Exhibit 99.2
EMDEON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue : | ||||||||||||||||
Services | $ | 274,158 | $ | 237,198 | $ | 792,509 | $ | 690,615 | ||||||||
Products | 25,574 | 23,824 | 76,048 | 72,096 | ||||||||||||
Total revenue | 299,732 | 261,022 | 868,557 | 762,711 | ||||||||||||
Cost of operations : | ||||||||||||||||
Services | 158,967 | 142,484 | 472,951 | 414,533 | ||||||||||||
Products | 10,743 | 9,582 | 32,974 | 30,562 | ||||||||||||
Total cost of operations | 169,710 | 152,066 | 505,925 | 445,095 | ||||||||||||
Development and engineering | 9,243 | 8,912 | 27,164 | 26,595 | ||||||||||||
Sales, marketing, general and administrative | 74,050 | 63,865 | 216,263 | 189,292 | ||||||||||||
Depreciation and amortization | 18,189 | 15,801 | 51,964 | 44,826 | ||||||||||||
Legal expense | 1,023 | 5,904 | 1,840 | 14,347 | ||||||||||||
Advisory expense | 2,126 | — | 4,198 | — | ||||||||||||
Loss on investments | — | — | — | 3,642 | ||||||||||||
Loss on redemption of convertible debt | — | — | — | 1,902 | ||||||||||||
Interest income | 6,599 | 5,124 | 15,450 | 13,380 | ||||||||||||
Interest expense | 4,723 | 2,996 | 14,082 | 11,670 | ||||||||||||
Other expense | — | 1,863 | — | 1,863 | ||||||||||||
Income from continuing operations before income tax provision and minority interest | 27,267 | 14,739 | 62,571 | 36,859 | ||||||||||||
Income tax provision | 3,474 | 1,851 | 12,082 | 3,567 | ||||||||||||
Minority interest in WebMD Health Corp., net of tax | 140 | 38 | (653 | ) | 38 | |||||||||||
Income from continuing operations | 23,653 | 12,850 | 51,142 | 33,254 | ||||||||||||
Income from discontinued operations, net of tax | 358,048 | 1,257 | 370,171 | 6,868 | ||||||||||||
Net income | $ | 381,701 | $ | 14,107 | $ | 421,313 | $ | 40,122 | ||||||||
Basic income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.08 | $ | 0.04 | $ | 0.18 | $ | 0.10 | ||||||||
Income from discontinued operations | 1.25 | — | 1.29 | 0.02 | ||||||||||||
Net income | $ | 1.33 | $ | 0.04 | $ | 1.47 | $ | 0.12 | ||||||||
Diluted income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.08 | $ | 0.03 | $ | 0.17 | $ | 0.09 | ||||||||
Income from discontinued operations | 1.19 | 0.01 | 1.25 | 0.02 | ||||||||||||
Net income | $ | 1.27 | $ | 0.04 | $ | 1.42 | $ | 0.11 | ||||||||
Weighted-average shares outstanding used in computing income per common share: | ||||||||||||||||
Basic | 287,967 | 356,091 | 286,749 | 339,576 | ||||||||||||
Diluted | 300,012 | 370,313 | 297,409 | 351,875 | ||||||||||||
EMDEON CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data, unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue | ||||||||||||||||
Emdeon Business Services | $ | 187,266 | $ | 171,396 | $ | 557,974 | $ | 516,941 | ||||||||
WebMD | 66,645 | 45,094 | 173,308 | 119,134 | ||||||||||||
ViPS | 24,843 | 24,278 | 73,525 | 66,310 | ||||||||||||
Porex | 21,298 | 20,410 | 64,544 | 60,663 | ||||||||||||
Inter-segment eliminations | (320 | ) | (156 | ) | (794 | ) | (337 | ) | ||||||||
$ | 299,732 | $ | 261,022 | $ | 868,557 | $ | 762,711 | |||||||||
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) | ||||||||||||||||
Emdeon Business Services | $ | 44,547 | $ | 32,297 | $ | 127,519 | $ | 103,315 | ||||||||
WebMD | 14,633 | 9,077 | 30,759 | 15,100 | ||||||||||||
ViPS | 5,302 | 3,988 | 15,517 | 11,992 | ||||||||||||
Porex | 6,133 | 6,385 | 18,732 | 17,846 | ||||||||||||
Corporate | (11,000 | ) | (12,509 | ) | (33,633 | ) | (35,894 | ) | ||||||||
