Exhibit 99.2
WebMD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| Revenue | $ | 299,615 | $ | 250,635 | $ | 852,710 | $ | 705,584 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of operations | 168,571 | 149,270 | 495,174 | 410,556 | ||||||||||||
| Development and engineering | 14,392 | 11,334 | 38,479 | 32,654 | ||||||||||||
| Sales, marketing, general and administrative | 84,762 | 72,450 | 245,054 | 209,917 | ||||||||||||
| Depreciation, amortization and other | 15,189 | 11,097 | 40,922 | 52,961 | ||||||||||||
| Legal expense | 2,325 | 493 | 6,577 | 493 | ||||||||||||
| Restructuring and integration charge | 4,535 | — | 4,535 | — | ||||||||||||
| Interest income | 4,512 | 6,401 | 14,506 | 16,434 | ||||||||||||
| Interest expense | 4,843 | 4,703 | 14,429 | 10,444 | ||||||||||||
| Other income, net | 94 | 3,039 | 578 | 4,340 | ||||||||||||
| Income from continuing operations before income tax provision | 9,604 | 10,728 | 22,624 | 9,333 | ||||||||||||
| Income tax provision | 1,435 | 1,273 | 2,979 | 3,261 | ||||||||||||
| Income from continuing operations | 8,169 | 9,455 | 19,645 | 6,072 | ||||||||||||
| Loss from discontinued operations, net of income taxes | — | 3,366 | — | 33,611 | ||||||||||||
| Net income (loss) | $ | 8,169 | $ | 6,089 | $ | 19,645 | $ | (27,539 | ) | |||||||
| Basic income (loss) per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.03 | $ | 0.03 | $ | 0.06 | $ | 0.02 | ||||||||
| Loss from discontinued operations | — | (0.01 | ) | — | (0.11 | ) | ||||||||||
| Net income (loss) | $ | 0.03 | $ | 0.02 | $ | 0.06 | $ | (0.09 | ) | |||||||
| Diluted income (loss) per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.02 | $ | 0.03 | $ | 0.06 | $ | 0.02 | ||||||||
| Loss from discontinued operations | — | (0.01 | ) | — | (0.10 | ) | ||||||||||
| Net income (loss) | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | (0.08 | ) | |||||||
| Weighted-average shares outstanding used in computing income (loss) per common share: | ||||||||||||||||
| Basic | 312,366 | 305,471 | 311,379 | 304,121 | ||||||||||||
| Diluted | 333,978 | 328,463 | 333,048 | 326,396 | ||||||||||||
WebMD CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| Revenues | ||||||||||||||||
| Transaction services | $ | 174,643 | $ | 131,977 | $ | 504,459 | $ | 365,491 | ||||||||
| Physician services | 76,924 | 75,487 | 219,703 | 224,295 | ||||||||||||
| Portal services | 37,017 | 31,164 | 95,178 | 79,882 | ||||||||||||
| Plastic technologies | 19,385 | 19,093 | 58,543 | 55,015 | ||||||||||||
| Inter-segment eliminations | (8,354 | ) | (7,086 | ) | (25,173 | ) | (19,099 | ) | ||||||||
| $ | 299,615 | $ | 250,635 | $ | 852,710 | $ | 705,584 | |||||||||
| Income (loss) before restructuring, taxes, non-cash and other items | ||||||||||||||||
| Transaction services | $ | 31,750 | $ | 21,767 | $ | 90,514 | $ | 68,160 | ||||||||
| Physician services | 5,856 | 3,686 | 8,978 | 16,342 | ||||||||||||
| Portal services | 10,040 | 8,712 | 22,208 | 18,922 | ||||||||||||
| Plastic technologies | 5,823 | 5,690 | 17,140 | 15,857 | ||||||||||||
| Corporate | (15,170 | ) | (12,809 | ) | (42,703 | ) | (37,652 | ) | ||||||||
| Interest income | 4,512 | 6,401 | 14,506 | 16,434 | ||||||||||||
| Interest expense | (4,843 | ) | (4,703 | ) | (14,429 | ) | (10,444 | ) | ||||||||
| $ | 37,968 | $ | 28,744 | $ | 96,214 | $ | 87,619 | |||||||||
| Basic income per common share before restructuring, taxes, non-cash and other items (a) | $ | 0.12 | $ | 0.09 | $ | 0.31 | $ | 0.29 | ||||||||
