Exhibit 99.2
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue | $ | 135,138 | $ | 135,305 | $ | 408,116 | $ | 366,042 | ||||||||
Cost of operations | 49,097 | 47,610 | 148,698 | 135,972 | ||||||||||||
Sales and marketing | 29,597 | 28,957 | 94,161 | 86,789 | ||||||||||||
General and administrative | 22,787 | 22,964 | 67,614 | 62,350 | ||||||||||||
Depreciation and amortization | 6,781 | 6,935 | 19,929 | 20,268 | ||||||||||||
Interest income | 21 | 21 | 88 | 3,850 | ||||||||||||
Interest expense | 5,862 | 1,797 | 14,836 | 10,106 | ||||||||||||
Loss on convertible notes | — | 2,232 | — | 16,970 | ||||||||||||
Gain (loss) on investments | (1,150 | ) | (131 | ) | 14,679 | (22,977 | ) | |||||||||
Other income (expense), net | — | 107 | (53 | ) | (92 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Income from continuing operations before income tax provision (benefit) | 19,885 | 24,807 | 77,592 | 14,368 | ||||||||||||
Income tax provision (benefit) | 8,645 | 10,193 | 32,606 | (4,140 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Income from continuing operations | 11,240 | 14,614 | 44,986 | 18,508 | ||||||||||||
Income (loss) from discontinued operations, net of tax | 2,994 | (1,024 | ) | 10,388 | (1,024 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 14,234 | $ | 13,590 | $ | 55,374 | $ | 17,484 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Basic income (loss) per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.19 | $ | 0.25 | $ | 0.77 | $ | 0.33 | ||||||||
Income (loss) from discontinued operations | 0.06 | (0.02 | ) | 0.18 | (0.01 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 0.25 | $ | 0.23 | $ | 0.95 | $ | 0.32 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted income (loss) per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.19 | $ | 0.24 | $ | 0.75 | $ | 0.31 | ||||||||
Income (loss) from discontinued operations | 0.05 | (0.02 | ) | 0.17 | (0.02 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 0.24 | $ | 0.22 | $ | 0.92 | $ | 0.29 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted-average shares outstanding used in computing income (loss) per common share: | ||||||||||||||||
Basic | 57,461 | 58,095 | 57,913 | 54,602 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted | 58,698 | 61,435 | 59,882 | 58,660 | ||||||||||||
|
|
|
|
|
|
|
|
WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue | ||||||||||||||||
Public portal advertising and sponsorship | $ | 115,033 | $ | 113,078 | $ | 346,504 | $ | 299,927 | ||||||||
Private portal services | 20,105 | 22,227 | 61,612 | 66,115 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 135,138 | $ | 135,305 | $ | 408,116 | $ | 366,042 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a) | $ | 43,465 | $ | 44,578 | $ | 126,612 | $ | 104,536 | ||||||||
Interest, taxes, non-cash and other items (b) | ||||||||||||||||
Interest income | 21 | 21 | 88 | 3,850 | ||||||||||||
Interest expense | (5,862 | ) | (1,797 | ) | (14,836 | ) | (10,106 | ) | ||||||||
Income tax (provision) benefit | (8,645 | ) | (10,193 | ) | (32,606 | ) | 4,140 | |||||||||
Depreciation and amortization | (6,781 | ) | (6,935 | ) | (19,929 | ) | (20,268 | ) | ||||||||
Non-cash stock-based compensation | (9,808 | ) | (8,804 | ) | (28,969 | ) | (23,605 | ) | ||||||||
Loss on convertible notes | — | (2,232 | ) | — | (16,970 | ) | ||||||||||
Gain (loss) on investments | (1,150 | ) | (131 | ) | 14,679 | (22,977 | ) | |||||||||
Other income (expense), net | — | 107 | (53 | ) | (92 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Income from continuing operations | 11,240 | 14,614 | 44,986 | 18,508 | ||||||||||||
Income (loss) from discontinued operations, net of tax | 2,994 | (1,024 | ) | 10,388 | (1,024 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 14,234 | $ | 13,590 | $ | 55,374 | $ | 17,484 | ||||||||
|
|
|
|
|
|
|
|
(a) | See Annex A-Explanation of Non-GAAP Financial Measures. |
(b) | Reconciliation of Adjusted EBITDA to net income (loss). |
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
September 30, 2011 | December 31, 2010 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 1,101,286 | $ | 400,501 | ||||
Accounts receivable, net | 117,938 | 134,448 | ||||||
Prepaid expenses and other current assets | 13,172 | 12,161 | ||||||
Deferred tax assets | 21,204 | 23,467 | ||||||
|
|
|
| |||||
Total current assets | 1,253,600 | 570,577 | ||||||
Property and equipment, net | 58,064 | 61,516 | ||||||
Goodwill | 202,104 | 202,104 | ||||||
Intangible assets, net | 20,656 | 22,626 | ||||||
Deferred tax assets | 62,613 | 71,125 | ||||||
Other assets | 32,318 | 14,254 | ||||||
|
|
|
| |||||
Total Assets | $ | 1,629,355 | $ | 942,202 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Accrued expenses | $ | 51,141 | $ | 53,181 | ||||
