Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2013 |
Accounting Policies [Abstract] | ' |
Background | ' |
Background |
WebMD Health Corp. (the “Company” or “WebMD”) is a Delaware corporation that was incorporated on May 3, 2005. The Company completed an initial public offering on September 28, 2005. The Company’s Common Stock trades under the symbol “WBMD” on the Nasdaq Global Select Market. From the completion of the initial public offering through the completion of the Company’s merger with HLTH Corporation (“HLTH”) on October 23, 2009 (the “Merger”), the Company was more than 80% owned by HLTH. On October 23, 2009, the Merger was completed, with HLTH merging into WebMD and WebMD continuing as the surviving corporation. |
The Company provides health information services to consumers, physicians and other healthcare professionals, employers and health plans through its public and private online portals, mobile platforms and health-focused publications. The WebMD Health Network includes: www.WebMD.com, the Company’s primary public portal for consumers and related mobile services; www.Medscape.com, the Company’s primary public portal for physicians and other healthcare professionals and related mobile services; and other sites through which the Company provides branded content. WebMD’s services for consumers enable them to obtain information on health and wellness topics or on a particular disease or condition, to assess their personal health status, to use online trackers, tools and quizzes, to locate physicians, to receive periodic e-mailed newsletters and alerts on topics of individual interest, and to participate in online communities with peers and experts. WebMD’s services for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (“CME”) credit and communicate with peers. The Company does not charge any usage, membership or download fees for access to its public portals or mobile platforms. WebMD generates revenue from its public portals and mobile platforms primarily through the sale of various types of advertising and sponsorship programs to its clients, which include: pharmaceutical, biotechnology and medical device companies; healthcare services companies; consumer products companies whose products relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention; and various other businesses, organizations and governmental entities. Advertisers and sponsors use WebMD’s services to reach, educate and inform target audiences of consumers, physicians and other healthcare professionals. The Company also generates revenue from advertising sold in WebMD Magazine, a consumer magazine distributed to physician office waiting rooms. In addition, the Company generates revenue from the sale of certain information products. WebMD’s private portals enable employers and health plans to provide their employees and members with access to personalized health and benefit information and decision-support tools that help them to make more informed benefit, treatment and provider decisions and motivate them to make healthier lifestyle choices. The Company also provides health and condition management programs for use by its private portals clients’ employees and members to help them achieve their wellness goals. In addition, WebMD offers clients telephonic, online and onsite health coaching services for their employees and members. The Company generates revenue from its private portals through the licensing of its technology and content to employers and health plans, either directly or through its distributors. WebMD offers its health coaching services and its health and condition management programs on a per participant basis. |
Interim Financial Statements | ' |
Interim Financial Statements |
The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2013. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations. |
The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2012, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. |
Seasonality | ' |
Seasonality |
The timing of the Company’s revenue is affected by seasonal factors. The Company’s public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of the Company’s public portals. This portion of the Company’s revenue is usually the lowest in the first quarter of each calendar year, and generally increases during each consecutive quarter throughout the year. The timing of revenue in relation to the Company’s expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing, and general and administrative expenses as a percentage of revenue in each calendar quarter. |
Accounting Estimates | ' |
Accounting Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the Consolidated Financial Statements. Significant estimates and assumptions by management affect the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite-lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards. |
Presentation of Segment Information | ' |
Presentation of Segment Information |
The Company generates its revenue through its public and private portals. Discrete financial information related to a measure of profit or loss for these two revenue streams is not available as they leverage many common expenses, and the Company does not separately allocate these common expenses in assessing the performance of its business. Accordingly, the Company views its business as one reportable operating segment. |
