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HLTH Corporation Update
Date:2/11/2008

WebMD Provides Preliminary Fourth Quarter Results and Updates Financial

Guidance for 2008

Kevin Cameron, HLTH CEO, To Take Medical Leave

Martin J. Wygod, Chairman, To Assume Acting CEO Role at HLTH

ELMWOOD PARK, N.J. and NEW YORK, Feb. 11 /PRNewswire-FirstCall/ -- HLTH Corporation (Nasdaq: HLTH) provided a brief corporate update today.

In November 2007, HLTH Corporation indicated that it was evaluating potential transactions that would allow HLTH's stockholders to participate more directly in the ownership of WebMD Health Corp. stock and would be making a proposal to a Special Committee formed by the Board of Directors of WebMD regarding a potential merger. HLTH announced today that it has not yet been able to reach agreement with the Special Committee and its advisors on mutually acceptable terms for a merger and that it plans to continue negotiations for a short period of time. After such period, the process is expected to conclude, whether or not an agreement is reached. There can be no assurance that a transaction will be agreed upon or ultimately consummated.

HLTH has received a great deal of interest from potential strategic buyers for both VIPS and Porex since announcing that HLTH was considering selling those businesses. HLTH will be moving rapidly to obtain formal offers for these businesses from potential buyers and plans to continue that process whether or not an agreement is reached with respect to the merger with WebMD.

HLTH Closes Sale of 48% Interest in Emdeon Business Services for $575 Million

In a separate release today, HLTH Corporation announced that it has executed a definitive agreement and closed the sale of its 48% minority inion. 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 measure and net income 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:

-- 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. WebMD

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

WebMD'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, WebMD believes this exclusion assists management and

investors in making period-to-period comparisons of operating

performance. Investors should note that 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

expenses 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. WebMD 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

WebMD'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, WebMD believes that excluding stock-based

compensation from Adjusted EBITDA assists management and investors in

making meaningful comparisons between WebMD'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 our parent, HLTH Corporation

in 2000. The advertising is available only on various Newscorp

properties, primarily its television network and cable channels without

any cash cost to WebMD. The amount of advertising that can be used in

any year is subject to annual contractual limitation and expires in

2010. WebMD does not incur any other cash expenses related to airing of

television advertising. WebMD 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 WebMD

otherwise incurs, (iii) because WebMD 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 WebMD derives some benefit from such advertising and that such

expenses will recur in the future.

-- Interest Income. Interest income is associated with the level of

marketable debt securities and other interest bearing accounts in which

WebMD invests. Interest income varies over time due to varying levels

of securities available for investment. Transactions that WebMD has

entered into in recent periods that have impacted securities available

for investment include the initial public offering of equity in WebMD

and acquisitions of other companies for varying amounts of cash since

our initial public offering. Additional financing transactions as well

as potential acquisitions that WebMD may enter into in the future could

impact the levels and timing of securities available for investment.

WebMD excludes interest income from Adjusted EBITDA (i) because it is

not directly attributable to the performance of WebMD'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 interest income will recur in future periods.

-- Income Tax Provision. WebMD had a net operating loss (NOL)

carryforward of approximately $240,000 as of the year ended December

31, 2006. Due to a limited history of generating taxable income, WebMD

has maintained a full valuation allowance on these NOL carryforwards.

As WebMD has used these NOL carryforwards, the related valuation

allowances have been reversed through the income statement. The timing

of such reversals has not been consistent and as a result, WebMD's

income tax expense can fluctuate significantly from period to period in

a manner not directly related to WebMD's operating performance. WebMD

excludes the income tax provision from Adjusted EBITDA (i) because it

believes that the income tax provision is not directly attributable to

the underlying performance of WebMD'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

provision will recur in future periods.

terest in Emdeon Business Services to an affiliate of General Atlantic LLC and investment funds managed by Hellman & Friedman LLC. The sale price was $575 million in cash.

