WebMD Announces Fourth Quarter and Year End Financial Results

        WebMD Announces Fourth Quarter and Year End Financial Results

PR Newswire

NEW YORK, Feb. 21, 2013

NEW YORK, Feb. 21, 2013 /PRNewswire/ -- WebMD Health Corp. (NASDAQ: WBMD), the
leading source of health information, today announced financial results for
the three and twelve months ended December 31, 2012.

"During the fourth quarter, we took actions to streamline operations and
reduce costs," said Cavan M. Redmond, Chief Executive Officer of WebMD. "We
enter 2013 as a more nimble organization that is well positioned to meet the
needs of our users and clients in a dynamic and demanding marketplace. We will
build on our strengths in providing consumers and physicians with trusted
content and valuable tools across a market leading multi-screen platform."

WebMD's fourth quarter revenue was at the high end of the range of financial
guidance provided on November 1, 2012 and earnings before interest, taxes,
non-cash and other items ("Adjusted EBITDA") exceeded the high end of that
range.

For the three months ended December 31, 2012:

  oRevenue was $132.7 million compared to $150.7 million in the prior year
    period. Public portal advertising and sponsorship revenue was $112.3
    million compared to $130.8 million in the prior year period. Private
    portal services revenue was $20.5 million compared to $19.8 million in the
    prior year period.
  oAdjusted EBITDA was $30.0 million, compared to $54.6 million in the prior
    year period.
  oNet loss was $(6.1) million or $(0.12) per diluted share compared to net
    income of $19.2 million or $0.33 per diluted share in the prior year
    period. Net loss would have been net income of $4.1 million or $0.08 per
    diluted share in the current period as compared to net income of $18.0
    million or $0.31 per diluted share in the prior year period, without the
    effect, in the current period, of an after-tax restructuring expense of
    $5.5 million, non-cash income tax valuation allowance of $4.7 million and,
    in the prior year period, of an after-tax gain on investments of $2.5
    million and after-tax transaction costs of $1.3 million.

For the twelve months ended December 31, 2012:

  oRevenue was $469.9 million, compared to $558.8 million in the prior year
    period. Public portal advertising and sponsorship revenue was $391.3
    million compared to $477.3 million in the prior year period. Private
    portal services revenue was $78.5 million compared to $81.5 million in the
    prior year period.
  oAdjusted EBITDA was $73.1 million, compared to $181.2 million in the prior
    year period. 
  oNet loss was $(20.3) million or $(0.40) per diluted share compared to net
    income of $74.6 million or $1.25 per diluted share in the prior year
    period. Net loss would have been $(10.6) million or $(0.21) per diluted
    share in the current period as compared to net income of $53.8 million or
    $0.90 per diluted share in the prior year period, without the effect, in
    the current period, of an after-tax gain on investments of $5.2 million,
    after-tax restructuring expense of $5.5 million, non-cash income tax
    valuation allowance of $4.7 million, after-tax stock compensation expense
    related to the voluntary surrender of options of $5.8 million, after-tax
    severance expenses of $1.6 million and after-tax income from discontinued
    operations of $2.7 million, and, in the prior year period, of an after-tax
    gain on investments of $11.7 million, after-tax transaction costs of $1.3
    million and after-tax income from discontinued operations of $10.4
    million.

Traffic Highlights

Traffic to the WebMD Health Network continued to grow, reaching an average of
117.4 million unique users per month and total traffic of 2.57 billion page
views during the fourth quarter, increases of 28% and 20%, respectively, from
a year ago. The prior year comparisons exclude traffic from WebMD's former
affiliate partner sites, which were phased out at the end of 2011.

Balance Sheet Highlights

As of December 31, 2012, WebMD had $992 million in cash and cash equivalents
and $800 million in aggregate principal amount of convertible notes
outstanding.