Deferred revenue | 90,673 | 97,043 | ||||||
Liabilities of discontinued operations | 1,810 | 17,327 | ||||||
|
|
|
| |||||
Total current liabilities | 143,624 | 167,551 | ||||||
2.25% convertible notes due 2016 | 400,000 | — | ||||||
2.50% convertible notes due 2018 | 400,000 | — | ||||||
Other long-term liabilities | 22,403 | 21,756 | ||||||
Stockholders’ equity | 663,328 | 752,895 | ||||||
|
|
|
| |||||
Total Liabilities and Stockholders’ Equity | $ | 1,629,355 | $ | 942,202 | ||||
|
|
|
|
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 55,374 | $ | 17,484 | ||||
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||||||||
(Income) loss from discontinued operations, net of tax | (10,388 | ) | 1,024 | |||||
Depreciation and amortization | 19,929 | 20,268 | ||||||
Non-cash interest, net | 2,702 | 4,862 | ||||||
Non-cash stock-based compensation | 28,969 | 23,605 | ||||||
Deferred income taxes | 5,378 | (17,260 | ) | |||||
Loss on convertible notes | — | 16,970 | ||||||
(Gain) loss on investments | (14,679 | ) | 22,977 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 16,510 | (2,206 | ) | |||||
Prepaid expenses and other, net | 1,238 | (3,006 | ) | |||||
Accrued expenses and other long-term liabilities | (176 | ) | 1,695 | |||||
Deferred revenue | (6,370 | ) | 3,413 | |||||
|
|
|
| |||||
Net cash provided by continuing operations | 98,487 | 89,826 | ||||||
Net cash used in discontinued operations | (136 | ) | (17,082 | ) | ||||
|
|
|
| |||||
Net cash provided by operating activities | 98,351 | 72,744 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from sales of available-for-sale securities | — | 361,852 | ||||||
Proceeds received from ARS option | 16,561 | 407 | ||||||
Purchases of property and equipment | (16,061 | ) | (20,329 | ) | ||||
Finalization of sale price of discontinued operations | — | (1,430 | ) | |||||
|
|
|
| |||||
Net cash provided by investing activities | 500 | 340,500 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 26,435 | 57,168 | ||||||
Cash used for withholding taxes due on stock-based awards | (6,730 | ) | (76,559 | ) | ||||
Net proceeds from issuance of the 2.50% Notes and 2.25% Notes | 774,745 | — | ||||||
Repurchases of 1.75% Notes and 3 1/8% Notes | — | (94,475 | ) | |||||
Purchases of treasury stock | (217,427 | ) | (420,948 | ) | ||||
Excess tax benefit on stock-based awards | 24,911 | 14,003 | ||||||
|
|
|
| |||||
Net cash provided by (used in) financing activities | 601,934 | (520,811 | ) | |||||
|
|
|
| |||||
Net increase in cash and cash equivalents | 700,785 | (107,567 | ) | |||||
Cash and cash equivalents at beginning of period | 400,501 | 459,766 | ||||||
|
|
|
| |||||
Cash and cash equivalents at end of period | $ | 1,101,286 | $ | 352,199 | ||||
|
|
|
|
WEBMD HEALTH CORP.
NET INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator: | ||||||||||||||||
Income from continuing operations | $ | 11,240 | $ | 14,614 | $ | 44,986 | $ | 18,508 | ||||||||
Effect of participating non-vested restricted stock | (70 | ) | (152 | ) | (320 | ) | (222 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income from continuing operations- Basic and Diluted | $ | 11,170 | $ | 14,462 | $ | 44,666 | $ | 18,286 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) from discontinued operations, net of tax | $ | 2,994 | $ | (1,024 | ) | $ | 10,388 | $ | (1,024 | ) | ||||||
Effect of participating non-vested restricted stock | (19 | ) | 12 | (74 | ) | 12 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) from discontinued operations, net of tax - Basic and Diluted | $ | 2,975 | $ | (1,012 | ) | $ | 10,314 | $ | (1,012 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Denominator: | ||||||||||||||||
Weighted-average shares — Basic | 57,461 | 58,095 | 57,913 | 54,602 | ||||||||||||
Employee stock options and restricted stock | 1,237 | 3,340 | 1,969 | 4,058 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted weighted-average shares after assumed conversions — Diluted | 58,698 | 61,435 | 59,882 | 58,660 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Basic income (loss) per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.19 | $ | 0.25 | $ | 0.77 | $ | 0.33 | ||||||||
Income (loss) from discontinued operations | 0.06 | (0.02 | ) | 0.18 | (0.01 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 0.25 | $ | 0.23 | $ | 0.95 | $ | 0.32 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted income (loss) per common share: | ||||||||||||||||
Income from continuing operations | $ | 0.19 | $ | 0.24 | $ | 0.75 | $ | 0.31 | ||||||||
Income (loss) from discontinued operations | 0.05 | (0.02 | ) | 0.17 | (0.02 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 0.24 | $ | 0.22 | $ | 0.92 | $ | 0.29 | ||||||||
|
|
|
|
|
|
|
|