WebMD Announces Fourth Quarter and Year End ResultsWebMD Sees Initial Benefits From Integration Activities Fourth Quarter Loss Before Restructuring and Non-Cash Items Declines 46% from Proforma Third Quarter Results
PR NEWSWIRE - March 22, 2001 16:00
ELMWOOD PARK, N.J., Mar 22, 2001 /PRNewswire via COMTEX/ -- WebMD Corporation (Nasdaq: HLTH) today announced financial results for the quarter and year ended December 31, 2000.
Financial Highlights
Revenue for the December 2000 quarter was $199.0 million compared to revenue of $151.2 million for the September 2000 quarter, an increase of 32%. Revenue for the December 1999 quarter was $33.2 million. The net loss, excluding restructuring, integration and non-cash expenses, for the December 2000 quarter was ($51.8) million or ($0.14) per share, compared to ($65.8) million, or ($0.27) per share for the September 2000 quarter and ($47.5) million or ($0.40) per share for the December 1999 quarter. The net loss for the December 2000 quarter was $(1.349) billion or $(3.75) per share compared with $(786.9) million or $(3.17) per share for the September 2000 quarter and $(234.7) million or $(1.98) per share for the December 1999 quarter.
Revenue for the year ended December 31, 2000 was $517.2 million compared to revenue of $102.1 million for the year ended December 31, 1999. The net loss excluding restructuring, integration and non-cash expenses for the year ended December 31, 2000 was ($246.2) million, or ($1.01) per share compared to ($79.4) million, or ($0.99) per share for year ended December 31, 1999. The net loss for the year ended December 31, 2000 was $(3.086) billion or $(12.61) per share compared to $(288.0) million and $(3.58) per share for the year ended December 31, 1999.
The Company recorded a charge related to its restructuring and integration efforts of $408.0 million and $452.9 million for the quarter and year ended December 31, 2000, respectively. This includes (i) non-cash charges of $365.9 million and $380.0 million for the quarter and year ended December 31, 2000, respectively, relating to the previously announced transactions with News Corporation and Dupont, stock option compensation charges related to the previously announced severance arrangements with certain executives and the write-off of assets related to facilities to be consolidated; (ii) a charge of $31.5 million and $62.3 million for the quarter and year ended December 31, 2000, respectively, primarily relating to accruals for anticipated lease termination costs and severance relating to the Company's previously announced restructuring initiatives and (iii) $10.6 million for both the quarter and year ended December 31, 2000 relating to integration related expenses such as "stay put" arrangements for employees given future termination dates, moving, relocation and outside professional fees which are required to be expensed as incurred. The Company also recorded a non-cash charge of $39.6 million for the year ended December 31, 2000 primarily relating to various past investments made in Internet-related businesses. The charge reflects the decline in value of such investments given the financial condition of the individual companies.
As of December 31, 2000, the Company had approximately $710.5 million in cash and marketable securities.
The financial results for the year ended December 31, 2000 reflect the acquisition of Kinetra and the transaction with News Corporation completed in late January 2000, the acquisition of ENVOY Corporation, which was completed May 26, 2000 and the mergers with Medical Manager, CareInsite and OnHealth which were completed on September 12, 2000. These transactions have been accounted for as purchases and the results of operations of each of these are included in the financial results since the acquisition dates. The results exclude the Company's plastic and filtration technologies subsidiaries given the Company's decision to divest these businesses.
Revenue categories are as follows (in millions):
Year
2000 Q4 2000Q3 2000(a) Q2 2000(a) Q1 2000(a)
Transaction
services $268.8 $94.1 $ 88.2 $55.0 $31.5
Physician
services 120.1 75.1 29.0 9.2 6.8
Portal
services 101.6 24.8 28.6 26.8 21.4
Other
products 26.7 5.0 5.4 10.1 6.2
Total
revenue $517.2 $199.0 $151.2 $101.1 $65.9
(a) Prior quarter amounts have been reclassified to conform to current
quarter presentation. Transaction Services product offerings of
$4.6, $3.2 and $2.7 for the September, June and March quarters,
respectively, and content syndication fees of $3.0, $3.0 and $2.0 for
the September, June and March quarter, respectively, previously
classified as other product revenue have been reclassified to
Transaction Services and Portal Services revenue.
Transaction Services revenue was $94.1 million for the December 2000 quarter, an increase of 7% compared to the September 2000. The increase was primarily due to the additional revenue contribution from Medical Manager, whose results are included for the entire December quarter and to a lesser extent, an increase in transaction volume. Total electronic transactions were approximately 526 million in the December quarter, compared to 474 million in the September 2000 quarter.
Physician Services revenue was $75.1 million for the December 2000 quarter, an increase of 159% compared to the September 2000 quarter. The increase was primarily attributable to the inclusion of revenues from Medical Manager Health Systems for the entire December quarter.
