ELMWOOD PARK, N.J., July 30 /PRNewswire-FirstCall/ -- HLTH
Corporation (NASDAQ:HLTH) today announced financial results for the
three months ended June 30, 2009. "I am pleased with WebMD's
results this quarter. At a time when many internet and media
companies are seeing declines in advertising revenue, WebMD
continues to experience strong growth," said Martin J. Wygod,
Chairman and Acting CEO of HLTH Corporation. "Advertiser demand for
our high quality and highly engaged audience is increasing. The
strength of the WebMD brand, the size and quality of our audience,
the sophisticated set of services we offer our advertisers, and our
technology platform and expertise clearly differentiate us from
others in the marketplace and provide a solid foundation for
growth." Consolidated Financial Highlights Revenue for the second
quarter was $98.6 million compared to $86.0 million in the prior
year period, an increase of 15%. Earnings before interest, taxes,
non-cash and other items ("Adjusted EBITDA") for the second quarter
was $20.0 million compared to $12.8 million in the prior year
period, an increase of 56%. Income from continuing operations for
the second quarter was $700 thousand or $0.01 per share as compared
to a loss from continuing operations of $(1.6) million or $(0.01)
per share in the prior year period. Loss from discontinued
operations was $(12.4) million or $(0.12) per share, compared to
$(3.2) million or $(0.02) per share in the prior year period. Net
loss was $(11.7) million or $(0.11) per share, compared to $(4.8)
million or $(0.03) per share in the prior year period. HLTH's
financial results present Little Blue Book, WebMD's print directory
business, and Porex as discontinued operations for current and
prior periods, and present ViPS, which was sold in July 2008, as
discontinued operations in the prior year period. Loss from
discontinued operations and net loss for the second quarter of 2009
include an after-tax expense of approximately $11 million
reflecting an increase in the estimate of HLTH's indemnification
obligation for the defense costs of the eight former officers and
directors of Emdeon Practice Services, a former subsidiary of HLTH
which was divested in 2006, partially offset by proceeds from a
settlement with one of our insurance carriers related to this
matter. The loss from discontinued operations and net loss for the
second quarter of 2009 also include a non-cash, after-tax
impairment charge of $5 million related to the carrying value of
WebMD's Little Blue Book physician directory business. At June 30,
2009, HLTH had approximately $828 million in cash and investments,
of which $373 million is attributable to WebMD. Operating
Highlights Public portal advertising and sponsorship revenue was
$76.0 million for the second quarter, compared to $64.1 million in
the prior year period, an increase of 18%. Traffic to the WebMD
Health Network continued to grow strongly, reaching an average of
59.8 million unique users per month and total traffic of 1.4
billion page views during the second quarter, increases of 24% and
31%, respectively, from a year ago. In the second quarter, 1.6
million continuing medical education (CME) programs were completed
on the WebMD Professional Network, an increase of 25% from the
prior year period. Private portal services revenue was $22.6
million for the second quarter compared to $21.9 million in the
prior year period, an increase of 4%. The base of large employers
and health plans utilizing WebMD's private Health and Benefits
portals during the second quarter was 137 as compared to 123 a year
ago. During the quarter, WebMD launched integrated platform
services for Blue Cross Blue Shield of Florida, Inc. Merger with
WebMD As previously announced, HLTH and WebMD entered into a
definitive merger agreement on June 17, 2009. On July 10, 2009,
WebMD filed a Registration Statement with the SEC containing a
preliminary joint proxy statement/prospectus relating to the merger
and HLTH and WebMD have scheduled stockholders meetings for
September 25, 2009 to seek the necessary stockholder approvals.
