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 | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue : | ||||||||||||||||
Services | $ | 205,743 | $ | 241,658 | $ | 998,252 | $ | 932,273 | ||||||||
Products | 24,308 | 22,106 | 100,356 | 94,202 | ||||||||||||
Total revenue | 230,051 | 263,764 | 1,098,608 | 1,026,475 | ||||||||||||
Cost of operations : | ||||||||||||||||
Services | 108,157 | 140,675 | 581,108 | 555,208 | ||||||||||||
Products | 9,676 | 9,884 | 42,650 | 40,446 | ||||||||||||
Total cost of operations | 117,833 | 150,559 | 623,758 | 595,654 | ||||||||||||
Development and engineering | 6,485 | 9,058 | 33,649 | 35,653 | ||||||||||||
Sales, marketing, general and administrative | 71,412 | 65,595 | 288,015 | 254,887 | ||||||||||||
Depreciation and amortization | 10,012 | 16,079 | 61,976 | 60,905 | ||||||||||||
Legal expense | 738 | 3,488 | 2,578 | 17,835 | ||||||||||||
Gain on sale of EBS | 352,297 | — | 352,297 | — | ||||||||||||
Loss on investments | — | 2,723 | — | 6,365 | ||||||||||||
Interest income | 16,889 | 8,147 | 32,339 | 21,527 | ||||||||||||
Interest expense | 4,697 | 4,652 | 18,779 | 16,322 | ||||||||||||
Transition services income | 2,184 | — | 2,524 | — | ||||||||||||
Other expenses | — | — | 4,198 | 3,765 | ||||||||||||
Income from continuing operations before income tax provision (benefit) | 390,244 | 19,757 | 452,815 | 56,616 | ||||||||||||
Income tax provision (benefit) | 44,111 | (4,568 | ) | 56,193 | (1,001 | ) | ||||||||||
Minority interest in WebMD Health Corp. | 1,359 | 870 | 706 | 908 | ||||||||||||
Equity in earnings of EBS Master LLC | 763 | — | 763 | — | ||||||||||||
Income from continuing operations | 345,537 | 23,455 | 396,679 | 56,709 | ||||||||||||
Income from discontinued operations, net of tax | 889 | 9,397 | 371,060 | 16,265 | ||||||||||||
Net income | $ | 346,426 | $ | 32,852 | $ | 767,739 | $ | 72,974 | ||||||||
Basic income per common share: | ||||||||||||||||
Income from continuing operations | $ | 1.35 | $ | 0.07 | $ | 1.42 | $ | 0.17 | ||||||||
Income from discontinued operations | 0.00 | 0.02 | 1.33 | 0.04 | ||||||||||||
Net income | $ | 1.35 | $ | 0.09 | $ | 2.75 | $ | 0.21 | ||||||||
Diluted income per common share: (a) | ||||||||||||||||
Income from continuing operations | $ | 1.14 | $ | 0.07 | $ | 1.25 | $ | 0.16 | ||||||||
Income from discontinued operations | 0.00 | 0.02 | 1.12 | 0.05 | ||||||||||||
Net income | $ | 1.14 | $ | 0.09 | $ | 2.37 | $ | 0.21 | ||||||||
Weighted-average shares outstanding used in computing income per common share: | ||||||||||||||||
Basic | 256,688 | 348,261 | 279,234 | 341,747 | ||||||||||||
Diluted | 308,295 | 355,782 | 331,642 | 352,852 | ||||||||||||
(a) | Diluted income per common share for the three months and the year ended December 31, 2006 reflects the dilutive impact of the convertible notes. |
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 | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue | ||||||||||||||||
Emdeon Business Services | $ | 103,116 | $ | 172,364 | $ | 661,090 | $ | 689,305 | ||||||||
WebMD | 80,573 | 49,104 | 253,881 | 168,238 | ||||||||||||
ViPS | 25,349 | 24,003 | 98,874 | 90,313 | ||||||||||||
Porex | 21,158 | 18,461 | 85,702 | 79,124 | ||||||||||||
Inter-segment eliminations | (145 | ) | (168 | ) | (939 | ) | (505 | ) | ||||||||
$ | 230,051 | $ | 263,764 | $ | 1,098,608 | $ | 1,026,475 | |||||||||
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) | ||||||||||||||||
Emdeon Business Services | $ | 25,392 | $ | 35,214 | $ | 152,911 | $ | 138,529 | ||||||||
WebMD | 22,320 | 12,446 | 53,079 | 27,546 | ||||||||||||
ViPS | 5,012 | 4,921 | 20,529 | 16,913 | ||||||||||||
Porex | 6,242 | 4,678 | 24,974 | 22,524 | ||||||||||||
Corporate | (9,781 | ) | (13,587 | ) | (43,414 | ) | (49,481 | ) | ||||||||