Portal Services revenue was $24.8 million for the December 2000 quarter, a decrease of 13% from the September 2000 quarter. The decrease in portal revenues was due to a decline in carriage revenues from certain start-up Internet-related customers and a decrease in advertising revenues related to the industry wide softening in Internet-related advertising.
Other Products and Services revenue was $5.0 million for the December 2000, a decrease of 7% from the September 2000 quarter. The decline compared to September reflected the phasing out of certain non-core product offerings. The other product and service revenues will be fully phased out during 2001.
The net loss for the December quarter was impacted by the restructuring and integration charge and an increase in goodwill amortization attributable to the full quarter impact of the acquisition of Medical Manager, CareInsite and OnHealth. In commenting on the results for the December 2000 quarter, Anthony Vuolo, Chief Financial Officer, noted, "The results for the December quarter show the first benefits of the restructuring and integration plan implemented at the end of September. The loss before restructuring, integration and non-cash expenses decreased approximately $14 million or 21% compared to the September quarter actual and $44 million or 46% compared to pro forma results for the September 2000 quarter. The benefits of our restructuring and integration efforts will continue to be realized throughout 2001."
Restructuring and Integration Update
At the end of the third quarter, WebMD began the implementation of its restructuring and integration initiatives related to the multiple acquisitions made by the Company. These initiatives include the consolidation of multiple operating facilities, integration of sales forces and customer service functions, the consolidation of duplicative administrative functions and a review of certain of its product offerings and strategic relationships. The objective of these initiatives is to create a highly leveragable infrastructure that can efficiently and profitably service the Company's customers.
Marv Rich, President, said, "We have made significant progress in our efforts to consolidate operations and reduce spending in order to achieve our goal of reaching cash profitability at the end of this year. We have integrated OnHealth into webmd.com while achieving significant reductions in marketing expenditures and have maintained our position as the leading consumer health site. Despite the soft Internet advertising market, we have been able to continue to sign new advertising contracts for our core webmd.com advertising business. We are beginning to cross-sell our consumer portal services to our payer customers and we expect several payers to launch a customized version of WebMD Health for their health plan members in the coming months. We have also begun to leverage our physician user base and sales and support network in order to increase the transaction volumes being submitted by our physician customers to our payer customers." He continued, "In addition, we are very pleased with the results of the beta sites for our new wireless handheld product. The feedback we are getting from physicians is excellent and we are finding that once physicians begin using it, they find it is an integral part of their daily workflow whose value more than justifies the related subscription fees."
During the quarter, the Company terminated its existing relationship with Dupont and restructured its relationship with News Corporation. The Company also exited the relationships related to information technology outsourcing and other smaller products and relationships which were non-profitable or non-strategic. Despite the loss of revenues from these relationships, these actions, along with the benefits of the restructuring and integration initiatives announced previously, are expected to yield a further reduction in the loss before restructuring, integration and non-cash expenses for the March quarter and position the Company well for achieving its goals of reducing this loss to an amount between $75 and $100 million for 2001 with a positive exit rate at the end of 2001.
WebMD's restructured agreements with News Corporation and DuPont allowed WebMD to retire the convertible preferred which converted into approximately 21.3 million shares of its common stock and 7 million warrants. In addition, during the quarter, the Company purchased 5.1 million shares of its common stock in private transactions for approximately $30 million.
Martin J. Wygod, Chief Executive Officer, said, "We continue to make significant progress in our restructuring and integration efforts and are very pleased that we were able to recognize even greater than expected benefits of the restructuring in the fourth quarter. We were able to successfully renegotiate numerous strategic relationships in a way that was mutually beneficial to both WebMD and its partners and I remain confident that the majority of the remaining relationships will be resolved favorably." He continued, "I strongly believe that the e-health marketplace represents a tremendous opportunity. While the current year can be characterized as a building year with the focus on integration of our key assets, we look forward to realizing the real benefits of our efforts in 2002 and beyond."
ABOUT WEBMD
WebMD provides connectivity and a full suite of services to the healthcare industry that improve administrative efficiencies and clinical effectiveness enabling high-quality patient care. The Company's products and services facilitate information exchange, communication and transactions between the consumer, physician and healthcare institutions.
All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding: future financial results and other projections of measures of future financial performance of WebMD; the amount and timing of the benefits expected from WebMD's integration plan and of the costs of executing such plan; potential changes in WebMD's business relationships and future deployment of applications. These statements are based on WebMD's current plans and expectations and involve risks and uncertainties that could cause actual future events or results to be different from those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of WebMD's products and services; operational difficulties relating to combining acquired companies and businesses; the profit potential of WebMD's strategic relationships and customer contracts; economic conditions and regulatory matters affecting the Internet and healthcare industries; and the ability of WebMD to attract and retain qualified personnel. Further information about these matters can be found in WebMD's Securities and Exchange Commission filings. WebMD expressly disclaims any intent or obligation to update these forward-looking statements.
