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These excerpts taken from the WBMD 10-K filed Feb 27, 2009. Introduction
According to data made available by The Centers for
Medicare & Medicaid Services (CMS) Office of the
Actuary in January 2009, healthcare spending in the United
States grew 6.1% in 2007, to $2.2 trillion (or an average of
$7,421 per person), and continued to outpace overall economic
growth, which grew by 4.8% in 2007. While the 2007 increase in
healthcare spending was not as large as those in some recent
years, healthcare spending as a percentage of gross domestic
product continued to increase according to the CMS data, from
16.0% to 16.2%. CMS also indicated that private health insurance
premiums grew 6.0% in 2007, the same rate as in 2006. In
response to increasing healthcare costs, employers and health
plans have been:
In connection with the ongoing effort to shift greater
responsibility for healthcare costs to consumers, employers and
health plans are making available more health and benefits
information and decision-support applications to help their
employees and plan members make informed decisions about
treatment options,
Table of Contents
health risks and healthcare providers. The goal is to encourage
employees and plan members to take a more active role in
managing their healthcare by providing relevant information,
including data related to healthcare costs and quality promoting
transparency. Our WebMD Health and Benefits
Managersm
provides an integrated health and benefits management platform
that helps employers and health plans present actionable
information and applications through a convenient, custom
private portal. Our online solutions complement the
employer’s or payer’s existing benefit-related
services and offline educational efforts.
We generate revenue from our private portals primarily through
the licensing of our technology and content to employers and
health plans, either directly or through our distributors. Our
private portals are not part of The WebMD Health Network
and do not involve advertising or sponsorship by third
parties; and we do not include private portal users or page
views when we measure The WebMD Health Network’s
traffic volume.
Introduction According to data made available by The Centers for Medicare & Medicaid Services (CMS) Office of the Actuary in January 2009, healthcare spending in the United States grew 6.1% in 2007, to $2.2 trillion (or an average of $7,421 per person), and continued to outpace overall economic growth, which grew by 4.8% in 2007. While the 2007 increase in healthcare spending was not as large as those in some recent years, healthcare spending as a percentage of gross domestic product continued to increase according to the CMS data, from 16.0% to 16.2%. CMS also indicated that private health insurance premiums grew 6.0% in 2007, the same rate as in 2006. In response to increasing healthcare costs, employers and health plans have been:
In connection with the ongoing effort to shift greater responsibility for healthcare costs to consumers, employers and health plans are making available more health and benefits information and decision-support applications to help their employees and plan members make informed decisions about treatment options,
Table of Contentshealth risks and healthcare providers. The goal is to encourage employees and plan members to take a more active role in managing their healthcare by providing relevant information, including data related to healthcare costs and quality promoting transparency. Our WebMD Health and Benefits Managersm provides an integrated health and benefits management platform that helps employers and health plans present actionable information and applications through a convenient, custom private portal. Our online solutions complement the employer’s or payer’s existing benefit-related services and offline educational efforts. We generate revenue from our private portals primarily through the licensing of our technology and content to employers and health plans, either directly or through our distributors. Our private portals are not part of The WebMD Health Network and do not involve advertising or sponsorship by third parties; and we do not include private portal users or page views when we measure The WebMD Health Network’s traffic volume. Introduction
This section of the Annual Report contains a description of laws
and regulations applicable to us, either directly or through
their effect on our healthcare industry customers, as well as
healthcare and Internet industry standards that serve a
self-regulatory function, and related matters. Existing and
future laws, regulations and industry standards affecting the
healthcare, information technology and Internet industries could
create unexpected liabilities for us, cause us to incur
additional costs and restrict our operations. Many of the laws
that affect us, and particularly those applying to healthcare,
are very complex and may be subject to varying interpretations
by courts and other governmental authorities. We cannot provide
assurance that we will be able to accurately anticipate the
application of laws, regulations and industry standards to our
operations.
Most of our revenue flows either directly from the healthcare
industry or from other sources that could be affected by changes
affecting healthcare spending. The healthcare industry is highly
regulated and is subject to changing political, regulatory and
other influences. These factors affect the purchasing practices
and operations of healthcare organizations as well as the
behavior and attitudes of consumers. Federal and state
legislatures and agencies periodically consider programs to
reform or revise aspects of the United States healthcare system.
These programs may contain proposals to increase governmental
involvement in healthcare, change reimbursement rates or
otherwise change the environment in which healthcare industry
participants operate. Healthcare industry participants may
respond by reducing their expenditures or postponing expenditure
decisions, including expenditures for our products and services.
We are unable to predict future proposals with any certainty or
to predict the effect they could have on our businesses.
