WebMD anticipates 15% increase in revenue for second quarter 2011

WebMD Health Corp. (Nasdaq: WBMD), the leading source of health information, today announced preliminary financial results for the three months ended June 30, 2011 and updated financial guidance for 2011.

Preliminary Results For the Three Months Ended June 30, 2011

WebMD expects that its second quarter results will be in line with previously stated financial guidance for the quarter.

• Revenue for the June quarter is expected to be approximately $141 million, an increase of approximately 15% over the prior year period. Advertising revenue increased approximately 20% over the prior year period.
• Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") for the June quarter is expected to be approximately $45 million or 32% of revenues, an increase of approximately 31% over the prior year period.
• Income from continuing operations for the June quarter is expected to be approximately $14 million or $0.23 per diluted share, an increase of 82%. Income from continuing operations includes an after tax gain on investments of approximately $1.0 million, or $0.02 per diluted share.
• Net income for the June quarter is expected to be approximately $21.4 million or $0.35 per diluted share which includes an after tax gain from investments of approximately $1.0 million, or $0.02 per diluted share and an after tax gain from discontinued operations of approximately $7.4 million, or $0.12 per diluted share attributable to the final resolution of a Department of Justice investigation relating to a business that was divested in 2006.

Traffic to the WebMD Health Network continued to grow, reaching an average of 104.8 million unique users per month and total traffic of 2.17 billion page views during the second quarter, increases of 30% and 24%, respectively, from a year ago. Excluding a small affiliate site that will cease to be a part of the WebMD Health Network beginning in the September 2011 quarter, unique users would have been 100.4 million and page views would have been 2.14 billion. When excluding this affiliate site from both the current and prior periods, users and page views would have increased 28% and 24%, respectively.  

Updated 2011 Financial Guidance

Based on current visibility into the second half of this year, WebMD has updated its financial guidance for 2011 and expects the following:

• Revenue of $580 million to $600 million,
• Adjusted EBITDA of $200 million to $210 million, and
• Income from continuing operations of $71 million to $80 million.

WebMD expects 2011 revenue of $580 million to $600 million to assume the following distribution:

• Approximately 86% from public portals advertising and sponsorship, representing growth of approximately 12% to 15% over the prior year, and
• Approximately 14% from private portal licensing, representing a decrease of 4% to 7% over the prior year.

WebMD's prior financial guidance for 2011, as last disseminated on May 5, 2011, was:

• Revenue of $610 million to $640 million,
• Adjusted EBITDA of $215 million to $230 million, and
• Income from continuing operations of $79.8 million to $91.8 million.

For the September 2011 quarter, WebMD expects:

• Revenue of $135 million to $140 million, with approximately 85% from public portals advertising and sponsorship and 15% from private portal licensing. Advertising revenue is expected to increase 1% to 5%, while private portal revenue is expected to decrease 5% to 9%, compared to the prior year period,
• Adjusted EBITDA is expected to be approximately 29% of revenue, and
• Income from continuing operations is expected to be approximately 6.4% of revenue.

The revisions to the Company's financial guidance for the second half of 2011 are the result of several factors, including:

• Extended internal legal and regulatory review of larger biopharmaceutical sponsorship programs in both the consumer and professional markets that were sold in previous quarters which is causing longer delays in the launch of these programs than was previously anticipated,
• Unexpected delays and cancellations of new consumer sponsorships sold in previous quarters that were scheduled to launch later this year. The cancellations were due to budget cuts on the part of several consumer products companies,
• A reduction in sales estimates and related revenue contribution for the second half of 2011 due to the impact of the items mentioned above, and
• Lower licensing revenue as a result of less than anticipated new customer additions that would have offset customer attrition in the private portals business.

"While I am disappointed in our growth in the back half of this year, I am confident that the long term opportunity for WebMD is substantial," said Wayne Gattinella, President and CEO, WebMD. "We will be launching a new portfolio of streamlined sponsorship services this quarter that are designed to enhance program performance, better facilitate the internal approval process of our biopharmaceutical customers and speed the time to implementation. We expect our advertising and sponsorship revenue growth to improve commencing in the middle of next year."

Final Results to Be Released on August 2, 2011

The information in this release is preliminary. WebMD is completing its normal closing process and will release its second quarter results on August 2, 2011, at approximately 4:00 p.m. (Eastern time) and will hold a conference call with investors and analysts to discuss its second quarter results at 4:45 p.m. (Eastern time) on that day. 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.