HLTH expects to recognize a taxable gain on this transaction and expects to utilize a portion of its federal net operating loss ("NOL") carryforward to offset a portion of the tax liability resulting from this transaction. Under the tax sharing agreement between HLTH and WebMD, WebMD will be reimbursed for any NOL carryforward attributable to WebMD that is utilized by HLTH in this transaction. The amount of the utilization of the WebMD NOL carryforward and related reimbursement is dependent on numerous factors and cannot be determined at this time.

WebMD Fourth Quarter and Full Year 2007 Preliminary Financial Results

WebMD expects that it will report financial results for the fourth quarter and full year 2007 at the high end of the revenue range and at or above the high end of the range for earnings before interest, taxes, depreciation, amortization, and other non-cash items ("Adjusted EBITDA") and net income included in the guidance it provided in November 2007, after adjusting that guidance to reflect the sale of its offline professional medical reference and textbook publication business discussed below. These preliminary expectations for WebMD's results for the fourth quarter and full year 2007 do not reflect amounts for any benefit relating to a reversal of valuation allowance against its deferred tax assets or for any gain from the sale of the discontinued operations discussed below.

WebMD announced that it sold, effective December 31, 2007, its offline professional medical reference and textbook publication business. This business, which will be reflected as a discontinued operation in the Company's financial statements, was anticipated to generate revenue of approximately $1 million and $4.3 million for the fourth quarter and full year 2007, respectively, with no contribution to Adjusted EBITDA or net income for either the fourth quarter or full year 2007.

WebMD is completing its normal year end closing process and, as previously announced, will provide fourth quarter and year end financial results on February 21, 2008 and host a conference call to discuss those results at 4:45 PM ET on that day.

WebMD 2008 Financial Guidance

WebMD announced today that it is updating its financial guidance for 2008. After adjusting for the impact of the sale of its offline professional medical reference and textbook publication business discussed above, WebMD's prior financial guidance for 2008, as disseminated on November 7, 2007, was:

-- Revenue of $415 to $430 million,

-- Adjusted EBITDA of $120 to $130 million, and

-- Net income of $44 to $53 million.

WebMD's updated financial guidance for 2008 is summarized as follows:

-- Revenue of $395 to $415 million,

-- Adjusted EBITDA of $107.5 to $120 million, and

-- Net income of $36.5 to $46 million.

This financial guidance does not reflect any benefit resulting from any reversal of valuation allowance against WebMD's deferred tax assets.

WebMD's updated 2008 revenue guidance, which is about 5% lower than its previous guidance, reflects recent events that include:
-- A more conservative outlook associated with our display advertising

distribution agreement with Yahoo, based on the potential acquisition

of their business.

-- Recent legal developments impacting certain of our pharmaceutical

advertisers' product marketing plans.

-- A more cautious business environment which may affect new client

procurement decisions, particularly in the private portals market.

WebMD currently expects 2008 revenue of $395 to $415 million, assuming the following distribution:
-- Approximately 72% from advertising and sponsorship, with organic

revenue growth of approximately 26% to 32% over 2007;

-- Approximately 23% from licensing of our private portal products, with

organic revenue growth of approximately 10% to 14% over 2007; and

-- Approximately 5% from publishing and content syndication revenues,

consistent with 2007.

Wayne Gattinella, President and Chief Executive Officer of WebMD, said: "While we feel it is prudent to incorporate a more conservative outlook in our financial guidance at this time, we remain enthusiastic about our growth opportunities and confident in our ability to continue to deliver strong operating performance."

A schedule outlining WebMD's updated 2008 quarterly financial guidance is attached to this press release.

Management Update

HLTH Corporation announced today that Kevin Cameron, CEO, will begin medical leave, effective immediately. Martin J. Wygod, Chairman, will assume the role of Acting CEO at HLTH.

About HLTH Corporation

HLTH Corporation's (Nasdaq: HLTH) businesses are comprised of WebMD Health Corp. (Nasdaq: WBMD), ViPS and Porex. 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. ViPS provides healthcare data management, analytics, decision- support and process automation solutions and related information technology services to governmental, Blue Cross Blue Shield and commercial healthcare payers. ViPS' solutions and services help its clients improve patient outcomes, increase customer satisfaction and reduce costs. Porex is a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications.

