WEBMD CORPORATION

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

All statements contained in this Current Report on Form 8-K, other than statements of historical fact, are forward-looking statements, including those regarding WebMD’s guidance on future financial results and other projections or measures of future performance of WebMD; the amount and timing of the benefits expected from strategic initiatives and acquisitions; potential changes in WebMD’s business relationships; future deployment of applications; and other potential sources of additional revenue. These statements 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; operational difficulties relating to combining acquired companies and businesses; WebMD’s ability to form and maintain mutually beneficial relationships with customers and strategic partners; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries, including matters relating to the Health Insurance Portability and Accountability Act of 1996 (HIPAA); and the ability of WebMD to attract and retain qualified personnel. Further information about these matters can be found in WebMD’s other Securities and Exchange Commission filings. WebMD expressly disclaims any intent or obligation to update these forward-looking statements.

This Current Report on Form 8-K includes 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: income before taxes, restructuring, non-cash and other items and related per share amounts. WebMD believes that the presentation of those non-GAAP measures, and changes in those measures, provides additional information that may be useful to investors. The tables included in Exhibit 99.2 hereto contain GAAP financial measures and a reconciliation between GAAP and non-GAAP financial measures. The non-GAAP financial measures should be viewed as supplemental to, and not as an alternative for, the GAAP financial measures.

On May 5, 2003, WebMD Corporation announced the following information regarding our results for the quarter ended March 31, 2003:


	Key Financial Highlights

	Our revenues for the quarter ended March 31, 2003 were $234.7 million compared to $225.9 million last year, an increase of 4%. Net loss for the quarter was ($7.4) million or ($0.02) per share compared to ($29.6) million or ($0.09) per share a year ago. Cash flow from operations for the quarter was $34.0 million. As of March 31, 2003, we had $685.5 million in cash and short and long-term marketable debt securities, an increase of $45.8 million from December 31, 2002.

	Segment Operating Results

	WebMD Envoy. Revenues for our Transaction Services segment, WebMD Envoy, were $115.5 million for the March 2003 quarter, a decrease of 2% from last year. Income before interest, taxes, restructuring, non-cash and other items was $24.1 million, an increase of 37% from last year.

	WebMD Medical Manager. Revenues for our Physician Services segment, WebMD Medical Manager, were $72.0 million for the March 2003 quarter, an increase of 9% from last year. Income before interest, taxes, restructuring, non-cash and other items was $6.3 million, which is equal to last year.

	WebMD Health. Revenues for our Portal Services segment, WebMD Health, were $22.2 million for the March 2003 quarter, an increase of 30% from last year. Income before interest, taxes, restructuring, non-cash and other items was $4.0 million, an improvement of $8.9 million from last year.

	Porex. Revenues for our Plastic Technologies segment, Porex, were $30.5 million for the March 2003 quarter, an increase of 3% from last year. Income before interest, taxes, restructuring, non-cash and other items was $7.3 million, a decrease of $0.3 million from last year.

On May 5, 2003, we also announced that Roger C. Holstein has been appointed our Chief Executive Officer. We had previously announced that we intended to separate the role of Chairman and Chief Executive Officer. Martin J. Wygod will remain as Chairman and will focus on the overall strategy, strategic relationships and transactions that will create long-term value for stockholders. Anthony Vuolo, our Chief Financial Officer, will transition from his current role to Executive Vice President, Business Development. Kirk Layman, who has been with us since 1997 and is currently Executive Vice President, Administration will become acting Chief Financial Officer as of May 15, 2003. Mr. Layman was Chief Accounting Officer of Medical Manager Corporation until the time of its acquisition by WebMD and prior to that was a partner at Arthur Andersen.

On May 5, 2003, WebMD Corporation issued a press release announcing first quarter 2003 earnings and certain management changes. A copy of the press release is attached as Exhibit 99.1. The press release was accompanied by the financial tables included in Exhibit 99.2.

The information in Exhibits 99.1 and 99.2 is being furnished, in accordance with SEC Release No. 33-8216, pursuant to Item 12, “Disclosure of Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Pursuant to the requirements of the Securities Exchange Act of 1934, WebMD Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

5 EX-99.1 3 g82577exv99w1.htm EX-99.1 PRESS RELEASE, DATED MAY 5, 2003 EX-99.1 PRESS RELEASE, DATED MAY 5, 2003

WEBMD REPORTS FIRST QUARTER INCOME BEFORE TAXES, NON-CASH AND OTHER ITEMS
INCREASED 110% FROM A YEAR AGO

ELMWOOD PARK, NJ (May 5, 2003) — WebMD Corporation (NASDAQ: HLTH) today reported financial results for its first quarter ended March 31, 2003.

