Emdeon Reports Second Quarter 2011 Results

NASHVILLE, Tenn., Aug. 8, 2011 /PRNewswire/ --

• Revenue of $282.1 million, increased 16.0% over second quarter 2010
• Non-GAAP Adjusted EBITDA of $74.7 million, increased 14.7% over second quarter 2010

Emdeon Inc. (NYSE: EM), a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced financial results for the second quarter ended June 30, 2011, as summarized below:

"We are pleased with our financial results for the second quarter.  Our new initiatives in clinical information exchange and recently acquired solutions are resonating with our customer base.  Emdeon's revenue cycle management and payment distribution solutions also continued to contribute solid organic growth," said George Lazenby, Emdeon's chief executive officer.  "We are especially pleased with the performance of our newest acquisition, EquiClaim.  Interest in this payment integrity solution has been strong among our customers and is performing well against our internal targets."

Second quarter revenue was $282.1 million, an increase of 16.0%, compared to $243.3 million for the same period in 2010, as a result of recent acquisitions and organic growth.  GAAP operating income for the second quarter of 2011 was $27.6 million compared to $30.6 million for the same period in 2010, a decrease of 10.0%.  This decrease was primarily due to higher depreciation and amortization expense from 2010 acquisitions and capital expenditures, as well as higher equity compensation expense.  Second quarter Non-GAAP Adjusted EBITDA grew 14.7% to $74.7 million, or 26.5% of revenue, from Non-GAAP Adjusted EBITDA of $65.2 million, or 26.8% of revenue, in the comparable period in 2010.  The slight decrease in Non-GAAP Adjusted EBITDA as a percentage of revenue was primarily due to increased investment in new solutions combined with revenue mix changes, including the impact of recent acquisitions.  

GAAP net income (before noncontrolling interest) for the second quarter of 2011 was $9.2 million compared to GAAP net income of $7.3 million for the same period in 2010.  GAAP net income per diluted share for the second quarter of 2011 was $0.06 compared to $0.05 for the same period in 2010.  Non-GAAP Adjusted Net Income per fully diluted share for the second quarter of 2011 was $0.26, using a weighted average fully diluted share count of 124.2 million, compared to $0.22, using a weighted average fully diluted share count of 122.6 million, for the same period in 2010.

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 unaudited condensed 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 maintained its previously announced 2011 annual financial outlook ranges of $1.105 to $1.135 billion for revenue, $300 to $310 million for Non-GAAP Adjusted EBITDA and $1.00 to $1.06 for Non-GAAP Adjusted Net Income per fully diluted share (using a weighted average share count of 124.0 million).

Cancellation of Conference Call and Webcast

As noted in an earlier release, Emdeon entered into a definitive merger agreement on August 3, 2011 with Blackstone Capital Partners VI L.P. under which this Blackstone fund will acquire a controlling interest in Emdeon.  With the proposed transaction, Emdeon will not host a conference call to discuss financial results for the second quarter of 2011.  The Company expects to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 on or about August 9, 2011.

About Emdeon

Emdeon is a leading provider of revenue and payment cycle management and clinical information exchange 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 and clinical information exchange processes. 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 the proposed merger transaction and 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 the proposed merger transaction and 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.  Such factors related to the proposed merger transaction include unexpected costs or liabilities, delays due to regulatory review, certain closing conditions (including the committed financing) may not be timely satisfied or waived, litigation may be commenced and general economic and business conditions may change.  Such factors related to Emdeon's actual financial results or results of operations include:  effects of competition, including competition from entities that are customers for certain of Emdeon's solutions; Emdeon's ability to maintain relationships with its customers and channel partners; Emdeon's ability to effectively cross-sell its solutions to existing customers and to continue to generate revenue and maintain profitability by developing or acquiring and successfully deploying new or updated solutions; pricing pressures on Emdeon's solutions; 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 Annual Report on Form 10-K for the year ended December 31, 2010, as well as Emdeon's periodic and other reports, filed with the Securities and Exchange Commission.

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.

Explanation of Non-GAAP Financial Measures

Emdeon's management 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 income tax provision (benefit), net interest expense 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 (except for contingently issuable shares subject to performance conditions and shares or other potentially dilutive securities not otherwise contemplated in the share denominator utilized in the applicable year's financial outlook range) 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 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 2011.  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 capital structure, all of which are difficult to estimate and primarily dependent on future events.

SOURCE Emdeon Inc.