Emdeon Reports Fourth Quarter and Full Year 2009 Results
- 9.5% Revenue Growth Over Fourth Quarter 2008
- 17.0% Increase in Adjusted EBITDA Over Fourth Quarter 2008
NASHVILLE, Tenn., March 16 /PRNewswire-FirstCall/ -- Emdeon (NYSE: EM), a leading provider of healthcare revenue and payment cycle management solutions, today announced financial results for the fourth quarter and full year ended December 31, 2009, as summarized below:
(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
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.
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:
- 2010 revenue to be between $1.0 to $1.06 billion
- 2010 Adjusted EBITDA to be between $266 to $278 million
- 2010 Adjusted Net Income per fully diluted share to be between $0.90 to $0.94 using a weighted average share count of 122.4 million(1)
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.
Emdeon Inc.
Condensed Consolidated Statements of Operations
(unaudited and amounts in thousands, except share and per share amounts)
For the Three Months For the Year
Ended December 31, Ended December 31,
2009 2008 2009 2008
---- ---- ---- ----
Revenue $238,560 $217,933 $918,448 $853,599
Costs and expenses:
Cost of operations
(exclusive of
depreciation and
amortization below) 144,788 136,140 562,867 541,563
Development and
engineering 9,503 7,596 33,928 28,625
Sales, marketing,
general and
administrative 28,555 21,903 113,701 91,212
Depreciation and
amortization 28,270 25,885 105,321 97,864
Loss on abandonment
of leased properties 933 3,081 1,675 3,081
--- ----- ----- -----
Operating income 26,511 23,328 100,956 91,254
Interest income - (32) (75) (963)
Interest expense 17,921 21,818 70,246 71,717
Other (519) - (519) -
---- -- ---- --
Income before income
tax provision 9,109 1,542 31,304 20,500
Income tax provision
(benefit) 4,416 (2,635) 17,301 8,567
----- ------ ------ -----
Net income 4,693 4,177 14,003 11,933
Net income attributable
to noncontrolling
interest 1,552 82 4,422 2,702
----- -- ----- -----
Net income attributable
to Emdeon Inc. $3,141 $4,095 $9,581 $9,231
====== ====== ====== ======
Net income per share
Class A common stock:
Basic $0.03 $0.05 $0.12 $0.12
===== ===== ===== =====
Diluted $0.03 $0.04 $0.12 $0.12
===== ===== ===== =====
Weighted average common
shares outstanding:
Basic 90,322,841 77,413,610 82,459,169 74,775,039
========== ========== ========== ==========
Diluted 90,322,841 100,000,000 82,525,002 100,000,000
========== =========== ========== ===========
Emdeon Inc.
Condensed Consolidated Balance Sheets
(unaudited and amounts in thousands, except share amounts)
December 31, December 31,
2009 2008
---- ----
Assets
Current assets:
Cash and cash equivalents $211,999 $71,478
Accounts receivable, net of allowance for
doubtful accounts of $4,433 and $4,576 at
December 31, 2009 and 2008, respectively 151,022 144,149
Deferred income tax assets 4,924 2,285
Prepaid expenses and other current assets 16,632 21,137
------ ------
Total current assets 384,577 239,049
Property and equipment, net 152,091 136,038
Goodwill 703,027 646,851
Intangible assets, net 989,280 971,001
Other assets, net 1,451 7,340
----- -----
Total assets $2,230,426 $2,000,279
========== ==========
Liabilities and equity
Current liabilities:
Accounts payable $9,910 $805
Accrued expenses 72,493 79,513
Deferred revenues 12,153 12,056
Current portion of long-term debt 9,972 17,244
----- ------
Total current liabilities 104,528 109,618
Long-term debt, excluding current portion 830,710 807,986
Deferred income tax liabilities 145,914 159,811
Tax receivable agreement obligations to
related parties 142,044 -
Other long-term liabilities 27,361 44,711
Commitments and contingencies
Equity:
Preferred stock (par value $0.00001),
25,000,000 shares authorized and 0 shares
issued and outstanding - -
