EX-99.2 3 g19946exv99w2.htm EX-99.2 EX-99.2
Exhibit 99.2
HLTH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2009     2008     2009     2008  
            (a)             (a)  
Revenue
  $ 98,631     $ 85,964     $ 188,895     $ 166,614  
Cost of operations
    39,229       31,968       75,794       62,895  
Sales and marketing
    26,797       24,898       54,358       50,047  
General and administrative
    22,003       22,778       43,851       43,627  
Depreciation and amortization
    6,956       7,214       14,059       13,989  
Interest income
    1,958       8,062       4,220       19,998  
Interest expense
    5,781       6,585       12,317       13,110  
Gain on repurchases of convertible notes
    3,473             10,120        
Gain on sale of EBS Master LLC
                      538,024  
Impairment of auction rate securities
                      60,108  
Other expense, net
    552       666       821       4,810  
 
                       
Income (loss) from continuing operations before income tax provision (benefit)
    2,744       (83 )     2,035       476,050  
Income tax provision (benefit)
    750       569       (467 )     26,171  
Equity in earnings of EBS Master LLC
                      4,007  
 
                       
Consolidated income (loss) from continuing operations
    1,994       (652 )     2,502       453,886  
Consolidated loss from discontinued operations, net of tax
    (13,284 )     (3,063 )     (12,767 )     (6 )
 
                       
Consolidated net (loss) income inclusive of noncontrolling interest
    (11,290 )     (3,715 )     (10,265 )     453,880  
(Income) loss attributable to noncontrolling interest
    (387 )     (1,071 )     (997 )     2,774  
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (11,677 )   $ (4,786 )   $ (11,262 )   $ 456,654  
 
                       
 
                               
Amounts attributable to HLTH stockholders:
                               
Income (loss) from continuing operations
  $ 703     $ (1,611 )   $ 509     $ 456,711  
Loss from discontinued operations
    (12,380 )     (3,175 )     (11,771 )     (57 )
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (11,677 )   $ (4,786 )   $ (11,262 )   $ 456,654  
 
                       
 
                               
Basic (loss) income per common share:
                               
Income (loss) from continuing operations
  $ 0.01     $ (0.01 )   $ 0.00     $ 2.50  
Loss from discontinued operations
    (0.12 )     (0.02 )     (0.11 )     (0.00 )
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (0.11 )   $ (0.03 )   $ (0.11 )   $ 2.50  
 
                       
 
                               
Diluted (loss) income per common share:
                               
Income (loss) from continuing operations
  $ 0.01     $ (0.01 )   $ 0.00     $ 2.04  
Loss from discontinued operations
    (0.12 )     (0.02 )     (0.11 )     (0.01 )
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (0.11 )   $ (0.03 )   $ (0.11 )   $ 2.03  
 
                       
 
                               
Weighted-average shares outstanding used in computing (loss) income per common share:
                               
Basic
    102,608       182,622       102,178       182,399  
 
                       
Diluted
    105,674       186,243       104,962       228,209  
 
                       
 
(a)   The consolidated financial statements for the three and six months ended June 30, 2008 have been adjusted to reflect (i) the required adoption, effective January 1, 2009, of Financial Accounting Standards Board’s Staff Position APB Opinion No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” and Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” and (ii) the reclassification of WebMD’s Little Blue Book print directory business to discontinued operations.

 


 

HLTH CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2009     2008     2009     2008  
            (d)             (d)  
Revenue
                               
WebMD:
                               
Public portal advertising and sponsorship
  $ 75,992     $ 64,138     $ 143,281     $ 122,865  
Private portal services
    22,639       21,866       45,614       43,789  
Inter-segment eliminations
          (40 )           (40 )
 
                       
 
  $ 98,631     $ 85,964     $ 188,895     $ 166,614  
 
                       
 
                               
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)
                               
WebMD
  $ 23,218     $ 18,392     $ 41,906     $ 34,724  
Corporate
    (3,197 )     (5,573 )     (6,624 )     (10,632 )
 
                       
 
