Exhibit 99.2
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 171,438 | $ | 152,607 | $ | 497,574 | $ | 444,270 | ||||||||
Cost of operations | 65,458 | 59,552 | 193,759 | 177,836 | ||||||||||||
Sales and marketing | 35,264 | 32,850 | 104,634 | 97,896 | ||||||||||||
General and administrative | 20,005 | 22,942 | 67,744 | 67,397 | ||||||||||||
Depreciation and amortization | 7,912 | 7,266 | 23,071 | 23,103 | ||||||||||||
Interest income | 1,034 | 10 | 1,607 | 36 | ||||||||||||
Interest expense | 7,065 | 5,681 | 17,430 | 18,024 | ||||||||||||
Loss on convertible notes | — | 2,058 | — | 2,058 | ||||||||||||
Gain on investments | — | — | — | 139 | ||||||||||||
Other expense | 1,712 | — | 1,712 | 4,100 | ||||||||||||
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Income before income tax provision | 35,056 | 22,268 | 90,831 | 54,031 | ||||||||||||
Income tax provision | 13,438 | 9,080 | 35,715 | 17,468 | ||||||||||||
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Net income | $ | 21,618 | $ | 13,188 | $ | 55,116 | $ | 36,563 | ||||||||
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Net income per common share: | ||||||||||||||||
Basic | $ | 0.57 | $ | 0.36 | $ | 1.46 | $ | 1.00 | ||||||||
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Diluted | $ | 0.47 | $ | 0.32 | $ | 1.22 | $ | 0.89 | ||||||||
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Weighted-average shares outstanding used in | ||||||||||||||||
computing income per common share: | ||||||||||||||||
Basic | 38,103 | 36,721 | 37,804 | 36,606 | ||||||||||||
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Diluted | 55,845 | 49,958 | 53,836 | 49,912 | ||||||||||||
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WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | ||||||||||||||||
Advertising and sponsorship | ||||||||||||||||
Biopharma and medical device | $ | 107,048 | $ | 89,870 | $ | 296,353 | $ | 251,692 | ||||||||
OTC, CPG and other | 29,026 | 28,850 | 93,907 | 89,047 | ||||||||||||
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136,074 | 118,720 | 390,260 | 340,739 | |||||||||||||
Health services | 28,247 | 27,460 | 85,134 | 83,223 | ||||||||||||
Information services | 7,117 | 6,427 | 22,180 | 20,308 | ||||||||||||
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$ | 171,438 | $ | 152,607 | $ | 497,574 | $ | 444,270 | |||||||||
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Net income | $ | 21,618 | $ | 13,188 | $ | 55,116 | $ | 36,563 | ||||||||
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Interest, taxes, non-cash and other items (a) | ||||||||||||||||
Interest income | (1,034 | ) | (10 | ) | (1,607 | ) | (36 | ) | ||||||||
Interest expense | 7,065 | 5,681 | 17,430 | 18,024 | ||||||||||||
Income tax provision | 13,438 | 9,080 | 35,715 | 17,468 | ||||||||||||
Depreciation and amortization | 7,912 | 7,266 | 23,071 | 23,103 | ||||||||||||
Non-cash stock-based compensation | 4,638 | 9,142 | 21,038 | 24,731 | ||||||||||||
Loss on convertible notes | — | 2,058 | — | 2,058 | ||||||||||||
Gain on investments | — | — | — | (139 | ) | |||||||||||
Other expense | 1,712 | — | 1,712 | 4,100 | ||||||||||||
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Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (b) | $ | 55,349 | $ | 46,405 | $ | 152,475 | $ | 125,872 | ||||||||
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(a) | Reconciliation of net income to Adjusted EBITDA. |
(b) | See Annex A-Explanation of Non-GAAP Financial Measures. |
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, | December 31, | |||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 88,600 | $ | 641,165 | ||||
Accounts receivable, net | 153,255 | 174,313 | ||||||
Investments | 949,488 | — | ||||||
Prepaid expenses and other current assets | 17,972 | 18,998 | ||||||
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Total current assets | 1,209,315 | 834,476 | ||||||
Property and equipment, net | 84,929 | 81,027 | ||||||
Goodwill | 202,980 | 202,980 | ||||||
Intangible assets, net | 8,554 | 10,894 | ||||||
Deferred tax assets, net | 8,984 | 15,694 | ||||||
Other assets | 8,497 | 10,852 | ||||||
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Total Assets | $ | 1,523,259 | $ | 1,155,923 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Accrued expenses | $ | 65,892 | $ | 80,664 | ||||
Deferred revenue | 102,251 | 102,715 | ||||||
2.25% convertible notes due 2016, net | — | 102,523 | ||||||
