WebMD Announces Second Quarter Financial Results

               WebMD Announces Second Quarter Financial Results

PR Newswire

NEW YORK, July 31, 2013

NEW YORK, July 31, 2013 /PRNewswire/ -- WebMD Health Corp. (NASDAQ: WBMD), the
leading source of health information, today announced financial results for
the three months ended June 30, 2013.

"We are pleased to report strong second quarter results and reaffirm our
increased revenue and earnings expectations for the balance of 2013," said
David J. Schlanger, Interim CEO, WebMD. "WebMD's market leadership is
demonstrated by our ability to meet the demands of consumers and physicians
with health information and tools tailored to their specific interests at the
right time on the right screen through our websites, mobile optimized sites
and apps."

Financial Highlights
For the three months ended June 30, 2013:

  oRevenue was $125.3 million, compared to $112.7 million in the prior year
    period, an increase of 11%. Public portal advertising and sponsorship
    revenue was $105.8 million, compared to $93.7 million in the prior year
    period. Private portal services revenue was $19.5 million, compared to
    $18.9 million in the prior year period.
  oEarnings before interest, taxes, non-cash and other items ("Adjusted
    EBITDA") increased 105% to $29.2 million, or 23.3% of revenue, compared to
    $14.2 million, or 12.6% of revenue, in the prior year period.
  oNet income was $2.6 million, or $0.05 per diluted share, compared to a net
    loss of $(5.6) million, or $(0.11) per diluted share, in the prior year
    period.

These results are consistent with the preliminary release issued by the
Company on July 12, 2013.

Balance Sheet Highlights
As of June 30, 2013, WebMD had approximately $1 billion in cash and cash
equivalents and $800 million in aggregate principal amount of convertible
notes outstanding.

Traffic Highlights
Traffic to the WebMD Health Network during the second quarter reached an
average of 125.5 million unique users per month and total traffic of 2.64
billion page views for the quarter, increases of 17% and 6%, respectively,
from the prior year period.

Increased 2013 Financial Guidance Reaffirmed
WebMD reaffirmed its 2013 financial guidance which it increased on July 12,
2013 in conjunction with the announcement of its preliminary second quarter
financial results.

David J. Schlanger said, "We are continuing to see momentum in our public
portals advertising business, particularly with our biopharmaceutical
customers. We are well positioned to take advantage of the opportunities ahead
of us."

The Company's reaffirmed financial guidance is summarized as follows:

WebMD expects the following for 2013:

  oRevenue of $485 million to $505 million, an increase of 3% to 7% from the
    prior year.
  oAdjusted EBITDA of $100 million to $110 million, an increase of 37% to 50%
    from the prior year.
  oNet income of $3 million to $11 million. Net loss in the prior year was
    $(20.3) million.

WebMD expects 2013 revenue distribution to be:

  oApproximately 83% from public portals advertising and sponsorship,
    representing growth of approximately 3% to 7% over the prior year, and
  oApproximately 17% from private portal licensing, representing growth of
    approximately 5% to 9% over the prior year.

WebMD's reaffirmed guidance reflects: (a) actual results for the first half of
2013; (b) visibility for the second half of 2013 based upon several factors,
including orders received to date and those expected over the balance of the
year; and (c) anticipated expenses relating to new private portal customer
implementations as well as public portal initiatives such as enhanced data and
analytics and new content and enhanced offerings for both users and
advertisers.

For the third quarter of 2013, WebMD expects:

  oRevenue to be in excess of $128 million;
  oAdjusted EBITDA to be in excess of 22% of revenue; and
  oNet income to be approximately 3% of revenue.

A schedule summarizing the Company's current financial guidance is attached to
this press release.

Termination of Stockholder Rights Plan
The Board of Directors has approved the termination of WebMD's Stockholder
Rights Plan. The Board believes the Rights Plan, which was first adopted in
November 2011, has served its purpose during what was a challenging period for
the Company and has determined that it is not necessary to continue the Rights
Plan at this time. The termination of the Rights Plan is expected to be
completed within the next week. WebMD's Board of Directors may, in the
future, adopt a new rights agreement or comparable plan if, in the exercise of
its fiduciary duties, it determines that such adoption is in the best
interests of WebMD and its stockholders.