Class A common stock (par value, $0.00001),
400,000,000 shares authorized and
90,423,941 and 77,413,610 shares
outstanding at December 31, 2009 and 2008,
respectively 1 1
Class B common stock, exchangeable, (par
value, $0.00001), 52,000,000 shares
authorized and 24,752,955 and 22,586,390
shares outstanding at December 31, 2009 and
2008, respectively - -
Additional paid-in capital 730,941 670,702
Accumulated other comprehensive loss (11,198) (23,195)
Retained earnings 33,704 24,123
------ ------
Emdeon Inc. equity 753,448 671,631
Noncontrolling interest 226,421 206,522
------- -------
Total equity 979,869 878,153
------- -------
Total liabilities and equity $2,230,426 $2,000,279
========== ==========
Emdeon Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited and amounts in thousands)
Year Ended
December 31,
2009 2008
---- ----
Operating activities
Net income $14,003 $11,933
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 105,321 97,864
Equity compensation expense 25,415 4,145
Deferred income tax benefit (1,248) (4,140)
Amortization of debt discount and issuance costs 11,947 9,954
Amortization of discontinued cash flow hedge from
other comprehensive loss 7,970 9,745
Change in fair value of interest rate swap (not
subject to hedge accounting) - (12,714)
Loss on abandonment of leased properties 1,675 3,081
Loss on disposal of fixed assets 17 177
Other (519) -
Changes in operating assets and liabilities:
Accounts receivable (2,571) (19,409)
Prepaid expenses and other 4,945 (12,049)
Accounts payable 4,731 (9,159)
Accrued expenses and other liabilities (9,329) 3,119
Due to HLTH Corporation - (797)
Deferred revenues 95 1,585
Tax receivable agreement obligations to related
parties 299 -
--- --
Net cash provided by operating activities 162,751 83,335
------- ------
Investing activities
Purchases of property and equipment (48,292) (27,971)
Payments for acquisitions, net of cash acquired (76,250) (21,061)
Purchase of Emdeon Business Services, net of cash
acquired - (306,260)
Proceeds from sale of office supplies business 1,300 -
----- --
Net cash used in investing activities (123,242) (355,292)
-------- --------
Financing activities
Proceeds from initial public offering 147,964 -
Repurchase of Class A common stock (1,586) -
Repurchase of Units of EBS Master LLC (5,373) -
Debt principal and sublicense obligation payments (29,203) (7,550)
Payment of debt issuance costs (359) -
Proceeds from revolver - 10,000
Payments on revolver (10,200) -
Capital contributions from stockholders 203 307,615
Distribution to stockholders (434) (317)
---- ----
Net cash provided by financing activities 101,012 309,748
------- -------
Net increase in cash and cash equivalents 140,521 37,791
Cash and cash equivalents at beginning of period 71,478 33,687
------ ------
Cash and cash equivalents at end of period $211,999 $71,478
======== =======
Segment Information
(unaudited and amounts in thousands)
For the Three Months Ended December 31, 2009
--------------------------------------------
Corporate &
Payer Provider Pharmacy Eliminations Consolidated
----- -------- -------- ------------ ------------
Revenue from external
customers
Claims management $47,165 $- $- $- $47,165
Payment services 55,552 - - - 55,552
Patient statements - 67,086 - - 67,086
Revenue cycle
management - 40,287 - - 40,287
Dental - 7,823 - - 7,823
Pharmacy services - - 20,647 - 20,647
Inter-segment revenue 468 110 - (578) -
--- --- -- ---- --
Net revenue 103,185 115,306 20,647 (578) 238,560
Costs and expenses:
Cost of operations 65,379 73,236 6,721 (548) 144,788
Development and
engineering 3,505 4,011 1,987 - 9,503
Sales, marketing,
general and
administrative 5,342 7,643 2,608 12,962 28,555
Loss on abandonment
of leased properties - 45 - 888 933
-- -- -- --- ---
Segment
contribution (1) $28,959 $30,371 $9,331 $(13,880) 54,781
