WEBMD HEALTH CORP. NEW YORK, Feb. 24, 2015 /PRNewswire/ -- WebMD Health Corp. (NASDAQ: WBMD), the leading source of health information, today announced fourth quarter and full year financial results for 2014.
"We are pleased to report financial results for 2014 that are at the high end of our revenue and earnings expectations," said David Schlanger, Chief Executive Officer, WebMD. "We deliver our content and tools on the platforms that our users and advertisers are interested in, and the result has been strong growth in both our mobile traffic and revenue. In 2014, 34% of our advertising revenue was delivered on a mobile device."
Financial Highlights
For the three months ended December 31, 2014:
-- Revenue was $162.7 million, compared to $146.3 million in the prior year
period, an increase of 11%. Advertising and sponsorship revenue was
$127.0 million compared to $120.2 million in the prior year period.
Private portal services revenue was $28.6 million compared to $21.9
million in the prior year period. Information services revenue was $7.1
million compared to $4.2 million in the prior year period.
-- Earnings before interest, taxes, non-cash and other items ("Adjusted
EBITDA") was $48.1 million, compared to $40.6 million in the prior year
period, an increase of 18%.
-- Net income was $16.3 million or $0.38 per diluted share, compared to
$10.8 million, or $0.25 per diluted share in the prior year period. Net
income in the current year period would have been $15.2 million, or
$0.36 per diluted share, without the effect of a $1.1 million after tax
gain on discontinued operations resulting from the resolution of tax
indemnification liabilities related to the 2009 sale of Porex. Net
income in the prior year period would have been $11.8 million, or $0.27
per diluted share, without the effect of an after-tax loss on
convertible notes of $1.0 million.
For the twelve months ended December 31, 2014:
-- Revenue was $580.4 million compared to $515.3 million in the prior year
period, an increase of 13%. Advertising and sponsorship revenue was
$454.0 million compared to $417.0 million in the prior year. Private
portal services revenue was $103.2 million compared to $82.1 million in
the prior year. Information services revenue was $23.3 million compared
to $16.2 million in the prior year.
-- Adjusted EBITDA was $158.6 million compared to $122.9 million in the
prior year, an increase of 29%.
-- Net income was $42.1 million or $1.00 per diluted share compared to
$15.1 million or $0.31 per diluted share in the prior year. In the
current year, net income would have been $40.9 million, or $0.97 per
diluted share, without the effect of the $1.1 million after tax gain on
discontinued operations noted above. In the prior year, net income would
have been $18.9 million, or $0.39 per diluted share, without the effect
of an after-tax loss on convertible notes of $3.0 million and after-tax
severance expenses of $0.8 million.
Traffic Highlights
Traffic to the WebMD Health Network during the fourth quarter reached an average of 190 million unique users per month generating 3.70 billion page views for the quarter, increases of 22% and 17%, respectively, from the prior year period.
Balance Sheet Highlights
During the quarter, WebMD used: $25.1 million in cash to repurchase 676 thousand shares of its common stock under its stock repurchase program. Under the repurchase program, WebMD may repurchase shares from time to time in the open market, through block trades or in private transactions, depending on market conditions and other factors.
As of December 31, 2014, WebMD had: approximately $707 million in cash and cash equivalents; $952 million in aggregate principal amount of convertible notes outstanding; and approximately 37.2 million shares of its common stock outstanding (including approximately 900 thousand unvested shares of restricted stock).
Subsequent to the end of the fourth quarter, WebMD used $3.2 million in cash to repurchase 84 thousand shares. As of today, approximately $32 million remains available for repurchases under its stock repurchase program.
Financial Guidance
Today WebMD issued financial guidance for the first quarter and full year 2015.
For the full year ending December 31, 2015, WebMD expects:
-- Revenue to be approximately $615 million to $635 million, an increase of
approximately 6% to 9% from the prior year.