Analyst and Investor Conference Call
WebMD will hold a conference call with investors and analysts to discuss its
second quarter 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 expected contracts with customers, 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 and this press release is intended
to be read in conjunction with those 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®, CME Circle®, Medpulse®, eMedicine®, MedicineNet®,
theheart.org® and RxList® are among the 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       Six Months Ended
                              June 30,                 June 30,
                              2013         2012        2013       2012
Revenue                       $         $       $       $   
                              125,317      112,668     238,079    219,615
Cost of operations            51,596       54,243      98,539     107,714
Sales and marketing           31,422       31,822      62,355     61,925
General and administrative    24,282       21,746      47,816     50,768
Depreciation and              6,635        6,713       13,488     13,643
amortization
Interest income               17           34          38         45
Interest expense              5,832        5,832       11,664     11,668
Gain on investments           -            -           -          8,074
Other expense                 1,353        1,097       1,353      2,297
Income (loss) from continuing
operations before income
  tax provision (benefit)     4,214        (8,751)     2,902      (20,281)
  Income tax provision        1,603        (2,649)     1,829      (6,402)
  (benefit)
Income (loss) from            2,611        (6,102)     1,073      (13,879)
continuing operations
  Income from discontinued    -            508         -          508
  operations, net of tax
Net income (loss)             $       $       $      $   
                              2,611         (5,594)    1,073    (13,371)
Basic income (loss) per
common share:
  Income (loss) from          $       $       $      $     
  continuing operations        0.05         (0.12)    0.02   (0.26)
  Income from discontinued    -            0.01        -          0.01
  operations
Net income (loss)             $       $       $      $     
                               0.05         (0.11)    0.02   (0.25)
Diluted income (loss) per
common share:
  Income (loss) from          $       $       $      $     
  continuing operations        0.05         (0.12)    0.02   (0.26)
  Income from discontinued    -            0.01        -          0.01
  operations
Net income (loss)             $       $       $      $     
                               0.05         (0.11)    0.02   (0.25)
Weighted-average shares
outstanding used in
  computing income (loss)
  per common share:
  Basic                       49,315       49,615      49,161     52,692
  Diluted                     50,925       49,615      50,175     52,692





WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
                                    Three Months Ended   Six Months Ended
                                    June 30,             June 30,
                                    2013       2012      2013       2012
Revenue
    Public portal advertising and   $        $      $        $  
    sponsorship                     105,783   93,744   199,221   181,520
    Private portal services         19,534     18,924    38,858     38,095
                                    $        $       $        $  
                                    125,317   112,668  238,079   219,615
Earnings before interest, taxes,
non-cash
    and other items ("Adjusted     $       $      $       $   
    EBITDA") (a)                    29,241    14,238   50,530    25,489
Interest, taxes, non-cash and
other items (b)
    Interest income                 17         34        38         45
    Interest expense                (5,832)    (5,832)   (11,664)   (11,668)
    Income tax (provision) benefit  (1,603)    2,649     (1,829)    6,402
    Depreciation and amortization  (6,635)    (6,713)   (13,488)   (13,643)
    Non-cash stock-based            (11,224)   (9,381)   (21,161)   (26,281)
    compensation
    Gain on investments             -          -         -          8,074
    Other expense                   (1,353)    (1,097)   (1,353)    (2,297)
Income (loss) from continuing       2,611      (6,102)   1,073      (13,879)
operations
    Income from discontinued       -          508       -          508
    operations, net of tax
Net income (loss)                 $      $      $      $  
                                    2,611     (5,594)  1,073     (13,371)
(a) See Annex A-Explanation of Non-GAAP Financial Measures.
(b) Reconciliation of Adjusted EBITDA to net income (loss).





WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                 June 30, 2013        December 31, 2012
                                 (unaudited)
Assets
Cash and cash equivalents        $              $           
                                 1,026,139           991,835
Accounts receivable, net         103,793              106,622
Prepaid expenses and other       17,520               13,882
current assets
Deferred tax assets              10,232               10,328
 Total current assets     1,157,684            1,122,667
Property and equipment, net     61,223               66,604
Goodwill                         202,104              202,104
Intangible assets, net           14,970               16,105
Deferred tax assets              52,711               56,039
Other assets                     24,182               27,106
Total Assets                     $              $         
                                 1,512,874           1,490,625
Liabilities and Stockholders'
Equity
Accrued expenses                 $           $           
                                 53,338                64,256
Deferred revenue                 98,325               92,176
Liabilities of discontinued      1,506                1,506
operations
 Total current liabilities  153,169              157,938
2.25% convertible notes due      400,000              400,000
2016
2.50% convertible notes due      400,000              400,000
2018
Other long-term liabilities      22,498               22,698
Stockholders' equity             537,207              509,989
Total Liabilities and            $              $         
Stockholders' Equity             1,512,874           1,490,625





WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                                          Six Months Ended
                                          June 30,
                                          2013                 2012
Cash flows from operating activities:
 Net income (loss)                        $       1,073  $   (13,371)
 Adjustments to reconcile net income
 (loss) to net cash provided by
  operating activities:
    Income from discontinued operations,  -                    (508)
    net of tax
    Depreciation and amortization         13,488               13,643
    Non-cash interest, net                2,163                2,163
    Non-cash stock-based compensation     21,161               26,281
    Deferred income taxes                 856                  (6,870)
    Gain on investments                   -                    (8,074)
    Changes in operating assets and
    liabilities:
       Accounts receivable                2,829                24,501
       Prepaid expenses and other, net    (3,060)              (4,469)
       Accrued expenses and other         (10,665)             (9,128)
       long-term liabilities
       Deferred revenue                   6,149                1,230
           Net cash provided by           33,994               25,398
           operating activities
Cash flows from investing activities:
 Proceeds received from ARS option        -                    9,269
 Purchases of property and equipment      (7,367)              (16,606)
           Net cash used in investing     (7,367)              (7,337)
           activities
Cash flows from financing activities:
 Proceeds from exercise of stock options  10,340               816
 Cash used for withholding taxes due on   (1,745)              (1,958)
 stock-based awards
 Purchases of treasury stock             (1,281)              (173,910)
 Excess tax benefit on stock-based        363                  -
 awards
           Net cash provided by (used     7,677                (175,052)
           in) financing activities
Net increase (decrease) in cash and cash  34,304               (156,991)
equivalents
Cash and cash equivalents at beginning    991,835              1,121,217
of period
Cash and cash equivalents at end of       $   1,026,139     $   964,226
period





WebMD Health Corp.
Financial Guidance for the Year Ending December 31, 2013
(In millions, except per share amounts)
                                            Guidance Range
Revenue                                     $ 485.0             $ 505.0
Earnings before interest, taxes,
non-cash
and other items ("Adjusted EBITDA")         $ 100.0             $ 110.0
(a)
Interest, taxes, non-cash and other
items (b)
Interest expense, net                       (23.0)              (23.0)
Depreciation and amortization               (28.0)              (27.0)
Non-cash stock-based compensation           (39.0)              (37.0)
Other expense (c)                           (1.4)               (1.4)
Pre-tax income                              8.6                 21.6
Income tax provision                        (5.6)               (10.6)
Net income                                  $ 3.0               $ 11.0
Net income per share:
Basic                                       $ 0.06              $ 0.22
Diluted                                     $ 0.06              $ 0.21
Weighted-average shares outstanding
used in computing per share amounts:
Basic                                       50.0                50.0
Diluted                                     52.0                52.0
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to Net Income
(c) Represents severance expense for the Company's former Chief Executive
Officer
Additional information regarding forecast for the quarter ending September 30,
2013:
- Revenue is forecasted to be in excess of$128 million
- Adjusted EBITDA as a percentage of revenue is forecasted to be in excess of
22%
- Net income as a percentage of revenue is forecasted to be approximately 3%
Additional information regarding full year forecast:
- The distribution of the annual revenue is expected to be approximately 83%
public portals advertising and sponsorship and 17% 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 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 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 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 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 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 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 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 Statement of Operations are summarized as follows:



                                    Three Months Ended   Six Months Ended
                                    June 30,             June 30,
                                    2013      2012       2013       2012
Non-cash stock-based compensation
included in:
   Cost of operations               $        $         $  3,341 $  4,630
                                    1,471    1,873
   Sales and marketing              $        $         $  4,520 $  4,465
                                    1,997    2,304
   General and administrative       $        $         $ 13,300  $ 17,186
                                    7,756    5,204



  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         Six Months Ended
                          June 30,                   June 30,
                          2013          2012         2013        2012
Non-cash interest expense
 2.50% Convertible Notes  $     452 $    452  $    904 $    904
 2.25% Convertible Notes  $     629 $    629  $  1,259  $  1,259


Cash interest expense
 2.50% Convertible Notes  $   2,500   $  2,500    $  5,000  $  5,000
 2.25% Convertible Notes  $   2,250   $  2,250    $  4,500  $  4,500



  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 net income. In recent periods, these other items have included,
    but were not limited to: (i) gain or loss on investments; (ii) a
    restructuring charge; and (iii) severance expense. 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, 212-624-3817, rfisher@webmd.net, Kate Hahn,
212-624-3760, khahn@webmd.net
 
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