Many healthcare laws are complex, and their application to
specific products and services may not be clear. In particular,
many existing healthcare laws and regulations, when enacted, did
not anticipate the healthcare information services that we
provide. However, these laws and regulations may nonetheless be
applied to our products and services. Our failure to accurately
anticipate the application of these laws and
Table of Contents
regulations to our businesses, or other failure to comply, could
create liability for us, result in adverse publicity and
negatively affect our businesses.
This section of the Annual Report also contains a description of
other laws and regulations, including general consumer
protection laws and Internet-related laws that affect some of
our businesses. Laws and regulations have been adopted, and may
be adopted in the future, that address Internet-related issues,
including online content, privacy, online marketing, unsolicited
commercial email, taxation, pricing, and quality of products and
services. Some of these laws and regulations, particularly those
that relate specifically to the Internet, were adopted
relatively recently, and their scope and application may still
be subject to uncertainties. Interpretations of these laws, as
well as any new or revised law or regulation, could decrease
demand for our services, increase our cost of doing business, or
otherwise cause our business to suffer.
Introduction This section of the Annual Report contains a description of laws and regulations applicable to us, either directly or through their effect on our healthcare industry customers, as well as healthcare and Internet industry standards that serve a self-regulatory function, and related matters. Existing and future laws, regulations and industry standards affecting the healthcare, information technology and Internet industries could create unexpected liabilities for us, cause us to incur additional costs and restrict our operations. Many of the laws that affect us, and particularly those applying to healthcare, are very complex and may be subject to varying interpretations by courts and other governmental authorities. We cannot provide assurance that we will be able to accurately anticipate the application of laws, regulations and industry standards to our operations. Most of our revenue flows either directly from the healthcare industry or from other sources that could be affected by changes affecting healthcare spending. The healthcare industry is highly regulated and is subject to changing political, regulatory and other influences. These factors affect the purchasing practices and operations of healthcare organizations as well as the behavior and attitudes of consumers. Federal and state legislatures and agencies periodically consider programs to reform or revise aspects of the United States healthcare system. These programs may contain proposals to increase governmental involvement in healthcare, change reimbursement rates or otherwise change the environment in which healthcare industry participants operate. Healthcare industry participants may respond by reducing their expenditures or postponing expenditure decisions, including expenditures for our products and services. We are unable to predict future proposals with any certainty or to predict the effect they could have on our businesses. Many healthcare laws are complex, and their application to specific products and services may not be clear. In particular, many existing healthcare laws and regulations, when enacted, did not anticipate the healthcare information services that we provide. However, these laws and regulations may nonetheless be applied to our products and services. Our failure to accurately anticipate the application of these laws and
Table of Contentsregulations to our businesses, or other failure to comply, could create liability for us, result in adverse publicity and negatively affect our businesses. This section of the Annual Report also contains a description of other laws and regulations, including general consumer protection laws and Internet-related laws that affect some of our businesses. Laws and regulations have been adopted, and may be adopted in the future, that address Internet-related issues, including online content, privacy, online marketing, unsolicited commercial email, taxation, pricing, and quality of products and services. Some of these laws and regulations, particularly those that relate specifically to the Internet, were adopted relatively recently, and their scope and application may still be subject to uncertainties. Interpretations of these laws, as well as any new or revised law or regulation, could decrease demand for our services, increase our cost of doing business, or otherwise cause our business to suffer. These excerpts taken from the WBMD 10-K filed Feb 29, 2008. Introduction
In response to increasing healthcare costs, employers and health
plans have been enhancing wellness programs, educating
employees, changing benefit plan designs to increase
deductibles, co-payments and other out-of-pocket costs and
taking other steps to motivate their members and employees to
use healthcare in a cost-effective manner. The new plan designs
may also include provisions that increase consumer
responsibility for healthcare costs and healthcare
decision-making. These are sometimes referred to as
consumer-directed health plans. Consumer-directed health plans
may also combine high deductible health insurance with a
tax-preferred cash account, such as a health reimbursement
arrangement (HRA) or a health savings account (HSA), containing
pre-tax funds that employees can spend on covered healthcare
expenses. The goal is to give employees pertinent information
about healthcare costs and quality, so that they are able to
make financially responsible and informed healthcare purchasing
decisions.