-- Approximately $486 million to $502 million of revenue is expected to
be from advertising and sponsorship, an increase of 7% to 11% from
the prior year. Growth in advertising and sponsorship will be driven
by growth in revenue from biopharma customers of approximately 12%
to 15% in 2015.
-- Approximately $105 million to $108 million of revenue is expected to
be from private portals services, an increase of 2% to 5% from the
prior year.
-- Approximately $24 million to $25 million of revenue is expected to
be from information services, an increase of 3% to 7% from the prior
year.
-- Adjusted EBITDA to be approximately $180 million to $190 million, an
increase of approximately 13% to 20% from the prior year.
-- Net income to be approximately $50.5 million to $59.5 million.
For the first quarter of 2015, WebMD expects:
-- Revenue to be approximately $141 million to $143 million, an increase of
approximately 5% to 7% from the prior year period.
-- Adjusted EBITDA is expected to be approximately $37 million to $38
million, an increase of approximately 11% to 14% from the prior year
period.
-- Net income to be approximately $8.5 million to $9.5 million.
"The external environment for biopharma advertisers, our largest customer base, is robust and sales activity with these customers has been strong in recent quarters," said Mr. Schlanger. "As a result, we expect revenue from biopharma to grow 12% to 15% in 2015."
A schedule summarizing the Company's financial guidance is attached to this press release.
Analyst and Investor Conference Call
WebMD will hold a conference call with investors and analysts at 4:45 p.m. (Eastern) today. The call can be accessed at www.wbmd.com (in the Investor Relations section). A replay of the audio webcast will be available at the same web address.
About WebMD
WebMD Health Corp. (NASDAQ: WBMD) is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers, and health plans through our public and private online portals, mobile platforms and health-focused publications.
The WebMD Health Network includes WebMD.com, Medscape.com, MedicineNet.com, eMedicineHealth.com, RxList.com, Medscape Education (Medscape.org) and other WebMD owned sites and apps.
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: guidance on our future financial results and other projections or measures of our future performance; market opportunities and our ability to capitalize on them; and the benefits expected from new or expected contracts with customers, new or updated products or services and from other potential sources of additional revenue. These statements speak only as of the date of this press release, are based on our 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 our products and services; our relationships with customers and other factors affecting their use of our services, including regulatory matters affecting their products and services; our ability to deploy new or updated services and to create new or enhanced revenue streams from those services; our ability to attract and retain qualified personnel; and changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet and information technology industries. Further information about these matters can be found in our Securities and Exchange Commission filings and this press release is intended to be read in conjunction with information contained in those filings. 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®, Medscape®, CME Circle®, Medpulse®, eMedicine®, MedicineNet®, theheart.org® and RxList® are among the trademarks of WebMD Health Corp. or its subsidiaries.
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue $162,727 $146,277 $580,449 $515,293
Cost of operations 60,676 57,763 224,094 209,740
Sales and marketing 36,978 33,081 136,160 127,997
General and administrative 24,756 22,715 94,119 93,220
Depreciation and amortization 7,774 6,566 29,811 26,606
Interest income 18 22 69 76
Interest expense 6,171 5,329 24,686 22,826
Loss on convertible notes - 1,575 - 4,871
Other expense - - - 1,353
