Emdeon Reports Fourth Quarter and Full Year 2011 Results

NASHVILLE, Tenn., April 10, 2012 /PRNewswire/ --Emdeon Inc., a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced financial results for the fourth quarter ended December 31, 2011, as summarized below:

(In millions)	Combined 4Q 11	4Q 10	% Change		Combined FY 11	FY 10	% Change
Revenue	$ 283.9	$ 275.7	3.0%		$ 1,119.6	$ 1,002.2	11.7%
Net Income (Loss)	$ (70.8)	$ 15.0	-571.1%		$ (37.0)	$ 33.2	-211.7%
Non-GAAP Adjusted EBITDA	$ 80.3	$ 74.1	8.4%		$ 300.5	$ 268.1	12.1%

"We are pleased with our operating results for the fourth quarter and for the full 2011 year. Completing our acquisition by Blackstone was a significant highlight of 2011," said George Lazenby, Emdeon's chief executive officer. "Entering 2012, we remain focused on our business strategy to make healthcare more efficient and look forward to delivering continued solid financial performance."

Fourth quarter revenue was $283.9 million, an increase of 3.0%, compared to $275.7 million for the same period in 2010. Fourth quarter revenue was reduced by $2.0 million due to acquisition method adjustments related to the Blackstone transaction, which occurred in the fourth quarter of 2011 (the "2011 Transaction").

Net income (loss) for the fourth quarter of 2011 was ($70.8) million compared to net income of $15.0 million for the same period in 2010. This loss was primarily due to costs and expenses, including increased interest expense, associated with the 2011 Transaction, which more than offset the impact of business growth as compared to the prior year period.

Fourth quarter Non-GAAP Adjusted EBITDA grew 8.4% to $80.3 million, or 28.3% of revenue, from Non-GAAP Adjusted EBITDA of $74.1 million, or 26.9% of revenue, in the comparable period in 2010.

For the year ended December 31, 2011, revenue was $1,119.6 million compared to $1,002.2 million for 2010, an increase of 11.7%.

Net income (loss) for 2011 was ($37.0) million compared to net income of $33.2 million in 2010. This loss was primarily due to costs and expenses, including increased interest expense, associated with the 2011 Transaction, which more than offset the impact of business growth as compared to the prior year.

Non-GAAP Adjusted EBITDA for 2011 grew 12.1% to $300.5 million, or 26.8% of revenue, from Non-GAAP Adjusted EBITDA of $268.1 million, or 26.8% of revenue, 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."

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 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 solutions, 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. 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. 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 discussedin the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and elsewhere in Emdeon's Annual Report for the year ended December 31, 2011, as well as any public reports, press releases, filings or other public statements made by Emdeon.

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.

Emdeon Inc.
Condensed Consolidated Statements of Operations
(unaudited and amounts in thousands)
	Successor		Predecessor					Successor		Predecessor
	November2 through December31, 2011		October 1 through November1, 2011	Combined ThreeMonths Ended December 31, 2011		ThreeMonths Ended December 31, 2010		November2 through December31, 2011		January 1 through November1, 2011	Combined YearEnded December31, 2011		YearEnded December31, 2010
Revenue	$ 190,384		$ 93,506	$ 283,890		$ 275,661		$ 190,384		$ 929,264	$ 1,119,648		$ 1,002,152
Costs and expenses:
Cost of operations (exclusive of depreciation and amortization below)	117,421		57,062	174,483		169,246		117,421		572,541	689,962		612,367
Development and engineering	5,153		2,487	7,640		9,670		5,153		26,090	31,243		30,638
Sales, marketing, general and administrative	21,778		10,668	32,446		30,987		21,778		111,463	133,241		116,947
Depreciation and amortization	28,772		11,975	40,747		37,667		28,772		128,761	157,533		124,721
Accretion	2,916		-	2,916		-		2,916		-	2,916		-
Transaction related costs	17,857		61,813	79,670		-		17,857		66,625	84,482		-
Operating income (loss)	(3,513)		(50,499)	(54,012)		28,091		(3,513)		23,784	20,271		117,479
Interest income	(1)		(2)	(3)		(2)		(1)		(12)	(13)		(14)
Interest expense	29,344		5,355	34,699		13,284		29,344		43,213	72,557		61,031
Other	(5,843)		-	(5,843)		(5,144)		(5,843)		(8,036)	(13,879)		(9,284)
Income (loss) before income tax provision (benefit)	(27,013)		(55,852)	(82,865)		19,953		(27,013)		(11,381)	(38,394)		65,746
Income tax provision (benefit)	(9,560)		(2,533)	(12,093)		4,931		(9,560)		8,201	(1,359)		32,579
Net income (loss)	(17,453)		(53,319)	(70,772)		15,022		(17,453)		(19,582)	(37,035)		33,167
Net income (loss) attributable to noncontrolling interest	-		(4,105)	(4,105)		5,331		-		5,109	5,109		13,621
Net income (loss) attributable to Emdeon Inc.	$ (17,453)		$ (49,214)	$ (66,667)		$ 9,691		$ (17,453)		$ (24,691)	$ (42,144)		$ 19,546