In connection with the shift to employees of a greater portion
of decision-making and responsibility for healthcare costs,
employers and health plans generally also make available health
and benefits information and decision-support tools to educate
and help their employees make informed decisions about treatment
options, health risks and healthcare providers. We believe that
our WebMD Health and Benefits Manager private portals provide
the tools and information employees and plan members need to
take a more active role in managing their healthcare. Our
cost-effective, online solutions complement the employer’s
or payer’s existing benefit-related services and offline
educational efforts. As part of this increase in the use of
information technology in healthcare, employees and plan
members, and employers and plans have recognized that the
creation of the personal health record for an employee or plan
member is an important application in centralizing the
individual’s experience, and allowing the individual to
store, manage and access important health information to
facilitate improved quality and lower cost of care. By making
the needed information and decision-support tools available
through a convenient and easy-to-use online service, employers
and payers can help their employees and members make choices
that reduce both administrative and healthcare costs. We believe
that our WebMD Health and Benefits Manager tools, including our
personal health record application, are well positioned to play
a role in such efforts. A 2005 study commissioned by the Blue
Cross and Blue Shield Association and conducted by the RAND
Corporation concluded that Web-based treatment decision-support
tools can play an important role in assisting in consumer
treatment decisions to foster improved outcomes. For example,
RAND cited studies that showed consumers who use
decision-support tools are less likely to choose elective
surgery in favor of less invasive procedures and are more likely
to get preventive care.
For the reasons described above, we believe that the increased
shift to employees of a greater share of decision-making and
responsibility for healthcare costs, including increased
enrollment in consumer-directed health plans and increased use
of information technology (including personal health records) to
assist employees in making informed decisions about healthcare,
will be a significant driver for the growth of our private
portals during the next several years. In addition, as described
in more detail below, we believe that there are benefits to
employers and health plans, regardless of health plan design
considerations, in making the WebMD Health and Benefits Manager
services available to their employees and members, including
reduced benefits administration costs, communication and
customer service costs, as well as more efficient coordination
of messaging through the use of integrated employee or member
profiles, and an increase in appropriate utilization of third
party services like disease management or pharmacy benefit
management.
Our private portals do not display any advertisements and do not
generate revenue from advertising or sponsorship. Membership for
each of our private portals is limited to the employees (and
dependents) and members of the respective employer and health
plan clients. Each member must initially register on the private
portal provided, at which point a unique user identification
name and passcode is assigned to ensure a secure sign-on each
time the user accesses the portal.
Table of Contents
Introduction In response to increasing healthcare costs, employers and health plans have been enhancing wellness programs, educating employees, changing benefit plan designs to increase deductibles, co-payments and other out-of-pocket costs and taking other steps to motivate their members and employees to use healthcare in a cost-effective manner. The new plan designs may also include provisions that increase consumer responsibility for healthcare costs and healthcare decision-making. These are sometimes referred to as consumer-directed health plans. Consumer-directed health plans may also combine high deductible health insurance with a tax-preferred cash account, such as a health reimbursement arrangement (HRA) or a health savings account (HSA), containing pre-tax funds that employees can spend on covered healthcare expenses. The goal is to give employees pertinent information about healthcare costs and quality, so that they are able to make financially responsible and informed healthcare purchasing decisions. In connection with the shift to employees of a greater portion of decision-making and responsibility for healthcare costs, employers and health plans generally also make available health and benefits information and decision-support tools to educate and help their employees make informed decisions about treatment options, health risks and healthcare providers. We believe that our WebMD Health and Benefits Manager private portals provide the tools and information employees and plan members need to take a more active role in managing their healthcare. Our cost-effective, online solutions complement the employer’s or payer’s existing benefit-related services and offline educational efforts. As part of this increase in the use of information technology in healthcare, employees and plan members, and employers and plans have recognized that the creation of the personal health record for an employee or plan member is an important application in centralizing the individual’s experience, and allowing the individual to store, manage and access important health information to facilitate improved quality and lower cost of care. By making the needed information and decision-support tools available through a convenient and easy-to-use online service, employers and payers can help their employees and members make choices that reduce both administrative and healthcare costs. We believe that our WebMD Health and Benefits Manager tools, including our personal health record application, are well positioned to play a role in such efforts. A 2005 study commissioned by the Blue Cross and Blue Shield Association and conducted by the RAND Corporation concluded that Web-based treatment decision-support tools can play an important role in assisting in consumer treatment decisions to foster improved outcomes. For example, RAND cited studies that showed consumers who use decision-support tools are less likely to choose elective surgery in favor of less invasive procedures and are more likely to get preventive care. For the reasons described above, we believe that the increased shift to employees of a greater share of decision-making and responsibility for healthcare costs, including increased enrollment in consumer-directed health plans and increased use of information technology (including personal health records) to assist employees in making informed decisions about healthcare, will be a significant driver for the growth of our private portals during the next several years. In addition, as described in more detail below, we believe that there are benefits to employers and health plans, regardless of health plan design considerations, in making the WebMD Health and Benefits Manager services available to their employees and members, including reduced benefits administration costs, communication and customer service costs, as well as more efficient coordination of messaging through the use of integrated employee or member profiles, and an increase in appropriate utilization of third party services like disease management or pharmacy benefit management. Our private portals do not display any advertisements and do not generate revenue from advertising or sponsorship. Membership for each of our private portals is limited to the employees (and dependents) and members of the respective employer and health plan clients. Each member must initially register on the private portal provided, at which point a unique user identification name and passcode is assigned to ensure a secure sign-on each time the user accesses the portal.
