| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Revenue | $ | 89,136 | $ | 77,197 | $ | 170,818 | $ | 149,078 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of operations | 32,763 | 28,997 | 64,333 | 57,615 | ||||||||||||
| Sales and marketing | 25,460 | 21,929 | 51,290 | 44,799 | ||||||||||||
| General and administrative | 23,181 | 26,950 | 44,325 | 55,393 | ||||||||||||
| Depreciation and amortization | 7,315 | 7,239 | 14,203 | 13,564 | ||||||||||||
| Interest income | 8,062 | 10,100 | 19,998 | 19,774 | ||||||||||||
| Interest expense | 4,628 | 4,616 | 9,235 | 9,325 | ||||||||||||
| Gain on sale of EBS Master LLC | — | — | 538,024 | — | ||||||||||||
| Impairment of auction rate securities | — | — | 60,108 | — | ||||||||||||
| Other (expense) income, net | (666 | ) | 1,396 | (4,810 | ) | 4,278 | ||||||||||
| Income (loss) from continuing operations before income tax provision | 3,185 | (1,038 | ) | 480,536 | (7,566 | ) | ||||||||||
| Income tax provision | 1,330 | 1,658 | 26,944 | 1,427 | ||||||||||||
| Minority interest in WHC income (loss) | 1,071 | 843 | (2,774 | ) | 958 | |||||||||||
| Equity in earnings of EBS Master LLC | — | 7,575 | 4,007 | 14,674 | ||||||||||||
| Income from continuing operations | 784 | 4,036 | 460,373 | 4,723 | ||||||||||||
| Loss from discontinued operations, net of tax | (3,651 | ) | (49,499 | ) | (82 | ) | (44,484 | ) | ||||||||
| Net (loss) income | $ | (2,867 | ) | $ | (45,463 | ) | $ | 460,291 | $ | (39,761 | ) | |||||
| Basic (loss) income per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.00 | $ | 0.02 | $ | 2.52 | $ | 0.03 | ||||||||
| Loss from discontinued operations | (0.02 | ) | (0.27 | ) | (0.00 | ) | (0.25 | ) | ||||||||
| Net (loss) income | $ | (0.02 | ) | $ | (0.25 | ) | $ | 2.52 | $ | (0.22 | ) | |||||
| Diluted (loss) income per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.00 | $ | 0.02 | $ | 2.04 | $ | 0.02 | ||||||||
| Loss from discontinued operations | (0.02 | ) | (0.26 | ) | (0.00 | ) | (0.23 | ) | ||||||||
| Net (loss) income | $ | (0.02 | ) | $ | (0.24 | ) | $ | 2.04 | $ | (0.21 | ) | |||||
| Weighted-average shares outstanding used in computing (loss) income per common share: | ||||||||||||||||
| Basic | 182,622 | 180,219 | 182,399 | 178,115 | ||||||||||||
| Diluted | 186,243 | 191,032 | 228,209 | 188,693 | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenue | ||||||||||||||||
| WebMD Online Services: | ||||||||||||||||
| Advertising and sponsorship | $ | 62,383 | $ | 52,436 | $ | 118,448 | $ | 99,857 | ||||||||
| Licensing | 21,866 | 19,799 | 43,789 | 39,914 | ||||||||||||
| Content syndication and other | 345 | 653 | 762 | 1,537 | ||||||||||||
| Total WebMD Online Services | 84,594 | 72,888 | 162,999 | 141,308 | ||||||||||||
| WebMD Publishing and Other Services | 4,582 | 4,382 | 7,859 | 7,906 | ||||||||||||
| Inter-segment eliminations | (40 | ) | (73 | ) | (40 | ) | (136 | ) | ||||||||
| $ | 89,136 | $ | 77,197 | $ | 170,818 | $ | 149,078 | |||||||||
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a) | ||||||||||||||||
| WebMD Online Services | $ | 18,800 | $ | 14,042 | $ | 35,331 | $ | 27,034 | ||||||||
| WebMD Publishing and Other Services | 1,027 | 863 | 273 | 505 | ||||||||||||
| Corporate | (5,573 | ) | (6,337 | ) | (10,632 | ) | (13,063 | ) | ||||||||
| $ | 14,254 | $ | 8,568 | $ | 24,972 | $ | 14,476 | |||||||||