Financial Guidance

Today WebMD issued financial guidance for 2013. For 2013, WebMD expects:

  oRevenue to be approximately $430 million to $455 million.
  oAdjusted EBITDA to be approximately $60 million to $80 million.
  oNet loss from continuing operations to be approximately $(22) million to
    $(7) million, or $(0.45) to $(0.13) per diluted share.

For the first quarter of 2013, WebMD expects:

  oRevenue to be in excess of $105 million.
  oAdjusted EBITDA to be in excess of 13% of revenue.
  oNet loss from continuing operations to be approximately 6% of revenue.

WebMD is providing a schedule (attached to this press release) with additional
detail.

Analyst and Investor Conference Call 

WebMD will hold a conference call with investors and analysts to discuss its
fourth quarter and year end results at 4:45 p.m. (Eastern) today. The call can
be accessed at www.wbmd.com(in the Investor Relations section). A replay of
the audio webcast will be available at the same web address.

About WebMD

WebMD Health Corp. (NASDAQ: WBMD) is the leading provider of health
information services, serving consumers, physicians, healthcare professionals,
employers, and health plans through our public and private online portals,
mobile platforms and health-focused publications.

The WebMD Health Network includes WebMD Health, Medscape, MedicineNet,
eMedicineHealth, RxList, theheart.org, Medscape Education and other owned
WebMD sites.

*****************************

All statements contained in this press release and the related analyst and
investor conference call, other than statements of historical fact, are
forward-looking statements, including those regarding: guidance on our
future financial results and other projections or measures of our future
performance; market opportunities and our ability to capitalize on them; and
the benefits expected from new or updated products or services and from other
potential sources of additional revenue. These statements speak only as of the
date of this press release, are based on our 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 our products and services; our
relationships with customers and other factors affecting their use of our
products and services, including regulatory matters affecting their products;
our ability to successfully implement changes to, among other things, our
product and service offerings, capital allocation plans and cost structure;
our ability to attract and retain qualified personnel; and changes in
economic, political or regulatory conditions or other trends affecting the
healthcare, Internet and information technology industries. Further
information about these matters can be found in our Securities and Exchange
Commission filings. Except as required by applicable law or regulation, we do
not undertake any obligation to update our forward-looking statements to
reflect future events or circumstances.

*************************************

This press release, and the accompanying tables, include both financial
measures in accordance with accounting principles generally accepted in the
United States of America, or GAAP, as well as certain non-GAAP financial
measures. The tables attached to this press release include reconciliations
of these non-GAAP financial measures to GAAP financial measures. In addition,
an "Explanation of Non-GAAP Financial Measures" is attached to this press
release as Annex A.

*****************************

WebMD®, Medscape®, eMedicine®, MedicineNet®, RxList®, Subimo®, Medsite®,
Summex® and Medscape® Mobile are trademarks of WebMD Health Corp. or its
subsidiaries.



WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
                              Three Months Ended        Years Ended
                              December 31,              December 31,
                              2012         2011         2012         2011
Revenue                       $         $        $         $   
                              132,738      150,659      469,866      558,775
Cost of operations            55,352       52,979       216,361      201,677
Sales and marketing           32,598       30,165       127,659      124,326
General and administrative    23,767       23,657       97,618       91,271
Depreciation and amortization 8,248        6,872        28,399       26,801
Interest income               22           24           86           112
Interest expense              5,834        5,809        23,334       20,645
Gain on investments           -            3,837        8,074        18,516
Restructuring                 7,579        -            7,579        -
Other expense                 -            2,275        2,297        2,328
(Loss) income from continuing
operations before income
   tax provision (benefit)    (618)        32,763       (25,221)     110,355
   Income tax provision       5,470        13,561       (2,134)      46,167
   (benefit)
(Loss) income from continuing (6,088)      19,202       (23,087)     64,188
operations
   Income from discontinued   -            -            2,743        10,388
   operations, net of tax
Net (loss) income             $        $       $         $    
                              (6,088)     19,202       (20,344)    74,576
Basic (loss) income per
common share:
   (Loss) income from         $       $       $       $    
   continuing operations      (0.12)        0.34     (0.45)        1.11
   Income from discontinued   -            -            0.05         0.18
   operations
Net (loss) income             $       $       $       $    
                              (0.12)        0.34     (0.40)        1.29
Diluted (loss) income per
common share:
   (Loss) income from         $       $       $       $    
   continuing operations      (0.12)        0.33     (0.45)        1.08
   Income from discontinued   -            -            0.05         0.17
   operations
Net (loss) income             $       $       $       $    
                              (0.12)        0.33     (0.40)        1.25
Weighted-average shares
outstanding used in
   computing (loss) income
   per common share:
 Basic                   49,041       55,685       50,862       57,356
 Diluted                49,041       68,326       50,862       59,124



WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
                                   Three Months Ended      Years Ended
                                   December 31,            December 31,
                                   2012         2011       2012       2011
Revenue
    Public portal advertising and  $          $        $        $  
    sponsorship                    112,257     130,821   391,339   477,325
    Private portal services        20,481       19,838     78,527     81,450
                                   $          $        $        $  
                                   132,738     150,659   469,866   558,775
Earnings before interest, taxes,
non-cash
    and other items ("Adjusted    $         $       $       $  
    EBITDA") (a)                   30,049      54,626    73,149    181,238
Interest, taxes, non-cash and
other items (b)
    Interest income                22           24         86         112
    Interest expense               (5,834)      (5,809)    (23,334)   (20,645)
    Income tax (provision) benefit (5,470)      (13,561)   2,134      (46,167)
    Depreciation and amortization (8,248)      (6,872)    (28,399)   (26,801)
    Non-cash stock-based           (9,028)      (10,768)   (44,921)   (39,737)
    compensation
    Gain on investments            -            3,837      8,074      18,516
    Restructuring                  (7,579)      -          (7,579)    -
    Other expense                  -            (2,275)    (2,297)    (2,328)
(Loss) income from continuing      (6,088)      19,202     (23,087)   64,188
operations
    Income from discontinued      -            -          2,743      10,388
    operations, net of tax
Net (loss) income                $         $       $        $   
                                   (6,088)     19,202    (20,344)  74,576
(a) See Annex A-Explanation of Non-GAAP Financial
    Measures.
(b) Reconciliation of Adjusted EBITDA to net (loss)
    income.



WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
                                  December 31,
                                  2012                 2011
Assets
Cash and cash equivalents         $            $         
                                  991,835              1,121,217
Accounts receivable, net          106,622              121,335
Prepaid expenses and other        13,882               12,690
current assets
Deferred tax assets               10,328               20,482
 Total current assets      1,122,667            1,275,724
Property and equipment, net      66,604               57,139
Goodwill                          202,104              202,104
Intangible assets, net            16,105               19,999
Deferred tax assets               56,039               55,017
Other assets                      27,106               31,042
Total Assets                      $              $         
                                  1,490,625           1,641,025
Liabilities and Stockholders'
Equity
Accrued expenses                  $           $           
                                  64,256                55,238
Deferred revenue                  92,176               88,055
Liabilities of discontinued       1,506                1,506
operations
 Total current liabilities   157,938              144,799
2.25% convertible notes due 2016  400,000              400,000
2.50% convertible notes due 2018  400,000              400,000
Other long-term liabilities       22,698               21,790
Stockholders' equity              509,989              674,436
Total Liabilities and             $              $         
Stockholders' Equity              1,490,625           1,641,025



WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                                           Years Ended
                                           December 31,
                                           2012                2011
Cash flows from operating activities:
 Net (loss) income                        $     (20,344)  $    74,576
 Adjustments to reconcile net (loss)
 income to net cash provided by
  operating activities:
     Income from discontinued operations,  (2,743)             (10,388)
     net of tax
     Depreciation and amortization         28,399              26,801
     Non-cash interest, net                4,326               3,758
     Non-cash stock-based compensation     44,921              39,737
     Deferred income taxes                 (2,337)             13,696
     Gain on investments                   (8,074)             (18,516)
     Changes in operating assets and
     liabilities:
        Accounts receivable                14,713              13,113
        Prepaid expenses and other, net    (1,589)             1,416
        Accrued expenses and other         9,429               2,511
        long-term liabilities
        Deferred revenue                   4,121               (8,988)
          Net cash provided by continuing  70,822              137,716
          operations
          Net cash provided by (used in)   4,324               (440)
          discontinued operations
          Net cash provided by operating   75,146              137,276
          activities
Cash flows from investing activities:
 Proceeds received from ARS option         9,269               21,566
 Purchases of property and equipment       (35,171)            (20,911)
          Net cash (used in) provided by   (25,902)            655
          investing activities
Cash flows from financing activities:
 Proceeds from exercise of stock options   827                 28,339
 Cash used for withholding taxes due on    (2,740)             (9,234)
 stock-based awards
 Net proceeds from issuance of the 2.50%   -                   774,745
 Notes and 2.25% Notes
 Purchases of treasury stock              (177,090)           (241,263)
 Excess tax benefit on stock-based awards  377                 30,198
          Net cash (used in) provided by   (178,626)           582,785
          financing activities
Net (decrease) increase in cash and cash   (129,382)           720,716
equivalents
Cash and cash equivalents at beginning of  1,121,217           400,501
period
Cash and cash equivalents at end of        $     991,835   $  1,121,217
period



WebMD Health Corp.
Financial Guidance for the Year Ending December 31, 2013
(in millions, except per share amounts)
                                                  Guidance Range
Revenue                                           $   430.0      $  
                                                                   455.0
Earnings before interest, taxes,
non-cash
 and other items ("Adjusted                      $    60.0     $   
EBITDA") (a)                                                       80.0
Interest, taxes, non-cash and
other items (b)
Interest expense, net                             (23.0)           (23.0)
Depreciation and amortization                     (30.0)           (28.0)
Non-cash stock-based compensation                 (38.0)           (34.0)
Pre-tax loss from continuing                      (31.0)           (5.0)
operations
Income tax benefit (provision)                    8.7              (1.5)
Loss from continuing operations                   $   (22.3)     $    
                                                                   (6.5)
Loss from continuing operations
per share:
 Basic and Diluted                              $   (0.45)     $   
                                                                   (0.13)
Weighted-average shares
outstanding used in computing per
share amounts:
 Basic and Diluted                              50.0             50.0
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to loss from continuing
operations
Additional information regarding forecast for the quarter ending March 31,
2013:
 - Revenue is forecasted
to be in excess of $105 million.
 - Adjusted EBITDA as a percentage of revenue is forecasted to be in
excess of 13%.
 - Loss from continuing operations as a percentage of revenue is
forecasted to be approximately (6%).
Additional information regarding
full year forecast:
 - The distribution of the annual revenue is expected to be
approximately 82% public portals advertising and

sponsorshipand18% private portal licensing. Quarterly revenue
distributions may vary from this annual

estimate.
 - Convertible Notes are not expected to be dilutive for the full year
or any quarter.
The above guidance does not include the impact, if any, of future deployment
of capital for items such as share repurchases or acquisitions,gains or
losses from discontinued operations,or other non-recurring, one-time or
unusual items.

ANNEX A

Explanation of Non-GAAP Financial Measures

The accompanying WebMD Health Corp. press release and attachments include both
financial measures in accordance with U.S. generally accepted accounting
principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP
financial measures represent earnings before interest, taxes, non-cash and
other items (which we refer to as "Adjusted EBITDA") and related per share
amounts. Adjusted EBITDA should be viewed as supplemental to, and not as an
alternative for: income or loss from continuing operations calculated in
accordance with GAAP (referred to below as "income from continuing
operations"); or net income or loss calculated in accordance with GAAP
(referred to below as "net income"). The attachments to the press release
include reconciliations of non-GAAP financial measures to GAAP financial
measures.