Emdeon Inc.
Condensed Consolidated Balance Sheets
(unaudited and amounts in thousands, except share and per share amounts)
	Successor		Predecessor
	December31,		December31,
	2011		2010
Assets
Current assets:
Cash and cash equivalents	$ 37,925		$ 99,188
Accounts receivable, net of allowance for doubtful accounts of $1,201 and $5,394 at December 31, 2011 and 2010, respectively	188,960		174,191
Deferred income tax assets	6,042		7,913
Prepaid expenses and other current assets	16,926		25,020
Total current assets	249,853		306,312
Property and equipment, net	278,090		231,307
Goodwill	1,470,216		908,310
Intangible assets, net	1,821,897		1,035,886
Other assets, net	39,403		9,750
Total assets	$ 3,859,459		$ 2,491,565
Liabilities and equity
Current liabilities:
Accounts payable	$ 8,827		$ 4,732
Accrued expenses	132,137		112,245
Deferred revenues	5,561		12,130
Current portion of long-term debt	16,034		12,494
Total current liabilities	162,559		141,601
Long-term debt, excluding current portion	1,945,074		933,749
Deferred income tax liabilities	518,037		200,357
Tax receivable agreement obligations to related parties	139,713		138,533
Other long-term liabilities	1,413		22,037
Commitments and contingencies
Equity:
Common stock (par value, $0.01), 100 shares authorized, issued and outstanding at December 31, 2011	-		-
Preferred stock (par value, $0.00001), 25,000,000 shares authorized and 0 shares issued and outstanding at December 31, 2010	-		-
ClassA common stock (par value, $0.00001),400,000,000 shares authorized and 91,064,486 shares outstanding at December 31, 2010	-		1
ClassB common stock, exchangeable (par value, $0.00001),52,000,000 shares authorized and 24,689,142 shares outstanding at December 31, 2010	-		-
Additional paid-in capital	1,110,310		738,888
Contingent consideration	-		1,955
Accumulated other comprehensive loss	(194)		(2,569)
Retained earnings	(17,453)		53,250
Emdeon Inc. equity	1,092,663		791,525
Noncontrolling interest	-		263,763
Total equity	1,092,663		1,055,288
Total liabilities and equity	$ 3,859,459		$ 2,491,565