Table of ContentsThis excerpt taken from the WBMD 10-Q filed Nov 9, 2007. Introduction
Our
Company
We are a leading provider of health information services to
consumers, physicians and other healthcare professionals,
employers and health plans. We have organized our business into
two operating segments as follows:
Table of Contents
products, including continuing medical education
(“CME”) services. Our sponsors and advertisers include
pharmaceutical, biotechnology, medical device and consumer
products companies. We provide information and services that
enable employees and members, respectively, to make more
informed benefit, treatment and provider decisions through our
private portals for employers and health plans. We also provide
related services for use by such employees and members,
including lifestyle education and personalized telephonic health
coaching as a result of the acquisition of Summex on
June 13, 2006. We generate revenue from our private portals
through the licensing of these portals to employers and health
plans either directly or through distributors. We also
distribute our online content and services to other entities and
generate revenue from these arrangements through the sale of
advertising and sponsorship products and content syndication
fees. The Company also provides
e-detailing
promotion and physician recruitment services for use by
pharmaceutical, medical device and healthcare companies as a
result of the acquisition of Medsite on September 11, 2006.
Certain
Potential Transactions
As previously disclosed, HLTH currently intends to propose a
transaction that would allow HLTH’s stockholders to
participate more directly in the ownership of WebMD Common
Stock. In that regard, the WebMD Board of Directors has formed a
special committee (which we refer to as the Special Committee),
consisting of Stanley S. Trotman, Jr. and Jerome C. Keller
(two non-management members of WebMD’s Board who do not
serve on HLTH’s Board of Directors), to evaluate and
negotiate any potential transaction with HLTH. The Special
Committee has retained Morgan Joseph & Co. Inc. as its
financial advisor and Cahill Gordon & Reindel LLP as its
legal counsel. HLTH has retained Raymond James &
Associates, Inc. as its financial advisor and O’Melveny
& Myers LLP as its legal counsel. There can be no assurance
that any such transaction will be agreed upon or ultimately
consummated.
The potential transaction that HLTH currently intends to propose
to the Special Committee (which we refer to as the Potential
Merger Transaction) would involve the merger of HLTH into WebMD,
with WebMD being the surviving company. Each share of HLTH
Common Stock would be converted, in the merger, into a
combination of cash and WebMD Common Stock. HLTH expects the
merger consideration to reflect, among other factors, an
evaluation of the realizable values of the assets and
liabilities of HLTH, other than its ownership of WebMD. HLTH
expects that shares of WebMD Common Stock would constitute up to
50% of the merger consideration and their receipt would be tax
free to HLTH stockholders. HLTH expects that the cash necessary
to consummate the transaction would come from cash and cash
equivalents on hand at HLTH and WebMD and from the proceeds of
the sales by HLTH of its ViPS and Porex subsidiaries and
possibly its 48% interest in EBS Master LLC. HLTH has received
unsolicited preliminary indications of interest for each of
these assets and intends to explore potential sales transactions
(which we refer to as the Potential Sale Transactions). However,
there can be no assurance that such exploration will result in
any definitive agreement or transaction.
WebMD stockholders, other than HLTH, would continue to own their
shares of WebMD Class A Common Stock following the
Potential Merger Transaction, but would no longer be minority
stockholders of a controlled company and the shares of WebMD
Class B Common Stock currently owned by HLTH would be
retired. In addition, as a result of the transaction, the amount
of publicly traded WebMD Common Stock would be dramatically
increased. However, HLTH anticipates that the total number of
outstanding shares of WebMD Common Stock would be reduced in the
transaction.
Table of Contents
Background
Information on Certain Trends and Strategies
Use of the Internet by Consumers and
Physicians. The Internet has emerged as a major
communications medium and has already fundamentally changed many
sectors of the economy, including the marketing and sales of
financial services, travel, and entertainment, among others. The
Internet is also changing the healthcare industry and has
transformed how consumers and physicians find and utilize
healthcare information. As consumers are required to assume
greater financial responsibility for rising healthcare costs,
the Internet serves as a valuable resource by providing them
with immediate access to searchable and dynamic interactive
content to check symptoms, assess risks, understand diseases,
find providers and evaluate treatment options. The Internet has
also become a primary source of information for physicians
seeking to improve clinical practice and is growing relative to
traditional information sources, such as conferences, meetings
and offline journals.
Increased Online Marketing and Education Spending for
Healthcare Products. Pharmaceutical,
biotechnology and medical device companies spend large amounts
each year marketing their products and educating consumers and
physicians about them, however, only a small portion of this
amount is currently spent on online services. We believe that
these companies, which comprise the majority of our advertisers
and sponsors, are becoming increasingly aware of the
effectiveness of the Internet relative to traditional media in
providing health, clinical and product-related information to
consumers and physicians, and this increasing awareness will
result in increasing demand for our services.
