EX-99.2 3 g17720exv99w2.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     Years Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
 
                                
Revenue
   $ 111,512     $ 96,581     $ 382,697     $ 331,693  
 
                                
Costs and expenses:
                                
Cost of operations
     38,708       29,645       138,363       117,281  
Sales and marketing
     30,585       26,387       108,316       93,645  
General and administrative
     22,250       23,210       89,503       104,321  
Depreciation and amortization
     7,312       7,302       28,780       28,256  
Interest income
     5,916       11,397       35,300       42,035  
Interest expense
     4,642       4,608       18,513       18,593  
Restructuring
     7,416       —       7,416       —  
Gain on sale of EBS Master LLC
     —       —       538,024       —  
Impairment of auction rate securities
     —       —       60,108       —  
Other (expense) income, net
     (142 )     (1,462 )     (5,949 )     3,805  
 
                        
Income from continuing operations before income tax (benefit) provision
     6,373       15,364       499,073       15,437  
Income tax (benefit) provision
     (4,372 )     (13,145 )     30,251       (8,741 )
Minority interest in WHC
     1,961       7,909       1,032       10,667  
Equity in earnings of EBS Master LLC
     —       5,887       4,007       28,566  
 
                        
Income from continuing operations
     8,784       26,487       471,797       42,077  
Income (loss) from discontinued operations, net of tax
     333       16,582       93,492       (22,198 )
 
                        
Net income
   $ 9,117     $ 43,069     $ 565,289     $ 19,879  
 
                        
 
                                
Basic income (loss) per common share:
                                
Income from continuing operations
   $ 0.06     $ 0.15     $ 2.70     $ 0.24  
Income (loss) from discontinued operations
     0.00       0.09       0.53       (0.13 )
 
                        
Net income
   $ 0.06     $ 0.24     $ 3.23     $ 0.11  
 
                        
 
                                
Diluted income (loss) per common share:
                                
Income from continuing operations
   $ 0.06     $ 0.13     $ 2.19     $ 0.21  
Income (loss) from discontinued operations
     0.00       0.07       0.43       (0.12 )
 
                        
Net income
   $ 0.06     $ 0.20     $ 2.62     $ 0.09  
 
                        
 
                                
Weighted-average shares outstanding used in computing income (loss) per common share:
                                
Basic
     151,199       181,280       174,928       179,330  
 
                        
Diluted
     175,274       212,335       220,127       188,763  
 
                        

 

 

HLTH CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
                                 
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
Revenue
                                
WebMD Online Services:
                                
Advertising and sponsorship
   $ 85,296     $ 70,389     $ 275,790     $ 229,333  
Licensing
     23,198       21,556       89,126       81,471  
Content syndication and other
     280       351       1,434       2,378  
 
                        
Total WebMD Online Services
     108,774       92,296       366,350       313,182  
WebMD Publishing and Other Services
     2,758       4,346       16,427       18,772  
Inter-segment eliminations
     (20 )     (61 )     (80 )     (261 )
 
                        
 
   $ 111,512     $ 96,581     $ 382,697     $ 331,693  
 
                        
 
                                
Earnings before interest, taxes, non-cash
                                
and other items (“Adjusted EBITDA”) (a)
                               
WebMD Online Services
   $ 34,148     $ 31,612     $ 95,435     $ 80,594  
WebMD Publishing and Other Services
     (338 )     1,460       1,147       4,103  
Corporate
     (4,534 )     (5,628 )     (19,845 )     (24,502 )
 
                        
 
   $ 29,276     $ 27,444     $ 76,737     $ 60,195  
 
                                
Adjusted EBITDA per diluted common share (b)
   $ 0.17     $ 0.13     $ 0.35     $ 0.32  
 
                        
 
                                
Interest, taxes, non-cash and other items (c)
                                
Interest income
     5,916       11,397       35,300       42,035  
Interest expense
     (4,642 )     (4,608 )     (18,513 )     (18,593 )
Income tax benefit (provision)
     4,372       13,145       (30,251 )     8,741  
Depreciation and amortization
     (7,312 )     (7,302 )     (28,780 )     (28,256 )
Non-cash stock-based compensation
     (5,816 )     (6,406 )     (24,790 )     (32,652 )
Non-cash advertising
     (3,361 )     (2,775 )     (5,097 )     (5,264 )
Minority interest in WHC
     (1,961 )     (7,909 )     (1,032 )     (10,667 )
Restructuring
     (7,416 )     —       (7,416 )     —  
Equity in earnings of EBS Master LLC
     —       5,887       4,007       28,566  
Gain on sale of EBS Master LLC
     —       —       538,024       —  
Impairment of auction rate securities
     —       —       (60,108 )     —  
Other expense, net
     (272 )     (2,386 )     (6,284 )     (2,028 )
 
                        
Income from continuing operations
     8,784       26,487       471,797       42,077  
Income (loss) from discontinued operations, net of tax
     333       16,582       93,492       (22,198 )
 
                        
Net income
   $ 9,117     $ 43,069     $ 565,289     $ 19,879  
 
                        
 
                                
Basic income (loss) per common share:
                                
Income from continuing operations
   $ 0.06     $ 0.15     $ 2.70     $ 0.24  
Income (loss) from discontinued operations
     0.00       0.09       0.53       (0.13 )
 