Revenue for the quarter was $234.7 million compared to $225.9 million last year, an increase of 4%. Income before taxes, non-cash, restructuring and other items for the quarter was $31.3 million or $0.10 per share compared to $14.9 million or $0.05 per share last year. Net loss for the quarter was ($7.4) million or ($0.02) per share compared to ($29.6) million or ($0.09) per share a year ago. Cash flow from operations for the quarter was $34.0 million. As of March 31, 2003, WebMD had $685.5 million in cash and short and long-term marketable debt securities, an increase of $45.8 million from December 31, 2002.

Martin J. Wygod, Chairman, stated, “We are continuing to make significant investments in order to deliver comprehensive and competitively differentiated product offerings across all of our businesses. By successfully introducing products that offer value to our patient, physician, payer, pharmaceutical and medical device customers, we will achieve sustainable long-term revenue and earnings growth. With a strong balance sheet, the leverage of being a leader in our respective markets, and the broader healthcare market trends supporting our strategy, I continue to feel very good about the long term opportunities available to WebMD.”

WebMD Envoy revenues were $115.5 million for the March 2003 quarter, a decrease of 2% from last year. Revenues increased 3% from last year when excluding the impact of certain exited non-strategic relationships and products. Revenue growth and transaction mix continues to shift toward the higher priced, higher margin medical transaction services, which currently account for the majority of Envoy’s revenues. Envoy continues to focus on HIPAA enabling technologies for our payer and submitter customers which, when HIPAA is implemented later this year, should positively impact revenue growth. Income before interest, taxes, restructuring, non-cash and other items was $24.1 million, an increase of 37% from last year reflecting the benefits of WebMD’s restructuring efforts.

WebMD Medical Manager revenues were $72.0 million for the March 2003 quarter, an increase of 9% from last year, primarily reflecting increased network services revenues and maintenance fees. Income before interest, taxes, restructuring, non-cash and other items was $6.3 million, which is equal to last year and reflects the

continued investment necessary to support the Intergy product and HIPAA related Network Services growth initiatives.

WebMD Health revenues were $22.2 million for the March 2003 quarter, an increase of 30% from last year. Income before interest, taxes, restructuring, non-cash and other items was $4.0 million, an improvement of $8.9 million from last year. The improvement reflects margins from incremental revenues, the consolidation of the technology platforms and improvements in content and promotional expenses. Traffic to WebMD and Medscape reached a record 21.3 million unique monthly visitors, a 34% increase versus a year ago and Medscape issued a record 122,000 hours of continuing medical education credits, a 110% increase versus a year ago.

Porex revenues were $30.5 million for the March 2003 quarter, an increase of 3% from last year, resulting primarily from an increase in sales of its porous product lines. Income before interest, taxes, restructuring, non-cash and other items was $7.3 million, a decrease of $0.3 million from last year. The slight decrease in earnings reflects overall economic conditions and the competitive nature of certain of Porex’s markets.

WebMD also announced today that Roger C. Holstein has been appointed to Chief Executive Officer. Several months ago, WebMD announced that it would seek to separate the role of Chairman and CEO. Martin J. Wygod will remain as Chairman and will focus on the overall strategy, strategic relationships and transactions that will create long-term value for stockholders. Anthony Vuolo, Chief Financial Officer, will transition from his current role to EVP of Business Development. Kirk Layman who has been with the Company since 1997 and is currently EVP of Administration will become acting Chief Financial Officer as of May 15, 2003. Mr. Layman was Chief Accounting Officer of Medical Manager until the time of its acquisition by WebMD and prior to that was a partner at Arthur Andersen.

Mr. Wygod stated, “In the 13 years that I have worked with Roger, I have watched him emerge as a solid executive whose passion, energy and knowledge drives WebMD. It is with great pleasure that I watch him assume the role of Chief Executive Officer of WebMD. Roger and I will continue to work very closely together.” He continued, “I am pleased that Tony Vuolo will be working in business development where he has assisted me over the last 17 years. Kirk Layman will assume the role of acting Chief Financial Officer until a permanent successor is named. Kirk has played an instrumental role in our financial and operational restructuring and is a valued member of the executive management team. I am very comfortable that, with Kirk’s technical expertise and extensive knowledge of our Company, this will be a seamless transition.”

Roger C. Holstein, Chief Executive Officer, said, “We will continue to make significant investments ahead of what we believe will be an improving revenue trend in late 2003 and 2004. We expect modest growth in our transaction business until later this year and strong sequential quarterly trends in our portal and physician services businesses. We are comfortable with our previous guidance for full year 2003 although we may be at the lower end of our earnings guidance in the June quarter as we continue to invest in our HIPAA initiatives and infrastructure and reduce our backlog of network services orders at Medical Manager.”