Changes in Health Plan Design; Health Management
Initiatives. While overall healthcare costs have
been rising at a rapid annual rate, employers’ costs of
providing healthcare benefits to their employees have been
increasing at an even faster rate. In response to these
increases, employers are seeking to shift a greater portion of
healthcare costs onto their employees and to redefine
traditional health benefits. Employers and health plans want to
motivate their members and employees to evaluate their
healthcare decisions more carefully in order to be more
cost-effective. As employers continue to implement high
deductible and consumer-directed healthcare plans (referred to
as CDHPs) and related Health Savings Accounts (referred to as
HSAs) to achieve these goals, we believe that they will continue
to implement services like those we provide through our private
online portals. In addition, health plans and employers have
begun to recognize that encouraging the good health of their
members and employees not only benefits the members and
employees but also has financial benefits for the health plans
and employers. Accordingly, many employers and health plans have
been enhancing health management programs and taking steps to
provide healthcare information and education to employees and
members, including through online services.
Traffic to the WebMD Health Network. During
the past several years, an increasing portion of the page view
traffic to The WebMD Health Network has come from Web
sites that we own. This has resulted from increases in traffic
to sites we own and acquisitions of additional sites, as well as
from the expiration of relationships with certain third party
sites that had carried our content and had been included in
The WebMD Health Network, including the expiration of our
relationship with the AOL division of Time Warner
(“AOL”) on May 1, 2007. Under the agreement
between WebMD and AOL, WebMD had provided healthcare content,
tools and services for use on certain AOL properties. As a
result of the expiration of that agreement, the monthly unique
users and page view traffic from AOL is no longer a part of
The WebMD Health Network. Additionally, revenues and
earnings of approximately $5 million per year related to
certain contractual guarantees also ended with the expiration of
that agreement.
Seasonality
The timing of our revenue is affected by seasonal factors.
Advertising and sponsorship revenue within our Online Services
segment is seasonal, primarily due to the annual budget approval
process of the advertising and sponsorship clients of our public
portals. This portion of our revenue is usually the lowest in
the first quarter of each calendar year, and increases during
each consecutive quarter throughout the year. Our private portal
licensing revenue is historically higher in the second half of
the year as new customers are typically added during this period
in conjunction with their annual open enrollment periods for
employee benefits. Finally, the annual distribution cycle within
our Publishing and Other Services segment results in a
significant portion of our revenue in this segment being
recognized in the second and third quarter of each calendar
year.
Table of Contents
The timing of revenue in relation to our expenses, much of which
do not vary directly with revenue, has an impact on cost of
operations, sales and marketing and general and administrative
expenses as a percentage of revenue in each calendar quarter.
This excerpt taken from the WBMD DEF 14A filed Aug 14, 2007. Introduction
This section describes the compensation paid by WebMD during
2006 to the members of our Board of Directors who are not also
WebMD or HLTH employees. We refer to these individuals as
Non-Employee Directors. The Compensation Committee of the WebMD
Board is authorized to determine the compensation of the
Non-Employee Directors.
As described below, only two types of compensation were paid by
WebMD to Non-Employee Directors in 2006 for their Board and
Board Committee service: (1) annual fees paid in the form
of shares of WebMD Class A Common Stock and (2) a
grant of non-qualified options to purchase WebMD Class A
Common Stock. None of the Non-Employee Directors received any
other compensation from WebMD during 2006 and none of them
provided any services to WebMD during 2006, except their service
as a director. WebMD does not offer any deferred compensation
plans or retirement plans to its Non-Employee Directors.
During 2005, in connection with our initial public offering,
each of our Non-Employee Directors received: (1) a grant of
options to purchase 13,200 shares of our Class A
Common Stock with an exercise price equal to the initial public
offering price of $17.50 and (2) a grant of
4,400 shares of restricted WebMD Common Stock, subject to
vesting based on continued service (which we refer to as WebMD
Restricted Stock). These shares of WebMD Restricted Stock and
options vest at the rate of 25% per year on each of the first
through fourth anniversaries of the date of grant.
This excerpt taken from the WBMD 10-Q filed Aug 9, 2007. Introduction
Our
Company
We are a leading provider of health information services to
consumers, physicians and other healthcare professionals,
employers and health plans. We have organized our business into
two operating segments as follows:
Table of Contents
Background
Information on Certain Trends and Strategies
Use of the Internet by Consumers and
Physicians. The Internet has emerged as a major
communications medium and has already fundamentally changed many
sectors of the economy, including the marketing and sales of
financial services, travel, and entertainment, among others. The
Internet is also changing the healthcare industry and has
transformed how consumers and physicians find and utilize
healthcare information. As consumers are required to assume
greater financial responsibility for rising healthcare costs,
the Internet serves as a valuable resource by providing them
with immediate access to searchable and dynamic interactive
content to check symptoms, assess risks, understand diseases,
find providers and evaluate treatment options. The Internet has
also become a primary source of information for physicians
seeking to improve clinical practice and is growing relative to
traditional information sources, such as conferences, meetings
and offline journals.
