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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
MAY 2, 2000
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Date of Report (Date of earliest event reported)
HEALTHEON/WEBMD CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-24975 94-3236644
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
400 THE LENOX BUILDING
3399 PEACHTREE ROAD NE
ATLANTA, GEORGIA 30326
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(Address of principal executive offices, including zip code)
(404) 495-7600
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(Registrant's telephone number, including area code)
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(Former name or address, if changed since last report)
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ITEM 5. OTHER EVENTS
5.1 Attached hereto as Exhibit 99.1 and incorporated by reference
herein is the first quarter 2000 earnings release of Healtheon/WebMD
Corporation, as presented in the press release dated May 2, 2000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following exhibit is filed herewith:
99.1 Press Release issued by Healtheon/WebMD Corporation dated
May 2, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Healtheon/WebMD Corporation has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HEALTHEON/WEBMD CORPORATION
Dated: May 2, 2000 By /s/ Jack Dennison
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Jack Dennison, Vice President and
General Counsel
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EXHIBIT INDEX
99.1 Press Release issued by Healtheon/WebMD Corporation dated May 2, 2000.
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Exhibit 99.1
Healtheon | WebMD
For more information contact:
Media:
Anne O'Connell
Alexander Ogilvy Public Relations
[email protected]
404-881-2318
Investors:
Lew Belote
VP of Finance
Healtheon/WebMD
[email protected]
404-495-7602
HEALTHEON/WEBMD ANNOUNCES FIRST QUARTER 2000 FINANCIAL RESULTS
ATLANTA. MAY 2, 2000. Healtheon/WebMD (Nasdaq: HLTH) today announced financial
results for the first quarter of fiscal 2000, ended March 31, 2000.
Financial Highlights
Revenue for the first quarter ended March 31, 2000 was $65.9 million compared to
revenue of $17.6 million reported in the year ago quarter, an increase of 275%
and compared to revenue of $33.2 million reported for the fourth quarter of
1999, an increase of 98%.
The operating loss before non-cash charges, primarily depreciation and
amortization, ("EBITDA") for the quarter was ($85.9) million or ($0.49) per
share and ($73.0) million or ($0.42) per share including interest income.
The financial results reflect the completion of the merger of Healtheon with
WebMD and the acquisitions of MedE America and Medcast on November 11, 1999.
Additionally, the acquisition of Kinetra and the transaction with News
Corporation were completed in late January 2000. These
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transactions have been accounted for as purchases and are included in the
financial results since the acquisition dates.
Jeff Arnold, Chief Executive Officer of Healtheon/WebMD, said, "Our first
quarter revenue growth results from the value we are providing to consumers,
physicians and their staff, healthcare companies and our other partners as we
execute our vision. The growth reflects an increase in advertising/e-commerce
revenue, growth in subscription revenues, the effective integration of the
Kinetra acquisition and our continued growth in transactions. Additionally, our
cash position remains strong at more than $1 billion."
Revenue Analysis
Revenue categories are as follows:
Q1 2000 Q4 1999 Q1 1999
Transactions $28.9 $19.4 $9.6
Advertising/e-commerce 19.4 4.1 --
Subscriptions 6.8 2.7 --
Products and services 10.8 7.0 8.0
Total Revenue $65.9 $33.2 $17.6
Transaction revenue accounted for 44% of total revenue in the quarter. In the
first quarter of 2000, total transactions were approximately 131 million. Total
Internet transactions were approximately 4.8 million representing 41% growth
from the fourth quarter of 1999.
Advertising/e-commerce revenue accounted for 30% of total revenue in the
quarter. This revenue category continues to see significant growth as healthcare
companies benefit from the Company's growing number of physician offices and
consumers using one portal, www.webmd.com.
Subscriptions accounted for 10% of revenue in the quarter. At the end of the
first quarter there were approximately 100,000 registered physician users of
WebMD Practice compared to approximately 68,000 in the fourth quarter of 1999,
representing an increase of 47%. Additionally, at the end of the first quarter
there were approximately 21,500 administrative users of WebMD Practice compared
to approximately 12,000 at the end of the fourth quarter of 1999.
Products and services accounted for 16% of revenue in the quarter. The growth
this quarter was primarily due to content fees and health channel revenues from
News Corporation.
Internet Utilization Metrics
Provider Adoption
Internet transactions grew by 41% to 4.8 million in the first quarter of 2000
from 3.4 million in the fourth quarter of 1999. The Company now provides
connectivity through WebMD Practice to hundreds of payers, including "real time"
connectivity for transactions such as eligibility, referrals and claims status
to more than 40 health plans representing 60 million covered lives. The Company
has continued to enhance the depth and quality of its information with the
successful integration of Scientific American Medicine, which went live in the
first quarter of 2000. This growth in
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transactions combined with the growth in content page views resulted in a total
of 15 million professional page views during the first quarter of 2000.
