HLTH Corporation Announces Third Quarter Financial Results
Kevin Cameron, Chief Executive Officer of HLTH Corporation, said: "WebMD'sgrowth for the quarter was strong as it continued to consolidate itsleadership as the most recognized and utilized brand of health information andbetter position itself for sustainable growth in the future." He continued,"As previously announced, we continue to move forward on structuring atransaction that would allow HLTH shareholders to participate more directly inthe ownership of WebMD stock."
Consolidated Financial Highlights
Revenue for the third quarter was $133.3 million. Earnings beforeinterest, taxes, non-cash and other items ("Adjusted EBITDA") for the thirdquarter was $29.3 million or $0.16 per share. Income from continuingoperations for the third quarter was $16.1 million or $0.08 per share. Netincome for the September 2007 quarter was $16.6 million or $0.09 per share.
The Company's consolidated results are not comparable to the respectiveprior year periods. On November 16, 2006, HLTH Corporation completed the saleof a 52% interest in its Emdeon Business Services segment (excluding the ViPSbusiness) to an affiliate of General Atlantic LLC. The Company's 48% portionof EBS' income is reflected in the line item "Equity in earnings of EBS MasterLLC" for the September 2007 quarter. For the prior year period, the results ofEmdeon Business Services are included in the Company's consolidated revenuesand earnings. As a result, the Company's consolidated results will not becomparable to prior year periods until after the anniversary of thetransaction is reached.
As of September 30, 2007, HLTH Corporation had approximately $784 millionin cash and short-term investments on a consolidated basis, including $278million in cash and short-term investments held by WebMD Health Corp., its 84%owned subsidiary.
Segment Operating Results
WebMD segment revenue was $87.2 million for the third quarter compared to$66.6 million in the prior year period, an increase of 31%, driven bycontinued growth in online services. Segment Adjusted EBITDA was $24.1 millioncompared to $14.6 million in the prior year period, an increase of 65% overthe prior year, primarily as a result of the increase in revenues.
ViPS segment revenue was $24.3 million for the third quarter compared to$24.8 million in the prior year period, a decrease of 2%, primarily due to adecrease in professional consulting services provided to governmentalagencies. Segment Adjusted EBITDA was $4.8 million, down from $5.3 million ayear ago. Operating margins decreased to 19.8%. As previously disclosed, thirdquarter revenue and Adjusted EBITDA were impacted by the unexpectedcancellation of one contract caused by an unrelated government contractor'sfailure to meet certain deadlines.
Porex segment revenue was $21.9 million for the third quarter compared to$21.3 million in the prior year period, an increase of 3%. The increase wasprimarily attributable to strength in sales of surgical products and theimpact of favorable foreign currency exchange rates. Segment Adjusted EBITDAwas $6.4 million compared to $6.1 million in the prior year period, anincrease of 5%. Operating margins increased to 29.5% from 28.8% in the yearago period, primarily due to the higher revenue as well as lower directmanufacturing costs relating to the mix of products produced.
Investment in Emdeon Business Services
Revenue for Emdeon Business Services (which is not a segment and is notincluded in the Company's consolidated revenue) was a record $203.0 millionfor the third quarter. Emdeon Business Services continues to generate strongyear over year growth. HLTH recorded $8.0 million of Equity in earnings of EBSMaster LLC in the September 2007 quarter, reflect
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