.2
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenue |
$ | 154,058 | $ | 158,553 | ||||
| Cost of operations |
63,501 | 62,513 | ||||||
| Sales and marketing |
36,008 | 33,756 | ||||||
| General and administrative |
22,619 | 23,756 | ||||||
| Depreciation and amortization |
7,061 | 7,487 | ||||||
| Interest income |
1,953 | 206 | ||||||
| Interest expense |
7,066 | 5,100 | ||||||
| Other expense |
262 | — | ||||||
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| Income before income tax provision |
19,494 | 26,147 | ||||||
| Income tax provision |
7,161 | 10,429 | ||||||
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| Net income |
$ | 12,333 | $ | 15,718 | ||||
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| Net income per common share: |
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| Basic |
$ | 0.33 | $ | 0.42 | ||||
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| Diluted |
$ | 0.30 | $ | 0.36 | ||||
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| Weighted-average shares outstanding used in computing income per common share: |
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| Basic |
36,866 | 37,267 | ||||||
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| Diluted |
49,828 | 52,335 | ||||||
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WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenue |
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| Advertising and sponsorship |
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| Biopharma and medical device |
$ | 89,480 | $ | 88,685 | ||||
| OTC, CPG and other |
31,998 | 33,754 | ||||||
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| 121,478 | 122,439 | |||||||
| Health services |
24,539 | 28,255 | ||||||
| Information services |
8,041 | 7,859 | ||||||
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| $ | 154,058 | $ | 158,553 | |||||
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| Net income |
$ | 12,333 | $ | 15,718 | ||||
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| Interest, taxes, non-cash and other items (a) |
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| Interest income |
(1,953 | ) | (206 | ) | ||||
| Interest expense |
7,066 | 5,100 | ||||||
| Income tax provision |
7,161 | 10,429 | ||||||
| Depreciation and amortization |
7,061 | 7,487 | ||||||
| Non-cash stock-based compensation |
9,023 | 8,528 | ||||||
| Other expense |
262 | — | ||||||
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| Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (b) |
$ | 40,953 | $ | 47,056 | ||||
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| (a) | Reconciliation of net income to Adjusted EBITDA. |
| (b) | See Annex A-Explanation of Non-GAAP Financial Measures. |
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| Assets |
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| Cash and cash equivalents |
$ | 88,567 | $ | 492,424 | ||||
| Accounts receivable, net |
158,228 | 179,454 | ||||||
| Investments |
945,885 | 498,500 | ||||||
| Prepaid expenses and other current assets |
21,381 | 15,294 | ||||||
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| Total current assets |
1,214,061 | 1,185,672 | ||||||
| Property and equipment, net |
81,870 | 83,296 | ||||||
| Goodwill |
202,980 | 202,980 | ||||||
| Intangible assets, net |
7,124 | 7,774 | ||||||
| Deferred tax assets, net |
212,690 | 14,544 | ||||||
| Other assets |
7,382 | 6,920 | ||||||
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| Total Assets |
$ | 1,726,107 | $ | 1,501,186 | ||||
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| Liabilities and Stockholders’ Equity |
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| Accrued expenses |
$ | 56,082 | $ | 78,597 | ||||
| Deferred revenue |
123,411 | 105,310 | ||||||
| 2.50% convertible notes due 2018, net |
398,512 | — | ||||||
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| Total current liabilities |
578,005 | 183,907 | ||||||
| 2.50% convertible notes due 2018, net |
— | 398,066 | ||||||
| 1.50% convertible notes due 2020, net |
295,724 | 295,432 | ||||||
| 2.625% convertible notes due 2023, net |
351,531 | 351,190 | ||||||
| Other long-term liabilities |
28,067 | 28,731 | ||||||
| Stockholders’ equity |
472,780 | 243,860 | ||||||
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| Total Liabilities and Stockholders’ Equity |
$ | 1,726,107 | $ | 1,501,186 | ||||
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WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: |
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| Net income |
$ | 12,333 | $ | 15,718 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
7,061 | 7,487 | ||||||
| Non-cash interest, net |
1,079 | 897 | ||||||
| Non-cash stock-based compensation |
9,023 | 8,528 | ||||||
| Deferred income taxes |
6,621 | 9,074 | ||||||
| Changes in operating assets and liabilities: |
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| Accounts receivable |
21,226 | (3,070 | ) | |||||
| Prepaid expenses and other, net |
(7,850 | ) | 1,731 | |||||
| Accrued expenses and other long-term liabilities |
(22,722 | ) | (20,147 | ) | ||||
| Deferred revenue |
18,101 | 13,598 | ||||||
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| Net cash provided by operating activities |
44,872 | 33,816 | ||||||
| Cash flows from investing activities: |
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| Purchases of property and equipment |
(5,427 | ) | (9,229 | ) | ||||
| Purchases of investments |
(446,042 | ) | — | |||||
| Partial redemption of cost-method investment |
— | 526 | ||||||
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| Net cash used in investing activities |
(451,469 | ) | (8,703 | ) | ||||
| Cash flows from financing activities: |
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| Proceeds from exercise of stock options |
6,604 | 30,165 | ||||||
| Cash used for withholding taxes due on stock-based awards |
(3,864 | ) | (890 | ) | ||||
| Maturity of convertible notes |
— | (102,682 | ) | |||||
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| Net cash provided by (used in) financing activities |
2,740 | (73,407 | ) | |||||
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| Net decrease in cash and cash equivalents |
(403,857 | ) | (48,294 | ) | ||||
| Cash and cash equivalents at beginning of period |
492,424 | 641,165 | ||||||
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| Cash and cash equivalents at end of period |
$ | 88,567 | $ | 592,871 | ||||
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WEBMD HEALTH CORP.
NET INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Numerator: |
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| Net income – Basic |
$ | 12,333 | $ | 15,718 | ||||
| Interest expense on 1.50% convertible notes, net of tax |
878 | 878 | ||||||
| Interest expense on 2.50% convertible notes, net of tax |
1,827 | 1,827 | ||||||
| Interest expense on 2.25% convertible notes, net of tax |
— | 457 | ||||||
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| Net income – Diluted |
$ | 15,038 | $ | 18,880 | ||||
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| Denominator: |
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| Weighted-average shares – Basic |
36,866 | 37,267 | ||||||
| Stock options and restricted stock |
1,007 | 1,755 | ||||||
| 1.50% convertible notes |
5,721 | 5,694 | ||||||
| 2.50% convertible notes |
6,234 | 6,205 | ||||||
| 2.25% convertible notes |
— | 1,414 | ||||||
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| Adjusted weighted-average shares after assumed conversions – Diluted |
49,828 | 52,335 | ||||||
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| Net income per common share: |
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| Basic |
$ | 0.33 | $ | 0.42 | ||||
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| Diluted |
$ | 0.30 | $ | 0.36 | ||||
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