Financial Guidance HLTH's financial guidance is provided in a
schedule attached to this release. In a separate release issued
today, WebMD reaffirmed its financial guidance for 2009 and
narrowed the ranges for its anticipated revenue and Adjusted EBITDA
by raising the low end of those ranges. Analyst and Investor
Conference Call As previously announced, HLTH and WebMD will host a
conference call at 4:45 pm (Eastern) today to discuss their
respective second quarter results. Investors can access the call
via webcast at http://www.hlth.com/ (in the Investor Relations
section). A replay of the call will be available at the same web
address. About HLTH HLTH Corporation (NASDAQ:HLTH) owns
approximately 83% of WebMD Health Corp. (NASDAQ:WBMD). WebMD is the
leading provider of health information services, serving consumers,
physicians, healthcare professionals, employers and health plans
through its public and private online portals and health-focused
publications. HLTH also owns Porex, a developer, manufacturer and
distributor of proprietary porous plastic products and components
used in healthcare, industrial and consumer applications. All
statements contained in this press release and the related analyst
and investor conference call, other than statements of historical
fact, are forward-looking statements, including those regarding:
our guidance on HLTH's and WebMD's future financial results and
other projections or measures of their future performance; market
opportunities and WebMD's ability to capitalize on them; the
benefits expected from new products or services and from other
potential sources of additional revenue; expectations regarding the
market for WebMD's and HLTH's investments in auction rate
securities (ARS); the merger transaction between HLTH and WebMD
(the "Merger Transaction"); and the potential sale transaction with
respect to Porex (the "Potential Porex Transaction"). These
statements speak only as of the date of this press release, are
based on HLTH's and WebMD's current plans and expectations, and
involve risks and uncertainties that could cause actual future
events or results to be different than 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; WebMD's relationships with customers
and strategic partners; changes in the markets for ARS; and changes
in economic, political or regulatory conditions or other trends
affecting the healthcare, Internet, information technology and
plastics industries. Further information about these matters can be
found in our other Securities and Exchange Commission filings. In
addition, there can be no assurances regarding: whether HLTH and
WebMD will be able to complete the Merger Transaction or as to the
timing of such transaction; or whether HLTH will be able to
complete the Potential Porex Transaction or as to the timing or
terms of such transaction. Except as required by applicable law or
regulation, we do not undertake any obligation to update our
forward-looking statements to reflect future events or
circumstances. This press release, and the accompanying tables,
include both financial measures in accordance with accounting
principles generally accepted in the United States of America, or
GAAP, as well as certain non-GAAP financial measures. The tables
attached to this press release include reconciliations of these
non-GAAP financial measures to GAAP financial measures. In
addition, an "Explanation of Non-GAAP Financial Measures" is
attached to this press release as Annex A. WebMD , and POREX are
trademarks of HLTH Corporation or its subsidiaries. -Tables Follow-
HLTH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share data, unaudited) Three Months Ended Six
Months Ended June 30, June 30, ------------------ ----------------
2009 2008 2009 2008 ---- ---- ---- ---- (a) (a) Revenue $98,631
$85,964 $188,895 $166,614 Cost of operations 39,229 31,968 75,794
62,895 Sales and marketing 26,797 24,898 54,358 50,047 General and
administrative 22,003 22,778 43,851 43,627 Depreciation and
amortization 6,956 7,214 14,059 13,989 Interest income 1,958 8,062
4,220 19,998 Interest expense 5,781 6,585 12,317 13,110 Gain on
repurchases of convertible notes 3,473 - 10,120 - Gain on sale of
EBS Master LLC - - - 538,024 Impairment of auction rate securities
- - - 60,108 Other expense, net 552 666 821 4,810 --- --- --- -----
Income (loss) from continuing operations before income tax
provision (benefit) 2,744 (83) 2,035 476,050 Income tax provision
(benefit) 750 569 (467) 26,171 Equity in earnings of EBS Master LLC
- - - 4,007 --- --- --- ----- Consolidated income (loss) from
continuing operations 1,994 (652) 2,502 453,886 Consolidated loss
from discontinued operations, net of tax (13,284) (3,063) (12,767)
(6) ------- ------ ------- -- Consolidated net (loss) income
inclusive of noncontrolling interest (11,290) (3,715) (10,265)
453,880 (Income) loss attributable to noncontrolling interest (387)
(1,071) (997) 2,774 ---- ------ ---- ----- Net (loss) income
attributable to HLTH stockholders $(11,677) $(4,786) $(11,262)
$456,654 ======== ======= ======== ======== Amounts attributable to
HLTH stockholders: Income (loss) from continuing operations $703
$(1,611) $509 $456,711 Loss from discontinued operations (12,380)
(3,175) (11,771) (57) ------- ------ ------- --- Net (loss) income