                        
Net income
   $ 0.06     $ 0.24     $ 3.23     $ 0.11  
 
                        
 
                                
Diluted income (loss) per common share:
                                
Income from continuing operations
   $ 0.06     $ 0.13     $ 2.19     $ 0.21  
Income (loss) from discontinued operations
     0.00       0.07       0.43       (0.12 )
 
                        
Net income
   $ 0.06     $ 0.20     $ 2.62     $ 0.09  
 
                        
 
                                
Weighted-average shares outstanding used in computing income (loss) per common share:
                                
Basic
     151,199       181,280       174,928       179,330  
 
                        
Diluted
     175,274       212,335       220,127       188,763  
 
                        
 
(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)
                 
    December 31,  
    2008     2007  
Assets
                
Cash and cash equivalents
   $ 629,848     $ 536,879  
Short-term investments
     371       290,858  
Accounts receivable, net
     94,140       86,081  
Due from EBS Master LLC
     —       1,224  
Prepaid expenses and other current assets
     40,811       71,090  
Assets of discontinued operations
     118,775       262,964  
 
            
Total current assets
     883,945       1,249,096  
 
                
Investments
     288,049       2,383  
Property and equipment, net
     56,731       49,554  
Goodwill
     213,148       217,323  
Intangible assets, net
     32,690       36,314  
Investment in EBS Master LLC
     —       25,261  
Other assets
     24,465       71,466  
 
            
Total Assets
   $ 1,499,028     $ 1,651,397  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Accrued expenses
   $ 54,708     $ 49,598  
Deferred revenue
     80,489       76,401  
Liabilities of discontinued operations
     98,212       123,131  
 
            
Total current liabilities
     233,409       249,130  
 
                
Convertible notes
     650,000       650,000  
Other long-term liabilities
     22,664       21,137  
 
                
Minority interest in WHC
     134,223       131,353  
 
                
Stockholders’ equity
     458,732       599,777  
 
            
 
                
Total Liabilities and Stockholders’ Equity
   $ 1,499,028     $ 1,651,397  
 
            

 

 

HLTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                 
    Years Ended December 31,  
    2008     2007  
Cash flows from operating activities:
                
Net income
   $ 565,289     $ 19,879  
Adjustments to reconcile net income to net cash provided by operating activities:
                
(Income) loss from discontinued operations, net of tax
     (93,492 )     22,198  
Depreciation and amortization
     28,780       28,256  
Minority interest in WHC
     1,032       10,667  
Equity in earnings of EBS Master LLC
     (4,007 )     (28,566 )
Non-cash interest expense, net
     1,944       2,916  
Non-cash advertising
     5,097       5,264  
Non-cash stock-based compensation
     24,790       32,652  
Deferred income taxes
     10,617       (10,136 )
Gain on sale of EBS Master LLC
     (538,024 )     —  
Gain on 2006 EBS Sale
     —       (399 )
Impairment of auction rate securities
     60,108       —  
Changes in operating assets and liabilities:
                
Accounts receivable
     (8,059 )     3,840  
Prepaid expenses and other, net
     1,892       5,329  
Accrued expenses and other long-term liabilities
     5,908       (44,318 )
Deferred revenue
     4,088       314  
 
            
Net cash provided by continuing operations
     65,963       47,896  
Net cash provided by discontinued operations
     31,151       27,497  
 
            
Net cash provided by operating activities
     97,114       75,393  
 
                
Cash flows from investing activities:
                
Proceeds from maturities and sales of available-for-sale securities
     118,339       670,326  
Purchases of available-for-sale securities
     (177,150 )     (927,038 )
Purchases of property and equipment
     (24,335 )     (19,053 )
Purchase of investment in preferred stock
     (6,471 )     —  
Cash paid in business combinations, net of cash acquired
     (2,633 )     —  
Purchase of minority interest in subsidiary
     (12,818 )     —  
Proceeds related to the sale of EBS Master LLC
     574,617       —  
Proceeds from the sale of discontinued operations
     247,491       11,667  
Proceeds from the 2006 EBS Sale, net
     —       2,898  
Proceeds from advances to EBS MasterLLC
     1,224       18,792  
 
            
Net cash provided by (used in) continuing operations
     718,264       (242,408 )
Net cash used in discontinued operations
     (4,782 )     (4,741 )
 
            
Net cash provided by (used in) investing activities
     713,482       (247,149 )
 
                
Cash flows from financing activities:
                
Proceeds from issuance of HLTH and WHC common stock
     21,683       133,054  
Tax benefit on stock-based awards
     748       6,601  
Purchases of treasury stock under repurchase program
     —       (47,123 )
Purchases of treasury stock in tender offer
     (737,324 )     —  
Other
     (700 )     (20 )
 
            
Net cash (used in) provided by continuing operations
     (715,593 )     92,512  
Net cash used in discontinued operations
     (76 )     (175 )
 
            
Net cash (used in) provided by financing activities
     (715,669 )     92,337  
Effect of exchange rates on cash
     (1,958 )     1,607  
 
            
Net increase (decrease) in cash and cash equivalents
     92,969       (77,812 )
Cash and cash equivalents at beginning of period
     536,879       614,691  
 
            
Cash and cash equivalents at end of period
   $ 629,848     $ 536,879