EX-99.2 3 g16318exv99w2.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     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
Revenue
   $ 100,367     $ 86,034     $ 271,185     $ 235,112  
Costs and expenses:
                                
Cost of operations
     35,323       30,021       99,656       87,636  
Sales and marketing
     26,439       22,459       77,729       67,258  
General and administrative
     22,929       25,718       67,254       81,111  
Depreciation and amortization
     7,265       7,390       21,468       20,954  
Interest income
     9,386       10,864       29,384       30,638  
Interest expense
     4,636       4,660       13,871       13,985  
Gain on sale of EBS Master LLC
     —       —       538,024       —  
Impairment of auction rate securities
     —       —       60,108       —  
Other (expense) income, net
     (997 )     989       (5,807 )     5,267  
 
                        
Income from continuing operations before income tax provision
     12,164       7,639       492,700       73  
Income tax provision
     7,679       2,977       34,623       4,404  
Minority interest in WHC income (loss)
     1,845       1,800       (929 )     2,758  
Equity in earnings of EBS Master LLC
     —       8,005       4,007       22,679  
 
                        
Income from continuing operations
     2,640       10,867       463,013       15,590  
Income (loss) from discontinued operations, net of tax
     93,241       5,704       93,159       (38,780 )
 
                        
Net income (loss)
   $ 95,881     $ 16,571     $ 556,172     $ (23,190 )
 
                        
 
                                
Basic income (loss) per common share:
                                
Income from continuing operations
   $ 0.01     $ 0.06     $ 2.53     $ 0.09  
Income (loss) from discontinued operations
     0.51       0.03       0.51       (0.22 )
 
                        
Net income (loss)
   $ 0.52     $ 0.09     $ 3.04     $ (0.13 )
 
                        
 
                                
Diluted income (loss) per common share:
                                
Income from continuing operations
   $ 0.01     $ 0.06     $ 2.06     $ 0.08  
Income (loss) from discontinued operations
     0.50       0.03       0.41       (0.21 )
 
                        
Net income (loss)
   $ 0.51     $ 0.09     $ 2.47     $ (0.13 )
 
                        
 
                                
Weighted-average shares outstanding used in computing income (loss) per common share:
                                
Basic
     183,716       179,811       182,838       178,681  
 
                        
Diluted
     187,527       188,071       228,653       188,486  
 
                        

 

HLTH CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
Revenue
                                
WebMD Online Services:
                                
Advertising and sponsorship
   $ 72,046     $ 59,087     $ 190,494     $ 158,944  
Licensing
     22,139       20,001       65,928       59,915  
Content syndication and other
     392       490       1,154       2,027  
 
                        
Total WebMD Online Services
     94,577       79,578       257,576       220,886  
WebMD Publishing and Other Services
     5,810       6,520       13,669       14,426  
Inter-segment eliminations
     (20 )     (64 )     (60 )     (200 )
 
                        
 
   $ 100,367     $ 86,034     $ 271,185     $ 235,112  
 
                        
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)
                                
WebMD Online Services
   $ 25,956     $ 21,948     $ 61,287     $ 48,982  
WebMD Publishing and Other Services
     1,212       2,138       1,485       2,643  
Corporate
     (4,679 )     (5,811 )     (15,311 )     (18,874 )
 
                        
 
   $ 22,489     $ 18,275     $ 47,461     $ 32,751  
 
Adjusted EBITDA per diluted common share (b)
   $ 0.12     $ 0.10     $ 0.21     $ 0.17  
 
                        
 
                                
Interest, taxes, non-cash and other items (c)
                                
Interest income
   $ 9,386     $ 10,864     $ 29,384     $ 30,638  
Interest expense
     (4,636 )     (4,660 )     (13,871 )     (13,985 )
Income tax provision
     (7,679 )     (2,977 )     (34,623 )     (4,404 )
Depreciation and amortization
     (7,265 )     (7,390 )     (21,468 )     (20,954 )
Non-cash stock-based compensation
     (6,531 )     (9,285 )     (18,974 )     (26,246 )
Non-cash advertising
     (178 )     (169 )     (1,736 )     (2,489 )
Minority interest in WHC (income) loss
     (1,845 )     (1,800 )     929       (2,758 )
Equity in earnings of EBS Master LLC
     —       8,005       4,007       22,679  
Gain on sale of EBS Master LLC
     —       —       538,024       —  
Impairment of auction rate securities
     —       —       (60,108 )     —  
Other (expense) income, net
     (1,101 )     4       (6,012 )     358  
 
                        
Income from continuing operations
     2,640       10,867       463,013       15,590  
Income (loss) from discontinued operations, net of tax
     93,241       5,704       93,159       (38,780 )
 
                        
Net income (loss)
   $ 95,881     $ 16,571     $ 556,172     $ (23,190 )
 
                        
 
                                
Basic income (loss) per common share:
                                