$ | 59,615 | $ | 39,238 | $ | 158,894 | $ | 112,359 | |||||||||
Adjusted EBITDA per diluted common share (a) | $ | 0.20 | $ | 0.11 | $ | 0.53 | $ | 0.32 | ||||||||
Interest, taxes, non-cash and other items (b) | ||||||||||||||||
Depreciation and amortization | $ | (18,189 | ) | $ | (15,801 | ) | $ | (51,964 | ) | $ | (44,826 | ) | ||||
Non-cash stock-based compensation | (11,226 | ) | (1,073 | ) | (35,235 | ) | (3,631 | ) | ||||||||
Non-cash advertising | (1,660 | ) | (1,986 | ) | (4,454 | ) | (6,999 | ) | ||||||||
Legal expense | (1,023 | ) | (5,904 | ) | (1,840 | ) | (14,347 | ) | ||||||||
Advisory expense | (2,126 | ) | — | (4,198 | ) | — | ||||||||||
Interest income | 6,599 | 5,124 | 15,450 | 13,380 | ||||||||||||
Interest expense | (4,723 | ) | (2,996 | ) | (14,082 | ) | (11,670 | ) | ||||||||
Income tax provision | (3,474 | ) | (1,851 | ) | (12,082 | ) | (3,567 | ) | ||||||||
Minority interest in WebMD Health Corp., net of tax | (140 | ) | (38 | ) | 653 | (38 | ) | |||||||||
Loss on investments | — | — | — | (3,642 | ) | |||||||||||
Loss on redemption of convertible debt | — | — | — | (1,902 | ) | |||||||||||
Other expense | — | (1,863 | ) | — | (1,863 | ) | ||||||||||
Income from continuing operations | 23,653 | 12,850 | 51,142 | 33,254 | ||||||||||||
Income from discontinued operations, net of tax | 358,048 | 1,257 | 370,171 | 6,868 | ||||||||||||
Net income | $ | 381,701 | $ | 14,107 | $ | 421,313 | $ | 40,122 | ||||||||
Basic income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.08 | $ | 0.04 | $ | 0.18 | $ | 0.10 | ||||||||
Income from discontinued operations | 1.25 | — | 1.29 | 0.02 | ||||||||||||
Net income | $ | 1.33 | $ | 0.04 | $ | 1.47 | $ | 0.12 | ||||||||
Diluted income per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.08 | $ | 0.03 | $ | 0.17 | $ | 0.09 | ||||||||
Income from discontinued operations | 1.19 | 0.01 | 1.25 | 0.02 | ||||||||||||
Net income | $ | 1.27 | $ | 0.04 | $ | 1.42 | $ | 0.11 | ||||||||
Weighted-average shares outstanding used in computing income per common share: | ||||||||||||||||
Basic | 287,967 | 356,091 | 286,749 | 339,576 | ||||||||||||
Diluted | 300,012 | 370,313 | 297,409 | 351,875 | ||||||||||||
(a) | Adjusted EBITDA per diluted common share is based on the weighted-average shares outstanding used in computing diluted income per common share. | |
(b) | Reconciliation of Adjusted EBITDA to net income (see Annex A — Explanation of Non-GAAP Financial Measures). |
EMDEON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 875,460 | $ | 155,616 | ||||
Short-term investments | 71,943 | 267,387 | ||||||
Accounts receivable, net | 101,217 | 195,317 | ||||||
Inventory | 9,342 | 10,791 | ||||||
Prepaid expenses and other current assets | 39,889 | 30,936 | ||||||
Assets held for sale | 949,693 | — | ||||||
Assets of discontinued operations | — | 254,247 | ||||||
Total current assets | 2,047,544 | 914,294 | ||||||
Marketable equity securities | 2,668 | 4,430 | ||||||
Property and equipment, net | 66,907 | 95,686 | ||||||
Goodwill | 288,109 | 895,975 | ||||||
Intangible assets, net | 125,969 | 235,271 | ||||||
Other assets | 68,667 | 50,027 | ||||||
Total Assets | $ | 2,599,864 | $ | 2,195,683 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Accounts payable | $ | 7,014 | $ | 7,739 | ||||
Accrued expenses | 98,745 | 170,102 | ||||||
Deferred revenue | 76,515 | 68,390 | ||||||
Liabilities held for sale | 85,591 | — | ||||||
Liabilities of discontinued operations | — | 68,436 | ||||||