Adjusted EBITDA per diluted common share (b) | $ | 0.08 | $ | 0.04 | $ | 0.11 | $ | 0.08 | ||||||||
Interest, taxes, non-cash and other items (c) | ||||||||||||||||
| Interest income | $ | 8,062 | $ | 10,100 | $ | 19,998 | $ | 19,774 | ||||||||
| Interest expense | (4,628 | ) | (4,616 | ) | (9,235 | ) | (9,325 | ) | ||||||||
| Income tax provision | (1,330 | ) | (1,658 | ) | (26,944 | ) | (1,427 | ) | ||||||||
| Depreciation and amortization | (7,315 | ) | (7,239 | ) | (14,203 | ) | (13,564 | ) | ||||||||
| Non-cash stock-based compensation | (6,471 | ) | (7,779 | ) | (12,443 | ) | (16,961 | ) | ||||||||
| Non-cash advertising | — | — | (1,558 | ) | (2,320 | ) | ||||||||||
| Minority interest in WHC (income) loss | (1,071 | ) | (843 | ) | 2,774 | (958 | ) | |||||||||
| Equity in earnings of EBS Master LLC | — | 7,575 | 4,007 | 14,674 | ||||||||||||
| Gain on sale of EBS Master LLC | — | — | 538,024 | — | ||||||||||||
| Impairment of auction rate securities | — | — | (60,108 | ) | — | |||||||||||
| Other (expense) income, net | (717 | ) | (72 | ) | (4,911 | ) | 354 | |||||||||
| Income from continuing operations | 784 | 4,036 | 460,373 | 4,723 | ||||||||||||
| Loss from discontinued operations, net of tax | (3,651 | ) | (49,499 | ) | (82 | ) | (44,484 | ) | ||||||||
| Net (loss) income | $ | (2,867 | ) | $ | (45,463 | ) | $ | 460,291 | $ | (39,761 | ) | |||||
| Basic (loss) income per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.00 | $ | 0.02 | $ | 2.52 | $ | 0.03 | ||||||||
| Loss from discontinued operations | (0.02 | ) | (0.27 | ) | (0.00 | ) | (0.25 | ) | ||||||||
| Net (loss) income | $ | (0.02 | ) | $ | (0.25 | ) | $ | 2.52 | $ | (0.22 | ) | |||||
| Diluted (loss) income per common share: | ||||||||||||||||
| Income from continuing operations | $ | 0.00 | $ | 0.02 | $ | 2.04 | $ | 0.02 | ||||||||
| Loss from discontinued operations | (0.02 | ) | (0.26 | ) | (0.00 | ) | (0.23 | ) | ||||||||
| Net (loss) income | $ | (0.02 | ) | $ | (0.24 | ) | $ | 2.04 | $ | (0.21 | ) | |||||
| Weighted-average shares outstanding used in computing (loss) income per common share: | ||||||||||||||||
| Basic | 182,622 | 180,219 | 182,399 | 178,115 | ||||||||||||
| Diluted | 186,243 | 191,032 | 228,209 | 188,693 | ||||||||||||
| (a) | See Annex A — Explanation of Non-GAAP Financial Measures. | |
| (b) | Adjusted EBITDA per diluted common share is based on the weighted-average shares outstanding used in computing diluted (loss) income per common share. | |
| (c) | Reconciliation of Adjusted EBITDA to income from continuing operations. |
| June 30, 2008 | December 31, 2007 | |||||||
Assets | ||||||||
| Cash and cash equivalents | $ | 1,123,899 | $ | 536,879 | ||||
| Short-term investments | 304,325 | 290,858 | ||||||
| Accounts receivable, net | 68,865 | 86,081 | ||||||
| Due from EBS Master LLC | 69 | 1,224 | ||||||
| Prepaid expenses and other current assets | 24,331 | 71,090 | ||||||
| Assets of discontinued operations | 268,046 | 262,964 | ||||||
| Total current assets | 1,789,535 | 1,249,096 | ||||||
| Marketable equity securities | 2,543 | 2,383 | ||||||
| Property and equipment, net | 48,491 | 49,554 | ||||||
| Goodwill | 214,475 | 217,323 | ||||||
| Intangible assets, net | 31,323 | 36,314 | ||||||
| Investment in EBS Master LLC | — | 25,261 | ||||||
| Other assets | 62,330 | 71,466 | ||||||
| Total Assets | $ | 2,148,697 | $ | 1,651,397 | ||||
