Martin J. Wygod, Chairman and Acting Chief Executive Officer of HLTHCorporation, said: "We firmly believe that the size and breadth of the overallmarket opportunity remains unchanged. With its unique set of assets andindustry leadership, WebMD is well positioned to capitalize on the shift toonline marketing and education to both consumers as well as physicians bothhere in the U.S. and abroad."
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Consolidated Financial Highlights
Revenue for the second quarter was $89.1 million, an increase of 15% overthe prior year. Earnings before interest, taxes, non-cash and other items("Adjusted EBITDA") for the second quarter was $14.3 million, an increase of66% over the prior year. Income from continuing operations for the secondquarter was $0.8 million or $0.00 per share, loss from discontinued operationswas $3.7 million or $0.02 per share and net loss was $2.9 million or $0.02 pershare.
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At June 30, 2008, HLTH had approximately $1.4 billion in cash andinvestments, of which $325 million is attributable to WebMD.
Segment Operating Results
WebMD Online Services segment revenue was $84.6 million for the secondquarter compared to $72.9 million in the prior year period, an increase of16%. Advertising and sponsorship revenue increased 19% to $62.4 million.Private portal licensing revenue increased 10% to $21.9 million. OnlineServices segment Adjusted EBITDA increased 34% to $18.8 million compared to$14.0 million in the prior year period.
WebMD Publishing and Other Services segment revenue was $4.6 million forthe second quarter compared to $4.4 million in the prior year period, anincrease of 5%. Publishing and Other Services segment Adjusted EBITDA was $1.0million compared to $0.86 million in the prior year period.
Discontinued Operations
HLTH's financial results present the ViPS and Porex businesses asdiscontinued operations in the current and prior year periods, reflecting thedecision to divest these businesses. The sale of the ViPS business wascompleted on July 22, 2008 for $225 million in cash. WebMD's offlineprofessional medical reference and textbook publication business is presentedas a discontinued operation in the prior year period, reflecting the sale ofthat business on December 31, 2007.
Discontinued operations during the quarter included the results ofoperations of ViPS and Porex as well as an additional pre-tax charge of $17million relating to HLTH's obligation to advance the legal costs of certainformer officers of the Practice Services subsidiary which HLTH sold in 2006.As of June 30, 2008, this accrual totaled $58 million. As previously reported,several insurance carriers who had issued D&O insurance to HLTH have refusedto advance these costs and HLTH commenced an action against these carriers toenforce its rights. On July 31, 2008 the Superior Court for the State ofDelaware granted HLTH's motion for partial summary judgment to enforce theduty of such carriers to advance and reimburse these costs.
Merger with WebMD
As previously announced, HLTH and WebMD entered into a definitive mergeragreement on February 20, 2008. Completion of the merger is conditioned upon,among other things, approval of the stockholders of both HLTH and WebMD. HLTHand WebMD expect to file a joint preliminary proxy statement/prospectusrelating to the merger shortly after the filing of their respective secondquarter Form 10-Q filings. Assuming that timely clearance is received from theSEC, HLTH and WebMD expect to be in a position to hold stockholder meetings inOctober 2008 to seek the necessary stockholder approvals. Those meetings wouldalso be the Annual Meetings for HLTH and WebMD.
Financial Guidance
WebMD reaffirmed its financial guidance for