attributable to HLTH stockholders $(11,677) $(4,786) $(11,262)
$456,654 ======== ======= ======== ======== Basic (loss) income per
common share: Income (loss) from continuing operations $0.01
$(0.01) $0.00 $2.50 Loss from discontinued operations (0.12) (0.02)
(0.11) (0.00) ----- ----- ----- ----- Net (loss) income
attributable to HLTH stockholders $(0.11) $(0.03) $(0.11) $2.50
====== ====== ====== ===== Diluted (loss) income per common share:
Income (loss) from continuing operations $0.01 $(0.01) $0.00 $2.04
Loss from discontinued operations (0.12) (0.02) (0.11) (0.01) -----
----- ----- ----- Net (loss) income attributable to HLTH
stockholders $(0.11) $(0.03) $(0.11) $2.03 ====== ====== ======
===== Weighted-average shares outstanding used in computing (loss)
income per common share: Basic 102,608 182,622 102,178 182,399
======= ======= ======= ======= Diluted 105,674 186,243 104,962
228,209 ======= ======= ======= ======= (a) The consolidated
financial statements for the three and six months ended June 30,
2008 have been adjusted to reflect (i) the required adoption,
effective January 1, 2009, of Financial Accounting Standards
Board's Staff Position APB Opinion No. APB 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)" and Statement of
Financial Accounting Standards No. 160, "Noncontrolling Interests
in Consolidated Financial Statements - an amendment of ARB No. 51"
and (ii) the reclassification of WebMD's Little Blue Book print
directory business to discontinued operations. HLTH CORPORATION
CONSOLIDATED SEGMENT INFORMATION (In thousands, except per share
data, unaudited) Three Months Ended Six Months Ended June 30, June
30, ------------------ ---------------- 2009 2008 2009 2008 ----
---- ---- ---- Revenue (d) (d) WebMD: Public portal advertising and
sponsorship $75,992 $64,138 $143,281 $122,865 Private portal
services 22,639 21,866 45,614 43,789 Inter-segment eliminations -
(40) - (40) - --- - --- $98,631 $85,964 $188,895 $166,614 =======
======= ======== ======== Earnings before interest, taxes, non-cash
and other items ("Adjusted EBITDA") (a) WebMD $23,218 $18,392
$41,906 $34,724 Corporate (3,197) (5,573) (6,624) (10,632) ------
------ ------ ------- 20,021 12,819 35,282 24,092 Adjusted EBITDA
per diluted common share (b) $0.19 $0.07 $0.34 $0.11 ----- -----
----- ----- Interest, taxes, non-cash and other items (c) Interest
income 1,958 8,062 4,220 19,998 Interest expense (5,781) (6,585)
(12,317) (13,110) Income tax (provision) benefit (750) (569) 467
(26,171) Depreciation and amortization (6,956) (7,214) (14,059)
(13,989) Non-cash stock-based compensation (9,412) (6,448) (18,566)
(12,388) Non-cash advertising - - (1,753) (1,558) Gain on
repurchases of convertible notes 3,473 - 10,120 - Equity in
earnings of EBS Master LLC - - - 4,007 Gain on sale of EBS Master
LLC - - - 538,024 Impairment of auction rate securities - - -
(60,108) Other expense, net (559) (717) (892) (4,911) ---- ----
---- ------ Consolidated income (loss) from continuing operations
1,994 (652) 2,502 453,886 Consolidated loss from discontinued
operations, net of tax (13,284) (3,063) (12,767) (6) ------- ------
------- -- Consolidated net (loss) income inclusive of
noncontrolling interest (11,290) (3,715) (10,265) 453,880 (Income)
loss attributable to noncontrolling interest (387) (1,071) (997)
2,774 ---- ------ ---- ----- Net (loss) income attributable to HLTH
stockholders $(11,677) $(4,786) $(11,262) $456,654 ======== =======
======== ======== Amounts attributable to HLTH stockholders: Income
(loss) from continuing operations $703 $(1,611) $509 $456,711 Loss
from discontinued operations (12,380) (3,175) (11,771) (57) -------
------ ------- --- Net (loss) income attributable to HLTH
stockholders $(11,677) $(4,786) $(11,262) $456,654 ======== =======
======== ======== Basic (loss) income per common share: Income
(loss) from continuing operations $0.01 $(0.01) $0.00 $2.50 Loss
from discontinued operations (0.12) (0.02) (0.11) (0.00) -----
----- ----- ----- Net (loss) income attributable to HLTH
stockholders $(0.11) $(0.03) $(0.11) $2.50 ====== ====== ======
===== Diluted (loss) income per common share: Income (loss) from
continuing operations $0.01 $(0.01) $0.00 $2.04 Loss from
discontinued operations (0.12) (0.02) (0.11) (0.01) ----- -----
----- ----- Net (loss) income attributable to HLTH stockholders
$(0.11) $(0.03) $(0.11) $2.03 ====== ====== ====== =====
Weighted-average shares outstanding used in computing (loss) income
per common share: Basic 102,608 182,622 102,178 182,399 =======
======= ======= ======= Diluted 105,674 186,243 104,962 228,209
======= ======= ======= ======= (a) See Annex A-Explanation of
Non-GAAP Financial Measures. (b) Adjusted EBITDA per diluted common
share is based on the weighted- average shares outstanding used in
computing diluted (loss) income per common share. (c)
Reconciliation of Adjusted EBITDA to consolidated income (loss)
from continuing operations. (d) The consolidated financial
statements for the three and six months ended June 30, 2008 have
been adjusted to reflect (i) the required adoption, effective
January 1, 2009, of Financial Accounting Standards Board's Staff
Position No. APB 14-1, "Accounting for Convertible Debt Instruments
That May Be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)" and Statement of Financial Accounting Standards No.
