Exhibit 99.2
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2016 | | | 2015 | | | 2016 | | | 2015 | |
Revenue | | $ | 167,583 | | | $ | 148,320 | | | $ | 326,136 | | | $ | 291,663 | |
Cost of operations | | | 65,788 | | | | 60,407 | | | | 128,301 | | | | 118,284 | |
Sales and marketing | | | 35,614 | | | | 32,570 | | | | 69,370 | | | | 65,046 | |
General and administrative | | | 23,983 | | | | 23,002 | | | | 47,739 | | | | 44,455 | |
Depreciation and amortization | | | 7,672 | | | | 7,592 | | | | 15,159 | | | | 15,837 | |
Interest income | | | 367 | | | | 9 | | | | 573 | | | | 26 | |
Interest expense | | | 5,265 | | | | 6,171 | | | | 10,365 | | | | 12,343 | |
Gain on investments | | | — | | | | 139 | | | | — | | | | 139 | |
Other expense | | | — | | | | 4,100 | | | | — | | | | 4,100 | |
| | | | | | | | | | | | | | | | |
Income before income tax provision | | | 29,628 | | | | 14,626 | | | | 55,775 | | | | 31,763 | |
Income tax provision | | | 11,848 | | | | 1,255 | | | | 22,277 | | | | 8,388 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 17,780 | | | $ | 13,371 | | | $ | 33,498 | | | $ | 23,375 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.47 | | | $ | 0.36 | | | $ | 0.89 | | | $ | 0.64 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.39 | | | $ | 0.32 | | | $ | 0.75 | | | $ | 0.57 | |
| | | | | | | | | | | | | | | | |
Weighted-average shares outstanding used in computing income per common share: | | | | | | | | | | | | | | | | |
Basic | | | 38,041 | | | | 36,705 | | | | 37,654 | | | | 36,549 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 51,948 | | | | 53,618 | | | | 52,142 | | | | 43,684 | |
| | | | | | | | | | | | | | | | |
WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2016 | | | 2015 | | | 2016 | | | 2015 | |
Revenue | | | | | | | | | | | | | | | | |
Advertising and sponsorship | | | | | | | | | | | | | | | | |
Biopharma and medical device | | $ | 100,620 | | | $ | 85,977 | | | $ | 189,305 | | | $ | 161,822 | |
OTC, CPG and other | | | 31,127 | | | | 30,249 | | | | 64,881 | | | | 60,197 | |
| | | | | | | | | | | | | | | | |
| | | 131,747 | | | | 116,226 | | | | 254,186 | | | | 222,019 | |
Health services | | | 28,632 | | | | 26,441 | | | | 56,887 | | | | 55,763 | |
Information services | | | 7,204 | | | | 5,653 | | | | 15,063 | | | | 13,881 | |
| | | | | | | | | | | | | | | | |
| | $ | 167,583 | | | $ | 148,320 | | | $ | 326,136 | | | $ | 291,663 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a) | | $ | 50,070 | | | $ | 40,549 | | | $ | 97,126 | | | $ | 79,467 | |
| | | | |
Interest, taxes, non-cash and other items (b) | | | | | | | | | | | | | | | | |
Interest income | | | 367 | | | | 9 | | | | 573 | | | | 26 | |
Interest expense | | | (5,265 | ) | | | (6,171 | ) | | | (10,365 | ) | | | (12,343 | ) |
Income tax provision | | | (11,848 | ) | | | (1,255 | ) | | | (22,277 | ) | | | (8,388 | ) |
Depreciation and amortization | | | (7,672 | ) | | | (7,592 | ) | | | (15,159 | ) | | | (15,837 | ) |
Non-cash stock-based compensation | | | (7,872 | ) | | | (8,208 | ) | | | (16,400 | ) | | | (15,589 | ) |
Gain on investments | | | — | | | | 139 | | | | — | | | | 139 | |
Other expense | | | — | | | | (4,100 | ) | | | — | | | | (4,100 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 17,780 | | | $ | 13,371 | | | $ | 33,498 | | | $ | 23,375 | |
| | | | | | | | | | | | | | | | |
(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)
| | | | | | | | |
| | June 30, 2016 | | | December 31, 2015 | |
| | (unaudited) | | | | |
Assets | | | | | | | | |
Cash and cash equivalents | | $ | 69,545 | | | $ | 641,165 | |
Accounts receivable, net | | | 158,489 | | | | 174,313 | |
Investments | | | 948,661 | | | | — | |
Prepaid expenses and other current assets | | | 16,570 | | | | 18,998 | |
| | | | | | | | |
Total current assets | | | 1,193,265 | | | | 834,476 | |
| | |
Property and equipment, net | | | 87,198 | | | | 81,027 | |
Goodwill | | | 202,980 | | | | 202,980 | |
Intangible assets, net | | | 9,334 | | | | 10,894 | |
Deferred tax assets, net | | | 12,217 | | | | 15,694 | |
Other assets | | | 10,606 | | | | 10,852 | |
| | | | | | | | |
Total Assets | | $ | 1,515,600 | | | $ | 1,155,923 | |
| | | | | | | | |
| | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Accrued expenses | | $ | 65,235 | | | $ | 80,664 | |
Deferred revenue | | | 117,301 | | | | 102,715 | |
