EXHIBIT 99.2
WebMD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2004 | 2003 | |||||||
| Revenue | $ | 271,214 | $ | 221,531 | ||||
| Costs and expenses: | ||||||||
| Cost of operations | 162,642 | 125,845 | ||||||
| Development and engineering | 11,096 | 10,917 | ||||||
| Sales, marketing, general and administrative | 76,994 | 68,108 | ||||||
| Depreciation, amortization and other | 12,585 | 26,920 | ||||||
| Legal expense | 2,037 | — | ||||||
| Interest income | 5,483 | 5,048 | ||||||
| Interest expense | 4,748 | 2,815 | ||||||
| Other income, net | 37 | 183 | ||||||
| Income (loss) from continuing operations before income tax provision | 6,632 | (7,843 | ) | |||||
| Income tax provision | 931 | 987 | ||||||
| Income (loss) from continuing operations | 5,701 | (8,830 | ) | |||||
| Income from discontinued operations, net of income taxes | — | 1,472 | ||||||
| Net income (loss) | $ | 5,701 | $ | (7,358 | ) | |||
| Basic income (loss) per common share: | ||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.03 | ) | |||
| Income from discontinued operations | — | 0.01 | ||||||
| Net income (loss) | $ | 0.02 | $ | (0.02 | ) | |||
| Diluted income (loss) per common share: | ||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.03 | ) | |||
| Income from discontinued operations | — | 0.01 | ||||||
| Net income (loss) | $ | 0.02 | $ | (0.02 | ) | |||
| Weighted-average shares outstanding used in computing income (loss) per common share: | ||||||||
| Basic | 309,491 | 302,892 | ||||||
| Diluted | 327,402 | 302,892 | ||||||
WebMD CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2004 | 2003 | |||||||
| Revenues | ||||||||
| Transaction services | $ | 163,779 | $ | 115,493 | ||||
| Physician services | 71,006 | 72,011 | ||||||
| Portal services | 26,309 | 22,180 | ||||||
| Plastic technologies (a) | 18,421 | 17,326 | ||||||
| Inter-segment eliminations | (8,301 | ) | (5,479 | ) | ||||
| $ | 271,214 | $ | 221,531 | |||||
| Income (loss) before taxes, non-cash and other items | ||||||||
| Transaction services | $ | 29,850 | $ | 24,051 | ||||
| Physician services | 1,351 | 6,297 | ||||||
| Portal services | 4,542 | 4,018 | ||||||
| Plastic technologies (a) | 5,042 | 4,660 | ||||||
| Corporate | (13,305 | ) | (12,462 | ) | ||||
| Interest income | 5,483 | 5,048 | ||||||
| Interest expense | (4,748 | ) | (2,815 | ) | ||||
| $ | 28,215 | $ | 28,797 | |||||
| Basic income per common share before taxes, non-cash and other items (b) | $ | 0.09 | $ | 0.10 | ||||
| Diluted income per common share before taxes, non-cash and other items (b) | $ | 0.09 | $ | 0.10 | ||||
| Taxes, non-cash and other items (c) | ||||||||
| Depreciation, amortization and other | $ | (12,585 | ) | $ | (26,920 | ) | ||
| Amortization of prepaid content and services (included in cost of operations) | (255 | ) | — | |||||
| Amortization of prepaid content and services (included in sales, marketing, general and administrative) | (5,038 | ) | (6,146 | ) | ||||
| Non-cash stock compensation (included in sales, marketing, general and administrative) | (1,705 | ) | (3,757 | ) | ||||
| Legal expense | (2,037 | ) | — | |||||
| Income tax provision | (931 | ) | (987 | ) | ||||
| Other income, net | 37 | 183 | ||||||
| Income (loss) from continuing operations | 5,701 | (8,830 | ) | |||||
| Income from discontinued operations, net of income taxes | — | 1,472 | ||||||
| Net income (loss) | $ | 5,701 | $ | (7,358 | ) | |||
| Basic income (loss) per common share: | ||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.03 | ) | |||
| Income from discontinued operations | — | 0.01 | ||||||
| Net income (loss) | $ | 0.02 | $ | (0.02 | ) | |||
| Diluted income (loss) per common share: | ||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.03 | ) | |||
| Income from discontinued operations | — | 0.01 | ||||||
| Net income (loss) | $ | 0.02 | $ | (0.02 | ) | |||
| Weighted-average shares outstanding used in computing income (loss) per common share: | ||||||||
| Basic | 309,491 | 302,892 | ||||||
| Diluted | 327,402 | 302,892 | ||||||
| (a) | Effective August 1, 2003, the Company completed the sale of two operating units of its Plastic Technologies segment, Porex Bio Products, Inc. and Porex Medical Products, Inc., in two separate transactions. Beginning in the quarter ended September 30, 2003, the Company’s consolidated financial statements reflect these operating units as discontinued operations for all prior periods. The above segment information reflects these operating units as discontinued operations for the prior period. | |
| (b) | Basic and diluted income per common share before taxes, non-cash and other items is based on the weighted-average shares outstanding used in computing basic and diluted income (loss) per common share. | |