Liabilities and Stockholders’ Equity | ||||||||
| Accrued expenses | $ | 44,807 | $ | 49,598 | ||||
| Deferred revenue | 87,401 | 76,401 | ||||||
| Liabilities of discontinued operations | 124,788 | 123,131 | ||||||
| Total current liabilities | 256,996 | 249,130 | ||||||
| Convertible notes | 650,000 | 650,000 | ||||||
| Other long-term liabilities | 21,332 | 21,137 | ||||||
| Minority interest in WHC | 135,416 | 131,353 | ||||||
| Stockholders’ equity | 1,084,953 | 599,777 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 2,148,697 | $ | 1,651,397 | ||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2008 | 2007 | |||||||
Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 460,291 | $ | (39,761 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Loss from discontinued operations, net of tax | 82 | 44,484 | ||||||
| Depreciation and amortization | 14,203 | 13,564 | ||||||
| Minority interest in WHC (income) loss | (2,774 | ) | 958 | |||||
| Equity in earnings of EBS Master LLC | (4,007 | ) | (14,674 | ) | ||||
| Amortization of debt issuance costs | 1,490 | 1,447 | ||||||
| Non-cash advertising | 1,558 | 2,320 | ||||||
| Non-cash stock-based compensation | 12,443 | 16,961 | ||||||
| Deferred income taxes | 5,556 | 1,041 | ||||||
| Gain on sale of EBS Master LLC and 2006 EBS Sale | (538,024 | ) | (399 | ) | ||||
| Impairment of auction rate securities | 60,108 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 17,216 | 7,976 | ||||||
| Prepaid expenses and other, net | 21,090 | 1,128 | ||||||
| Accrued expenses and other long-term liabilities | (3,695 | ) | (44,070 | ) | ||||
| Deferred revenue | 11,000 | 10,576 | ||||||
| Net cash provided by continuing operations | 56,537 | 1,551 | ||||||
| Net cash (used in) provided by discontinued operations | (343 | ) | 17,429 | |||||
| Net cash provided by operating activities | 56,194 | 18,980 | ||||||
Cash flows from investing activities: | ||||||||
| Proceeds from maturities and sales of available-for-sale securities | 106,586 | 194,096 | ||||||
| Purchases of available-for-sale securities | (177,150 | ) | (388,942 | ) | ||||
| Purchases of property and equipment | (6,985 | ) | (10,217 | ) | ||||
| Proceeds related to the sales of EBS, EPS and ACS/ACP, net of expenses | 598,935 | 2,898 | ||||||
| Decreases in net advances to EBS Master LLC | 1,155 | 19,730 | ||||||
| Other | 148 | — | ||||||
| Net cash provided by (used in) continuing operations | 522,689 | (182,435 | ) | |||||
| Net cash used in discontinued operations | (3,144 | ) | (2,341 | ) | ||||
| Net cash provided by (used in ) investing activities | 519,545 | (184,776 | ) | |||||
Cash flows from financing activities: | ||||||||
| Proceeds from issuance of HLTH and WHC common stock | 9,644 | 103,263 | ||||||
| Purchases of treasury stock under repurchase program | — | (42,906 | ) | |||||
| Other | (80 | ) | 457 | |||||
| Net cash provided by continuing operations | 9,564 | 60,814 | ||||||
| Net cash used in discontinued operations | (76 | ) | (101 | ) | ||||
| Net cash provided by financing activities | 9,488 | 60,713 | ||||||
| Effect of exchange rates on cash | 1,793 | 361 | ||||||
| Net increase (decrease) in cash and cash equivalents | 587,020 | (104,722 | ) | |||||
| Cash and cash equivalents at beginning of period | 536,879 | 614,691 | ||||||
| Cash and cash equivalents at end of period | $ | 1,123,899 | $ | 509,969 | ||||