    20,021       12,819       35,282       24,092  
 
                               
Adjusted EBITDA per diluted common share (b)
  $ 0.19     $ 0.07     $ 0.34     $ 0.11  
 
                       
 
                               
Interest, taxes, non-cash and other items (c)
                               
Interest income
    1,958       8,062       4,220       19,998  
Interest expense
    (5,781 )     (6,585 )     (12,317 )     (13,110 )
Income tax (provision) benefit
    (750 )     (569 )     467       (26,171 )
Depreciation and amortization
    (6,956 )     (7,214 )     (14,059 )     (13,989 )
Non-cash stock-based compensation
    (9,412 )     (6,448 )     (18,566 )     (12,388 )
Non-cash advertising
                (1,753 )     (1,558 )
Gain on repurchases of convertible notes
    3,473             10,120        
Equity in earnings of EBS Master LLC
                      4,007  
Gain on sale of EBS Master LLC
                      538,024  
Impairment of auction rate securities
                      (60,108 )
Other expense, net
    (559 )     (717 )     (892 )     (4,911 )
 
                       
Consolidated income (loss) from continuing operations
    1,994       (652 )     2,502       453,886  
Consolidated loss from discontinued operations, net of tax
    (13,284 )     (3,063 )     (12,767 )     (6 )
 
                       
Consolidated net (loss) income inclusive of noncontrolling interest
    (11,290 )     (3,715 )     (10,265 )     453,880  
(Income) loss attributable to noncontrolling interest
    (387 )     (1,071 )     (997 )     2,774  
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (11,677 )   $ (4,786 )   $ (11,262 )   $ 456,654  
 
                       
 
                               
Amounts attributable to HLTH stockholders:
                               
Income (loss) from continuing operations
  $ 703     $ (1,611 )   $ 509     $ 456,711  
Loss from discontinued operations
    (12,380 )     (3,175 )     (11,771 )     (57 )
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (11,677 )   $ (4,786 )   $ (11,262 )   $ 456,654  
 
                       
 
                               
Basic (loss) income per common share:
                               
Income (loss) from continuing operations
  $ 0.01     $ (0.01 )   $ 0.00     $ 2.50  
Loss from discontinued operations
    (0.12 )     (0.02 )     (0.11 )     (0.00 )
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (0.11 )   $ (0.03 )   $ (0.11 )   $ 2.50  
 
                       
 
                               
Diluted (loss) income per common share:
                               
Income (loss) from continuing operations
  $ 0.01     $ (0.01 )   $ 0.00     $ 2.04  
Loss from discontinued operations
    (0.12 )     (0.02 )     (0.11 )     (0.01 )
 
                       
Net (loss) income attributable to HLTH stockholders
  $ (0.11 )   $ (0.03 )   $ (0.11 )   $ 2.03  
 
                       
 
                               
Weighted-average shares outstanding used in computing (loss) income per common share:
                               
Basic
    102,608       182,622       102,178       182,399  
 
                       
Diluted
    105,674       186,243       104,962       228,209  
 
                       
 
(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 (loss) income per common share.
 
(c)   Reconciliation of Adjusted EBITDA to consolidated income (loss) from continuing operations.
 
(d)   The consolidated financial statements for the three and six months ended June 30, 2008 have been adjusted to reflect (i) the required adoption, effective January 1, 2009, of Financial Accounting Standards Board’s Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” and Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” and (ii) the reclassification of WebMD’s Little Blue Book print directory business to discontinued operations.