As previously announced, WebMD will hold a conference call with investors and analysts to discuss these results at 4:45 p.m. (EDT) on May 5, 2003. Investors and the general public are invited to listen to a live audio webcast of the call at www.webmd.com (in the About WebMD section).

WebMD Corporation provides services that help physicians, consumers, providers and health plans navigate the complexity of the healthcare system. Our products and services streamline administrative and clinical processes, promote efficiency and reduce costs by facilitating information exchange, communication and electronic transactions between healthcare participants.

WebMD Health is the leading provider of online information, educational services and communities for physicians and consumers. WebMD Medical Manager is the leading provider of physician practice management software and related services. WebMD Envoy is the leading provider of electronic data interchange services for healthcare providers and commercial health plans.

Porex is a developer, manufacturer and distributor of proprietary porous and solid plastic products and components used in healthcare, industrial and consumer applications. Porex customers include both end-users of its finished products as well as manufacturers that include Porex components in their products.

All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding our guidance on future financial results and other projections or measures of future performance of WebMD; the amount and timing of the benefits expected from strategic initiatives and acquisitions; potential changes in WebMD’s business relationships; future deployment of applications; and other potential sources of additional revenue. These statements 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; operational difficulties relating to combining acquired companies and businesses; WebMD’s ability to form and maintain mutually beneficial relationships with customers and strategic partners; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries, including matters relating to the Health Insurance Portability and Accountability Act of 1996 (HIPAA); and the ability of WebMD to attract and retain qualified personnel. Further information about these matters can be found in WebMD’s Securities and Exchange Commission filings. WebMD expressly disclaims any intent or obligation to update these forward-looking statements.

This press release includes 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: income before taxes, restructuring, non-cash and other items and related per share amounts. WebMD believes that the presentation of those non-GAAP measures, and changes in those measures, provides additional information that may be useful to investors. The tables attached to this press release contain GAAP financial measures and a reconciliation between GAAP and non-GAAP financial measures. The non-GAAP financial measures should be viewed as supplemental to, and not as an alternative for, the GAAP financial measures.

EX-99.2 4 g82577exv99w2.htm EX-99.2 FINANCIAL TABLES ACCOMPANYING EXHIBIT 99.1 EX-99.2 FINANCIAL TABLES ACCOMPANYING EXHIBIT 99.1

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


		Three Months Ended
		March 31,

		2003			2002

Revenue		$	234,743		$	225,873
Costs and expenses:
	Cost of operations		134,380			138,531
	Development and engineering		11,012			10,868
	Sales, marketing, general and administrative		70,070			79,366
	Depreciation and amortization		27,976			32,759
	Restructuring and integration charge (benefit)		—			(3,750	)
	Gain on investments		183			—
	Interest income		5,055			3,140
	Interest expense		2,921			141

Income (loss) before income tax (benefit) provision			(6,378	)		(28,902	)
	Income tax (benefit) provision		980			700

Net income (loss)		$	(7,358	)	$	(29,602	)

Basic and diluted net income (loss) per common share		$	(0.02	)	$	(0.09	)

Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share			302,892			311,668

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


		Three Months Ended
		March 31,

		2003			2002

Revenues
	Transaction services	$	115,493		$	117,927
	Physician services		72,011			66,089
	Portal services		22,180			17,134
	Plastic technologies		30,538			29,541
	Inter-segment eliminations		(5,479	)		(4,818	)

		$	234,743		$	225,873

Income (loss) before taxes, restructuring, non-cash and other items
	Transaction services	$	24,051		$	17,538
	Physician services		6,297			6,252
	Portal services		4,018			(4,837	)
	Plastic technologies		7,280			7,598
	Corporate		(12,462	)		(14,607	)
	Interest income		5,055			3,140
	Interest expense		(2,921	)		(141	)

		$	31,318		$	14,943

	Basic and diluted income (loss) per common share before taxes, restructuring, non-cash and other items (a)	$	0.10		$	0.05

Taxes, restructuring, non-cash and other items(b)
	Depreciation and amortization	$	(27,976	)	$	(32,759	)
	Amortization of prepaid content and services (included in cost of operations)		—			(974	)
	Amortization of prepaid content and services (included in sales, marketing, general and administrative)		(6,146	)		(6,286	)
	Non-cash stock compensation (included in sales, marketing, general and administrative)		(3,757	)		(7,576	)
	Restructuring and integration (charge) benefit		—			3,750
	Income tax benefit (provision)		(980	)		(700	)
	Gain on investments		183			—

Net income (loss)		$	(7,358	)	$	(29,602	)

Basic and diluted net income (loss) per common share		$	(0.02	)	$	(0.09	)

(a) Basic and diluted income (loss) per common share before taxes, restructuring, non-cash and other items is based on the weighted average shares outstanding used in computing basic and diluted net income (loss) per common share.

