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, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue | $ | 143,490 | $ | 130,937 | $ | 417,722 | $ | 369,016 | ||||||||
Cost of operations | 56,398 | 53,438 | 163,418 | 151,977 | ||||||||||||
Sales and marketing | 32,950 | 32,561 | 99,182 | 94,916 | ||||||||||||
General and administrative | 23,243 | 22,689 | 69,363 | 70,505 | ||||||||||||
Depreciation and amortization | 7,667 | 6,552 | 22,037 | 20,040 | ||||||||||||
Interest income | 19 | 16 | 51 | 54 | ||||||||||||
Interest expense | 6,171 | 5,833 | 18,515 | 17,497 | ||||||||||||
Loss on convertible notes | — | 3,296 | — | 3,296 | ||||||||||||
Other expense | — | — | — | 1,353 | ||||||||||||
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Income before income tax provision | 17,080 | 6,584 | 45,258 | 9,486 | ||||||||||||
Income tax provision | 7,275 | 3,353 | 19,471 | 5,182 | ||||||||||||
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Net income | $ | 9,805 | $ | 3,231 | $ | 25,787 | $ | 4,304 | ||||||||
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Net income per common share: | ||||||||||||||||
Basic | $ | 0.26 | $ | 0.07 | $ | 0.67 | $ | 0.09 | ||||||||
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Diluted | $ | 0.23 | $ | 0.06 | $ | 0.61 | $ | 0.09 | ||||||||
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Weighted-average shares outstanding used in computing income per common share: | ||||||||||||||||
Basic | 37,960 | 48,540 | 38,349 | 48,954 | ||||||||||||
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Diluted | 45,757 | 50,594 | 46,364 | 50,315 | ||||||||||||
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WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue | ||||||||||||||||
Public portal advertising and sponsorship | $ | 117,695 | $ | 109,608 | $ | 343,110 | $ | 308,829 | ||||||||
Private portal services | 25,795 | 21,329 | 74,612 | 60,187 | ||||||||||||
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$ | 143,490 | $ | 130,937 | $ | 417,722 | $ | 369,016 | |||||||||
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Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a) | $ | 39,301 | $ | 31,720 | $ | 110,484 | $ | 82,250 | ||||||||
Interest, taxes, non-cash and other items (b) | ||||||||||||||||
Interest income | 19 | 16 | 51 | 54 | ||||||||||||
Interest expense | (6,171 | ) | (5,833 | ) | (18,515 | ) | (17,497 | ) | ||||||||
Income tax provision | (7,275 | ) | (3,353 | ) | (19,471 | ) | (5,182 | ) | ||||||||
Depreciation and amortization | (7,667 | ) | (6,552 | ) | (22,037 | ) | (20,040 | ) | ||||||||
Non-cash stock-based compensation | (8,402 | ) | (9,471 | ) | (24,725 | ) | (30,632 | ) | ||||||||
Loss on convertible notes | — | (3,296 | ) | — | (3,296 | ) | ||||||||||
Other expense | — | — | — | (1,353 | ) | |||||||||||
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Net income | $ | 9,805 | $ | 3,231 | $ | 25,787 | $ | 4,304 | ||||||||
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(a) | See Annex A-Explanation of Non-GAAP Financial Measures. |
(b) | Reconciliation of Adjusted EBITDA to net income. |
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, 2014 | December 31, 2013 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 699,847 | $ | 824,880 | ||||
Accounts receivable, net | 113,448 | 124,232 | ||||||
Prepaid expenses and other current assets | 15,091 | 13,243 | ||||||
Deferred tax assets | 12,350 | 13,620 | ||||||
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Total current assets | 840,736 | 975,975 | ||||||
Property and equipment, net | 61,238 | 64,884 | ||||||
Goodwill | 202,980 | 202,980 | ||||||
Intangible assets, net | 15,048 | 13,834 | ||||||
Deferred tax assets | 33,297 | 38,802 | ||||||
Other assets | 25,799 | 29,153 | ||||||
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Total Assets | $ | 1,179,098 | $ | 1,325,628 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Accrued expenses | $ | 65,260 | $ | 73,739 | ||||
