NEW YORK, April 23 /PRNewswire-FirstCall/ -- WebMD Health Corp. (Nasdaq: WBMD), the leading provider of health information services, today announced preliminary financial results for the three months ended March 31, 2008.
Preliminary Results for the Three Months Ended March 31, 2008
WebMD expects that it will report financial results for the first quarter at the high end of the range for revenue, earnings before interest, taxes, depreciation, amortization, and other non-cash items ("Adjusted EBITDA") and net income included in the guidance it provided on February 11, 2008.
This information is preliminary. WebMD is completing its normal closing process and, as previously announced will provide first quarter financial results on May 6, 2008 and host a conference call to discuss those results at 4:45 PM ET on that day.
Updated WebMD 2008 Financial Guidance
WebMD announced today that it is updating its financial guidance for 2008. Based on current visibility into the second half of 2008, WebMD is updating its financial guidance to reflect a recent shift toward shorter term buying commitments in certain of its customers' consumer advertising purchases which the Company believes is driven by increased caution in the current business climate.
WebMD's prior financial guidance for 2008, as disseminated on February
11, 2008, was:
-- Revenue of $395 to $415 million,
-- Adjusted EBITDA of $107.5 to $120.0 million, and
-- Net income of $36.5 to $46.0 million.
WebMD's updated financial guidance for 2008 is summarized as follows:
-- Revenue of $380 to $395 million,
-- Adjusted EBITDA of $97.5 to $107.5 million, and
-- Net income of $29.5 to $37.5 million.
A schedule outlining WebMD's updated 2008 financial guidance is attached to this press release.
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 first 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; and market opportunities and WebMD's ability to capitalize on them. These statements speak only as of the date of this press release, 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. 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 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 includes reconciliations of the non-GAAP financial measures to GAAP financial measures. In addition, an "Explanation of Non-GAAP Financial Measures" is attached 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.
FINANCIAL GUIDANCE SUMMARY
2008 Financial Guidance
(in millions, except per share amounts)
December 31, 2008
Revenue $380.00 $395.00
Earnings before interest, taxes,
depreciation, amortization and
other non-cash items ("Adjusted
EBITDA") (a) 97.50 107.50
Adjusted EBITDA per diluted common
share $1.57 $1.73
Interest, taxes, depreciation,
amortization and other non-cash
Interest income 10.00 11.00
Depreciation and amortization (31.00) (29.00)
Non-cash advertising (5.00) (5.00)
Non-cash stock-based compensation (22.00) (21.00)
Income tax provision (c) (20.00) (26.00)
Net income $29.50 $37.50
Net income per common share:
Basic $0.50 $0.64
Diluted $0.48 $0.60
outstanding used in computing net
income per common share:
Basic 59.00 59.00
Diluted 62.00 62.00
(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 allowance against
deferred tax assets.
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 compensation. 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
-- 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 $270,000 as of the year ended December
31, 2007. As WebMD uses these NOL carryforwards, the related
valuation allowances are 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
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