Consumer Adoption
Consumer page views increased 47% from the previous quarter to approximately 109
million from 74 million in the fourth quarter of 1999. According to Media
Metrix, WebMD.com monthly unique visitors increased 70% to 2.9 million unique
visitors in March 2000 from 1.7 million in December 1999. Additionally, as of
March 31, 2000, WebMD had more than 1.1 million community member registrations
compared to 700,000 in December 1999, representing an increase of 71%.
"Our growing utilization and reach with both professional healthcare providers
and consumers increases the value to our partners and allows us to improve and
better monetize our Internet portal," Arnold continued. "We are partnering with
premier healthcare companies that not only benefit from our access to
professional providers and consumers, but also contribute high-quality content
and services, which continues to enhance the user experience and the value of
the network on an accelerating basis."
Key Highlights of the First Quarter of 2000
The Company continued to make progress in streamlining communications,
connectivity and commerce among physician offices, consumers and healthcare
institutions. As of March 31, 2000, Healtheon/WebMD was deploying services to
more than 126,000 WebMD Practice users and approximately 10,000 dentists, 4,500
hospitals, 46,000 pharmacies, 650 payers and 8 laboratory companies.
Physician Office Management Information Systems (POMIS)
During the quarter, Healtheon/WebMD launched its physician office management
information system (POMIS) distribution strategy through alliances with Medic
Computer Systems, IDX Systems, InfoCure and the announced merger with Medical
Manager expected to close in the third quarter of 2000. The Company is on
schedule to begin deploying integrated services to its POMIS partners in the
third quarter of 2000. These deployments will significantly expand
Healtheon/WebMD's physician connectivity, collectively providing access to over
400,000 physicians, through which the Company expects to add transactions,
increase revenue growth and accelerate physician adoption.
Transaction Growth
The Company's expanded payer connectivity through WebMD Practice coupled with
the growth in physician office usage and deployment helped accelerate
transaction growth during the quarter. Additionally, Healtheon/WebMD's announced
agreement to acquire Envoy, the largest processor of healthcare electronic data
interchange (EDI) transactions in the U.S., positions the Company to further
accelerate growth in transaction volume and physician connectivity. The
acquisition, which is expected to close in the second quarter of 2000 and is
subject to the approval by the Department of Justice after completion of its
pending Hart Scott Rodino review, will significantly accelerate the
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growth of Healtheon/WebMD's electronic transactions resulting in the processing
of more than 2 billion transactions per year for its healthcare customers.
Value of the Network
The Company announced several partnerships during the quarter in which the
partner pays for a presence on the WebMD portal. Through its strategic
partnerships with healthcare companies including Mead Johnson, medibuy.com,
HealthStream, Medtronic and Kiva Genetics, Healtheon/WebMD expects to generate
revenue and further strengthen the breadth and functionality of its offerings. A
sampling of these new offerings include new parenting information, medical
supplies, premier educational services, information on diagnostic and
therapeutic devices and services, and genetics and genomics information. The
Company expects that this continued enhancement of Healtheon/WebMD services will
help drive further adoption of its services across the healthcare community as
well as revenue growth.
Organizational Structure
Healtheon/WebMD announced the addition of two key executives to strengthen the
organization to focus on execution and performance. Patricia Fili-Krushel, most
recently the president of ABC Television Network, a division of the Walt Disney
Co., accepted the new position of President and CEO of WebMD Health, the
consumer division of Healtheon/WebMD. She is responsible for all the consumer
product offerings including the Consumer Portal and the health cable channel
that was recently acquired from News Corporation as well as the International
division. Steve Grant, who was formerly Executive Vice President, U.S. Service
Delivery with American Express Company, brings proven operational and
world-class customer service experience to his post of Chief Operating Officer
for Healtheon/WebMD. His 25 years of experience is being utilized to
aggressively integrate the announced acquisitions and make the Company the
premier customer service and delivery organization in the healthcare technology
industry.
Kinetra and News Corporation Transactions
The total purchase price of the Kinetra acquisition was approximately $290
million consisting of 7.4 million shares of common stock and the related
acquisition costs. The purchase price has been allocated to the assets acquired
and liabilities assumed based on their fair value, resulting in goodwill and
other intangible assets of approximately $280 million which is being amortized
over three years.
The total purchase price of the elements in the News Corporation transaction was
approximately $715 million consisting of 2 million shares of common stock and
preferred stock that will convert to 21.3 million shares of common stock in
three years. The purchase price has been allocated to the assets acquired and
liabilities assumed based on their fair value, resulting in goodwill and other
intangible assets of approximately $260 million which is being amortized over
five years.