| (c) | Reconciliation of income (loss) before taxes, non-cash and other items to income (loss) from continuing operations. |
WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, | December 31, | |||||||
| 2004 | 2003 | |||||||
| (Unaudited) | (Audited) | |||||||
Assets | ||||||||
| Cash and cash equivalents | $ | 442,518 | $ | 63,298 | ||||
| Short-term investments | 2,637 | 207,383 | ||||||
| Accounts receivable, net | 182,479 | 181,173 | ||||||
| Inventory | 11,957 | 12,158 | ||||||
| Current portion of prepaid content and distribution services | 16,342 | 18,116 | ||||||
| Other current assets | 21,863 | 25,973 | ||||||
| Total current assets | 677,796 | 508,101 | ||||||
| Marketable debt securities | 401,234 | 451,290 | ||||||
| Marketable equity securities | 4,051 | 4,744 | ||||||
| Property and equipment, net | 76,318 | 77,278 | ||||||
| Prepaid content and distribution services | 28,155 | 31,992 | ||||||
| Goodwill | 844,501 | 844,448 | ||||||
| Intangible assets, net | 178,201 | 184,130 | ||||||
| Other assets | 33,140 | 33,323 | ||||||
| $ | 2,243,396 | $ | 2,135,306 | |||||
Liabilities and Stockholders’ Equity | ||||||||
| Accounts payable | $ | 8,843 | $ | 10,390 | ||||
| Accrued expenses | 205,282 | 208,430 | ||||||
| Deferred revenue | 89,878 | 86,708 | ||||||
| Total current liabilities | 304,003 | 305,528 | ||||||
| Convertible subordinated notes | 649,999 | 649,999 | ||||||
| Other long-term liabilities | 1,056 | 1,182 | ||||||
| Convertible redeemable exchangeable preferred stock | 98,123 | — | ||||||
| Stockholders’ equity | 1,190,215 | 1,178,597 | ||||||
| $ | 2,243,396 | $ | 2,135,306 | |||||
WebMD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2004 | 2003 | |||||||
Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 5,701 | $ | (7,358 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Income from discontinued operations | — | (1,472 | ) | |||||
| Depreciation, amortization and other | 12,585 | 26,920 | ||||||
| Amortization of debt issuance costs | 746 | 375 | ||||||
| Non-cash content and distribution services | 5,293 | 6,146 | ||||||
| Non-cash stock-based compensation | 1,705 | 3,757 | ||||||
| Loss (gain) on investments | 84 | (183 | ) | |||||
| Gain on sale of property and equipment | (121 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,306 | ) | (5,781 | ) | ||||
| Inventory | 201 | 6 | ||||||
| Prepaid content and distribution services | 318 | (191 | ) | |||||
| Accounts payable | (1,548 | ) | (134 | ) | ||||
| Accrued expenses | (3,177 | ) | (4,399 | ) | ||||
| Deferred revenue | 3,155 | 4,112 | ||||||
| Other, net | 6,020 | 9,653 | ||||||
| Net cash provided by continuing operations | 29,656 | 31,451 | ||||||
| Net cash provided by discontinued operations | — | 2,499 | ||||||
| Net cash provided by operating activities | 29,656 | 33,950 | ||||||
Cash flows from investing activities: | ||||||||
| Proceeds from maturities and sales of available-for-sale securities | 276,551 | 801 | ||||||
| Proceeds from maturities and redemptions of held-to-maturity securities | — | 101,919 | ||||||
| Purchases of available-for-sale securities | (24,600 | ) | (1,164 | ) | ||||
| Purchases of held-to-maturity securities | — | (75,119 | ) | |||||
| Purchases of property and equipment | (6,568 | ) | (3,706 | ) | ||||
| Proceeds received from sale of property and equipment | 417 | — | ||||||
| Cash paid in business combinations, net of cash acquired | (70 | ) | (344 | ) | ||||
| Other changes in equity of discontinued operations | — | (3,347 | ) | |||||
| Net cash provided by continuing operations | 245,730 | 19,040 | ||||||
| Net cash provided by discontinued operations | — | 3,031 | ||||||
| Net cash provided by investing activities | 245,730 | 22,071 | ||||||
Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | 10,885 | 17,025 | ||||||
| Net proceeds from issuance of preferred shares | 98,115 | — | ||||||
| Payments of notes payable and other | (95 | ) | (15 | ) | ||||
| Purchases of treasury shares | (4,877 | ) | (93 | ) | ||||
| Net cash provided by continuing operations | 104,028 | 16,917 | ||||||
| Net cash used in discontinued operations | — | (4 | ) | |||||
| Net cash provided by financing activities | 104,028 | 16,913 | ||||||
| Effect of exchange rates on cash | (194 | ) | 177 | |||||
| Net increase in cash and cash equivalents | 379,220 | 73,111 | ||||||
| Changes in cash attributable to discontinued operations | — | (5,526 | ) | |||||
| Cash and cash equivalents at beginning of period | 63,298 | 175,596 | ||||||
| Cash and cash equivalents at end of period | $ | 442,518 | $ | 243,181 | ||||