WebMD misses 3Q forecasts

WebMD (Nasdaq: HLTH) lost more than analysts expected in the third quarter and said its losses won't get any bigger.

After market close Monday, the online provider of health care administrative services reported a third quarter net loss of $65.8 million, or 27 cents per share, excluding special charges. First Call's survey of 16 analysts predicted a loss of 22 cents per share for WebMD's quarter ended Sept. 30.

Shares of WebMD slid to 9.6875 in afterhours activity on the Island electronic communications network, immediately following the release of quarterly results. WebMD stock fell 1 to 10.125 in Monday's regular trading, prior to the third quarter report.

Including restructuring and other non-cash expenses, WebMD lost $786.9 million, or $3.17 per share. Those costs included $44.9 million for restructuring following the acquisition of four companies, and a charge of $39.6 million to reflect a drop in the value of Internet-related investments.

Third quarter revenue rose 427 percent year-over-year and 50 percent sequentially to $151.2 million. Transaction services generated 55 percent of revenue, followed by physician services as 19 percent and portal revenue at 17 percent.

WebMD expects to generate profits before interest, taxes, depreciation and appreciation by the end of 2001, executives said. "The September quarter represents the high water mark for the cash loss for the Company on a pro forma basis," CFO Anthony Vuolo said. "The benefits of our integration plan are expected to be realized beginning with the December quarter and continuing throughout calendar year 2001."

However, WebMD expects to take more non-cash charges, and is taking another look at partnerships that currently generate a total of about $130 million in revenue.

"Given that many of the details of the arrangements need to be refined or in conflict with other relationships, it is inevitable that some of these revenue streams will be reduced in our efforts to redefine these relationships," CEO Martin J. Wygod said.

The company expects to take unspecified restructuring and integration charges related to those deals. Other charges will be recorded for relocating corporate offices and executive resignations.

Also Monday, WebMD announced two new directors, Paul A. Brooke and Herman Sarkowsky. Jim Clark resigned from the board last month, when Jeffrey Arnold resigned as co-CEO.

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