Outlook
Healtheon/WebMD management believes that, after completion of its pending
acquisitions, its 2001 revenues should exceed $1 billion and that it could
achieve positive earnings before non-cash charges as early as the fourth quarter
of 2001. The Company does not endorse published comments
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by one of the Company's directors at a recent conference suggesting that these
milestones could be achieved significantly earlier than previously suggested by
numerous published analysts' models.
"The rest of 2000 will be focused on executing the fundamentals of our business
model we announced to our shareholders in 1999, including closing of our
announced mergers and completing the integration of those organizations into our
company. Our commitment is to ensure that our customer service only gets
stronger as we complete this integration," said Mike Long, Chairman of
Healtheon/WebMD. "To summarize, our key goals for 2000 are to integrate our
merged healthcare assets with Internet connectivity, to increase adoption of our
services and grow our transactions which serve as the foundation of increasing
efficiencies and value to the healthcare system, and to continue to forge key
partnerships which will enhance our services, help us eliminate fragmentation in
the healthcare industry and monetize our network."
About Healtheon/WebMD
Healtheon/WebMD is the first end-to-end Internet healthcare company connecting
physicians and consumers to the entire healthcare industry. Healtheon/WebMD is
using the Internet to facilitate a new system for the delivery of healthcare,
resulting in a single, secure environment for all communications and
transactions that will enable a more efficient and cost effective healthcare
system. Healtheon/WebMD has its corporate headquarters in Atlanta and its
technology headquarters in Silicon Valley. For more information visit
http://www.webmd.com.
***
Other than historical information set forth herein, this announcement contains
forward-looking statements that involve risks and uncertainties, including those
relating to future financial performance. Actual results could be materially
different from those discussed in this announcement. Factors that could cause
actual results to differ include, among others: Healtheon/WebMD's limited
operating history, continued growth in the use of the Internet, acceptance of
the Internet as a secure medium over which to conduct transactions, competition
from other healthcare industry participants, and the company's ability to close
its pending acquisitions and integrate the acquired businesses with its own.
Additional risks associated with Healtheon/WebMD can be found in its Annual
Report for 1999 on Form 10-K and other periodic filings with the SEC, available
through its corporate web site.
HEALTHEON/WebMD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
March 31
2000 1999
(Unaudited)
Revenue $65,881 $17,555
Operating costs and expenses:
Cost of operations 59,365 15,518
Development and engineering 11,574 7,041
Sales and marketing 86,715 4,652
General and administrative 13,811 4,249
Depreciation and amortization 338,710 5,225
Total operating costs and expenses 510,175 36,685
Loss from operations (444,294) (19,130)
Interest income, net 12,829 561
Net loss $(431,465) $(18,569)
Basic and diluted net loss
per common share $(2.47) $(0.30)
Weighted average shares outstanding used in
computing basic and diluted net loss per
common share 175,041 62,665
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HEALTHEON/WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, Dec. 31,
2000 1999
(Unaudited)
Assets:
Cash, cash equivalents and short term
investments $1,160,682 $291,286
Accounts receivable, net 71,925 51,511
Other current assets 15,564 20,808
Total current assets 1,248,171 363,605
Property, plant and equipment, net 65,103 48,384
Prepaid content and services 616,875 273,038
Intangible assets, net 3,763,748 3,547,559
Other assets 54,370 9,876
Total assets $5,748,267 $4,242,462
Liabilities & Stockholders' Equity:
Accounts payable $45,186 $77,288
Accrued liabilities 81,770 62,841
Current portion of lease obligations 2,204 2,281
Deferred revenue 10,532 4,891
Total current liabilities 139,692 147,301
Long-term liabilities 121,409 121,489
Stockholders' Equity:
Convertible preferred stock 629,000 --
Common stock, additional paid in capital
and other 5,681,051 4,365,092
Accumulated deficit (822,885) (391,420)
Total stockholders' equity 5,487,166 3,973,672
Total liabilities & stockholders' equity $5,748,267 $4,242,462
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HEALTHEON/WebMD CORPORATION
ANALYSIS OF CASH LOSS FROM OPERATIONS AND NET LOSS
(In thousands, except per share data)
Three Months Ended
03/31/00 12/31/99 03/31/99
(Unaudited)
Loss from operations $(444,294) $(236,688) $(19,130)
Non cash charges:
Depreciation and amortization 338,710 177,853 5,225
Amortization of prepaid content and
services included in sales and
marketing 18,554 7,837 --
Amortization of deferred compensation
included in general and administrative 1,158 1,587 2,084
Loss from operations before non cash
charges (85,872) (49,411) (11,821)
Per share (0.49) (0.42) (0.19)
Interest income, net 12,829 1,939 561
Net loss before non cash charges $(73,043) $(47,472) $(11,260)
Per share $(0.42) $(0.40) $(0.18)
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