160, "Noncontrolling Interests in Consolidated Financial Statements
- an amendment of ARB No. 51" and (ii) the reclassification of
WebMD's Little Blue Book print directory business to discontinued
operations. HLTH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited) June 30, December 31, 2009 2008 -------
----------- Assets ------ Cash and cash equivalents $555,247
$629,848 Accounts receivable, net 78,674 93,082 Prepaid expenses
and other current assets 48,974 44,740 Assets of discontinued
operations 124,945 131,350 ------- ------- Total current assets
807,840 899,020 Investments 273,209 288,049 Property and equipment,
net 56,864 56,633 Goodwill 202,104 202,104 Intangible assets, net
28,888 32,328 Other assets 24,863 23,600 ------ ------ Total Assets
$1,393,768 $1,501,734 ========== ========== Liabilities and Equity
---------------------- Accrued expenses $45,090 $54,595 Deferred
revenue 86,261 79,613 Liabilities of discontinued operations
113,588 100,771 ------- ------- Total current liabilities 244,939
234,979 1.75% convertible notes 264,583 350,000 3 1/8% convertible
notes, net of discount of $26,409 at June 30, 2009 and $35,982 at
December 31, 2008 223,891 264,018 Other long-term liabilities
19,670 21,816 HLTH stockholders' equity 491,627 496,698
Noncontrolling interest in WHC 149,058 134,223 ------- -------
Equity 640,685 630,921 ---------- ---------- Total Liabilities and
Equity $1,393,768 $1,501,734 ========== ========== HLTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Six
Months Ended June 30, ---------------- 2009 2008 ---- ---- Cash
flows from operating activities: (a) Consolidated net (loss) income
inclusive of noncontrolling interest $(10,265) $453,880 Adjustments
to reconcile consolidated net (loss) income inclusive of
noncontrolling interest to net cash provided by operating
activities: Consolidated loss from discontinued operations, net of
tax 12,767 6 Depreciation and amortization 14,059 13,989 Equity in
earnings of EBS Master LLC - (4,007) Non-cash interest expense
5,310 5,365 Non-cash advertising 1,753 1,558 Non-cash stock-based
compensation 18,566 12,388 Deferred income taxes (2,363) 5,247 Gain
on repurchases of convertible notes (10,120) - Gain on sale of EBS
Master LLC - (538,024) Impairment of auction rate securities -
60,108 Changes in operating assets and liabilities: Accounts
receivable 14,408 15,249 Prepaid expenses and other, net (3,775)
6,466 Accrued expenses and other long-term liabilities (9,544)
(3,620) Deferred revenue 6,648 10,194 ----- ------ Net cash
provided by continuing operations 37,444 38,799 Net cash provided
by discontinued operations 5,509 17,395 ----- ------ Net cash
provided by operating activities 42,953 56,194 Cash flows from
investing activities: Proceeds from maturities and sales of
available-for-sale securities 1,100 106,586 Purchases of
available-for-sale securities - (177,150) Purchases of property and
equipment (10,955) (6,945) Proceeds related to the sales of EBS
Master LLC - 574,617 Proceeds from the sale of discontinued
operations 250 24,318 Proceeds from advances to EBS Master LLC -
1,155 Other - 148 - --- Net cash (used in) provided by continuing
operations (9,605) 522,729 Net cash used in discontinued operations
(2,356) (3,184) ------ ------ Net cash (used in) provided by
investing activities (11,961) 519,545 Cash flows from financing
activities: Proceeds from issuance of HLTH and WHC common stock
18,194 9,644 Repurchases of convertible notes (123,857) - Other -
(80) --- --- Net cash (used in) provided by continuing operations
(105,663) 9,564 Net cash used in discontinued operations - (76) ---
--- Net cash (used in) provided by financing activities (105,663)
9,488 Effect of exchange rates on cash 70 1,793 -- ----- Net
(decrease) increase in cash and cash equivalents (74,601) 587,020
Cash and cash equivalents at beginning of period 629,848 536,879
------- ------- Cash and cash equivalents at end of period $555,247
$1,123,899 ======== ========== (a) The consolidated financial
statements for the six months ended June 30, 2008 have been
adjusted to reflect (i) the Required adoption, effective January 1,
2009, of Financial Accounting Standards Board's Staff Position No.
