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WBMD » Topics » Prior to our IPO, we had not been operated as an entity separate from Emdeon, and, as a result, our historical and pro forma financial information may not be indicative of our historical financial results on a stand-alone basis or future financial performThis excerpt taken from the WBMD 10-K filed Mar 16, 2006. Prior
to our IPO, we had not been operated as an entity separate from
Emdeon, and, as a result, our historical and pro forma financial
information may not be indicative of our historical financial
results on a stand-alone basis or future financial
performance
Our consolidated financial information included in this Annual
Report assumes that, for the periods presented, we had existed
as a separate legal entity, and has been derived from the
consolidated financial statements of Emdeon. Some costs have
been reflected in the consolidated financial statements that are
not
Table of Contents
necessarily indicative of the costs that we would have incurred
had we operated as an independent, stand-alone entity for all
periods presented. These costs include allocated portions of
Emdeon’s corporate services and employee healthcare
expenses, interest expense and income taxes. Our consolidated
financial information included in this Annual Report may not be
indicative of our future financial performance, because these
statements do not necessarily reflect our historical financial
condition, results of operations and cash flows as they would
have been had we been operated during the periods presented as a
separate, stand-alone entity.
In addition, since the IPO, we have continued to rely on Emdeon
to provide us with certain services pursuant to the services
agreement we have entered into with Emdeon. We reimburse Emdeon
under agreed upon formulas that allocate to us a portion of
Emdeon’s aggregate costs related to those services. With
respect to most of the services provided under the services
agreement, we believe that it is likely that it would cost us
more to provide or contract for them on our own because we
benefit from Emdeon’s economies of scale as a larger
corporation. See also “Risks Related to our Relationship
with Emdeon — We continue to be dependent on
Emdeon to provide us with services for our business.”
We
will be required to evaluate our internal control over financial
reporting under Section 404 of the Sarbanes-Oxley Act of
2002, and any adverse results from such evaluation or from the
evaluation that will be conducted by our auditors could result
in a loss of investor confidence in our financial reports and
have an adverse effect on our stock price
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
beginning with our Annual Report on
Form 10-K
for the fiscal year ending December 31, 2006, we will be
required to include a report by our management on our internal
control over financial reporting. Such report will contain,
among other matters, an assessment of the effectiveness of our
internal control over financial reporting as of the end of our
fiscal year, including a statement as to whether or not our
internal control over financial reporting is effective. This
assessment must include disclosure of any material weaknesses in
our internal control over financial reporting identified by
management. Such report must also contain a statement that our
auditors have issued an attestation report on management’s
assessment of such internal controls.
We are currently in the process of preparing to comply with
Section 404. We have some experience with documenting,
testing and evaluating internal control over financial reporting
because our business is a segment of Emdeon, which has already
been required to evaluate its internal control over financial
reporting under Section 404. However, we have not been
through this process for WebMD itself and, because WebMD is a
smaller company, certain of the materiality thresholds
applicable in WebMD’s internal control over financial
reporting will be lower than those applicable to Emdeon. In
addition, we are currently preparing to perform financial
reporting processes that are separate from those of Emdeon,
using different financial reporting software than Emdeon uses.
We will need to document, test and evaluate our internal control
over financial reporting in connection with such implementation.
If our management identifies one or more material weaknesses in
our internal control over financial reporting as of
December 31, 2006, we will be unable to assert such
internal control is effective in our initial management report
on such internal control. If we are unable to make that
assertion (or if our auditors are unable to attest that our
management’s report is fairly stated or they are unable to
express an opinion on the effectiveness of our internal
controls), investors could lose confidence in the accuracy and
completeness of our financial reports, which could have an
adverse effect on our stock price.
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