EX-99.2 3 g18935exv99w2.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  
    March 31,  
    2009     2008  
            (a)  
Revenue
   $ 90,264     $ 80,650  
Costs and expenses:
                
Cost of operations
     36,565       30,927  
Sales and marketing
     27,561       25,149  
General and administrative
     21,848       20,849  
Depreciation and amortization
     7,103       6,775  
Interest income
     2,262       11,936  
Interest expense
     6,536       6,525  
Gain on repurchases of convertible notes
     6,647       —  
Gain on sale of EBS Master LLC
     —       538,024  
Impairment of auction rate securities
     —       60,108  
Other expense, net
     269       4,144  
 
            
(Loss) income from continuing operations before income tax (benefit) provision
     (709 )     476,133  
Income tax (benefit) provision
     (1,217 )     25,602  
Equity in earnings of EBS Master LLC
     —       4,007  
 
            
Consolidated income from continuing operations
     508       454,538  
Consolidated income from discontinued operations, net of tax
     517       3,057  
 
            
Consolidated net income before noncontrolling interest
     1,025       457,595  
(Income) loss attributable to noncontrolling interest
     (610 )     3,845  
 
            
Net income attributable to HLTH stockholders
   $ 415     $ 461,440  
 
            
 
                
Amounts attributable to HLTH stockholders:
                
(Loss) income from continuing operations
   $ (194 )   $ 458,322  
Income from discontinued operations
     609       3,118  
 
            
Net income attributable to HLTH stockholders
   $ 415     $ 461,440  
 
            
 
                
Basic (loss) income per common share:
                
(Loss) income from continuing operations
   $ (0.00 )   $ 2.52  
Income from discontinued operations
     0.00       0.01  
 
            
Net income attributable to HLTH stockholders
   $ 0.00     $ 2.53  
 
            
 
                
Diluted (loss) income per common share:
                
(Loss) income from continuing operations
   $ (0.00 )   $ 2.03  
Income from discontinued operations
     0.00       0.01  
 
            
Net income attributable to HLTH stockholders
   $ 0.00     $ 2.04  
 
            
 
                
Weighted-average shares outstanding used in computing (loss) income per common share:
                
Basic
     101,748       182,175  
 
            
Diluted
     101,748       228,159  
 
            
 
(a)   The consolidated financial statements for the three months ended March 31, 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. 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  
    March 31,  
    2009     2008  
Revenue
             (d)  
WebMD:
                
Advertising and sponsorship
   $ 65,428     $ 56,482  
Licensing
     22,975       21,923  
Print
     1,861       2,245  
 
            
 
   $ 90,264     $ 80,650  
 
            
 
                
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)
               
WebMD
   $ 18,688     $ 16,332  
Corporate
     (3,427 )     (5,059 )
 
            
 
     15,261       11,273  
   
Adjusted EBITDA per diluted common share (b)
   $ 0.15     $ 0.05  
 
            
 
                
Interest, taxes, non-cash and other items (c)
               
Interest income
     2,262       11,936  
Interest expense
     (6,536 )     (6,525 )
Income tax benefit (provision)
     1,217       (25,602 )
Depreciation and amortization
     (7,103 )     (6,775 )
Non-cash stock-based compensation
     (9,154 )     (5,940 )
Non-cash advertising
     (1,753 )     (1,558 )
Gain on repurchases of convertible notes
     6,647       —  
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
     (333 )     (4,194 )
 
            
Consolidated income from continuing operations
     508       454,538  
Consolidated income from discontinued operations, net of tax
     517       3,057  
 
            
Consolidated net income before noncontrolling interest
     1,025       457,595  
(Income) loss attributable to noncontrolling interest
     (610 )     3,845  
 
            
Net income attributable to HLTH stockholders
   $ 415     $ 461,440  
 
            
 
                
Amounts attributable to HLTH stockholders:
                
(Loss) income from continuing operations
   $ (194 )   $ 458,322  
Income from discontinued operations
     609       3,118  
 
            
Net income attributable to HLTH stockholders
   $ 415     $ 461,440  
 
            
 
                
Basic (loss) income per common share:
                
(Loss) income from continuing operations
   $ (0.00 )   $ 2.52  
Income from discontinued operations
     0.00       0.01  
 
            
Net income attributable to HLTH stockholders
   $ 0.00     $ 2.53  
 
            
 
                
Diluted (loss) income per common share:
                
(Loss) income from continuing operations
   $ (0.00 )   $ 2.03  
Income from discontinued operations
     0.00       0.01  
 
            
Net income attributable to HLTH stockholders
   $ 0.00     $ 2.04  
 
            
 
                
Weighted-average shares outstanding used in computing (loss) income per common share:
                
Basic
     101,748       182,175  
 
            
Diluted
     101,748       228,159  
 
            
 
(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 from continuing operations.
 