--- --- --- -----
Income from continuing operations before income 26,390 19,270 71,648 28,756
tax provision
11,236 8,458 30,707 13,640
Income tax provision
Income from continuing operations 15,154 10,812 40,941 15,116
1,122 - 1,122 -
Income from discontinued operations, net of tax
Net income $16,276 $10,812 $42,063 $15,116
======= ======= ======= =======
Basic income per common share:
$0.42 $0.27 $1.08 $0.32
Income from continuing operations
0.03 - 0.03 -
Income from discontinued operations
Net income $0.45 $0.27 $1.11 $0.32
===== ===== ===== =====
Diluted income per common share:
$0.36 $0.25 $0.97 $0.31
Income from continuing operations
0.02 - 0.03 -
Income from discontinued operations
Net income $0.38 $0.25 $1.00 $0.31
===== ===== ===== =====
Weighted-average shares outstanding used in
computing income per common share:
36,427 40,457 37,869 46,830
Basic
53,082 44,872 45,614 48,398
Diluted
WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue (a)
Advertising and sponsorship
$93,742 $86,544 $329,329 $304,018
Biopharma and medical device
33,294 33,640 124,636 113,009
OTC, CPG and other
127,036 120,184 453,965 417,027
Private portal services 28,570 21,924 103,182 82,111
Information services 7,121 4,169 23,302 16,155
----- ----- ------ ------
$162,727 $146,277 $580,449 $515,293
======== ======== ======== ========
Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") (b) $48,138 $40,636 $158,622 $122,886
Interest, taxes, non-cash and other items (c)
18 22 69 76
Interest income
(6,171) (5,329) (24,686) (22,826)
Interest expense
(11,236) (8,458) (30,707) (13,640)
Income tax provision
(7,774) (6,566) (29,811) (26,606)
Depreciation and amortization
(7,821) (7,918) (32,546) (38,550)
Non-cash stock-based compensation
- (1,575) - (4,871)
Loss on convertible notes
- - - (1,353)
Other expense
Income from continuing operations 15,154 10,812 40,941 15,116
1,122 - 1,122 -
Income from discontinued operations, net of tax
Net income $16,276 $10,812 $42,063 $15,116
======= ======= ======= =======
(a) Revenue consists of the following four groups:
- Advertising and Sponsorship - Biopharma and Medical Device consists of advertising and
sponsorship revenue from pharmaceutical, biotechnology and medical device clients relating
to ethical pharmaceutical products or other regulated devices or products or for
sponsoring educational programs;
Advertising and Sponsorship - OTC, CPG and Other consists of advertising and sponsorship
revenue relating to non-Rx or over-the-counter medications and other healthcare
products, food and beverages, beauty products and other consumer products, as well as
revenue from clients such as retailers, pharmacies, hospitals, health insurance companies
- and government agencies;
- Private Portal Services consists of revenue from employers and health plans for
subscriptions to the Company's private portals solution and related services, including
health coaching and condition management services; and
- Information Services consists of revenue from the sale of stand-alone information and data
products.
(b) See Annex A-Explanation of Non-GAAP Financial Measures.
(c) Reconciliation of Adjusted EBITDA to net income.
WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
------------
2014 2013
---- ----
Assets
------
Cash and cash
equivalents $706,776 $824,880
Accounts receivable,
net 136,806 124,232
Prepaid expenses and
other current assets 13,877 13,243
Deferred tax assets 18,147 13,620
Total current assets 875,606 975,975
Property and
equipment, net 59,573 64,884
Goodwill 202,980 202,980
Intangible assets, net 14,215 13,834
Deferred tax assets 18,947 38,802
Other assets 26,236 29,153
Total Assets $1,197,557 $1,325,628
========== ==========
Liabilities and
Stockholders' Equity
---------------------
Accrued expenses $72,658 $73,739
Deferred revenue 89,785 85,148
Liabilities of
discontinued
operations - 1,506
Total current
liabilities 162,443 160,393
2.25% convertible
notes due 2016 252,232 252,232
2.50% convertible
notes due 2018 400,000 400,000
1.50% convertible
