WebMD Health Corp (WBMD)

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Q4 2008 Earnings Call

February 19, 2009 4:45 pm ET


Risa Fisher - Vice President of Investor Relations.

Marty Wygod - Chairman of WebMD, Chairman, Acting CEO HLTH Corporation

Wayne Gattinella - Chief Executive Officer and President of WebMD

Mark Funston - Chief Financial Officer of HLTH and WebMD

Tony Vuolo - Chief Operating Officer of WebMD


Mark Mahaney - Citi

Mark May – Needham & Company

Rob Kelly - Citi

Analyst for Corey Tobin - William Blair

Jennifer Watson - Goldman Sachs

Anthony Petrone - Maxim Group



Good afternoon and welcome to HLTH Corporation and WebMD HLTH Corp’s December 2008 quarterly conference call. Today’s call is being recorded.

I will now turn the call over to Risa Fisher, Vice President of Investor Relations.

Risa Fisher

Good afternoon. This is a joint conference call to discuss HLTH and WebMD's fourth quarter financial results. The earnings release issued today by HLTH is available at www.hlth.com in the Investor Relations section. The earnings release issued today by WebMD is available at www.wbmd.com also in the Investor Relations section.

The releases issued today include reconciliations between GAAP and non-GAAP financial measures to be presented in this call. The explanatory paragraph in those releases concerning forward-looking disclosures and related risks and uncertainties also apply to forward-looking disclosures made during this call including those regarding our guidance on future financial results and other projections or measures of HLTH and WebMD's future performance. Information concerning the risk and uncertainties can be found in HLTH's and WebMD's SEC filings.

I would now like to turn the call over to Marty Wygod, Chairman of WebMD and Chairman and Acting CEO of HLTH Corporation.

Marty Wygod

Thanks Risa. Good afternoon and thank you for joining us today. Joining me on the call today are Wayne Gattinella, CEO and President of WebMD; Mark Funston, CEO of HLTH and WebMD and Tony Vuolo, COO of WebMD.

Before discussing the fourth quarter results I’d like to take a moment to reflect on some of the actions that HLTH’s management team have taken over the years that have resulted in positioning the company not only to deal with the current economic downturn but to enable us to take advantage of opportunities that may arise in this business environment.

We nurtured WebMD through the Internet bubble and developed it into a stand alone public entity which is far and away the market leader in the health vertical and continues to out perform other Internet companies even in these challenging times. We have raised capital when market conditions were favorable and have made acquisitions and other business segments on advantageous terms.

When we judged that the market conditions were appropriate we divested many of these assets for a total in excess of $2.6 billion over the last 2.5 years. The valuations of certain of these businesses would have been severely challenged by the current economic environment.

We have taken advantage over time of opportunities to reduce HLTH’s outstanding shares from in excess of 350 million shares outstanding to approximately 100 million shares to date. Most recently we completed a major tender offer allowing HLTH to reduce its shares outstanding by 45%. The recently completed tender offer provided an effective way to address the interest of all HLTH shareholders by presenting a near-term liquidity to those who desired it while simultaneously providing value to HLTH’s continuing shareholders. This proportional, indirect investment in WebMD increased substantially. We will continue to evaluate our corporate structure with the goal of enhancing stockholder value as market conditions evolve.

As we enter 2009 HLTH is very well positioned financially in this uncertain economy with over $400 million in consolidated cash and investments along with an 84% majority interest in WebMD. WebMD on a stand alone basis is similarly well positioned financially with over $325 million in cash and investments.

Turning specifically to the fourth quarter we are pleased with the fourth quarter results WebMD announced today. WebMD is the recognized leader in a large and under penetrated market. WebMD’s network continues to grow rapidly with unique businesses and page views reaching record levels. WebMD’s strong brand, high quality inventory and breadth of unique services can assist our bio-pharma customers with their challenges and enabling them to more efficiently market their products.

At this time I would like to turn it over to Mark Funston and then Wayne Gattinella to review the fourth quarter financials and operating results respectively. Then we will take all questions following that.

Mark Funston

Thank you Marty. Please note that WebMD’s and HLTH’s results present WebMD’s offline professional medical reference and textbook publication business as discontinued operations in the current and prior year period reflecting the sale of that business in December 2007.

HLTH results also presents the ViPS and Porex businesses as discontinued operations in the current and prior year periods reflecting the sale of ViPS in July 2008 and the ongoing process to divest the Porex business.

I will now review WebMD’s fourth quarter results. WebMD revenue for the December 2008 quarter was $111.5 million compared to $96.6 million last year, an increase of 15%. Looking further at the revenue of 15%, advertising and sponsorship revenue which represents 76% of revenue increased 21% to $85.3 million. Private portal licensing revenue which represents 21% of revenue increased 8% to $23.2 million. Other revenue decreased by $1.6 million to $2.8 million. WebMD The Magazine continues to do well and extends our brand and drives traffic to our sites.

Read the rest of this transcript for free on seekingalpha.com