| Diluted income per common share before restructuring, taxes, non-cash and other items (a) | $ | 0.11 | $ | 0.09 | $ | 0.29 | $ | 0.27 | ||||||||
| Restructuring, taxes, non-cash and other items (b) | ||||||||||||||||
| Depreciation, amortization and other | $ | (15,189 | ) | $ | (11,097 | ) | $ | (40,922 | ) | $ | (52,961 | ) | ||||
| Amortization of prepaid content and services (included in cost of operations) | (104 | ) | (1,105 | ) | (705 | ) | (1,932 | ) | ||||||||
| Amortization of prepaid content and services (included in sales, marketing, general and administrative) | (3,505 | ) | (4,970 | ) | (14,188 | ) | (16,292 | ) | ||||||||
| Non-cash stock compensation (included in sales, marketing, general and administrative) | (2,800 | ) | (3,390 | ) | (7,241 | ) | (10,948 | ) | ||||||||
| Legal expense | (2,325 | ) | (493 | ) | (6,577 | ) | (493 | ) | ||||||||
| Restructuring and integration charge | (4,535 | ) | — | (4,535 | ) | — | ||||||||||
| Income tax provision | (1,435 | ) | (1,273 | ) | (2,979 | ) | (3,261 | ) | ||||||||
| Other income, net | 94 | 3,039 | 578 | 4,340 | ||||||||||||
| Income from continuing operations | 8,169 | 9,455 | 19,645 | 6,072 | ||||||||||||
| Loss from discontinued operations, net of income taxes | — | (3,366 | ) | — | (33,611 | ) | ||||||||||
| Net income (loss) | $ | 8,169 | $ | 6,089 | $ | 19,645 | $ | (27,539 | ) | |||||||
| Basic income (loss) per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.03 | $ | 0.03 | $ | 0.06 | $ | 0.02 | ||||||||
| Loss from discontinued operations | — | (0.01 | ) | — | (0.11 | ) | ||||||||||
| Net income (loss) | $ | 0.03 | $ | 0.02 | $ | 0.06 | $ | (0.09 | ) | |||||||
| Diluted income (loss) per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.02 | $ | 0.03 | $ | 0.06 | $ | 0.02 | ||||||||
| Loss from discontinued operations | — | (0.01 | ) | — | (0.10 | ) | ||||||||||
| Net income (loss) | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | (0.08 | ) | |||||||
| Weighted-average shares outstanding used in computing income (loss) per common share: | ||||||||||||||||
| Basic | 312,366 | 305,471 | 311,379 | 304,121 | ||||||||||||
| Diluted | 333,978 | 328,463 | 333,048 | 326,396 | ||||||||||||
| (a) | Basic and diluted income per common share before restructuring, 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. | |||
| (b) | Reconciliation of income before restructuring, taxes, non-cash and other items to income from continuing operations. | |||
WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| September 30, | December 31, | |||||||
| 2004 | 2003 | |||||||
| (Unaudited) | (Audited) | |||||||
Assets | ||||||||
| Cash and cash equivalents | $ | 108,204 | $ | 63,298 | ||||
| Short-term investments | 25,784 | 207,383 | ||||||
| Accounts receivable, net | 203,288 | 181,173 | ||||||
| Inventory | 12,579 | 12,158 | ||||||
| Current portion of prepaid content and distribution services | 16,221 | 18,116 | ||||||
| Other current assets | 24,978 | 25,973 | ||||||
| Total current assets | 391,054 | 508,101 | ||||||
| Marketable debt securities | 515,096 | 451,290 | ||||||
| Marketable equity securities | 3,373 | 4,744 | ||||||
| Property and equipment, net | 83,071 | 77,278 | ||||||
| Prepaid content and distribution services | 19,020 | 31,992 | ||||||
| Goodwill | 959,799 | 844,448 | ||||||
| Intangible assets, net | 270,426 | 184,130 | ||||||
| Other assets | 35,800 | 33,323 | ||||||
| $ | 2,277,639 | $ | 2,135,306 | |||||
Liabilities and Stockholders’ Equity | ||||||||
| Accounts payable | $ | 10,777 | $ | 10,390 | ||||
| Accrued expenses | 207,271 | 208,430 | ||||||