notes due 2020 300,000 300,000
Other long-term
liabilities 21,293 22,103
Stockholders' equity 61,589 190,900
Total Liabilities and
Stockholders' Equity $1,197,557 $1,325,628
========== ==========
WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Years Ended
December 31,
------------
2014 2013
---- ----
Cash flows from operating activities:
Net income $42,063 $15,116
Adjustments to
reconcile net income
to net cash provided
by
operating activities:
Income from
discontinued
operations, net of
tax (1,122) -
Depreciation and
amortization 29,811 26,606
Non-cash interest,
net 4,511 4,192
Non-cash stock-
based compensation 32,546 38,550
Deferred income
taxes 14,717 13,070
Loss on convertible
notes - 4,871
Changes in
operating assets
and liabilities:
Accounts
receivable (12,574) (17,610)
Prepaid expenses
and other, net (673) 266
Accrued expenses
and other long-
term
liabilities (380) 8,061
Deferred revenue 4,637 (7,028)
----- ------
Net cash provided by continuing
operations 113,536 86,094
Net cash used in discontinued
operations (384) -
---- ---
Net cash provided by operating
activities 113,152 86,094
Cash flows from investing activities:
Cash paid in business
combination (3,182) -
Purchases of property
and equipment (23,194) (22,341)
Proceeds from sale of
property and equipment - 1,381
Net cash used in investing
activities (26,376) (20,960)
Cash flows from financing activities:
Proceeds from exercise
of stock options 40,602 29,724
Cash used for
withholding taxes due
on stock-based awards (33,385) (12,526)
Net proceeds from
issuance of
convertible notes - 291,823
Repurchase of
convertible notes - (150,354)
Repurchase of shares
through tender offers (97,588) (170,516)
Purchases of treasury
stock (128,748) (220,298)
Excess tax benefit on
stock-based awards 14,239 58
Net cash used in financing
activities (204,880) (232,089)
-------- --------
Net decrease in cash and cash equivalents (118,104) (166,955)
Cash and cash equivalents at beginning of period 824,880 991,835
------- -------
Cash and cash equivalents at end of period $706,776 $824,880
======== ========
WEBMD HEALTH CORP.
NET INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Numerator:
Income from continuing operations - Basic $15,154 $10,812 $40,941 $15,116
Interest expense on 1.50% convertible notes, net of tax 864 326 3,456 -
Interest expense on 2.50% convertible notes, net of tax 1,797 - - -
Interest expense on 2.25% convertible notes, net of tax 1,103 - - -
Income from continuing operations - Diluted $18,918 $11,138 $44,397 $15,116
Income from discontinued operations, net of tax -Basic and
Diluted $1,122 $ - $1,122 $ -
Denominator:
Weighted-average shares - Basic 36,427 40,457 37,869 46,830
Stock options and restricted stock 1,245 2,192 2,060 1,568
1.50% convertible notes 5,694 2,223 5,685 -
2.50% convertible notes 6,205 - - -
2.25% convertible notes 3,511 - - -
Adjusted weighted-average shares after assumed conversions
- Diluted 53,082 44,872 45,614 48,398
Basic income per common share:
Income from continuing operations $0.42 $0.27 $1.08 $0.32
Income from discontinued operations 0.03 - 0.03 -
Net income $0.45 $0.27 $1.11 $0.32
Diluted income per common share:
Income from continuing operations $0.36 $0.25 $0.97 $0.31
Income from discontinued operations 0.02 - 0.03 -
Net income $0.38 $0.25 $1.00 $0.31
WEBMD HEALTH CORP.
2014 REVENUE
(In thousands, unaudited)
Three Months Ended Year Ended
December 31,
2014
----
March 31, June 30, September 30, December 31,
2014 2014 2014 2014
---- ---- ---- ----
Revenue
Advertising and sponsorship
Biopharma and medical device $68,488 $81,981 $85,118 $93,742 $329,329
OTC, CPG and other 34,469 29,503 27,370 33,294 124,636
------
102,957 111,484 112,488 127,036 453,965
Private portal services 24,629 24,188 25,795 28,570 103,182
Information services 6,246 4,728 5,207 7,121 23,302
$133,832 $140,400 $143,490 $162,727 $580,449
======== ======== ======== ======== ========
- See Consolidated Supplemental Financial Information for descriptions of the above revenue groups.
WebMD Health Corp.