Emdeon Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited and amounts in thousands)
	Successor		Predecessor
	November 2, 2011 to December 31, 2011		January 1, 2011 to November 1, 2011	Combined Year Ended December 31, 2011		Year Ended December 31, 2010
Operating activities
Net income (loss)	$ (17,453)		$ (19,582)	$ (37,035)		$ 33,167
Adjustments to reconcile net income(loss)to netcashprovided by operatingactivities:
Depreciation and amortization	28,772		128,761	157,533		124,721
Equity compensation	-		54,932	54,932		17,721
Deferred income tax expense(benefit)	(5,771)		(15,045)	(20,816)		12,236
Accretion expense	2,916		-	2,916		-
Amortization of debt discount andissuancecosts	1,642		11,673	13,315		12,911
Amortization of discontinued cashflowhedge fromothercomprehensiveloss	-		3,167	3,167		5,800
Change in fair value of interest rateswap(notsubject to hedge accounting)	(2,755)		(7,983)	(10,738)		(3,908)
Change in contingent consideration	(5,843)		(8,036)	(13,879)		(9,284)
Other	489		1,119	1,608		419
Changes in operating assets andliabilities:
Accounts receivable	(13,447)		660	(12,787)		(2,429)
Prepaid expenses and other	982		6,638	7,620		(12,552)
Accounts payable	(2,912)		8,505	5,593		(7,499)
Accrued expenses, deferred revenueandotherliabilities	(15,401)		47,613	32,212		451
Tax receivable agreement obligationstorelatedparties	-		(3,519)	(3,519)		95
Net cash provided (used in) by operatingactivities	(28,781)		208,903	180,122		171,849
Investing activities
Purchases of property and equipment	(8,279)		(51,902)	(60,181)		(79,988)
Payments for acquisitions, net of cashacquired	-		(39,422)	(39,422)		(251,464)
Purchase of Emdeon Inc., net of cashacquired	(1,932,852)		-	(1,932,852)		-
Other	-		-	-		(3,000)
Net cash used in investing activities	(1,941,131)		(91,324)	(2,032,455)		(334,452)
Financing activities
Proceeds from issuance of stock	852,879		-	852,879		306
Proceeds from Term Loan Facility	1,185,114		-	1,185,114		-
Proceeds from Revolving Facility	25,000		-	25,000		-
Proceeds from Senior Notes	729,375		-	729,375		-
Payments on Revolving Facility	(10,000)		-	(10,000)		-
Payment of debt issuance costs	(35,901)		-	(35,901)		-
Proceeds from incremental loan	-		-	-		97,982
Debt principal payments and datasublicenseobligation payments	(942,138)		(10,128)	(952,266)		(11,423)
Repayment of assumed debtobligations	-		-	-		(35,254)
Other	(2,868)		(263)	(3,131)		(1,819)
Net cash provided by (used in) financingactivities	1,801,461		(10,391)	1,791,070		49,792
Net increase (decrease) in cash andcash equivalents	(168,451)		107,188	(61,263)		(112,811)
Cash and cash equivalents at beginningofperiod	206,376		99,188	99,188		211,999
Cash and cash equivalents at end ofperiod	$ 37,925		$ 206,376	$ 37,925		$ 99,188

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 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").

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 net income to the non-GAAP measure of Adjusted EBITDA. Adjusted EBITDA, as Emdeon defines it, may differ from and may not be comparable to similarly titled measures used by other companies, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations. Adjusted EBITDA calculations are also used in our credit facilities and indentures, although the precise adjustments used to calculate Adjusted EBITDA as used in our credit facilities and indentures vary in certain respects among such agreements and from those presented below.

Management uses Adjusted EBITDA 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 this non-GAAP measure assists Emdeon's board of directors, management, lenders and investors in comparing Emdeon's operating performance on a consistent basis because it removes 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 Inc.
		Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
		(unaudited and amounts in thousands)
				Combined Three Months Ended December 31, 2011		Three Months Ended December 31, 2010		Combined Year Ended December 31, 2011		Year Ended December 31, 2010
Net income (loss)				$ (70,772)		$ 15,022		$ (37,035)		$ 33,167
Interest expense, net				34,696		13,282		72,544		61,017
Income tax provision				(12,093)		4,931		(1,359)		32,579
Depreciation and amortization				40,747		37,667		157,533		124,721
EBITDA				(7,422)		70,902		191,683		251,484
Non-2011 Transaction related adjustments:
Equity compensation				2,036		5,030		19,646		17,721
Acquisition-related costs				3,066		1,079		7,140		4,521
Strategic initiatives costs				417		1,796		1,128		3,347
Loss on disposal				1,684		-		1,684		-
Contingent consideration adjustments				(5,843)		(5,144)		(13,879)		(9,284)
Other				1,416		462		2,271		349
2011 Transaction related adjustments:
Equity compensation				35,285		-		35,285		-
Costs and fees				44,385		-		49,197		-
Acquisition accounting adjustments				2,104		-		2,104		-
Accretion expense				2,916		-		2,916		-
Other				280		-		1,349		-
EBITDA Adjustments				87,746		3,223		108,841		16,654
Adjusted EBITDA				$ 80,324		$ 74,125		$ 300,524		$ 268,138
Note:	Adjusted EBITDA set forth above excludes pro forma adjustments to reflect certain acquisitions, cost savings initiatives and other items that are permitted to be added back under the terms of our credit facilities. Such pro forma adjustments were approximately $6.0 million for the year ended December 31, 2011.

SOURCE Emdeon Inc.