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The following table presents the revenues recognized related to the Company’s public portals and private portals during the three and nine months ended September 30, 2013 and 2012: |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Public portal revenues | | $ | 109,608 | | | $ | 97,562 | | | $ | 308,829 | | | $ | 279,082 | |
Private portal revenues | | | 21,329 | | | | 19,951 | | | | 60,187 | | | | 58,046 | |
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| | $ | 130,937 | | | $ | 117,513 | | | $ | 369,016 | | | $ | 337,128 | |
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Loss Contingencies | ' |
Loss Contingencies |
The Company accounts for loss contingencies in accordance with FASB ASC No. 450, “Contingencies.” Under ASC No. 450, accruals for loss contingencies are recorded when both (i) the information available indicates that it is probable that a liability has been incurred and (ii) the amount of the loss can be reasonably estimated. The Company records adjustments to these accruals to reflect the status of negotiations, settlements, advice of counsel and other information and events related to an individual matter. |
Net Income (Loss) Per Common Share | ' |
Net Income (Loss) Per Common Share |
Basic income (loss) per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods presented. Diluted income (loss) per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods, increased to give effect to potentially dilutive securities and assumes that any dilutive convertible notes were converted, only in the periods in which such effect is dilutive (shares in thousands): |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Numerator: | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations — Basic and Diluted | | $ | 3,231 | | | $ | (3,120 | ) | | $ | 4,304 | | | $ | (16,999 | ) |
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Income from discontinued operations, net of tax — Basic and Diluted | | $ | — | | | $ | 2,235 | | | $ | — | | | $ | 2,743 | |
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Denominator: | | | | | | | | | | | | | | | | |
Weighted-average shares — Basic | | | 48,540 | | | | 49,021 | | | | 48,954 | | | | 51,468 | |
Employee stock options and restricted stock | | | 2,054 | | | | — | | | | 1,361 | | | | — | |
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Adjusted weighted-average shares after assumed conversions — Diluted | | | 50,594 | | | | 49,021 | | | | 50,315 | | | | 51,468 | |
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Basic income (loss) per common share: | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.07 | | | $ | (0.06 | ) | | $ | 0.09 | | | $ | (0.33 | ) |
Income from discontinued operations | | | — | | | | 0.04 | | | | — | | | | 0.05 | |
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Net income (loss) | | $ | 0.07 | | | $ | (0.02 | ) | | $ | 0.09 | | | $ | (0.28 | ) |
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Diluted income (loss) per common share: | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.06 | | | $ | (0.06 | ) | | $ | 0.09 | | | $ | (0.33 | ) |
Income from discontinued operations | | | — | | | | 0.04 | | | | — | | | | 0.05 | |
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Net income (loss) | | $ | 0.06 | | | $ | (0.02 | ) | | $ | 0.09 | | | $ | (0.28 | ) |
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The Company has excluded its convertible notes, as well as certain outstanding stock options and restricted stock, from the calculation of diluted income (loss) per common share during the periods in which such securities were anti-dilutive. The following table presents the total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income (loss) per common share during the periods presented (shares in thousands): |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Options and restricted stock | | | 4,434 | | | | 12,628 | | | | 6,800 | | | | 11,914 | |
Convertible notes | | | 11,639 | | | | 11,629 | | | | 11,632 | | | | 11,576 | |
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| | | 16,073 | | | | 24,257 | | | | 18,432 | | | | 23,490 | |
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Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements |
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In July 2012, the Financial Accounting Standards Board (the “FASB”) issued an update to the existing guidance for impairment testing of indefinite-lived intangible assets, other than goodwill, similar to previously issued guidance for impairment testing of goodwill. The update simplifies how a company tests indefinite-lived intangible assets for impairment by allowing both public and nonpublic entities an option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing two-step quantitative impairment test, otherwise no further analysis is required. An entity may also elect not to perform the qualitative assessment and proceed directly to the two-step quantitative impairment test. The amendment is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, which for the Company was the first quarter of 2013. The adoption of this amendment did not have an impact on the Company’s financial condition, results of operations or cash flows. |
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In July 2013, the FASB issued an update to existing guidance on the financial presentation of unrecognized tax benefits. The update provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company will be the first quarter of 2014. The adoption of this update is expected to have no impact on the Company’s financial condition, results of operations or cash flows. |
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