$ | 49,185 | $ | 43,672 | $ | 208,079 | $ | 156,031 | |||||||||
Adjusted EBITDA per diluted common share (a) | $ | 0.16 | $ | 0.12 | $ | 0.63 | $ | 0.44 | ||||||||
Interest, taxes, non-cash and other items (b) | ||||||||||||||||
Depreciation and amortization | $ | (10,012 | ) | $ | (16,079 | ) | $ | (61,976 | ) | $ | (60,905 | ) | ||||
Non-cash stock-based compensation | (9,720 | ) | (1,249 | ) | (44,955 | ) | (4,880 | ) | ||||||||
Non-cash advertising | (2,960 | ) | (3,871 | ) | (7,414 | ) | (10,870 | ) | ||||||||
Legal expense | (738 | ) | (3,488 | ) | (2,578 | ) | (17,835 | ) | ||||||||
Interest income | 16,889 | 8,147 | 32,339 | 21,527 | ||||||||||||
Interest expense | (4,697 | ) | (4,652 | ) | (18,779 | ) | (16,322 | ) | ||||||||
Income tax (provision) benefit | (44,111 | ) | 4,568 | (56,193 | ) | 1,001 | ||||||||||
Minority interest in WebMD Health Corp. | (1,359 | ) | (870 | ) | (706 | ) | (908 | ) | ||||||||
Equity in earnings of EBS Master LLC | 763 | — | 763 | — | ||||||||||||
Gain on sale of EBS | 352,297 | — | 352,297 | — | ||||||||||||
Loss on investments | — | (2,723 | ) | — | (6,365 | ) | ||||||||||
Other expenses | — | — | (4,198 | ) | (3,765 | ) | ||||||||||
Income from continuing operations | 345,537 | 23,455 | 396,679 | 56,709 | ||||||||||||
Income from discontinued operations, net of tax | 889 | 9,397 | 371,060 | 16,265 | ||||||||||||
Net income | $ | 346,426 | $ | 32,852 | $ | 767,739 | $ | 72,974 | ||||||||
Basic income per common share: | ||||||||||||||||
Income from continuing operations | $ | 1.35 | $ | 0.07 | $ | 1.42 | $ | 0.17 | ||||||||
Income from discontinued operations | 0.00 | 0.02 | 1.33 | 0.04 | ||||||||||||
Net income | $ | 1.35 | $ | 0.09 | $ | 2.75 | $ | 0.21 | ||||||||
Diluted income per common share: (c) | ||||||||||||||||
Income from continuing operations | $ | 1.14 | $ | 0.07 | $ | 1.25 | $ | 0.16 | ||||||||
Income from discontinued operations | 0.00 | 0.02 | 1.12 | 0.05 | ||||||||||||
Net income | $ | 1.14 | $ | 0.09 | $ | 2.37 | $ | 0.21 | ||||||||
Weighted-average shares outstanding used in computing income per common share: | ||||||||||||||||
Basic | 256,688 | 348,261 | 279,234 | 341,747 | ||||||||||||
Diluted | 308,295 | 355,782 | 331,642 | 352,852 | ||||||||||||
(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). | |
(c) | Diluted income per common share for the three months and the year ended December 31, 2006 reflects the dilutive impact of the convertible notes. |
EMDEON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
December 31, | ||||||||
2006 | 2005 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 614,691 | $ | 155,616 | ||||
Short-term investments | 34,140 | 267,387 | ||||||
Accounts receivable, net | 121,608 | 195,317 | ||||||
Inventory | 9,922 | 10,791 | ||||||
Prepaid expenses and other current assets | 31,871 | 30,936 | ||||||
Due from EBS Master LLC | 30,716 | — | ||||||
Assets of discontinued operations | — | 254,247 | ||||||
Total current assets | 842,948 | 914,294 | ||||||
Marketable equity securities | 2,633 | 4,430 | ||||||
Property and equipment, net | 72,040 | 95,686 | ||||||
Goodwill | 337,669 | 895,975 | ||||||
Intangible assets, net | 129,473 | 235,271 | ||||||
Investment in EBS Master LLC | 1,521 | — | ||||||
Other assets | 65,659 | 50,027 | ||||||
Total Assets | $ | 1,451,943 | $ | 2,195,683 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Accounts payable | $ | 3,996 | $ | 7,739 | ||||
Accrued expenses | 113,175 | 170,102 | ||||||
Deferred revenue | 87,438 | 68,390 | ||||||
Liabilities of discontinued operations | — | 68,436 | ||||||
Total current liabilities | 204,609 | 314,667 | ||||||
Convertible notes | 650,000 | 650,000 | ||||||
Other long-term liabilities | 14,420 | 14,518 | ||||||
Minority interest in WebMD Health Corp. | 102,294 | 43,229 | ||||||
