WebMD Announces Third Quarter ResultsLoss Before Restructuring and Non-Cash Items Declines 70% From Prior Year and 18% From Last Quarter
PR NEWSWIRE - November 12, 2001 16:01
ELMWOOD PARK, N.J., Nov 12, 2001 /PRNewswire via COMTEX/ -- WebMD Corporation (Nasdaq: HLTH) today announced financial results for the quarter ended September 30, 2001.
Revenue for the September 2001 quarter was $167.0 million compared to $151.2 million for the September 2000 quarter. The loss from continuing operations, excluding restructuring, integration and non-cash expenses, for the September 2001 quarter was ($19.5) million or ($0.05) per share, compared to ($65.8) million or ($0.27) per share for the September 2000 quarter. The Company recorded a non-cash charge during the September 2001 quarter of $3.827 billion or ($10.64) per share related to the impairment of its long-lived and other assets, primarily goodwill and other acquired intangible assets. The net loss, including the non-cash charge discussed above, for the September 2001 quarter was ($4.624) billion or ($12.86) per share compared with ($786.9) million or ($3.17) per share for the September 2000 quarter.
As of September 30, 2001, the Company had approximately $586.8 million in cash and short-term marketable securities compared to $588.2 million as of June 30, 2001.
Anthony Vuolo, Chief Financial Officer stated: "The results for the September 2001 quarter are consistent with the objectives we outlined a year ago to continually reduce the Company's loss before restructuring and non-cash items during 2001 with the goal of eliminating this loss as we enter 2002. During the quarter, the loss from continuing operations before restructuring, integration and non-cash items declined by 70% compared to September 2000 and by 18% compared to June 2001. We are well positioned to take advantage of the significant opportunities that lie ahead with ample financial resources and the leading assets in the industry."
Revenue categories are as follows (in millions):
Q3 2001 Q3 2000 Q2 2001
Transaction services $91.6 $88.2 $96.9
Physician services 61.1 29.0 65.1
Portal services 14.3 28.6 15.9
Other products -- 5.4 0.8
Total revenue $167.0 $151.2 $178.7
Transaction Services revenue was $91.6 million for the September 2001 quarter compared to $88.2 million in the September 2000 quarter and $96.9 million in the June 2001 quarter. Total electronic transactions were 523 million for the September 2001 quarter compared to 487 million transactions in the September 2000 quarter and 536 million in the June 2001 quarter. The revenue increase compared to the September 2000 quarter was due to the inclusion of CareInsite for the full September 2001 quarter offset by reductions related to consolidating duplicative product offerings and certain legacy products. The decline in transaction services revenues compared to the June 2001 quarter reflects decreases resulting from a combination of seasonality factors and the anticipated reduction in revenues related to consolidating duplicative transaction services offerings and to certain legacy product offerings.
Physician Services revenue was $61.1 million for the September 2001 quarter compared to $29.0 million in the September 2000 quarter and $65.1 million in the June 2001 quarter. The increase in physician services revenues compared to the September 2000 quarter was due to the inclusion of Medical Manager Corporation for the full September 2001 quarter partially offset by the revenues from sponsored subscriptions that were 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. The decrease in physician services revenue compared to the June 2001 quarter resulted from the previously announced impact on new system sales associated with travel and scheduling conflicts and other delays in the month of September.
Portal Services revenue was $14.3 million for the September 2001 quarter compared to $28.6 million in the September 2000 quarter and $15.9 million for the June 2001 quarter. The decrease compared to the September 2000 quarter was attributable to the Company's relationships with News Corporation, Microsoft and Dupont which 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. The decrease in revenues compared to the June 2001 quarter was attributable to a combination of the deferral of certain committed advertising sponsorship until the fourth quarter of 2001 and to the continued softening of the Internet advertising market.
Operating expenses before restructuring and integration, depreciation, amortization and other non-cash expenses were $192.9 for the September 2001 quarter compared to $226.9 million in the September 2000 quarter and $210.6 million in the June 2001 quarter, reductions of 15%, and 8.4% respectively. 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. Sales, marketing, general and administrative expenses included severance expenses of approximately $3.0 million related to the departure of the Company's former President during the quarter.
Interest income was $6.4 million for the September 2001 quarter compared to $9.9 million for the September 2000 quarter and $8.1 million in the June 2001 quarter. The decline was due to a decline in interest rates and lower amounts available for investment.
As the Company previously announced, WebMD determined that it was necessary to conduct a review of its long-lived assets, primarily goodwill and other acquired intangible assets for impairment. These assets were recorded as a result of a series of acquisitions completed between November 1999 and September 2000. The Company's common stock was the primary consideration for these acquisitions. As a result of this review, the Company determined that its long-lived assets were impaired and recorded a write-down of $3.827 billion or $10.64 per share to adjust the carrying value of its long-lived assets to fair value.
During the September 2001 quarter, the Company acquired approximately 2.7 million shares of its common stock for $9.4 million under its previously announced stock repurchase program. As a result of the settlement with Quintiles and an additional purchase under its stock repurchase program, the Company has reacquired a total of approximately 47 million shares for $235 million in private transactions since the end of the September 2001 quarter. Since October 2000, the Company has reacquired a total of approximately 77 million shares of its common stock, including common stock equivalents related to the convertible preferred stock reacquired in February 2001.
Martin J. Wygod, Chairman and Chief Executive Officer of WebMD, stated: "We believe that the restructuring effort initiated a year ago will be substantially complete by the end of the year. During this process, we have consolidated operations and products, realigned strategic partnerships, while continuing to invest in products and services that will drive growth of our business. Today, WebMD is a company with significant strategic assets that are free of encumbrances and with management and employees that are fully focused on the business and opportunities at hand. As we look forward, we are excited by the long-term outlook and the environment that exists for both revenue and earnings growth. With regard to 2002, we believe that we will not begin to see traction in revenue growth until the last six months of the year, due to the uncertainty of the economy, as well as the timing of both new product distribution and the first scheduled HIPAA transaction standard implementation date." |
