WebMD Announces Second Quarter ResultsRestructuring and Integration Progress Continues Loss Before Restructuring and Non-Cash Items Declines 27% From Last Quarter and 57% From Prior Year
PR NEWSWIRE - August 09, 2001 16:00
ELMWOOD PARK, N.J., Aug 9, 2001 /PRNewswire via COMTEX/ -- WebMD Corporation (Nasdaq: HLTH) today announced financial results for the three months ended June 30, 2001. Revenue for the June 2001 quarter was $178.7 million compared to revenue of $184.5 million for the March 2001 quarter and $101.1 million for the June 2000 quarter. The loss, excluding restructuring, integration and non-cash expenses, for the June 2001 quarter was ($23.8) million or ($0.07) per share, compared to ($32.7) million, or ($0.09) per share for the March 2001 quarter and ($55.5) million or ($0.28) per share for the June 2000 quarter. The net loss for the June 2001 quarter was ($821.8) million or ($2.30) per share compared with ($1.039) billion or ($2.91) per share for the March 2001 quarter and ($518.3) million or ($2.64) per share for the June 2000 quarter.
The Company recorded charges related to its restructuring and integration efforts of $11.2 million for the quarter ended June 2001. This charge relates to payments made to customers of discontinued product lines to exit contractual obligations and "stay put" arrangements for employees given future termination dates.
As of June 30, 2001, the Company had approximately $588.2 million in cash and short-term marketable securities.
Revenue categories are as follows (in millions):
Q2 2001 Q1 2001 Q2 2000
Transaction services $ 96.9 $ 97.5 $ 55.0
Physician services 65.1 65.1 9.2
Portal services 15.9 19.9 26.8
Other products 0.8 2.0 10.1
Total revenue $ 178.7 $184.5 $ 101.1
Transaction Services revenue was $96.9 million for the June 2001 quarter compared to $97.5 million in the March 2001 quarter and $55.0 million in the June 2000 quarter. Total electronic transactions were 536 million for the June 2001 quarter compared to 549 million in the March 2001 quarter and 274 million transactions in the June 2000 quarter. The increase in revenues and transaction volumes compared to the June 2000 quarter was a result of the acquisition of ENVOY Corporation, which was completed on May 26, 2000 and, therefore, included in the June 2000 results for only a partial period.
Physician Services revenue was $65.1 million for the June 2001 quarter compared to $65.1 million in the March 2001 quarter and $9.2 million in the June 2000 quarter. The physician services revenues for the June 2000 quarter consisted solely of revenues from sponsored subscriptions to the company's physician portal offering. This source of revenue was eliminated effective December 31, 2000 as a result of the termination of the company's agreement with Dupont and the revisions to the company's agreement with Microsoft.
Portal Services revenue was $15.9 million for the June 2001 quarter as compared to $19.9 million for the March 2001 quarter and $26.8 million in the June 2000 quarter. The decrease in revenues compared to the March 2001 quarter was attributable to a combination of the deferral of certain committed advertising sponsorship until the fourth quarter of 2001 and the impact of the softening internet advertising market. The decrease compared to the June 2000 quarter was attributable to the company's relationships with News Corporation, Microsoft and Dupont that were restructured or terminated effective as of the end of December 2000 and the impact of the softening of the internet advertising market on both the company and certain of its customers.
Other revenues were $0.8 million for the June 2001 quarter as compared with $2.0 million for the March 2001 quarter and $10.1 million in the June 2000 quarter. The decline reflects the continuation of the phasing out of certain non-core product offerings. As stated previously, these other revenues will be fully phased out during 2001.
Operating expenses before restructuring and integration, depreciation, amortization and other non-cash expenses was $210.6 for the June 2001 quarter compared to $228.1 million in the March 2001 quarter. Each category of expense declined on both an absolute dollar and a percentage of revenue basis. The reduction in expenses reflects the benefits of both the Company's integration initiatives and the restructuring of many of the Company's strategic relationships.
Interest income was $8.1 million for the June 2001 quarter compared to $10.9 million in the March 2001 quarter. The decline was due to a decline in interest rates during the quarter and to a reduction in cash available for investment.
The loss before restructuring, integration, depreciation, amortization and other non cash charges was ($23.8) million for the June 2001 quarter compared to ($32.7) million for the March 2001 quarter and ($55.5) million in the June 2000 quarter. In commenting on the results for the June 2001 quarter, Marv Rich, President, observed, "The results for the June 2001 quarter reflect the continuing efforts to integrate the acquired companies and achieve the benefits originally contemplated by these acquisitions. The loss before restructuring, integration and non-cash items declined by 27% compared to March 2001 and 57% compared to June 2000. These improvements were attained even though revenues declined compared to the March 2001 quarter. Our current revenue expectations for 2001 are approximately $715 - $725 million. These expectations reflect the impact of exiting certain uneconomic hospital to physician connectivity relationships, consolidation of duplicate transaction services offerings, continued softness in the internet advertising market and the impact of an uncertain economy on the spending decisions of physicians. Nonetheless, we anticipate a continued decline in our operating expenses and remain confident that we will finish the year with a positive exit rate. At that time, we will have created an organization with the infrastructure necessary to achieve significant growth rates and be profitable in 2002 and beyond."
