WebMD Health Corp. (NASDAQ:WBMD) Q1 2017 Earnings Conference Call - Final Transcript

Good afternoon, and welcome to WebMD Health Corp's. First Quarter 2017 Conference Call. Today's call is being recorded.

I will now turn the call over to Mary Anne Lerma, Director of Investor Relations.

Good afternoon. This conference call is to discuss WebMD's first quarter results. The earnings release issued today by WebMD is available at www.wbmd.com in the Investor Relations section. The release and the related Form 8-K include reconciliations between GAAP and non-GAAP financial measures, which will be discussed during this call.

(Forward-Looking Cautionary Statements)

Joining us with prepared remarks today are Steve Zatz, Chief Executive Officer; and Blake DeSimone, Chief Financial Officer. We will take questions at the conclusion of our prepared remarks.

I would now like to turn it over to Steve Zatz, CEO of WebMD.

Thank you for joining us this afternoon. As expected, our first quarter results were below last year's, reflecting a more challenging macro environment for many of our biopharma customers and disappointing sales in 2016 in our WebMD Health Services business. These results were at the high end of our financial guidance provided in February, and we are reaffirming our 2017 guidance today. We remain focused on restoring WebMD's growth by providing the highest-quality health content, guidance and tools for both consumers and health care professionals, as well as delivering superior results for advertisers and value for our shareholders.

We believe that a strong drug pipeline, the continued shift towards digital advertising and the increasing consumerization of health care presents significant opportunities for longer-term growth for WebMD. Turning now to the financial results we reported today. Our first quarter revenue was $154.1 million, net income was $12.3 million and adjusted EBITDA was $41 million. Medscape, which accounts for approximately 60% of our advertising revenue, is the leading digital resource for medical news, clinical reference and medical education for physicians and other health care professionals. We believe that Medscape has the broadest scale and deepest online engagement with more physicians and health professionals than any other digital service, either in the U.S. or abroad.

During the first quarter worldwide, Medscape average approximately 8.7 million physician sessions per month, an increase of approximately 13% over the prior year period. Medscape is a registration site and most of our physician members come directly to Medscape rather than through search. In the U.S., Medscape has approximately 675,000 registered U.S. physicians that are active on an annual basis. They represent a substantial majority of the practicing physicians in the U.S.

During the first quarter, an average of approximately 403,000 U.S. physicians were active on Medscape monthly. We also reached approximately 2 million other health care professionals in the U.S. annually, many of whom engage with patients and affect prescribing decisions, such as nurse practitioners and physician assistants. In order to maintain its leadership position in providing the highest quality news, clinical reference and medical education, Medscape partners with leading academic medical centers, government agencies and professional societies.

Recently, we partnered with the Endocrine Society, the leading professional organization