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Fourth quarter revenue was $238.6 million, an increase of 9.5%, compared to $217.9 million for the same period in the prior year. GAAP operating income for the fourth quarter of 2009 was $26.5 million compared to $23.3 million for the same period last year. Excluding the impact of equity compensation, operating income for the fourth quarter of 2009 would have been $30.4 million compared to $21.6 million for the prior year period.
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Fourth quarter Adjusted EBITDA grew 17.0% to $62.6 million, or 26.2% of revenue, from Adjusted EBITDA of $53.5 million, or 24.6% of revenue, in the comparable period last year. GAAP net income (before noncontrolling interest) for the fourth quarter of 2009 was $4.7 million compared to GAAP net income of $4.2 million for the same period last year. GAAP net income per diluted share for the fourth quarter of 2009 was $0.03 as compared to $0.04 in the same period last year. GAAP net income (before noncontrolling interest) for the fourth quarter of 2009 increased as compared to the prior year period primarily from business growth, partially offset by increased equity compensation expense and income taxes. GAAP net income per diluted share for the fourth quarter of 2009 as compared to the prior year period was affected by the same factors, as well as increased income taxes and other expenses in the fourth quarter of 2009 that were applicable only to the controlling interest of Emdeon Inc. Adjusted Net Income per fully diluted share for the fourth quarter of 2009 was $0.20 compared to $0.17 for the same period last year.
For the year ended December 31, 2009, revenue was $918.4 million, an increase of 7.6%, compared to $853.6 million for 2008. GAAP operating income for 2009 was $101.0 million compared to $91.3 million for the prior year. Excluding the impact of equity compensation, operating income for 2009 would have been $126.4 million compared to $95.4 million for 2008.
Adjusted EBITDA grew to $240.3 million, or 26.2% of revenue, from Adjusted EBITDA for 2008 of $205.2 million, or 24.0% of revenue. For 2009, GAAP net income (before noncontrolling interest) was $14.0 million compared to GAAP net income of $11.9 million in 2008. GAAP net income per diluted share for both years was $0.12. GAAP net income (before noncontrolling interest) and GAAP net income per diluted share for 2009 as compared to 2008 were impacted by the same factors affecting the fourth quarter GAAP results as described above. Adjusted net income per fully diluted share for 2009 was $0.87 compared to $0.66 for 2008.
"Emdeon delivered another quarter and year of solid financial results, despite a challenging economic environment," said George Lazenby, Emdeon's chief executive officer. "All of our businesses are performing well and we are especially pleased with the continued momentum in payment distribution, revenue cycle management and ePrescribing. We are also seeing early success with our strategic growth areas including payment integrity and ePayment."
Lazenby continued, "Today we announced the execution of a definitive agreement to acquire Healthcare Technology Management Services (HTMS), a management consulting company primarily focused on the healthcare payer market. This acquisition will move Emdeon into the healthcare information technology consulting arena and further position us as a strategic partner to our customers. Emdeon's new consulting services will help our customers navigate this period of intense change - ARRA, HITECH, 5010/D.0, ICD-10 and the new HIPAA privacy and security requirements - not to mention the uncertainty of healthcare reform. This transaction builds upon our recent strategic acquisitions, such as FutureVision Technologies, The Sentinel Group and eRx Network, to expand the breadth and scope of our product and service offerings."
Commenting on 2010, Lazenby said, "We are excited by the progress we see in each of our businesses and confident that Emdeon is well positioned for growth as a result of the investments we continue to make in our network, product and service offerings and brand."
At December 31, 2009, Emdeon's cash and cash equivalents totaled $212.0 million. Total long-term debt under Emdeon's credit facilities was $856.4 million, before unamortized debt discount of $53.3 million.
A reconciliation of Emdeon's financial results determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) to certain non-GAAP financial measures has been provided in the financial statement tables included in this release to supplement its consolidated financial statements presented on a GAAP basis. An explanation of these non-GAAP measures is also included below under the heading "Explanation of Non-GAAP Financial Measures."
Financial Outlook
Emdeon currently anticipates its annual revenue, Adjusted EBITDA and Adjusted Net Income per fully diluted share for 2010 to be as follows:
Notice of Conference Call and Webcast
Emdeon will conduct a conference call/webcast for investors and institutional analysts on Tuesday, March 16, 2010 at 5:00 pm Eastern Time/4:00 pm Central Time to discuss Emdeon's financial results.
To access Emdeon's live conference call and webcast, dial 800-901-5231 (617-786-2961 for international calls) using conference code 46314135 or visit the Investors section of Emdeon's website: www.emdeon.com. Please go to the website at least 15 minutes prior to the event to register, download and install any necessary audio/video software to access the webcast. For those unable to listen to the live broadcast, conference call replay will be available for one week following the conference call by calling 888-286-8010 (617-801-6888 for international calls) using conference code 52858153. A webcast replay will also be archived on Emdeon's website for at least 30 days following the conference call.
About Emdeon
Emdeon (NYSE: EM) is a leading provider of revenue and payment cycle management solutions, connecting payers, providers and patients in the U.S. healthcare system. Emdeon's product and service offerings integrate and automate key business and administrative functions of its payer and provider customers throughout the patient encounter. Through the use of Emdeon's comprehensive suite of products and services, which are designed to easily integrate with existing technology infrastructures, customers are able to improve efficiency, reduce costs, increase cash flow and more efficiently manage the complex revenue and payment cycle process. For more information, visit www.emdeon.com.