2.25% convertible notes due 2016, net | | | — | | | | 102,523 | |
| | | | | | | | |
Total current liabilities | | | 182,536 | | | | 285,902 | |
| | |
2.50% convertible notes due 2018, net | | | 397,174 | | | | 396,281 | |
1.50% convertible notes due 2020, net | | | 294,849 | | | | 294,266 | |
2.625% convertible notes due 2023, net | | | 350,369 | | | | — | |
Other long-term liabilities | | | 23,572 | | | | 23,246 | |
| | |
Stockholders’ equity | | | 267,100 | | | | 156,228 | |
| | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 1,515,600 | | | $ | 1,155,923 | |
| | | | | | | | |
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| | | | | | | | |
| | Six Months Ended June 30, | |
| | 2016 | | | 2015 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 33,498 | | | $ | 23,375 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 15,159 | | | | 15,837 | |
Non-cash interest, net | | | 1,750 | | | | 2,256 | |
Non-cash stock-based compensation | | | 16,400 | | | | 15,589 | |
Deferred income taxes | | | 3,309 | | | | (6,476 | ) |
Gain on investments | | | — | | | | (139 | ) |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | 15,824 | | | | (12,282 | ) |
Prepaid expenses and other, net | | | 785 | | | | (6,130 | ) |
Accrued expenses and other long-term liabilities | | | (15,152 | ) | | | (14,465 | ) |
Deferred revenue | | | 14,586 | | | | 25,080 | |
| | | | | | | | |
Net cash provided by operating activities | | | 86,159 | | | | 42,645 | |
| | |
Cash flows from investing activities: | | | | | | | | |
Purchases of property and equipment | | | (19,858 | ) | | | (8,711 | ) |
Purchase of investments | | | (948,078 | ) | | | — | |
Partial redemption of cost-method investment | | | 526 | | | | — | |
Proceeds from sale of investments | | | — | | | | 139 | |
| | | | | | | | |
Net cash used in investing activities | | | (967,410 | ) | | | (8,572 | ) |
| | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from exercise of stock options | | | 49,412 | | | | 11,653 | |
Cash used for withholding taxes due on stock-based awards | | | (3,810 | ) | | | (2,960 | ) |
Net proceeds from issuance of convertible notes | | | 350,254 | | | | — | |
Maturity of convertible notes | | | (102,682 | ) | | | — | |
Purchases of treasury stock | | | — | | | | (5,351 | ) |
Excess tax benefit on stock-based awards | | | 16,457 | | | | 13,191 | |
| | | | | | | | |
Net cash provided by financing activities | | | 309,631 | | | | 16,533 | |
| | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (571,620 | ) | | | 50,606 | |
Cash and cash equivalents at beginning of period | | | 641,165 | | | | 706,776 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 69,545 | | | $ | 757,382 | |
| | | | | | | | |
WEBMD HEALTH CORP.
NET INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2016 | | | 2015 | | | 2016 | | | 2015 | |
Numerator: | | | | | | | | | | | | | | | | |
Net income – Basic | | $ | 17,780 | | | $ | 13,371 | | | $ | 33,498 | | | $ | 23,375 | |
Interest expense on 1.50% convertible notes, net of tax | | | 878 | | | | 864 | | | | 1,757 | | | | 1,728 | |
Interest expense on 2.50% convertible notes, net of tax | | | 1,827 | | | | 1,797 | | | | 3,653 | | | | — | |
Interest expense on 2.25% convertible notes, net of tax | | | — | | | | 1,103 | | | | 457 | | | | — | |
| | | | | | | | | | | | | | | | |
Net income – Diluted | | $ | 20,485 | | | $ | 17,135 | | | $ | 39,365 | | | $ | 25,103 | |
| | | | | | | | | | | | | | | | |
| | | | |
Denominator: | | | | | | | | | | | | | | | | |
Weighted-average shares – Basic | | | 38,041 | | | | 36,705 | | | | 37,654 | | | | 36,549 | |
Stock options and restricted stock | | | 2,008 | | | | 1,503 | | | | 1,882 | | | | 1,441 | |
1.50% convertible notes | | | 5,694 | | | | 5,694 | | | | 5,694 | | | | 5,694 | |
2.50% convertible notes | | | 6,205 | | | | 6,205 | | | | 6,205 | | | | — | |
2.25% convertible notes | | | — | | | | 3,511 | | | | 707 | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted weighted-average shares after assumed conversions – Diluted | | | 51,948 | | | | 53,618 | | | | 52,142 | | | | 43,684 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.47 | | | $ | 0.36 | | | $ | 0.89 | | | $ | 0.64 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.39 | | | $ | 0.32 | | | $ | 0.75 | | | $ | 0.57 | |
| | | | | | | | | | | | | | | | |