======= ======= ====== ========
Depreciation and
amortization 28,270
Interest income -
Interest expense 17,921
Other income (519)
----
Income before income
tax provision $9,109
======
For the Three Months Ended December 31, 2008
--------------------------------------------
Corporate &
Payer Provider Pharmacy Eliminations Consolidated
----- -------- -------- ------------ ------------
Revenue from external
customers
Claims management $45,309 $- $- $- $45,309
Payment services 49,352 - - - 49,352
Patient statements - 67,733 - - 67,733
Revenue cycle
management - 38,010 - - 38,010
Dental - 7,653 - - 7,653
Pharmacy services - - 9,876 - 9,876
Inter-segment revenue 57 470 - (527) -
-- --- -- ---- --
Net revenue 94,718 113,866 9,876 (527) 217,933
Costs and expenses:
Cost of operations 60,112 74,533 1,925 (430) 136,140
Development and
engineering 3,019 3,543 1,034 - 7,596
Sales, marketing,
general and
administrative 4,559 7,587 968 8,789 21,903
Loss on abandonment
of leased properties - - - 3,081 3,081
-- -- -- ----- -----
Segment
contribution (1) $27,028 $28,203 $5,949 $(11,967) 49,213
======= ======= ====== ========
Depreciation and
amortization 25,885
Interest income (32)
Interest expense 21,818
Other income -
--
Income before income
tax provision $1,542
======
For the Year Ended December 31, 2009
------------------------------------
Corporate &
Payer Provider Pharmacy Eliminations Consolidated
----- -------- -------- ------------ ------------
Revenue from external
customers
Claims management $184,605 $- $- $- $184,605
Payment services 211,985 - - - 211,985
Patient statements - 274,390 - - 274,390
Revenue cycle
management - 155,112 - - 155,112
Dental - 31,513 - - 31,513
Pharmacy services - - 60,843 - 60,843
Inter-segment revenue 902 1,498 - (2,400) -
--- ----- -- ------ --
Net revenue 397,492 462,513 60,843 (2,400) 918,448
Costs and expenses:
Cost of operations 253,473 294,700 16,668 (1,974) 562,867
Development and
engineering 12,677 15,294 5,957 - 33,928
Sales, marketing,
general and
administrative
25,803 31,978 8,047 47,873 113,701
Loss on abandonment
of leased properties - 45 - 1,630 1,675
-- -- -- ----- -----
Segment
contribution (1) $105,539 $120,496 $30,171 $(49,929) 206,277
======== ======== ======= ========
Depreciation and
amortization 105,321
Interest income (75)
Interest expense 70,246
Other income (519)
----
Income before income
tax provision $31,304
=======
For the Year Ended December 31, 2008
-------------------------------------
Corporate &
Payer Provider Pharmacy Eliminations Consolidated
----- -------- -------- ------------ ------------
Revenue from external
customers
Claims management $179,930 $- $- $- $179,930
Payment services 191,874 - - - 191,874
Patient statements - 266,233 - - 266,233
Revenue cycle
management - 144,904 - - 144,904
Dental - 31,591 - - 31,591
Pharmacy services - - 39,067 - 39,067
Inter-segment revenue 355 2,117 - (2,472) -
--- ----- -- ------ --
Net revenue 372,159 444,845 39,067 (2,472) 853,599
Costs and expenses:
Cost of operations 242,950 292,844 7,612 (1,843) 541,563
Development and
engineering 10,472 14,015 4,138 - 28,625
Sales, marketing,
general and
administrative 23,286 30,475 3,864 33,587 91,212
Loss on abandonment
of leased properties - - - 3,081 3,081
-- -- -- ----- -----
Segment
contribution (1) $95,451 $107,511 $23,453 $(37,297) 189,118
======= ======== ======= ========
Depreciation and
amortization 97,864
Interest income (963)
Interest expense 71,717
Other income -
--
Income before income
tax provision $20,500
=======
(1) Segment contribution has been reduced (increased) by equity-based
compensation expense (benefit) of $3,916, ($1,668), $25,415, and $4,145
for the three months ended December 31, 2009 and December 31, 2008 and
for the year ended December 31, 2009 and December 31, 2008, respectively.