APB 14-1, "Accounting for Convertible Debt Instruments That May Be
Settled in Cash Upon Conversion (Including Partial Cash
Settlement)" and Statement of Financial Accounting Standards No.
160, "Noncontrolling Interests in Consolidated Financial Statements
- an amendment of ARB No. 51" and (ii) the reclassification of
WebMD's Little Blue Book print directory business to discontinued
operations. FINANCIAL GUIDANCE SUMMARY HLTH CORPORATION 2009
Financial Guidance (in millions, except per share amounts) Year
Ending December 31, 2009 Range ----------------- Revenue $420.0
$440.0 ====== ====== Earnings before interest, taxes, non-cash and
other items ("Adjusted EBITDA") (a) WebMD $110.0 $120.0 Corporate
(14.0) (13.0) ----- ----- $96.0 $107.0 Adjusted EBITDA per diluted
common share $0.89 $0.99 ----- ----- Interest, taxes, non-cash and
other items (b) Interest income 9.0 9.0 Interest expense (c) (24.0)
(24.0) Depreciation and amortization (34.0) (31.0) Non-cash
advertising (1.8) (1.8) Non-cash stock-based compensation (39.0)
(36.0) Gain on repurchases of convertible notes (e) 10.1 10.1
Income tax provision (d) (7.4) (15.6) Other expenses (e) (0.9)
(0.9) --- ---- Consolidated income from continuing operations 8.0
16.8 Consolidated loss from discontinued operations (e) (12.8)
(12.8) ----- ----- Consolidated net (loss) income inclusive of
noncontrolling interest (4.8) 4.0 Income attributable to
noncontrolling interest (4.0) (6.0) ---- ---- Net loss attributable
to HLTH stockholders $(8.8) $(2.0) ===== ===== Net loss
attributable to HLTH stockholders per common share: Basic and
diluted $(0.08) $(0.02) ====== ====== Weighted-average shares
outstanding used in computing net loss attributable to HLTH
stockholders per common share: Basic 104.0 104.0 Diluted 108.0
108.0 (a) See Annex A - Explanation of Non-GAAP Financial Measures.
