLTH Corporation press release and financial tables 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 (loss) from continuing operations" or "net income (loss)" calculated in accordance with GAAP. The tables attached to the accompanying press release include reconciliations of non-GAAP financial measures to GAAP financial measures.

Adjusted EBITDA is used by HLTH's management as an additional measure of HLTH'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 HLTH's management identify additional trends in HLTH's and its reporting segments' financial results that may not be shown solely by period-to-period comparisons of income (loss) from continuing operations or net income (loss). In addition, HLTH uses Adjusted EBITDA in the incentive compensation programs applicable to many of its employees in order to evaluate HLTH's performance. HLTH 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 (loss), 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 (loss) from continuing operations or to net income (loss) that accompany our press releases containing non-GAAP financial measures, including the reconciliations contained in the tables attached to the accompanying press release.

HLTH believes that the presentation of Adjusted EBITDA is useful to investors in their analysis of HLTH's results for reasons similar to the reasons why HLTH's management finds it useful and because it helps facilitate investor understanding of decisions made by HLTH's management in light of the performance metrics used in making those decisions. In addition, as more fully described below, HLTH believes that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to income (loss) from continuing operations or to net (loss) income, helps investors make comparisons between HLTH 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 HLTH with other public companies and is not intended as a substitute for comparisons based on "income (loss) from continuing operations" or "net income (loss)" 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 HLTH from Adjusted EBITDA but included in income (loss) from continuing operations:

  • Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. HLTH excludes depreciation and amortization expense from Adjusted EBITDA because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of HLTH's business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, HLTH believes this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.

  • Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. HLTH believes that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in its operating performance because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of HLTH's business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, HLTH believes that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between HLTH's operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

  • Non-Cash Advertising Expense. This expense relates to the usage of non-cash advertising obtained from News Corporation ("Newscorp") in exchange for equity securities issued by HLTH in 2000. The advertising is available only on various Newscorp properties, primarily its television network and cable channels, without any cash cost to HLTH and will expire later this year. HLTH does not incur any other cash expenses related to airing of television advertising. HLTH excludes this expense from Adjusted EBITDA (i) because it is a non-cash expense, (ii) because it is incremental to other non-television cash advertising expense that HLTH otherwise incurs, (iii) because HLTH has not and believes it will not incur cash expenses relating to television advertising in the future and (iv) to assist management and investors in comparing its operating results over multiple periods. Investors should note that it is likely that HLTH derives some benefit from such advertising.

  • Interest Income and Expense. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which HLTH invests, as well as with interest expenses arising from the capital structure of HLTH. Interest income and expense varies over time due to a variety of financing transactions and due to acquisitions and divestitures that HLTH has entered into or may enter into in the future. HLTH has, in the past several years, issued convertible debentures and preferred stock, repurchased shares in cash tender offers and through other repurchase transactions, conducted an initial public offering of equity in its WebMD Health Corp. subsidiary (referred to below as WHC) and completed the divestiture of certain businesses. HLTH excludes interest income and interest expense from Adjusted EBITDA (i) because these items are not directly attributable to the performance of HLTH's business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income and expense will recur in future periods.

  • Income Tax (Benefit) Provision. HLTH has net operating loss (NOL) carryforwards for which it maintained a full valuation allowance until the fourth quarter of 2007. During 2008 and 2007, a portion of the valuation allowance was reversed after consideration of the relevant factors. The related valuation allowances are either reversed through the income statement, additional paid-in capital, or reversed to goodwill, to the extent those tax benefits were acquired through business combinations. The timing of such reversals has not been consistent and as a result, HLTH's income tax expense can fluctuate significantly from period to period in a manner not directly related to HLTH's operating performance. HLTH excludes the income tax (benefit) provision from Adjusted EBITDA (i) because it believes that the income tax (benefit) provision is not directly attributable to the underlying performance of HLTH's business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes. Investors should note that income tax (benefit) provision will recur in future periods.

  • Minority Interest in WHC. This represents the minority stockholders' proportionate share of net income or loss of WHC. The size of this minority interest is related to HLTH's percentage ownership of WHC. Changes in that percentage ownership may result from changes in WHC's capital structure, including as a result of sales of WHC equity securities by WHC or HLTH or as a result of exercise of WHC employee stock options. HLTH excludes minority interest from Adjusted EBITDA (i) because it believes that the size of the minority interest can vary for reasons not attributable to the underlying performance of HLTH's business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that minority interest in WHC will recur in future periods.

  • Other Items. HLTH engages in other activities and transactions that can impact HLTH's overall income from continuing operations. These other items included, but were not limited to, (i) legal expenses relating to the on-going Department of Justice investigation, (ii) equity in earnings of EBS Master LLC, which represented 48% of EBS's income through February 8, 2008, (iii) working capital adjustment from the sale of 52% of the Emdeon Business Services segment on November 16, 2006, (iv) a reduction of certain sales and use tax contingencies resulting from the expiration of certain applicable statutes of limitations, (v) advisory expenses relating to the evaluation, in 2008 and 2007, by HLTH's Board of Directors of strategic alternatives for HLTH, (vi) gain on sale from the sale of the remaining 48% ownership interest in EBS Master LLC, (vii) loss on the impairment of auction rate securities, and (viii) a restructuring charge. HLTH excludes these other items from Adjusted EBITDA because it believes these activities or transactions are not directly attributable to the performance of HLTH's business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.


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SOURCE HLTH Corporation
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