Income from continuing operations
   $ 0.01     $ 0.06     $ 2.53     $ 0.09  
Income (loss) from discontinued operations
     0.51       0.03       0.51       (0.22 )
 
                        
Net income (loss)
   $ 0.52     $ 0.09     $ 3.04     $ (0.13 )
 
                        
 
                                
Diluted income (loss) per common share:
                                
Income from continuing operations
   $ 0.01     $ 0.06     $ 2.06     $ 0.08  
Income (loss) from discontinued operations
     0.50       0.03       0.41       (0.21 )
 
                        
Net income (loss)
   $ 0.51     $ 0.09     $ 2.47     $ (0.13 )
 
                        
 
                                
Weighted-average shares outstanding used in computing income (loss) per common share:
                                
Basic
     183,716       179,811       182,838       178,681  
 
                        
Diluted
     187,527       188,071       228,653       188,486  
 
                        
 
(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)
                 
    September 30, 2008     December 31, 2007  
Assets
                
Cash and cash equivalents
   $ 1,380,179     $ 536,879  
Short-term investments
     284,789       290,858  
Accounts receivable, net
     78,148       86,081  
Due from EBS Master LLC
     —       1,224  
Prepaid expenses and other current assets
     27,190       71,090  
Assets of discontinued operations
     119,891       262,964  
 
            
Total current assets
     1,890,197       1,249,096  
 
                
Marketable equity securities
     2,175       2,383  
Property and equipment, net
     51,766       49,554  
Goodwill
     211,414       217,323  
Intangible assets, net
     28,917       36,314  
Investment in EBS Master LLC
     —       25,261  
Other assets
     36,534       71,466  
 
            
Total Assets
   $ 2,221,003     $ 1,651,397  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Accrued expenses
   $ 44,305     $ 49,598  
Deferred revenue
     81,740       76,401  
Liabilities of discontinued operations
     100,464       123,131  
 
            
Total current liabilities
     226,509       249,130  
 
                
Convertible notes
     650,000       650,000  
Other long-term liabilities
     21,184       21,137  
 
                
Minority interest in WHC
     139,250       131,353  
 
                
Stockholders’ equity
     1,184,060       599,777  
 
                
 
            
Total Liabilities and Stockholders’ Equity
   $ 2,221,003     $ 1,651,397  
 
            

 

HLTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                 
    Nine Months Ended  
    September 30,  
    2008     2007  
Cash flows from operating activities:
                
Net income (loss)
   $ 556,172     $ (23,190 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
(Income) loss from discontinued operations, net of tax
     (93,159 )     38,780  
Depreciation and amortization
     21,468       20,954  
Minority interest in WHC (loss) income
     (929 )     2,758  
Equity in earnings of EBS Master LLC
     (4,007 )     (22,679 )
Amortization of debt issuance costs
     2,248       2,179  
Non-cash advertising
     1,736       2,489  
Non-cash stock-based compensation
     18,974       26,246  
Deferred income taxes
     11,934       3,710  
Gain on sale of EBS Master LLC and 2006 EBS Sale
     (538,024 )     (399 )
Impairment of auction rate securities
     60,108       —  
Changes in operating assets and liabilities:
                
Accounts receivable
     7,932       14,835  
Prepaid expenses and other, net
     4,174       (198 )
Accrued expenses and other long-term liabilities
     (3,639 )     (45,878 )
Deferred revenue
     5,340       3,253  
 
            
Net cash provided by continuing operations
     50,328       22,860  
Net cash provided by discontinued operations
     28,497       24,366  
 
            
Net cash provided by operating activities
     78,825       47,226  
 
                
Cash flows from investing activities:
                
Proceeds from maturities and sales of available-for-sale securities
     117,539       356,492  
Purchases of available-for-sale securities
     (177,150 )     (694,522 )
Purchases of property and equipment
     (15,115 )     (14,427 )
Proceeds related to the sales of ViPS, EBS, EPS and ACS/ACP, net of expenses
     821,706       14,565  
Decreases in net advances to EBS Master LLC
     1,224       19,921  
Other
     148       —  
 
            
Net cash provided by (used in) continuing operations
     748,352       (317,971 )
Net cash used in discontinued operations
     (4,265 )     (3,785 )
 
            
Net cash provided by (used in ) investing activities
     744,087       (321,756 )
 
                
Cash flows from financing activities:
                
Proceeds from issuance of HLTH and WHC common stock
     20,725       114,077  
Purchases of treasury stock under repurchase program
     —       (47,120 )
Other
     343       (18 )
 
            
Net cash provided by continuing operations
     21,068       66,939  
Net cash used in discontinued operations
     (76 )     (130 )
 
            
Net cash provided by financing activities
     20,992       66,809  
Effect of exchange rates on cash
     (604 )     1,042  
 
            
Net increase (decrease) in cash and cash equivalents
     843,300       (206,679 )
Cash and cash equivalents at beginning of period
     536,879       614,691  
 
            
Cash and cash equivalents at end of period
   $ 1,380,179     $ 408,012