Adjusted EBITDA is used by our management as an additional measure of our
company's performance for purposes of business decision-making, including
developing budgets, managing expenditures, and evaluating potential
acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA
help our management identify additional trends in our company's financial
results that may not be shown solely by period-to-period comparisons of income
from continuing operations or net income. In addition, we may use Adjusted
EBITDA in the incentive compensation programs applicable to some of our
employees in order to evaluate our company's performance. Our management
recognizes that Adjusted EBITDA has inherent limitations because of the
excluded items, particularly those items that are recurring in nature. In
order to compensate for those limitations, management also reviews the
specific items that are excluded from Adjusted EBITDA, but included in income
from continuing operations or net income, as well as trends in those items.
The amounts of those items are set forth, for the applicable periods, in the
reconciliations of Adjusted EBITDA to income from continuing operations or to
net income that accompany our press releases and disclosure documents
containing non-GAAP financial measures, including the reconciliations
contained in the accompanying press release attachments.

We believe that the presentation of Adjusted EBITDA is useful to investors in
their analysis of our results for reasons similar to the reasons why our
management finds it useful and because it helps facilitate investor
understanding of decisions made by management in light of the performance
metrics used in making those decisions. In addition, as more fully described
below, we believe that providing Adjusted EBITDA, together with a
reconciliation of Adjusted EBITDA to income from continuing operations or to
net income, helps investors make comparisons between our company and other
companies that may have different capital structures, different effective
income tax rates and tax attributes, different capitalized asset values and/or
different forms of employee compensation. However, Adjusted EBITDA is
intended to provide a supplemental way of comparing our company with other
public companies and is not intended as a substitute for comparisons based on
income from continuing operations or net income. In making any comparisons to
other companies, investors need to be aware that companies use different
non-GAAP measures to evaluate their financial performance. Investors should
pay close attention to the specific definition being used and to the
reconciliation between such measures and the corresponding GAAP measures
provided by each company under applicable SEC rules.

The following is an explanation of the items excluded by us from Adjusted
EBITDA but included in income from continuing operations and net income:

  oDepreciation and Amortization. Depreciation and amortization expense is a
    non-cash expense relating to capital expenditures and intangible assets
    arising from acquisitions that are expensed on a straight-line basis over
    the estimated useful life of the related assets. We exclude depreciation
    and amortization expense from Adjusted EBITDA because we believe that (i)
    the amount of such expenses in any specific period may not directly
    correlate to the underlying performance of our business operations and
    (ii) such expenses can vary significantly between periods as a result of
    new acquisitions and full amortization of previously acquired tangible and
    intangible assets. Accordingly, we believe that this exclusion assists
    management and investors in making period-to-period comparisons of
    operating performance. Investors should note that the use of tangible and
    intangible assets contributed to revenue in the periods presented and will
    contribute to future revenue generation and should also note that such
    expense will recur in future periods.

  oStock-Based Compensation Expense. Stock-based compensation expense is a
    non-cash expense arising from the grant of stock-based awards to
    employees. We believe that excluding the effect of stock-based
    compensation from Adjusted EBITDA assists management and investors in
    making period-to-period comparisons in our company's operating performance
    because (i)the amount of such expenses in any specific period may not
    directly correlate to the underlying performance of our business
    operations and (ii)such expenses can vary significantly between periods
    as a result of the timing of grants of new stock-based awards, including
    grants in connection with acquisitions. Additionally, we believe that
    excluding stock-based compensation from Adjusted EBITDA assists management
    and investors in making meaningful comparisons between our company's
    operating performance and the operating performance of other companies
    that may use different forms of employee compensation or different
    valuation methodologies for their stock-based compensation. Investors
    should note that stock-based compensation is a key incentive offered to
    employees whose efforts contributed to the operating results in the
    periods presented and are expected to contribute to operating results in
    future periods. Investors should also note that such expenses will recur
    in the future. Stock-based compensation expenses included in the
    Consolidated Statements of Operations are summarized as follows:

                                    Three Months Ended  Year Ended
                                    December 31,        December 31,
                                    2012        2011    2012        2011
Non-cash stock-based compensation
included in:
  Cost of operations                $          $      $  8,160  $  7,707
                                    1,484      2,030
  Sales and marketing               $          $      $  8,201  $  9,079
                                    1,804      2,214
  General and administrative        $          $      $ 28,560   $ 22,951
                                    5,740      6,524

  oInterest Income and Expense. Interest income is associated with the level
    of marketable debt securities and other interest bearing accounts in which
    we invest, and interest expense is related to our company's capital
    structure (including non-cash interest expense relating to our convertible
    notes). Interest income and expense varies over time due to a variety of
    financing transactions and due to acquisitions and divestitures that we
    have entered into or may enter into in the future. We have, in the past,
    issued convertible debentures, repurchased shares in cash tender offers
    and repurchased shares and convertible debentures through other repurchase
    transactions, and completed the divestiture of certain businesses. We
    exclude interest income and interest expense from Adjusted EBITDA (i)
    because these items are not directly attributable to the performance of
    our business operations and, accordingly, their exclusion assists
    management and investors in making period-to-period comparisons of
    operating performance and (ii) to assist management and investors in
    making comparisons to companies with different capital structures.
    Investors should note that interest income and expense will recur in
    future periods. The following provides detail regarding the components of
    interest expense of our convertible notes:

                          Three Months Ended          Year Ended
                          December 31,                December 31,
                          2012           2011         2012        2011
Non-cash interest expense
 2.50% Convertible Notes  $     452  $    452  $  1,807  $  1,757
 2.25% Convertible Notes  $     630  $    604  $  2,519  $  2,001


Cash interest expense
 2.50% Convertible Notes  $   2,500    $  2,500    $ 10,000   $  9,722
 2.25% Convertible Notes  $   2,250    $  2,250    $  9,000  $  7,150

  oIncome Tax Provision (Benefit). We maintain a valuation allowance on a
    portion of our net deferred tax assets (including our net operating loss
    carryforwards), the amount of which may change from quarter to quarter
    based on factors that are not directly related to our results for the
    quarter. The valuation allowance is either adjusted through the statement
    of operations or additional paid-in capital. The timing of such
    adjustments has not been consistent and as a result, our income tax
    expense can fluctuate significantly from period to period in a manner not
    directly related to our operating performance. We exclude the income tax
    provision (benefit) from Adjusted EBITDA (i) because we believe that the
    income tax provision (benefit) is not directly attributable to the
    underlying performance of our business operations and, accordingly, its
    exclusion assists management and investors in making period-to-period
    comparisons of operating performance and (ii)to assist management and
    investors in making comparisons to companies with different tax
    attributes. Investors should note that income tax provision (benefit)
    will recur in future periods.

  oOther Items. We engage in other activities and transactions that can
    impact our income from continuing operations and net income. In recent
    periods, these other items have included, but were not limited to, (i)
    legal expenses relating to the Department of Justice investigation, (ii) a
    reduction of certain sales and use tax contingencies resulting from the
    expiration of certain applicable statutes of limitations, (iii) gain or
    loss on investments, (iv) legal fees and other expenses incurred in
    connection with the process conducted by our Board of Directors to explore
    strategic alternatives for our company; and (v) a restructuring charge.
    We exclude these other items from Adjusted EBITDA because we believe these
    activities or transactions are not directly attributable to the
    performance of our business operations and, accordingly, their exclusion
    assists management and investors in making period-to-period comparisons of
    operating performance. Investors should note that some of these other
    items may recur in future periods.

SOURCE WebMD Health Corp.

Website: http://www.wbmd.com
Contact: Investors - Risa Fisher, rfisher@webmd.net, +1-212-624-3817; Media -
Kate Hahn, khahn@webmd.net, +1-212-624-3760
 
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