WebMD CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited)
Three Months Ended Year Ended
December 31, December 31,
2000 1999 2000 1999
Revenue $198,951 $33,241 $517,153 $102,149
Operating costs and
expenses:
Cost of operations 137,103 34,861 383,565 88,576
Development and
engineering 13,555 8,799 58,788 29,669
Selling, general and
administrative 168,300 48,416 530,927 82,315
Depreciation and
amortization 834,120 177,853 2,186,986 193,067
Restructuring
charges 408,038 -- 452,919 --
Loss on investments -- -- 39,602 --
Interest income, net 13,251 1,939 50,026 3,486
Net loss $(1,348,914) $(234,749) $(3,085,608) $(287,992)
Basic and diluted net
loss per common share $(3.75) $(1.98) $(12.61) $(3.58)
Weighted average
shares outstanding
used in computing
basic and diluted
net loss per common
share 359,369 118,299 244,688 80,367
WebMD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended
Dec. 31, Sept. 30, Dec. 31,
2000 2000 1999
Revenue $198,951 $151,247 $33,241
Operating costs and expenses:
Cost of operations 137,103 108,903 34,861
Development and engineering 13,555 18,975 8,799
Selling, general and administrative 113,372 99,027 38,992
Interest income, net 13,251 9,882 1,939
Loss before restructuring, integration
and non-cash charges $(51,828) $(65,776) $(47,472)
Per share $(0.14) $(0.27) $(0.40)
Depreciation and amortization of
intangibles, including prepaid
content and services, deferred
compensation, restructuring
charges and loss on investment 1,297,086 721,149 187,277
Net loss $(1,348,914) $(786,925) $(234,749)
Per share $(3.75) $(3.17) $(1.98)
Weighted average shares outstanding
used in computing basic and diluted
net loss per common share 359,369 247,873 118,299
WebMD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Year Ended
December 31,
2000 1999
Revenue $517,153 $102,149
Operating costs and expenses:
Cost of operations 383,565 88,576
Development and engineering 58,788 29,669
Selling, general and
administrative 370,995 66,748
Interest income, net 50,026 3,486
Loss before restructuring,
integration and non-cash charges $(246,169) $(79,358)
Per share $(1.01) $(0.99)
Depreciation and amortization of
intangibles, including prepaid
content and services, deferred
compensation, restructuring
charges and loss on investment 2,839,439 208,634
Net loss $(3,085,608) $(287,992)
Per share $(12.61) $(3.58)
Weighted average shares outstanding
used in computing basic and
diluted net loss per common share 244,688 80,367
WebMD CORPORATION
RECONCILIATION TO NET LOSS
(In thousands, unaudited)
Three Months Ended
Dec. 31, Sept. 30, Dec. 31
2000 2000 1999
Loss before restructuring, integration
and non-cash charges $(51,828) $(65,776) $(47,472)
Non-cash charges:
Depreciation and amortization 834,120 597,728 177,853
Amortization of prepaid content and
services included in sales
and marketing 24,641 23,572 7,837
Amortization of deferred
compensation included in
general and administrative 30,287 15,366 1,587
Restructuring charges 408,038 44,881 --
Loss on investments -- 39,602 --
Total non-cash charges 1,297,086 721,149 187,277
Net loss $(1,348,914) $(786,925) $(234,749)
WebMD CORPORATION
RECONCILIATION TO NET LOSS
(In thousands, unaudited)
Year Ended
December 31,
2000 1999
Loss before restructuring,
integration and non-cash charges $(246,169) $(79,358)
Non-cash charges:
Depreciation and amortization 2,186,986 193,067
Amortization of prepaid content
and services included in sales and
marketing 87,473 7,934
Amortization of deferred
compensation included in general and
administrative 72,459 7,633
Restructuring charges 452,919 --
Loss on investments 39,602 --
Total non-cash charges 2,839,439 208,634
Net loss $(3,085,608) $(287,992)
WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
At December 31,
2000 1999
Assets
Cash and cash equivalents $490,797 $285,619
Accounts receivables, net 195,071 51,511
Assets held for sale 214,556 --
Other current assets 44,209 26,475
Total current assets 944,633 363,605
Marketable securities 219,686 --
Property and equipment, net 90,356 48,384
Prepaid content and services 229,081 273,038
Intangible and other assets, net 6,971,875 3,438,641
Total Assets $8,455,631 $4,123,668
Liabilities and stockholders' equity
Accounts payable $17,725 $34,514
Accrued and other liabilities 274,770 107,896
Deferred revenue 45,891 4,891
Total current liabilities 338,386 147,301
Long-term liabilities 25,260 2,695
Stockholders' equity 8,091,985 3,973,672
Total liabilities and stockholders
equity $8,455,631 $4,123,668
SOURCE WebMD Corporation |