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Total current liabilities | 168,143 | 285,902 | ||||||
2.50% convertible notes due 2018, net | 397,620 | 396,281 | ||||||
1.50% convertible notes due 2020, net | 295,140 | 294,266 | ||||||
2.625% convertible notes due 2023, net | 350,849 | — | ||||||
Other long-term liabilities | 28,965 | 23,246 | ||||||
Stockholders’ equity | 282,542 | 156,228 | ||||||
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Total Liabilities and Stockholders’ Equity | $ | 1,523,259 | $ | 1,155,923 | ||||
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WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 55,116 | $ | 36,563 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 23,071 | 23,103 | ||||||
Non-cash interest, net | 2,827 | 3,276 | ||||||
Non-cash stock-based compensation | 21,038 | 24,731 | ||||||
Deferred income taxes | 6,632 | (7,246 | ) | |||||
Loss on convertible notes | — | 2,058 | ||||||
Gain on investments | — | (139 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 21,058 | (10,201 | ) | |||||
Prepaid expenses and other, net | 2,747 | (5,692 | ) | |||||
Accrued expenses and other long-term liabilities | (9,748 | ) | (4,555 | ) | ||||
Deferred revenue | (464 | ) | 15,280 | |||||
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Net cash provided by operating activities | 122,277 | 77,178 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (24,449 | ) | (25,638 | ) | ||||
Purchase of investments | (948,078 | ) | — | |||||
Partial redemption of cost-method investment | 1,193 | — | ||||||
Proceeds from sale of investments | — | 139 | ||||||
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Net cash used in investing activities | (971,334 | ) | (25,499 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 52,702 | 15,185 | ||||||
Cash used for withholding taxes due on stock-based awards | (7,705 | ) | (3,836 | ) | ||||
Net proceeds from issuance of convertible notes | 350,394 | — | ||||||
Maturity of convertible notes | (102,682 | ) | (151,038 | ) | ||||
Purchases of treasury stock | (22,447 | ) | (28,406 | ) | ||||
Excess tax benefit on stock-based awards | 26,230 | 21,972 | ||||||
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Net cash provided by (used in) financing activities | 296,492 | (146,123 | ) | |||||
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Net decrease in cash and cash equivalents | (552,565 | ) | (94,444 | ) | ||||
Cash and cash equivalents at beginning of period | 641,165 | 706,776 | ||||||
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Cash and cash equivalents at end of period | $ | 88,600 | $ | 612,332 | ||||
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WEBMD HEALTH CORP.
NET INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Numerator: | ||||||||||||||||
Net income – Basic | $ | 21,618 | $ | 13,188 | $ | 55,116 | $ | 36,563 | ||||||||
Interest expense on 1.50% convertible notes, net of tax | 878 | 864 | 2,635 | 2,592 | ||||||||||||
Interest expense on 2.50% convertible notes, net of tax | 1,827 | 1,797 | 5,480 | 5,392 | ||||||||||||
Interest expense on 2.25% convertible notes, net of tax | — | — | 457 | — | ||||||||||||
Interest expense on 2.625% convertible notes, net of tax | 1,675 | — | 2,235 | — | ||||||||||||
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Net income – Diluted | $ | 25,998 | $ | 15,849 | $ | 65,923 | $ | 44,547 | ||||||||
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Denominator: | ||||||||||||||||
Weighted-average shares – Basic | 38,103 | 36,721 | 37,804 | 36,606 | ||||||||||||
Stock options and restricted stock | 1,709 | 1,338 | 1,824 | 1,407 | ||||||||||||
1.50% convertible notes | 5,694 | 5,694 | 5,694 | 5,694 | ||||||||||||
2.50% convertible notes | 6,205 | 6,205 | 6,205 | 6,205 | ||||||||||||
2.25% convertible notes | — | — | 471 | — | ||||||||||||
2.625% convertible notes | 4,134 | — | 1,838 | — | ||||||||||||
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Adjusted weighted-average shares after assumed conversions – Diluted | 55,845 | 49,958 | 53,836 | 49,912 | ||||||||||||
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Net income per common share: | ||||||||||||||||
Basic | $ | 0.57 | $ | 0.36 | $ | 1.46 | $ | 1.00 | ||||||||
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Diluted | $ | 0.47 | $ | 0.32 | $ | 1.22 | $ | 0.89 | ||||||||
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