Increased Online Marketing and Education Spending for
Healthcare Products. Pharmaceutical,
biotechnology and medical device companies spend large amounts
each year marketing their products and educating consumers and
physicians about them; however, only a small portion of this
amount is currently spent on online services. We believe that
these companies, which comprise the majority of our advertisers
and sponsors, are becoming increasingly aware of the
effectiveness of the Internet relative to traditional media in
providing health, clinical and product-related information to
consumers and physicians, and this increasing awareness will
result in increasing demand for our services.
Changes in Health Plan Design; Health Management
Initiatives. While overall healthcare costs have
been rising at a rapid annual rate, employers’ costs of
providing healthcare benefits to their employees have been
increasing at an even faster rate. In response to these
increases, employers are seeking to shift a greater portion of
healthcare costs onto their employees and to redefine
traditional health benefits. Employers and health plans want to
motivate their members and employees to evaluate their
healthcare decisions more carefully in order to be more
cost-effective. As employers continue to implement high
deductible and consumer-directed healthcare plans (referred to
as CDHPs) and related Health Savings Accounts (referred to as
HSAs) to achieve these goals, we believe that we will be able to
attract more employers and health plans to use our private
online portals. In addition, health plans and employers have
begun to recognize that encouraging the good health of their
members and employees not only benefits the members and
employees but also has financial benefits for the health plans
and employers. Accordingly, many employers and health plans have
been enhancing health management programs and taking steps to
provide healthcare information
Table of Contents
and education to employees and members, including through
online, telephonic and paper-based services. We believe that we
are well positioned to benefit from these trends because our
private portals provide the tools and information employees and
plan members need in order to make more informed decisions about
healthcare provider, benefit and treatment options.
Traffic to the WebMD Health Network. During
the past several years, an increasing portion of the page view
traffic to The WebMD Health Network has come from Web
sites that we own. However, a portion of the total page view
traffic continues to come from Web sites owned by third parties
that carry our content. During the quarter ended June 30,
2007, third party Web sites accounted for approximately 4% of
The WebMD Health Network’s aggregate page views. In
the past, an even larger percentage of the total page view
traffic had come from third party Web sites. Under an agreement
between WebMD and the AOL division of Time Warner
(“AOL”), which was entered into in May 2001 and
expired on May 1, 2007, WebMD provided healthcare content,
tools and services for use on certain AOL properties. The
monthly unique users and page view traffic from AOL was 3% and
1%, respectively, of the aggregate WebMD Health Network monthly
unique users and page view traffic for the quarter ended
June 30, 2007. As a result of the expiration of that
agreement, the monthly unique users and page view traffic from
AOL will no longer be part of the WebMD Health Network.
Additionally, revenues and earnings of approximately
$5 million per year related to certain contractual
guarantees also ended with the expiration of that agreement.
Seasonality
The timing of our revenue is affected by seasonal factors.
Advertising and sponsorship revenue within our Online Services
segment is seasonal, primarily due to the annual budget approval
process of the advertising and sponsorship clients of our public
portals. This portion of our revenue is usually the lowest in
the first quarter of each calendar year, and increases during
each consecutive quarter throughout the year. Our private portal
licensing revenue is historically higher in the second half of
the year as new customers are typically added during this period
in conjunction with their annual open enrollment periods for
employee benefits. Finally, the annual distribution cycle within
our Publishing and Other Services segment results in a
significant portion of our revenue in this segment being
recognized in the second and third quarters of each calendar
year. The timing of revenue in relation to our expenses, much of
which do not vary directly with revenue, has an impact on cost
of operations, sales and marketing and general and
administrative expenses as a percentage of revenue in each
calendar quarter.
This excerpt taken from the WBMD 10-Q filed May 10, 2007. Introduction
Our
Company
We are a leading provider of health information services to
consumers, physicians and other healthcare professionals,
employers and health plans. We have organized our business into
two operating segments as follows:
Table of Contents
Background
Information on Certain Trends and Strategies
Use of the Internet by Consumer and
Physicians. The Internet has emerged as a major
communications medium and has already fundamentally changed many
sectors of the economy, including the marketing and sales of
financial services, travel, and entertainment, among others. The
Internet is also changing the healthcare industry and has
transformed how consumers and physicians find and utilize
healthcare information. As consumers are required to assume
greater financial responsibility for rising healthcare costs,
the Internet serves as a valuable resource by providing them
with immediate access to searchable and dynamic interactive
content to check symptoms, assess risks, understand diseases,
find providers and evaluate treatment options. The Internet has
also become a primary source of information for physicians
seeking to improve clinical practice and is growing relative to
traditional information sources, such as conferences, meetings
and offline journals.