Convertible redeemable exchangeable preferred stock | 98,768 | 98,533 | ||||||
Stockholders’ equity | 381,852 | 1,074,736 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 1,451,943 | $ | 2,195,683 | ||||
EMDEON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Years Ended | ||||||||
December 31, | ||||||||
2006 | 2005 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 767,739 | $ | 72,974 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Income from discontinued operations, net of tax | (371,060 | ) | (16,265 | ) | ||||
Depreciation and amortization | 61,976 | 60,905 | ||||||
Minority interest in WebMD Health Corp. | 706 | 908 | ||||||
Equity in earnings of EBS Master LLC | (763 | ) | — | |||||
Amortization of debt issuance costs | 2,906 | 2,541 | ||||||
Non-cash advertising | 7,414 | 10,870 | ||||||
Non-cash stock-based compensation | 44,955 | 4,880 | ||||||
Bad debt expense | 1,627 | 2,527 | ||||||
Loss on investments | — | 6,365 | ||||||
Gain on sale of EBS | (352,297 | ) | — | |||||
Loss on redemption of convertible debt | — | 1,902 | ||||||
Reversal of income tax valuation allowance applied to goodwill | 30,770 | 174 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (45,434 | ) | (30,021 | ) | ||||
Inventory | 190 | (755 | ) | |||||
Prepaid expenses and other, net | (12,131 | ) | 2,629 | |||||
Accounts payable | 162 | (6,212 | ) | |||||
Accrued expenses and other long-term liabilities | 20,621 | 7,480 | ||||||
Deferred revenue | 15,654 | 7,954 | ||||||
Net cash provided by continuing operations | 173,035 | 128,856 | ||||||
Net cash provided by discontinued operations | 25,985 | 32,430 | ||||||
Net cash provided by operating activities | 199,020 | 161,286 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from maturities and sales of available-for-sale securities | 928,284 | 1,063,606 | ||||||
Purchases of available-for-sale securities | (686,815 | ) | (758,687 | ) | ||||
Purchases of property and equipment | (54,885 | ) | (51,276 | ) | ||||
Proceeds received from sale of property and equipment | — | 400 | ||||||
Cash paid in business combinations, net of cash acquired | (152,772 | ) | (93,712 | ) | ||||
Proceeds received from sale of EBS | 1,199,872 | — | ||||||
Advance to EBS Master LLC | (20,016 | ) | — | |||||
Proceeds received from sale of discontinued operations | 522,604 | — | ||||||
Other changes in equity of discontinued operations | 28,279 | 23,176 | ||||||
Net cash provided by continuing operations | 1,764,551 | 183,507 | ||||||
Net cash used in discontinued operations | (26,010 | ) | (34,575 | ) | ||||
Net cash provided by investing activities | 1,738,541 | 148,932 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of Emdeon and WebMD Health common stock | 156,078 | 48,571 | ||||||
Purchases of treasury stock under repurchase program | (83,167 | ) | (21,246 | ) | ||||
Purchases of treasury stock in Tender Offer | (1,552,120 | ) | (549,268 | ) | ||||
Payments of notes payable and other | (437 | ) | (631 | ) | ||||
Net proceeds from issuance of convertible debt | — | 289,875 | ||||||
Issuance of WebMD Health Corp. Class A common stock | — | 123,344 | ||||||
Redemption of convertible debt | — | (86,694 | ) | |||||
Net cash used in continuing operations | (1,479,646 | ) | (196,049 | ) | ||||
Net cash used in discontinued operations | — | — | ||||||
Net cash used in financing activities | (1,479,646 | ) | (196,049 | ) | ||||
Effect of exchange rates on cash | 1,135 | (678 | ) | |||||
Net increase in cash and cash equivalents | 459,050 | 113,491 | ||||||
Change in cash attributable to discontinued operations | 25 | 2,145 | ||||||
Cash and cash equivalents at beginning of period | 155,616 | 39,980 | ||||||
Cash and cash equivalents at end of period | $ | 614,691 | $ | 155,616 | ||||