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 HLTH Corporation (Nasdaq: HLTH).

The WebMD Health Network includes WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList and theHeart.org.

All statements contained in this press release and the attached Financial Guidance Summary, other than statements of historical fact, are forward- looking statements, including those regarding: WebMD's preliminary fourth quarter results (which reflect what WebMD currently expects to report and are subject to adjustment); WebMD's future financial results and other measures of WebMD's 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; the potential merger transaction between HLTH and WebMD (the "Potential Merger Transaction"); and the potential sales transactions with respect to ViPS and Porex (the "Potential Sales Transactions"). These statements speak only as of the date of this Current Report, are based on 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; relationships with customers and strategic partners; 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 other Securities and Exchange Commission filings. In addition, there can be no assurances regarding: on about these matters can be found in our Securities and Exchange Commission filings. In addition, there can be no assurances regarding: whether HLTH and WebMD will proceed with the Potential Merger Transaction or any other transaction relating to HLTH's ownership interest in WebMD or as to the timing or terms of any such transaction; whether HLTH will proceed with the Potential Sales Transactions or as to the timing or terms of such transactions. 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 attached Financial Guidance Summary include 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 Financial Guidance Summary attached to this press release includes reconciliations of 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 to this press release and the Financial Guidance Summary.

WebMD(R), WebMD Health(R), Medscape(R), eMedicine(R), MedicineNet(R), RxList(R), Subimo(R), Medsite(R), The Little Blue Book(R) and Summex(R), are trademarks of WebMD Health Corp. or its subsidiaries.

POREX(R) and ViPSSM are trademarks of HLTH Corporation or its subsidiaries.

Emdeon(TM) and Emdeon Business Services(TM) are trademarks of Emdeon Business Services, LLC or its subsidiaries.

FINANCIAL GUIDANCE SUMMARY

2008 Financial Guidance

(in millions, except per share amounts)

Year Ended

December 31, 2008

Range

Revenue $395.0 $415.0

Earnings before interest, taxes,

depreciation, amortization and other

non-cash items ("Adjusted EBITDA") (a) 107.5 120.0

Adjusted EBITDA per diluted common share $1.73 $1.94

Interest, taxes, depreciation, amortization

and other non-cash items (b)

Interest income 13.0 14.0

Depreciation and amortization (31.0) (29.0)

Non-cash advertising (5.0) (5.0)

Non-cash stock-based compensation (23.0) (22.0)

Income tax provision ( c ) (25.0) (32.0)

Net income $36.5 $46.0

Net income per common share:

Basic $0.62 $0.78

Diluted $0.59 $0.74

Weighted-average shares outstanding used in

computing net income per common share:

Basic 59.0 59.0

Diluted 62.0 62.0

Notes:

(a) See Annex A - Explanation of Non-GAAP Financial Measures

(b) Reconciliation of Adjusted EBITDA to net income

(c) Income tax rate for 2008 is estimated to be approximately 41% of

pretax income. The income tax provision excludes any benefit relating

to any reversal in 2008 of the valuation allownce against deferred tax

assets.

Additional Information:

-- Quarterly distribution of revenue is estimated to be approximately $80

to $82 in Q1, $90 to 94 in Q2, $106 to $112 in Q3 and $119 to $127 in

Q4

-- Adjusted EBITDA as a percentage of revenue is estimated to be

approximately 18% to 19% in Q1, 23% to 24% in Q2, 30% to 31% in Q3 and

34% to 36% in Q4

-- Net Income as a percentage of revenue is estimated to be approximately

2.5% to 4.0% in Q1, 7.5% to 8.5% in Q2, 11.5% to 13% in Q3 and 12.5% to

15.0% in Q4

ANNEX A

Explanation of Non-GAAP Financial Measures

(All dollar amounts in thousands)

The accompanying WebMD Health Corp. press release 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, depreciation, amortization and other non-cash 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 Financial Guidance Summary includes a reconciliation 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 that accompany our press releases containing non-GAAP financial measures, including the reconciliations contained 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 compensat
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SOURCE HLTH Corporation; WebMD
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