Increased Online Marketing and Education Spending for
Healthcare Products. Pharmaceutical,
biotechnology and medical device companies spend large amounts
each year marketing their products and educating consumers and
physicians about them, however, only a small portion of this
amount is currently spent on online services. We believe that
these companies, which comprise the majority of our advertisers
and sponsors, are becoming increasingly aware of the
effectiveness of the Internet relative to traditional media in
providing health, clinical and product-related information to
consumers and physicians, and that this increasing awareness
will result in increasing demand for our services.
Changes in Health Plan Design; Health Management
Initiatives. While overall healthcare costs have
been rising at a rapid annual rate, employers’ costs of
providing healthcare benefits to their employees have been
increasing at an even faster rate. In response to these
increases, employers are seeking to shift a greater portion of
healthcare costs onto their employees and to redefine
traditional health benefits. Employers and health plans want to
motivate their members and employees to evaluate their
healthcare decisions more carefully in order to be more
cost-effective. As employers continue to implement high
deductible and consumer-directed healthcare plans (referred to
as CDHPs) and related Health Savings Accounts (referred to as
HSAs) to achieve these goals, we believe that we will be able to
attract more employers and health plans to use our private
online portals. In addition, health plans and employers have
begun to recognize that encouraging the good health of their
members and employees not only benefits the members and
employees but also has financial benefits for the health plans
and employers. Accordingly, many employers and health
Table of Contents
plans have been enhancing health management programs and taking
steps to provide healthcare information and education to
employees and members, including through online services. We
believe that we are well positioned to benefit from these trends
because our private portals provide the tools and information
employees and plan members need in order to make more informed
decisions about healthcare provider, benefit and treatment
options.
Traffic to the WebMD Health Network. During
the past several years, an increasing portion of the page view
traffic to The WebMD Health Network has come from Web
sites that we own. However, a portion of the total page view
traffic continues to come from Web sites owned by third parties
that carry our content (including the AOL division of Time
Warner). During the quarter ended March 31, 2007, third
party Web sites accounted for approximately 4% of The WebMD
Health Network’s aggregate page views. In the past, an
even larger percentage of the total page view traffic had come
from third party Web sites. Under an agreement between WebMD and
the AOL division of Time Warner (“AOL”), which was
entered into in May 2001 and expired on May 1, 2007, WebMD
provided healthcare content, tools and services for use on
certain AOL properties. The monthly unique users and page view
traffic from AOL was 3% and 2%, respectively, of the aggregate
The WebMD Health Network monthly unique users and page
view traffic for the quarter ended March 31, 2007. As a
result of the expiration of that agreement, the monthly unique
users and page view traffic from AOL will no longer be part of
The WebMD Health Network. Additionally, revenues and
earnings of approximately $5 million per year related to
certain contractual guarantees will also end with the expiration
of that agreement.
Seasonality
The timing of our revenue is affected by seasonal factors.
Advertising and sponsorship revenue within our Online Services
segment is seasonal, primarily due to the annual budget approval
process of the advertising and sponsorship clients of our public
portals. This portion of our revenue is usually the lowest in
the first quarter of each calendar year, and increases during
each consecutive quarter throughout the year. Our private portal
licensing revenue is historically higher in the second half of
the year as new customers are typically added during this period
in conjunction with their annual open enrollment periods for
employee benefits. Finally, the annual distribution cycle within
our Publishing and Other Services segment results in a
significant portion of our revenue in this segment being
recognized in the second and third quarter of each calendar
year. The timing of revenue in relation to our expenses, much of
which do not vary directly with revenue, has an impact on cost
of operations, sales and marketing and general and
administrative expenses as a percentage of revenue in each
calendar quarter.
This excerpt taken from the WBMD 10-Q filed May 10, 2007. Introduction
Our
Company
We are a leading provider of health information services to
consumers, physicians and other healthcare professionals,
employers and health plans. We have organized our business into
two operating segments as follows:
Table of Contents
Recent
Developments
Acquisition of eMedicine.com, Inc. On
January 17, 2006, we acquired eMedicine.com, Inc.
(“eMedicine”), a privately held online publisher of
medical reference information for physicians and other
healthcare professionals. The total purchase consideration for
eMedicine was approximately $25,382, comprised of $24,682 in
cash, net of cash acquired, and $700 of estimated acquisition
costs. The results of operations of eMedicine have been included
in our financial statements from January 17, 2006, the
closing date of the acquisition, and are included in the Online
Services segment.