 


 

HLTH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
                 
    June 30,     December 31,  
    2009     2008  
Assets
               
Cash and cash equivalents
  $ 555,247     $ 629,848  
Accounts receivable, net
    78,674       93,082  
Prepaid expenses and other current assets
    48,974       44,740  
Assets of discontinued operations
    124,945       131,350  
 
           
Total current assets
    807,840       899,020  
 
               
Investments
    273,209       288,049  
Property and equipment, net
    56,864       56,633  
Goodwill
    202,104       202,104  
Intangible assets, net
    28,888       32,328  
Other assets
    24,863       23,600  
 
           
Total Assets
  $ 1,393,768     $ 1,501,734  
 
           
 
               
Liabilities and Equity
               
Accrued expenses
  $ 45,090     $ 54,595  
Deferred revenue
    86,261       79,613  
Liabilities of discontinued operations
    113,588       100,771  
 
           
Total current liabilities
    244,939       234,979  
 
               
1.75% convertible notes
    264,583       350,000  
31/8% convertible notes, net of discount of $26,409 at June 30, 2009 and $35,982 at December 31, 2008
    223,891       264,018  
Other long-term liabilities
    19,670       21,816  
 
               
HLTH stockholders’ equity
    491,627       496,698  
Noncontrolling interest in WHC
    149,058       134,223  
 
           
Equity
    640,685       630,921  
 
               
 
           
Total Liabilities and Equity
  $ 1,393,768     $ 1,501,734  
 
           
 

 


 

HLTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                 
    Six Months Ended  
    June 30,  
    2009     2008  
            (a)  
Cash flows from operating activities:
               
Consolidated net (loss) income inclusive of noncontrolling interest
  $ (10,265 )   $ 453,880  
Adjustments to reconcile consolidated net (loss) income inclusive of noncontrolling interest to net cash provided by operating activities:
               
Consolidated loss from discontinued operations, net of tax
    12,767       6  
Depreciation and amortization
    14,059       13,989  
Equity in earnings of EBS Master LLC
          (4,007 )
Non-cash interest expense
    5,310       5,365  
Non-cash advertising
    1,753       1,558  
Non-cash stock-based compensation
    18,566       12,388  
Deferred income taxes
    (2,363 )     5,247  
Gain on repurchases of convertible notes
    (10,120 )      
Gain on sale of EBS Master LLC
          (538,024 )
Impairment of auction rate securities
          60,108  
Changes in operating assets and liabilities:
               
Accounts receivable
    14,408       15,249  
Prepaid expenses and other, net
    (3,775 )     6,466  
Accrued expenses and other long-term liabilities
    (9,544 )     (3,620 )
Deferred revenue
    6,648       10,194  
 
           
Net cash provided by continuing operations
    37,444       38,799  
Net cash provided by discontinued operations
    5,509       17,395  
 
           
Net cash provided by operating activities
    42,953       56,194  
 
               
Cash flows from investing activities:
               
Proceeds from maturities and sales of available-for-sale securities
    1,100       106,586  
Purchases of available-for-sale securities
          (177,150 )
Purchases of property and equipment
    (10,955 )     (6,945 )
Proceeds related to the sales of EBS Master LLC
          574,617  
Proceeds from the sale of discontinued operations
    250       24,318  
Proceeds from advances to EBS Master LLC
          1,155  
Other
          148  
 
           
Net cash (used in) provided by continuing operations
    (9,605 )     522,729  
Net cash used in discontinued operations
    (2,356 )     (3,184 )
 
           
Net cash (used in) provided by investing activities
    (11,961 )     519,545  
 
               
Cash flows from financing activities:
               
Proceeds from issuance of HLTH and WHC common stock
    18,194       9,644  
Repurchases of convertible notes
    (123,857 )      
Other
          (80 )
 
           
Net cash (used in) provided by continuing operations
    (105,663 )     9,564  
Net cash used in discontinued operations
          (76 )
 
           
Net cash (used in) provided by financing activities
    (105,663 )     9,488  
Effect of exchange rates on cash
    70       1,793  
 
           
Net (decrease) increase in cash and cash equivalents
    (74,601 )     587,020  
Cash and cash equivalents at beginning of period
    629,848       536,879  
 
           
Cash and cash equivalents at end of period
  $ 555,247     $ 1,123,899  
 
           
 
(a)   The consolidated financial statements for the six months ended June 30, 2008 have been adjusted to reflect (i) the required adoption, effective January 1, 2009, of Financial Accounting Standards Board’s Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” and Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” and (ii) the reclassification of WebMD’s Little Blue Book print directory business to discontinued operations.