(b) Reconciliation of Adjusted EBITDA to consolidated income from
continuing operations. (c) Interest expense includes additional
non-cash interest expense from the January 1, 2009 adoption of
Financial Accounting Standards Board's Staff Position APB Opinion
No. 14-1, "Accounting for Convertible Debt Instruments That May Be
Settled in Cash Upon Conversion (Including Partial Cash
Settlement)." (d) The income tax provision excludes any benefit
relating to any reversal in 2009 of the valuation allowance against
deferred tax assets. (e) Net income attributable to HLTH
stockholders excludes guidance relating to the HLTH's discontinued
operations. This table reflects actual income and expense through
June 30, 2009 for the "gain on repurchases of convertible notes,"
"other expenses" and "consolidated loss from discontinued
operations" but does not reflect guidance for these items in any
future quarter. We do not make projections for these items,
although they may recur in future quarters. The above guidance
excludes potential reductions in Corporate expenses, reductions in
weighted-average shares outstanding, transaction expenses and other
impacts of the pending merger of WebMD and HLTH. ANNEX A
Explanation of Non-GAAP Financial Measures The accompanying HLTH
Corporation press release and financial tables include both
financial measures in accordance with U.S. generally accepted
accounting principles, or GAAP, as well as non-GAAP financial
measures. The non-GAAP financial measures represent earnings before
interest, taxes, non-cash and other items (which we refer to as
"Adjusted EBITDA") and related per share amounts. Adjusted EBITDA
should be viewed as supplemental to, and not as an alternative for,
"consolidated income (loss) from continuing operations" or "net
(loss) income attributable to HLTH stockholders" calculated in
accordance with GAAP. The tables attached to the accompanying press
release include reconciliations of non-GAAP financial measures to
GAAP financial measures. Adjusted EBITDA is used by HLTH's
management as an additional measure of HLTH's overall performance
and its reporting segments' performance for purposes of business
decision-making, including developing budgets, managing
expenditures, and evaluating potential acquisitions or
divestitures. Period-to-period comparisons of Adjusted EBITDA help
HLTH's management identify additional trends in HLTH's and its
reporting segments' financial results that may not be shown solely
by period-to-period comparisons of consolidated income (loss) from
continuing operations or net (loss) income attributable to HLTH
stockholders. In addition, HLTH uses Adjusted EBITDA in the
incentive compensation programs applicable to many of its employees
in order to evaluate HLTH's performance. HLTH management recognizes
that Adjusted EBITDA has inherent limitations because of the
excluded items, particularly those items that are recurring in
nature. In order to compensate for those limitations, management
also reviews the specific items that are excluded from Adjusted
EBITDA, but included in consolidated income (loss) from continuing
operations or net (loss) income attributable to HLTH stockholders,
as well as trends in those items. The amounts of those items are
set forth, for the applicable periods, in the reconciliations of
Adjusted EBITDA to consolidated income (loss) from continuing
operations or to net (loss) income attributable to HLTH
stockholders that accompany our press releases containing non-GAAP
financial measures, including the reconciliations contained in the
tables attached to the accompanying press release. HLTH believes
that the presentation of Adjusted EBITDA is useful to investors in
their analysis of HLTH's results for reasons similar to the reasons
why HLTH's management finds it useful and because it helps
facilitate investor understanding of decisions made by HLTH's
management in light of the performance metrics used in making those
decisions. In addition, as more fully described below, HLTH
believes that providing Adjusted EBITDA, together with a
reconciliation of Adjusted EBITDA to consolidated income (loss)
from continuing operations or to net (loss) income attributable to
HLTH stockholders, helps investors make comparisons between HLTH
and other companies that may have different capital structures,
different effective income tax rates and tax attributes, different
capitalized asset values and/or different forms of employee
compensation. However, Adjusted EBITDA is intended to provide a
supplemental way of comparing HLTH with other public companies and
is not intended as a substitute for comparisons based on
"consolidated income (loss) from continuing operations" or "net
(loss) income attributable to HLTH stockholders" calculated in
accordance with GAAP. In making any comparisons to other companies,
investors need to be aware that companies use different non-GAAP
measures to evaluate their financial performance. Investors should
pay close attention to the specific definition being used and to
the reconciliation between such measures and the corresponding GAAP
measures provided by each company under applicable SEC rules. The
following is an explanation of the items excluded by HLTH from
Adjusted EBITDA but included in consolidated income (loss) from
continuing operations: -- Depreciation and Amortization.
Depreciation and amortization expense is a non-cash expense
relating to capital expenditures and intangible assets arising from
acquisitions that are expensed on a straight-line basis over the
estimated useful life of the related assets. HLTH excludes
depreciation and amortization expense from Adjusted EBITDA because
it believes (i) the amount of such expenses in any specific period
may not directly correlate to the underlying performance of HLTH's
business operations and (ii) such expenses can vary significantly
between periods as a result of new acquisitions and full
amortization of previously acquired tangible and intangible assets.