Forward-Looking Statements
Statements made in this press release that express Emdeon's or management's intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements, which Emdeon intends to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. Forward-looking statements may include information concerning Emdeon's possible or assumed future results of operations, including descriptions of Emdeon's revenues, profitability, outlook and overall business strategy. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to Emdeon's operations and business environment, all of which are difficult to predict and many of which are beyond Emdeon's control. Although Emdeon believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Emdeon's actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements, including but not limited to: effects of competition, including competition from entities that are customers for certain of Emdeon's products and services; Emdeon's ability to maintain relationships with its customers and channel partners; Emdeon's ability to effectively cross-sell its products and services to existing customers and to continue to generate revenue and maintain profitability by developing and successfully deploying new or updated products and services; pricing pressures on Emdeon's products and services; the anticipated benefits from acquisitions not being fully realized or not being realized within the expected time frames; and general economic, business or regulatory conditions affecting the healthcare information technology and services industries; as well as the other risks discussed in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and elsewhere in Emdeon's Registration Statement on Form S-1 and the accompanying prospectus thereto, as filed with the Securities and Exchange Commission (the "SEC"), as well as Emdeon's periodic and other reports filed with the SEC.
You should keep in mind that any forward-looking statement made by Emdeon herein, or elsewhere, speaks only as of the date on which made. Emdeon expressly disclaims any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in Emdeon's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.
(1) The weighted average share count used for the 2010 financial outlook is higher than 2009 weighted average share count of 112.6 million due to the full year impact of the Class A common stock issued in connection with the August 2009 initial public offering, as well as estimates of (i) Class A common stock options and restricted stock units granted under the Emdeon Equity Incentive Plan during the first quarter of 2010 and (ii) shares of Class A common stock to be issued in connection with the HTMS acquisition.
Explanation of Non-GAAP Financial Measures
Emdeon's management team believes that in order to properly understand Emdeon's short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-operating items, when used as a supplement to financial performance measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These items result from facts and circumstances that vary in frequency and/or impact continuing operations. In addition, management uses results of operations before such excluded items to evaluate the operational performance of Emdeon as a basis for strategic planning and, in the case of Adjusted EBITDA, as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition to the description provided below, reconciliations of GAAP to non-GAAP results are provided in the financial statement tables included in this release.
In this release, Emdeon defines Adjusted EBITDA as EBITDA (which is defined as net income before net interest expense, income tax provision (benefit) and depreciation and amortization), plus certain other non-cash or non-operating items (collectively, "EBITDA Adjustments").
In this release, Emdeon defines Adjusted Net Income as the sum of (i) GAAP net income, (ii) EBITDA Adjustments, (iii) non-cash interest expense and (iv) depreciation and amortization expense resulting from adjustments of assets to fair value in connection with acquisition accounting, less income taxes computed based on a normalized income tax rate. Emdeon defines Adjusted Net Income per fully diluted share as the quotient of Adjusted Net Income and weighted average shares outstanding, assuming all potentially dilutive securities are fully dilutive and outstanding shares from their date of grant or issuance.
To properly evaluate Emdeon's business, Emdeon encourages investors to review the GAAP financial information included in this release, and not rely on any single financial measure to evaluate Emdeon's business. Emdeon also strongly encourages investors to review the reconciliation of GAAP net income and GAAP net income per diluted share to the applicable non-GAAP measures of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per fully diluted share. These non-GAAP measures, as Emdeon defines them, may not be similar to non-GAAP measures used by other companies.
Management uses Adjusted EBITDA and Adjusted Net Income per fully diluted share to facilitate a comparison of Emdeon's operating performance on a consistent basis from period to period that, when viewed in combination with Emdeon's GAAP results, management believes provides a more complete understanding of factors and trends affecting Emdeon's business than GAAP measures alone. Management believes these non-GAAP measures assist Emdeon's board of directors, management, lenders and investors in comparing Emdeon's operating performance on a consistent basis because they remove where applicable, the impact of Emdeon's capital and organizational structure, asset base, acquisition accounting, non-cash charges and non-operating items from Emdeon's operations.
Emdeon also presents Adjusted EBITDA and Adjusted Net Income per fully diluted share on a forward-looking basis as part of its Financial Outlook for 2010. Emdeon is unable to present a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures because management cannot predict, with sufficient reliability, contingent payments relating to past and possible future acquisitions, changes in the fair value of Emdeon's interest rate swap agreement and the effect on income taxes of these and other items attributable to Emdeon's organizational structure, which are difficult to estimate and primarily dependent on future events.
(In millions, except per share amounts) 4Q09 4Q08 FY09 FY08 ---- ---- ---- ---- Revenue $238.6 $217.9 $918.4 $853.6 Net Income $4.7 $4.2 $14.0 $11.9 Net Income per share (diluted) $0.03 $0.04 $0.12 $0.12 Non-GAAP Adjusted EBITDA $62.6 $53.5 $240.3 $205.2 Non-GAAP Adjusted Net Income per fully diluted share $0.20 $0.17 $0.87 $0.66 Non-GAAP fully diluted shares 121.0 106.1 112.6 105.5
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