Several strategic relationships were favorably revised during the quarter including AOL, Excite, VitalWorks and Practiceworks. Martin J. Wygod, Chairman and CEO of WebMD, said, "Although the process has been lengthy and there are still several outstanding important issues to resolve, we have made tremendous progress in evaluating and restructuring numerous strategic relationships. I believe that the modifications that have been made provide maximum strategic and economic value to both WebMD and our partners. Having reduced our loss before restructuring, integration, non-cash charges and interest income by approximately $300 million on an annualized basis since the beginning of our integration initiatives and having restructured agreements that now reflect true strategic partnerships, the management team can focus squarely on capitalizing on the substantial opportunities ahead of us."
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 CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
Revenue $178,714 $101,074 $363,205 $166,955
Costs and expenses:
Cost of operations 119,366 78,194 244,710 137,559
Development and
engineering 9,141 14,684 21,513 26,258
Sales, marketing, general
and administrative 113,809 124,136 242,367 224,662
Depreciation and
amortization 755,073 416,428 1,514,870 755,138
Restructuring and
integration charge 11,211 -- 219,894 --
Interest income, net 8,103 14,064 19,007 26,893
Net loss $(821,783) $(518,304) $(1,861,142) $(949,769)
Basic and diluted net loss
per common share $(2.30) $(2.64) $(5.21) $(5.11)
Weighted-average shares
outstanding used in computing
basic and diluted net loss
per common share 357,878 196,471 357,342 185,756
WebMD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended
June 30, March 31, June 30,
2001 2001 2000
Revenue $178,714 $184,491 $101,074
Costs and expenses:
Cost of operations 119,366 125,344 78,194
Development and engineering 9,141 12,372 14,684
Sales, marketing, general and
administrative 82,063 90,372 77,782
Interest income, net 8,103 10,904 14,064
Loss before restructuring, integration
and non-cash charges (23,753) $(32,693) $(55,522)
Basic and diluted net loss per
common share $(0.07) $(0.09) $(0.28)
Depreciation and amortization of
intangibles, including prepaid
content and services, deferred
compensation and restructuring
and integration charge. 798,030 1,006,666 462,782
Net loss $(821,783) $(1,039,359) $(518,304)
Basic and diluted net loss per
common share $(2.30) $(2.91) $(2.64)
Weighted average shares outstanding
used in computing basic and diluted
net loss per common share 357,878 356,806 196,471
WebMD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Six Months Ended
June 30, June 30,
2001 2000
Revenue $363,205 $166,955
Costs and expenses:
Cost of operations 244,710 137,559
Development and engineering 21,513 26,258
Sales, marketing, general and
administrative 172,435 158,596
Interest income, net 19,007 26,893
Loss before restructuring,
integration and non-cash charges (56,446) $(128,565)
Basic and diluted net loss per
common share $(0.16) $(0.69)
Depreciation and amortization of
intangibles, including prepaid
content and services, deferred
compensation and restructuring
and integration charge. 1,804,696 821,204
Net loss $(1,861,142) $(949,769)
Basic and diluted net loss per
common share $(5.21) $(5.11)
Weighted average shares outstanding
used in computing basic and
diluted net loss per common share 357,342 185,756
WebMD CORPORATION
RECONCILIATION TO NET LOSS
(In thousands, unaudited)
Three Months Ended
June 30, March 31, June 30,
2001 2001 2000
Loss before restructuring, integration
and non-cash charges $(23,753) $(32,693) $(55,522)
Non-cash and restructuring and
integration charges:
Depreciation and amortization 755,073 759,797 416,428
Amortization of prepaid content
and services 8,208 8,175 20,706
Amortization of deferred
compensation 23,538 30,011 25,648
Restructuring and integration charge 11,211 208,683 --
798,030 1,006,666 462,782
Net loss $(821,783) $(1,039,359) $(518,304)
WebMD CORPORATION
RECONCILIATION TO NET LOSS
(In thousands, unaudited)
Six Months Ended
June 30, June 30,
2001 2000
Loss before restructuring,
integration and non-cash charges $(56,446) $(128,565)
Non-cash and restructuring and
integration charges:
Depreciation and amortization 1,514,870 755,138
Amortization of prepaid content
and services 16,383 39,260
Amortization of deferred
compensation 53,549 26,806
Restructuring and integration charge 219,894 --
1,804,696 821,204
Net loss $(1,861,142) $(949,769)
WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
June 30, December 31,
2001 2000
Assets
Cash and cash equivalents $491,855 $490,797
Short-term marketable securities 96,376 --
Accounts receivable, net 182,107 195,071
Assets held for sale 214,556 214,556
Other current assets 36,862 44,209
Total current assets 1,021,756 944,633
Marketable securities 8,560 219,686
Property and equipment, net 75,459 90,356
Prepaid content, services and
distribution 118,240 229,081
Intangible and other assets, net 5,306,652 6,971,875
Total Assets $6,530,667 $8,455,631
Liabilities and Stockholders' equity
Notes and accounts payable $15,524 $19,563
Accrued expenses 252,477 272,932
Deferred revenue 51,473 45,891
Total current liabilities 319,474 338,386
Long-term liabilities 11,894 25,260
Stockholders' equity 6,199,299 8,091,985
Total Liabilities and
Stockholders' Equity $6,530,667 $8,455,631 |