| Deferred revenue | 104,794 | 86,708 | ||||||
| Total current liabilities | 322,842 | 305,528 | ||||||
| Convertible subordinated notes | 649,999 | 649,999 | ||||||
| Other long-term liabilities | 974 | 1,182 | ||||||
| Convertible redeemable exchangeable preferred stock | 98,240 | — | ||||||
| Stockholders’ equity | 1,205,584 | 1,178,597 | ||||||
| $ | 2,277,639 | $ | 2,135,306 | |||||
WebMD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2004 | 2003 | |||||||
Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 19,645 | $ | (27,539 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Loss from discontinued operations | — | 33,611 | ||||||
| Depreciation, amortization and other | 40,922 | 52,961 | ||||||
| Amortization of debt issuance costs | 2,255 | 1,505 | ||||||
| Non-cash content and distribution services | 14,893 | 18,224 | ||||||
| Non-cash stock-based compensation | 7,241 | 10,948 | ||||||
| Gain on investments | (457 | ) | (3,222 | ) | ||||
| Gain on sale of property and equipment | (121 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (8,001 | ) | 3,580 | |||||
| Inventory | (417 | ) | (1,144 | ) | ||||
| Prepaid content and distribution services | (26 | ) | (537 | ) | ||||
| Accounts payable | (874 | ) | (775 | ) | ||||
| Accrued expenses | (8,189 | ) | (12,174 | ) | ||||
| Deferred revenue | 9,284 | (2,228 | ) | |||||
| Other, net | 3,045 | 5,685 | ||||||
| Net cash provided by continuing operations | 79,200 | 78,895 | ||||||
| Net cash provided by discontinued operations | — | 5,130 | ||||||
| Net cash provided by operating activities | 79,200 | 84,025 | ||||||
Cash flows from investing activities: | ||||||||
| Proceeds from maturities and sales of available-for-sale securities | 384,238 | 11,322 | ||||||
| Proceeds from maturities and redemptions of held-to-maturity securities | — | 157,919 | ||||||
| Purchases of available-for-sale securities | (274,600 | ) | (7,754 | ) | ||||
| Purchases of held-to-maturity securities | — | (590,113 | ) | |||||
| Purchases of property and equipment | (24,889 | ) | (13,643 | ) | ||||
| Proceeds received from sale of property and equipment | 417 | — | ||||||
| Proceeds received from sale of discontinued operations | — | 46,500 | ||||||
| Cash paid in business combinations, net of cash acquired | (225,375 | ) | (133,471 | ) | ||||
| Other changes in equity of discontinued operations | — | 1,754 | ||||||
| Net cash used in continuing operations | (140,209 | ) | (527,486 | ) | ||||
| Net cash used in discontinued operations | — | (2,529 | ) | |||||
| Net cash used in investing activities | (140,209 | ) | (530,015 | ) | ||||
Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | 30,528 | 35,367 | ||||||
| Net proceeds from issuance of preferred stock | 98,115 | — | ||||||
| Payments of notes payable and other | (433 | ) | (211 | ) | ||||
| Purchases of treasury shares | (22,267 | ) | (18,125 | ) | ||||
| Net proceeds from issuance of convertible debt | — | 339,125 | ||||||
| Net cash provided by continuing operations | 105,943 | 356,156 | ||||||
| Net cash used in discontinued operations | — | (6,546 | ) | |||||
| Net cash provided by financing activities | 105,943 | 349,610 | ||||||
| Effect of exchange rates on cash | (28 | ) | 711 | |||||
| Net increase (decrease) in cash and cash equivalents | 44,906 | (95,669 | ) | |||||
| Changes in cash attributable to discontinued operations | — | 3,945 | ||||||
| Cash and cash equivalents at beginning of period | 63,298 | 175,596 | ||||||
| Cash and cash equivalents at end of period | $ | 108,204 | $ | 83,872 | ||||