Financial Guidance for the Year Ending December 31, 2015
(in millions, except per share amounts)
Guidance Range
--------------
Revenue:
Advertising and sponsorship
Biopharma and medical device $369.0 $380.0
OTC, CPG and other 117.0 122.0
486.0 502.0
Private portal services 105.0 108.0
Information services 24.0 25.0
$615.0 $635.0
Earnings before interest, taxes, non-cash
and other items ("Adjusted EBITDA") (a) $180.0 $190.0
Interest, taxes, non-cash and other items (b)
Interest expense, net (25.0) (25.0)
Depreciation and amortization (33.0) (31.0)
Non-cash stock-based compensation (37.0) (34.0)
----- -----
Pre-tax income 85.0 100.0
Income tax provision (34.5) (40.5)
Net income $50.5 $59.5
===== =====
Income per share:
Basic $1.38 $1.59
===== =====
Diluted (c) $1.23 $1.35
===== =====
Calculation of income per share:
Net income (numerator for basic income per share) $50.5 $59.5
Add-back of interest expense, net of tax, related to:
1.50% Notes 3.5 3.5
2.50% Notes 7.2 7.2
2.25% Notes - 4.4
Numerator for diluted income per share $61.2 $74.6
Weighted average shares outstanding (denominator for basic
income per share) 36.5 37.5
Stock options and restricted stock 1.5 2.5
Weighted average shares issuable upon conversion of:
1.50% Notes 5.7 5.7
2.50% Notes 6.2 6.2
2.25% Notes - 3.5
Denominator for diluted income per share 49.9 55.4
(a) See Annex A - Explanation of Non-GAAP Financial Measures
(b) Reconciliation of Adjusted EBITDA to net income
(c) See Supplemental 2015 Guidance for Income Per Share Calculation below
Additional information regarding forecast for the quarter ending March 31, 2015:
- Revenue is forecasted to be between $141 million to $143 million
- Revenue distribution is forecasted to be approximately 53% to 54% to Biopharma and medical device; 20% to 21% to OTC, CPG and other; 20% to private portal services
and 5.5% to information services
- Adjusted EBITDA is forecasted to be between $37 million to $38 million
- Net income is forecasted to be between $8.5 million to $9.5 million
The above guidance does not include the impact if any, of future deployment of capital for items such as share repurchases, acquisitions, any future gains or losses from discontinued operations, and other future non-recurring, one-time or unusual items.
WebMD Health Corp.
Supplemental 2015 Guidance for Income Per Share Calculation
Based on the Company's Financial Guidance for the Year Ending December 31, 2015, the 1.50% Notes and 2.50% Notes are expected to be dilutive to net income on both the low end and high end of the full year guidance range. The 2.25%
Notes are expected to be dilutive to net income on the high end of the full year guidance range. Additionally, each of the series of Notes may be dilutive in certain quarters, depending on the amount of net income for such quarter.
The following table contains the approximate level of net income for an individual quarter and for the full year 2015 at which each of the series of Notes would become dilutive to income per share. To the extent this net income is
exceeded for any such period, the table also includes the amounts by which the numerator and denominator should each be adjusted for purposes of the diluted income per share calculation. The amounts below assume a weighted-average
diluted share count of 38.0 million shares (prior to the effect of convertible notes) and the amounts are subject to change as such weighted average share count changes.
Quarterly Amounts Annual Amounts
----------------- --------------
All amounts in millions 1.50% 2.50% 2.25% 1.50% 2.50% 2.25%
Notes Notes Notes Notes Notes Notes
----- ----- ----- ----- ----- -----
Approximate net income at which
convertible notes become dilutive: $5.8 $11.8 $13.0 $23.1 $47.2 $52.1
Interest expense, net of tax to add-
back to net income (numerator): $0.9 $1.8 $1.1 $3.5 $7.2 $4.4
Additional shares to include in
weighted-average diluted share
count (denominator): 5.7 6.2 3.5 5.7 6.2 3.5
ANNEX A
Explanation of Non-GAAP Financial Measures
The accompanying WebMD Health Corp. press release and attachments 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 net income or loss calculated in accordance with GAAP (referred to below as "net income") or income or loss from continuing operations calculated in accordance with GAAP (referred to below as "income from continuing operations"). The attachments to the press release include reconciliations of non-GAAP financial measures to GAAP financial measures.