Deferred revenue | 84,247 | 85,148 | ||||||
Liabilities of discontinued operations | 1,506 | 1,506 | ||||||
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Total current liabilities | 151,013 | 160,393 | ||||||
2.25% convertible notes due 2016 | 252,232 | 252,232 | ||||||
2.50% convertible notes due 2018 | 400,000 | 400,000 | ||||||
1.50% convertible notes due 2020 | 300,000 | 300,000 | ||||||
Other long-term liabilities | 20,792 | 22,103 | ||||||
Stockholders’ equity | 55,061 | 190,900 | ||||||
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Total Liabilities and Stockholders’ Equity | $ | 1,179,098 | $ | 1,325,628 | ||||
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WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 25,787 | $ | 4,304 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 22,037 | 20,040 | ||||||
Non-cash interest, net | 3,384 | 3,245 | ||||||
Non-cash stock-based compensation | 24,725 | 30,632 | ||||||
Deferred income taxes | 6,791 | 4,592 | ||||||
Loss on convertible notes | — | 3,296 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 10,784 | 6,917 | ||||||
Prepaid expenses and other, net | (2,429 | ) | (100 | ) | ||||
Accrued expenses and other long-term liabilities | (9,319 | ) | (5,689 | ) | ||||
Deferred revenue | (901 | ) | (5,326 | ) | ||||
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Net cash provided by operating activities | 80,859 | 61,911 | ||||||
Cash flows from investing activities: | ||||||||
Cash paid in business combination | (3,182 | ) | — | |||||
Purchases of property and equipment | (17,964 | ) | (9,901 | ) | ||||
Proceeds from sale of property and equipment | — | 1,381 | ||||||
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Net cash used in investing activities | (21,146 | ) | (8,520 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 35,857 | 19,482 | ||||||
Cash used for withholding taxes due on stock-based awards | (31,294 | ) | (7,321 | ) | ||||
Repurchase of convertible notes | — | (101,750 | ) | |||||
Repurchase of shares through tender offers | (97,560 | ) | (170,516 | ) | ||||
Purchases of treasury stock | (103,602 | ) | (9,023 | ) | ||||
Excess tax benefit on stock-based awards | 11,853 | — | ||||||
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Net cash used in financing activities | (184,746 | ) | (269,128 | ) | ||||
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Net decrease in cash and cash equivalents | (125,033 | ) | (215,737 | ) | ||||
Cash and cash equivalents at beginning of period | 824,880 | 991,835 | ||||||
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Cash and cash equivalents at end of period | $ | 699,847 | $ | 776,098 | ||||
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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, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator: | ||||||||||||||||
Net income — Basic | $ | 9,805 | $ | 3,231 | $ | 25,787 | $ | 4,304 | ||||||||
Interest expense on 1.50% convertible notes, net of tax | 864 | — | 2,592 | — | ||||||||||||
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Net income — Diluted | $ | 10,669 | $ | 3,231 | $ | 28,379 | $ | 4,304 | ||||||||
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Denominator: | ||||||||||||||||
Weighted-average shares — Basic | 37,960 | 48,540 | 38,349 | 48,954 | ||||||||||||
Stock options and restricted stock | 2,113 | 2,054 | 2,333 | 1,361 | ||||||||||||
1.50% convertible notes | 5,684 | — | 5,682 | — | ||||||||||||
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Adjusted weighted-average shares after assumed conversions — Diluted | 45,757 | 50,594 | 46,364 | 50,315 | ||||||||||||
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Net income per common share: | ||||||||||||||||
Basic | $ | 0.26 | $ | 0.07 | $ | 0.67 | $ | 0.09 | ||||||||
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Diluted | $ | 0.23 | $ | 0.06 | $ | 0.61 | $ | 0.09 | ||||||||
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