Total current liabilities | 267,865 | 314,667 | ||||||
Convertible notes | 650,000 | 650,000 | ||||||
Other long-term liabilities | 14,331 | 14,518 | ||||||
Minority interest in WebMD Health Corp. | 60,413 | 43,229 | ||||||
Convertible redeemable exchangeable preferred stock | 98,709 | 98,533 | ||||||
Stockholders’ equity | 1,508,546 | 1,074,736 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 2,599,864 | $ | 2,195,683 | ||||
EMDEON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2006 | 2005 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 421,313 | $ | 40,122 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Income from discontinued operations, net of tax | (370,171 | ) | (6,868 | ) | ||||
Depreciation and amortization | 51,964 | 44,826 | ||||||
Minority interest in WebMD Health Corp., net of tax | (653 | ) | 38 | |||||
Amortization of debt issuance costs | 2,190 | 1,856 | ||||||
Non-cash advertising | 4,454 | 6,999 | ||||||
Non-cash stock-based compensation | 35,235 | 3,631 | ||||||
Bad debt expense | 1,170 | 1,532 | ||||||
Loss on investments | — | 3,642 | ||||||
Loss on redemption of convertible debt | — | 1,902 | ||||||
Reversal of income tax valuation allowance applied to goodwill | 5,307 | 4,330 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (19,930 | ) | (30,441 | ) | ||||
Inventory | 601 | 472 | ||||||
Prepaid expenses and other, net | (9,701 | ) | (2,399 | ) | ||||
Accounts payable | 825 | (6,147 | ) | |||||
Accrued expenses and other long-term liabilities | 3,284 | 10,710 | ||||||
Deferred revenue | 9,926 | 9,430 | ||||||
Net cash provided by continuing operations | 135,814 | 83,635 | ||||||
Net cash provided by discontinued operations | 25,985 | 15,466 | ||||||
Net cash provided by operating activities | 161,799 | 99,101 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from maturities and sales of available-for-sale securities | 831,145 | 336,014 | ||||||
Purchases of available-for-sale securities | (632,955 | ) | (516,109 | ) | ||||
Purchases of property and equipment | (38,231 | ) | (39,107 | ) | ||||
Proceeds received from sale of discontinued operations | 524,245 | — | ||||||
Cash paid in business combinations, net of cash acquired | (119,635 | ) | (74,380 | ) | ||||
Other changes in equity of discontinued operations | 28,279 | 9,116 | ||||||
Net cash provided by (used in) continuing operations | 592,848 | (284,466 | ) | |||||
Net cash used in discontinued operations | (26,010 | ) | (18,964 | ) | ||||
Net cash provided by (used in) investing activities | 566,838 | (303,430 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 62,768 | 43,384 | ||||||
Purchases of treasury stock | (71,843 | ) | (4,596 | ) | ||||
Net proceeds from issuance of convertible debt | — | 289,875 | ||||||
Redemption of convertible debt | — | (86,694 | ) | |||||
Payments of notes payable and other | (359 | ) | (495 | ) | ||||
Net cash (used in) provided by continuing operations | (9,434 | ) | 241,474 | |||||
Net cash (used in) provided by discontinued operations | — | — | ||||||
Net cash (used in) provided by financing activities | (9,434 | ) | 241,474 | |||||
Effect of exchange rates on cash | 616 | (1,117 | ) | |||||
Net increase in cash and cash equivalents | 719,819 | 36,028 | ||||||
Change in cash attributable to discontinued operations | 25 | 3,498 | ||||||
Cash and cash equivalents at beginning of period | 155,616 | 39,980 | ||||||
Cash and cash equivalents at end of period | $ | 875,460 | $ | 79,506 | ||||