(d)   The consolidated financial statements for the three months ended March 31, 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. 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)
                 
    March 31,     December 31,  
    2009     2008  
            (a)  
Assets
                
Cash and cash equivalents
   $ 552,483     $ 629,848  
Accounts receivable, net
     90,835       93,082  
Prepaid expenses and other current assets
     44,551       44,740  
Assets of discontinued operations
     129,253       131,350  
 
            
Total current assets
     817,122       899,020  
 
                
Investments
     275,885       288,049  
Property and equipment, net
     56,492       56,633  
Goodwill
     202,104       202,104  
Intangible assets, net
     30,570       32,328  
Other assets
     21,918       23,600  
 
            
Total Assets
   $ 1,404,091     $ 1,501,734  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Accrued expenses
   $ 33,849     $ 54,595  
Deferred revenue
     84,574       79,613  
Due to broker for repurchases of convertible notes
     8,484       —  
Liabilities of discontinued operations
     98,506       100,771  
 
            
Total current liabilities
     225,413       234,979  
 
                
1.75% convertible notes
     273,483       350,000  
31/8% convertible notes, net of discount of $31,799 at March 31, 2009 and $35,982 at December 31, 2008
     250,201       264,018  
Other long-term liabilities
     19,899       21,816  
 
                
HLTH stockholders’ equity
     494,004       496,698  
Noncontrolling interest in WHC
     141,091       134,223  
 
            
Stockholders’ equity
     635,095       630,921  
 
                
 
            
Total Liabilities and Stockholders’ Equity
   $ 1,404,091     $ 1,501,734  
 
            
 
(a)   The consolidated financial statements as of December 31, 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. 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 STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                 
    Three Months Ended  
    March 31,  
    2009     2008  
            (a)  
Cash flows from operating activities:
                
Net income attributable to HLTH stockholders
   $ 415     $ 461,440  
Adjustments to reconcile net income attributable to HLTH stockholders to net cash (used in) provided by operating activities:
                
Consolidated income from discontinued operations, net of tax
     (517 )     (3,057 )
Depreciation and amortization
     7,103       6,775  
Income (loss) attributable to noncontrolling interest
     610       (3,845 )
Equity in earnings of EBS Master LLC
     —       (4,007 )
Non-cash interest expense
     2,799       2,661  
Non-cash advertising
     1,753       1,558  
Non-cash stock-based compensation
     9,154       5,940  
Deferred income taxes
     (2,604 )     5,132  
Gain on repurchases of convertible notes
     (6,647 )     —  
Gain on sale of EBS Master LLC
     —       (538,024 )
Impairment of auction rate securities
     —       60,108  
Changes in operating assets and liabilities:
                
Accounts receivable
     2,247       10,449  
Prepaid expenses and other, net
     (1,224 )     17,493  
Accrued expenses and other long-term liabilities
     (20,741 )     10,479  
Deferred revenue
     4,961       11,231  
 
            
Net cash (used in) provided by continuing operations
     (2,691 )     44,333  
Net cash provided by (used in) discontinued operations
     2,001       (1,966 )
 
            
Net cash (used in) provided by operating activities
     (690 )     42,367  
 
                
Cash flows from investing activities:
                
Proceeds from maturities and sales of available-for-sale securities
     600       104,518  
Purchases of available-for-sale securities
     —       (177,150 )
Purchases of property and equipment
     (5,309 )     (2,651 )
Proceeds related to the sales of EBS Master LLC, EPS and ACS/ACP, net of fees
     250       598,935  
Other
     —       1,195  
 
            
Net cash (used in) provided by continuing operations
     (4,459 )     524,847  
Net cash used in discontinued operations
     (829 )     (1,449 )
 
            
Net cash (used in) provided by investing activities
     (5,288 )     523,398  
 
                
Cash flows from financing activities:
                
Proceeds from issuance of HLTH and WHC common stock
     7,041       1,777  
Repurchases of convertible notes
     (78,183 )     —  
 
            
Net cash (used in) provided by continuing operations
     (71,142 )     1,777  
Net cash used in discontinued operations
     —       (46 )
 
            
Net cash (used in) provided by financing activities
     (71,142 )     1,731  
Effect of exchange rates on cash
     (245 )     1,753  
 
            
Net (decrease) increase in cash and cash equivalents
     (77,365 )     569,249  
Cash and cash equivalents at beginning of period
     629,848       536,879  
 
            
Cash and cash equivalents at end of period
   $ 552,483     $ 1,106,128  
 
            
 
(a)   The consolidated financial statements for the three months ended March 31, 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. 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.