Accordingly, HLTH believes this exclusion assists management and
investors in making period-to-period comparisons of operating
performance. Investors should note that the use of tangible and
intangible assets contributed to revenue in the periods presented
and will contribute to future revenue generation and should also
note that such expense will recur in future periods. -- Stock-Based
Compensation Expense. Stock-based compensation expense is a
non-cash expense arising from the grant of stock-based awards to
employees. HLTH believes that excluding the effect of stock-based
compensation from Adjusted EBITDA assists management and investors
in making period-to-period comparisons in its operating performance
because it believes (i) the amount of such expenses in any specific
period may not directly correlate to the underlying performance of
HLTH's business operations and (ii) such expenses can vary
significantly between periods as a result of the timing of grants
of new stock-based awards, including grants in connection with
acquisitions. Additionally, HLTH believes that excluding
stock-based compensation from Adjusted EBITDA assists management
and investors in making meaningful comparisons between HLTH's
operating performance and the operating performance of other
companies that may use different forms of employee compensation or
different valuation methodologies for their stock-based
compensation. Investors should note that stock-based compensation
is a key incentive offered to employees whose efforts contributed
to the operating results in the periods presented and are expected
to contribute to operating results in future periods. Investors
should also note that such expenses will recur in the future. --
Non-Cash Advertising Expense. This expense relates to the usage of
non-cash advertising obtained from News Corporation ("Newscorp") in
exchange for equity securities issued by HLTH in 2000. The
advertising was available only on various Newscorp properties,
primarily its television network and cable channels, without any
cash cost to HLTH and expired this year. HLTH excludes this expense
from Adjusted EBITDA (i) because it is a non-cash expense, (ii)
because it is incremental to other non-television cash advertising
expense that HLTH otherwise incurs and (iii) to assist management
and investors in comparing its operating results over multiple
periods. Investors should note that it is likely that HLTH derives
some benefit from such advertising. -- Interest Income and Expense.
Interest income is associated with the level of marketable debt
securities and other interest bearing accounts in which HLTH
invests, as well as with interest expense, including non-cash
interest expense, arising from the capital structure of HLTH.
Interest income and expense varies over time due to a variety of
financing transactions and due to acquisitions and divestitures
that HLTH has entered into or may enter into in the future. HLTH
has, in the past several years, issued convertible debentures and
preferred stock, repurchased shares in cash tender offers and
through other repurchase transactions, conducted an initial public
offering of equity in its WebMD Health Corp. subsidiary (referred
to below as WHC) and completed the divestiture of certain
businesses. HLTH excludes interest income and interest expense from
Adjusted EBITDA (i) because these items are not directly
attributable to the performance of HLTH's business operations and,
accordingly, their exclusion assists management and investors in
making period-to-period comparisons of operating performance and
(ii) to assist management and investors in making comparisons to
companies with different capital structures. Investors should note
that interest income and expense will recur in future periods. --
Income Tax Provision (Benefit). HLTH maintains a valuation
allowance on a portion of its net operating loss carryforwards, the
amount of which may change from quarter to quarter based on factors
that are not directly related to HLTH's results for the quarter.
The valuation allowance is either reversed through the statement of
operations or additional paid-in capital. The timing of such
reversals has not been consistent and as a result, HLTH's income
tax expense can fluctuate significantly from period to period in a
manner not directly related to HLTH's operating performance. HLTH
excludes the income tax provision (benefit) from Adjusted EBITDA
(i) because it believes that the income tax provision (benefit) is
not directly attributable to the underlying performance of HLTH's
business operations and, accordingly, its exclusion assists
management and investors in making period-to-period comparisons of
operating performance and (ii) to assist management and investors
in making comparisons to companies with different tax attributes.
Investors should note that income tax provision (benefit) will
recur in future periods. -- Other Items. HLTH engages in other
activities and transactions that can impact HLTH's overall
consolidated income (loss) from continuing operations. These other
items included, but were not limited to, (i) legal expenses
relating to the on-going Department of Justice investigation, (ii)
equity in earnings of EBS Master LLC, which represented 48% of
EBS's income through February 8, 2008, (iii) gain on repurchases of
our convertible notes, (iv) a reduction of certain sales and use
tax contingencies resulting from the expiration of certain
applicable statutes of limitations, (v) advisory expenses relating
to the potential merger of HLTH into WHC, (vi) gain on sale from
the sale of the remaining 48% ownership interest in EBS Master LLC,
and (vii) loss on the impairment of auction rate securities. HLTH
excludes these other items from Adjusted EBITDA because it believes
these activities or transactions are not directly attributable to
the performance of HLTH's business operations and, accordingly,
their exclusion assists management and investors in making
period-to-period comparisons of operating performance. Investors
should note that some of these other items may recur in future
periods. DATASOURCE: HLTH Corporation CONTACT: Investors: Risa
Fisher, +1-201-414-2002, , or Media: Kate Hahn, +1-212-624-3760,
Web Site: http://www.hlth.com/
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