Acquisition of Summex Corporation. On
June 13, 2006, we acquired Summex Corporation
(“Summex”), a provider of health and wellness programs
that include online and offline health risk assessments,
lifestyle education and personalized telephonic health coaching.
The Summex programs complement the online health and benefits
platform that we provide to employers and health plans.
Summex’s team of professional health coaches work
one-on-one
with employees and plan members to change high-risk behaviors
that lead to illness and high medical costs. The total purchase
consideration for Summex was approximately $30,191, comprised of
$29,691 in cash, net of cash acquired, and $500 of estimated
acquisition costs. In addition, the Company has agreed to pay up
to an additional $10,000 in cash over a two-year period if
certain financial milestones are achieved. The results of
operations of Summex will be included in our financial
statements from June 13, 2006, the closing date of the
acquisition, and are included in the Online Services segment.
Acquisition of Medsite. On July 19, 2006,
we entered into an agreement to acquire the interactive medical
education, promotion and physician recruitment businesses of
Medsite, Inc. (“Medsite”) for a purchase price of
$41,000 in cash. Medsite provides
e-detailing
services for pharmaceutical, medical device and healthcare
companies, including program development, targeted recruitment
and online distribution and delivery. Medsite leverages its
proprietary physician database for online recruitment and
participation into its programs. The results of operations of
Medsite will be included in the Online Services segment upon
closing, which is expected during the third quarter of 2006.
Table of Contents
Background
Information on Certain Trends and Strategies
Use of the Internet by Consumer and
Physicians. The Internet has emerged as a major
communications medium and has already fundamentally changed many
sectors of the economy, including the marketing and sales of
financial services, travel, and entertainment, among others. The
Internet is also changing the healthcare industry and has
transformed how consumers and physicians find and utilize
healthcare information. As consumers are required to assume
greater financial responsibility for rising healthcare costs,
the Internet serves as a valuable resource by providing them
with immediate access to searchable and dynamic interactive
content to check symptoms, assess risks, understand diseases,
find providers and evaluate treatment options. The Internet has
also become a primary source of information for physicians
seeking to improve clinical practice and is growing relative to
traditional information sources such as conferences, meetings
and offline journals.
Increased Online Marketing and Education Spending for
Healthcare Products. Pharmaceutical,
biotechnology and medical device companies spend large amounts
each year marketing their products and educating consumers and
physicians about them, however, only a small portion of this
amount is currently spent on online services. We believe that
these companies, who comprise the majority of our advertisers
and sponsors, are becoming increasingly aware of the
effectiveness of the Internet relative to traditional media in
providing health, clinical and product-related information to
consumers and physicians, and this increasing awareness will
result in increasing demand for our services.
Changes in Health Plan Design; Health Management
Initiatives. While overall healthcare costs have
been rising at a rapid annual rate, employers’ costs of
providing healthcare benefits to their employees have been
increasing at an even faster rate. In response to these
increases, employers are seeking to shift a greater portion of
healthcare costs onto their employees and to redefine
traditional health benefits. Employers and health plans want to
motivate their members and employees to evaluate their
healthcare decisions more carefully in order to be more
cost-effective. As employers continue to implement high
deductible and consumer-directed healthcare plans (referred to
as CDHPs) and related Health Savings Accounts (referred to as
HSAs) to achieve these goals, we believe that we will be able to
attract more employers and health plans to use our private
online portals. In addition, health plans and employers have
begun to recognize that encouraging the good health of their
members and employees not only benefits the members and
employees but also has financial benefits for the health plans
and employers. Accordingly, many employers and health plans have
been enhancing health management programs and taking steps to
provide healthcare information and education to employees and
members, including through online services. We believe that we
are well positioned to benefit from these trends because our
private portals provide the tools and information employees and
plan members need in order to make more informed decisions about
healthcare provider, benefit and treatment options.
Seasonality
The timing of our revenue is affected by seasonal factors.
Advertising and sponsorship revenue within our Online Services
segment is seasonal, primarily due to the annual budget approval
process of the advertising and sponsorship clients of our public
portals. This portion of our revenue is usually the lowest in
the first quarter of each calendar year, and increases during
each consecutive quarter throughout the year. Our private portal
licensing revenue is historically higher in the second half of
the year as new customers are typically added during this period
in conjunction with their annual open enrollment periods for
employee benefits. Finally, the annual distribution cycle within
our Publishing and Other Services segment results in a
significant portion of our revenue in this segment being
recognized in the second and third quarter of each calendar
year. The timing of revenue in relation to our expenses, much of
which do not vary directly with revenue, has an impact on cost
of operations, sales and marketing and general and
administrative expenses as a percentage of revenue in each
calendar quarter.
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