(b) Reconciliation of income (loss) before taxes, restructuring, non-cash and other items to net income (loss).


			March 31,		December 31,
			2003		2002

			(Unaudited)
Assets
Cash and cash equivalents			$	252,652	$	179,541
Short-term investments				214,276		10,888
Accounts receivable, net				176,571		170,467
Inventory				18,489		18,804
Current portion of prepaid content and distribution services				25,660		25,406
Other current assets				18,447		26,197

		Total current assets		706,095		431,303

Marketable debt securities				218,602		449,289
Marketable equity securities				7,407		7,427
Property and equipment, net				91,714		94,737
Prepaid content and distribution services				42,324		48,532
Goodwill				629,217		629,055
Intangible assets, net				58,989		79,536
Other assets				26,240		26,369

			$	1,780,588	$	1,766,248

Liabilities and Stockholders’ Equity
Accounts payable			$	11,711	$	11,494
Accrued expenses				207,992		212,600
Deferred revenue				85,365		81,179
Current portion of long-term debt				6,546		6,546

	Total current liabilities			311,614		311,819

Convertible subordinated notes				300,000		300,000
Other long-term liabilities				605		628

Stockholders’ equity				1,168,369		1,153,801

			$	1,780,588	$	1,766,248

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


					Three Months Ended
					March 31,

					2003			2002

Cash flows from operating activities:
	Net income (loss)				$	(7,358	)	$	(29,602	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization				27,976			32,759
		Amortization of debt issuance costs				375			—
		Non-cash content and distribution services				6,146			7,260
		Non-cash stock based compensation				3,757			7,576
		Gain on investments				(183	)		—
		Changes in operating assets and liabilities:
			Accounts receivable			(6,074	)		(1,692	)
			Inventory			315			(1,894	)
			Prepaid content and distribution services			(191	)		(1,649	)
			Other, net			9,495			807
			Accounts payable			190			(3,389	)
			Accrued expenses			(4,610	)		10,049
			Deferred revenue			4,112			8,393

				Net cash provided by (used in) operating activities		33,950			28,618

Cash flows from investing activities:
	Proceeds from maturities of available-for-sale securities					801			79,248
	Proceeds from maturities and redemptions of held-to-maturity securities					101,919			1,055
	Purchases of available-for-sale securities					(1,164	)		—
	Purchases of held-to-maturity securities					(75,119	)		(156,714	)
	Purchases of property and equipment					(4,022	)		(5,753	)
	Cash paid in business combinations, net of cash acquired					(344	)		(1,142	)

				Net cash provided by (used in) investing activities		22,071			(83,306	)

Cash flows from financing activities:
	Proceeds from issuance of common stock					17,025			5,351
	Payments of notes payable and other					(19	)		(645	)
	Redemption of Series B Preferred Stock					—			(10,000	)
	Purchases of treasury stock					(93	)		—

				Net cash provided by (used in) financing activities		16,913			(5,294	)

Effect of exchange rates on cash						177			(121	)

Net increase (decrease) in cash and cash equivalents						73,111			(60,103	)
Cash and cash equivalents at beginning of period						179,541			286,273

Cash and cash equivalents at end of period					$	252,652		$	226,170


Delaware	0-24975	94-3236644

(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


The following exhibits are filed herewith:

99.1		Press Release issued by WebMD Corporation, dated May 5, 2003

99.2		Financial Tables Accompanying Exhibit 99.1


	WEBMD CORPORATION


Dated: May 5, 2003	By:	/s/ Lewis H. Leicher

		Lewis H. Leicher
		Senior Vice President


Exhibit
Number		Description

99.1		Press Release issued by WebMD Corporation, dated May 5, 2003

99.2		Financial Tables Accompanying Exhibit 99.1


Investors:		Media:

Risa Fisher		Jennifer Meyer
rfisher@webmd.net		jmeyer@webmd.net
201-414-2002		212-624-3912

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SIGNATURE
EXHIBIT INDEX
EX-99.1 PRESS RELEASE, DATED MAY 5, 2003
EX-99.2 FINANCIAL TABLES ACCOMPANYING EXHIBIT 99.1