Adjusted EBITDA is used by our management as an additional measure of our company's 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 our management identify additional trends in our company's financial results that may not be shown solely by period-to-period comparisons of net income or income from continuing operations. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees in order to evaluate our company's performance. Our 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 net income or income from continuing operations, 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 net income or income from continuing operations that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the accompanying press release attachments.
We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to net income or income from continuing operations, helps investors make comparisons between our company 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 our company with other public companies and is not intended as a substitute for comparisons based on net income or income from continuing operations. 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 us from Adjusted EBITDA but included in net income and income 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. We exclude
depreciation and amortization expense from Adjusted EBITDA because we
believe that (i) the amount of such expenses in any specific period may
not directly correlate to the underlying performance of our 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, we believe that
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. We believe that excluding the effect of stock-based
compensation from Adjusted EBITDA assists management and investors in
making period-to-period comparisons in our company's operating
performance because (i) the amount of such expenses in any specific
period may not directly correlate to the underlying performance of our
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,
we believe that excluding stock-based compensation from Adjusted EBITDA
assists management and investors in making meaningful comparisons
between our company'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. Stock-based
compensation expenses included in the Consolidated Statement of
Operations are summarized as follows:
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Non-cash stock-based
compensation included in:
Cost of
operations $1,384 $1,728 $5,940 $6,762
Sales and
marketing $1,559 $1,809 $7,221 $8,395
General and
administrative $4,878 $4,381 $19,385 $23,393
-- Interest Income and Expense. Interest income is associated with the
level of marketable debt securities and other interest bearing accounts
in which we invest, and interest expense is related to our company's
capital structure (including non-cash interest expense relating to our
convertible notes). Interest income and expense varies over time due to
a variety of financing transactions and due to acquisitions and
divestitures that we have entered into or may enter into in the future.
We have, in the past, issued convertible debentures, repurchased shares
in cash tender offers and repurchased shares and convertible debentures
through other repurchase transactions, and completed the divestiture of
certain businesses. We exclude interest income and interest expense
from Adjusted EBITDA (i) because these items are not directly
attributable to the performance of our 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. The following provides
detail regarding the components of interest expense of our convertible
notes:
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Non-cash interest
expense
2.25%
Convertible
Notes $390 $390 $1,560 $2,279
2.50%
Convertible
Notes $446 $446 $1,785 $1,802
1.50%
Convertible
Notes $291 $111 $1,166 $111
Cash interest
expense
2.25%
Convertible
Notes $1,419 $1,457 $5,675 $8,207
2.50%
Convertible
Notes $2,500 $2,500 $10,000 $10,000
1.50%
Convertible
Notes $1,125 $425 $4,500 $425
-- Income Tax Provision (Benefit). We maintain a valuation allowance on a
portion of our net deferred tax assets (including our net operating loss
carryforwards), the amount of which may change from quarter to quarter
based on factors that are not directly related to our results for the
quarter. The valuation allowance is either adjusted through the
statement of operations or additional paid-in capital. The timing of
such adjustments has not been consistent and as a result, our income tax
expense can fluctuate significantly from period to period in a manner
not directly related to our operating performance. We exclude the
income tax provision (benefit) from Adjusted EBITDA (i) because we
believe that the income tax provision (benefit) is not directly
attributable to the underlying performance of our 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. We engage in other activities and transactions that can
impact our net income or income from continuing operations. In recent
periods, these other items included, but were not limited to: (i) gain
or loss on investments; (ii) a restructuring charge; (iii) severance
expense; and (iv) loss on repurchases of our convertible notes. We
exclude these other items from Adjusted EBITDA because we believe these
activities or transactions are not directly attributable to the
performance of our 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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/webmd-announces-fourth-quarter-and-year-end-financial-results-300040633.html
SOURCE WebMD Health Corp.