Segment contribution without such equity-based compensation expense
(benefit) would have been $58,697, $47,545, $231,692 and $193,263 for the
three months ended December 31, 2009 and December 31, 2008 and for the
year ended December 31, 2009 and December 31, 2008, respectively.
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.
Emdeon Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(unaudited and amounts in thousands)
For the Three Months For the Year
Ended December 31, Ended December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net income $4,693 $4,177 $14,003 $11,933
Interest expense, net 17,921 21,786 70,171 70,754
Income tax provision (benefit) 4,416 (2,635) 17,301 8,567
Depreciation and amortization 28,270 25,885 105,321 97,864
------ ------ ------- ------
EBITDA 55,300 49,213 206,796 189,118
Equity-based compensation 3,916 (1,668) 25,415 4,145
Purchase accounting adjustments 209 834 1,398 5,579
IPO-related transaction costs - 450 1,513 750
Facilities consolidation costs 1,326 3,984 2,541 4,758
Acquisition and divestiture
related costs 2,068 709 2,840 804
Tax receivable agreements change
in estimate 299 - 299 -
Non-operating gain (519) - (519) -
---- -- ---- --
EBITDA Adjustments 7,299 4,309 33,487 16,036
----- ----- ------ ------
Adjusted EBITDA $62,599 $53,522 $240,283 $205,154
======= ======= ======== ========
Emdeon Inc.
Reconciliation of GAAP Net Income to Adjusted Net Income
(unaudited and amounts in thousands)
For the Three Months For the Year
Ended December 31, Ended December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net income $4,693 $4,177 $14,003 $11,933
Income tax provision (benefit) 4,416 (2,635) 17,301 8,567
EBITDA Adjustments 7,299 4,309 33,487 16,036
Non-cash interest expense 5,108 5,190 19,918 6,983
Depreciation and amortization
resulting from acquisition method
adjustments 19,458 18,775 76,444 70,735
------ ------ ------ ------
Adjusted net income before income
taxes 40,974 29,816 161,153 114,254
Normalized income tax provision 16,185 11,777 63,655 45,130
------ ------ ------ ------
Adjusted Net Income $24,789 $18,039 $97,498 $69,124
======= ======= ======= =======
Emdeon Inc.
Reconciliation of Diluted Net Income Per Diluted Share of Class A Common
Stock to Adjusted Net Income Per Fully Diluted Share(1)
(unaudited)
For the Three Months For the Year
Ended December 31, Ended December 31,
2009 2008 2009 2008
---- ---- ---- ----
Diluted net income per share Class A
common stock $0.03 $0.04 $0.12 $0.12
Impact of assuming full dilution of
all outstanding equity instruments
for the period 0.00 (0.01) 0.01 0.00
Adjustments on a per share basis:
Income tax provision (benefit) 0.04 (0.02) 0.15 0.08
EBITDA Adjustments 0.06 0.04 0.30 0.15
Non-cash interest expense 0.04 0.05 0.18 0.07
Depreciation and amortization
resulting from acquisition method
adjustments 0.16 0.18 0.68 0.67
---- ---- ---- ----
Adjusted net income before income taxes 0.33 0.28 1.44 1.09
Normalized income tax provision 0.13 0.11 0.57 0.43
---- ---- ---- ----
Adjusted Net Income per fully diluted
share $0.20 $0.17 $0.87 $0.66
===== ===== ===== =====
(1) The calculation of Adjusted Net Income per fully diluted share
assumes the following equity-based instruments were fully converted into
Class A common stock on their date of issuance:
(shares in thousands)
---------------------
For the Three Months For the Year
Ended December 31, Ended December 31,
2009 2008 2009 2008
---- ---- ---- ----
Weighted average of:
Class A shares outstanding 90,323 77,414 82,459 74,775
Class B shares outstanding 24,753 24,749 25,039 27,277
Restricted stock units outstanding 639 924 859 905
Options to purchase Class A shares
outstanding 5,247 3,060 4,254 2,525
----- ----- ----- -----
Shares assumed in Adjusted Net
Income per fully diluted share
calculation 120,962 106,147 112,611 105,482
======= ======= ======= =======
SOURCE Emdeon Inc.
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