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Emdeon Corporation (HLTH)

Q1 2007 Earnings Call

May 3, 2007 4:45 pm ET

Executives

Risa Fisher - VP, IR

Kevin Cameron - CEO

Marty Wygod - Chairman

Mark Funston - EVP and CFO

Wayne Gattinella - CEO and President, WebMD

Tony Vuolo - EVP, Finance, and CFO, WebMD

Analysts

Sandy Draper - Raymond James

Corey Tobin - William Blair & Company

Rob Kelly - Smith Barney

Len Podolsky - Piper Jaffray

Anthony Petrone - Maxim Group

Presentation

Operator

Good afternoon and welcome to Emdeon Corporation's March 2007 Quarterly Conference Call. Today's conference is being recorded. I will now turn the call over to Risa Fisher, Vice President of Investor Relations. You may begin.

Risa Fisher

Good afternoon and welcome to Emdeon's first quarter earnings call. I will now read a statement concerning forward-looking disclosures. All statements made today other than statements of historical facts are forward-looking statements, including those regarding our guidance on future financial results and other projections or measures of our future performance, our expectations concerning the growth of our online marketing budgets, other market opportunities, and our ability to capitalize on them, and the amount and timing of the benefits expected from acquisitions and other transactions from new products and services, and from other potential sources of additional revenue.

These statements speak only as of today and are based on our current plans and expectations, and they involve risks and uncertainties that could cause actual future events or results to be different from those described, including risks relating to market acceptance of our products and services, our ability to develop and maintain relationships with healthcare industry participants, including healthcare payers and providers and vendors of services to those payers and providers, difficulties in integrating acquired businesses, changes in economic, political, or regulatory conditions, or other trends affecting the healthcare, Internet, information technology, and plastics industries.

Many of these risks and uncertainties are described in our SEC filings, except as required by law, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances. The earnings release issued today is available on our website at www.emdeon.com, in the "About Emdeon" section and has also been furnished in the Form 8-K filed today with the SEC. The Form 8-K and our other SEC filings are also available on our website and on the SEC's website. The release includes reconciliations between GAAP and non-GAAP financial measures to be presented in this call.

I would now like to turn the call over to Chief Financial Officer, Mark Funston.

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Mark Funston

Good afternoon and thank you for joining us today. Joining me on the call today are Marty Wygod, Chairman of the Board; Kevin Cameron, Chief Executive Officer; Wayne Gattinella, CEO and President of WebMD; and Tony Vuolo, CFO of WebMD.

I will review our preliminary first quarter financial results and 2007 financial guidance. Wayne will share the highlights of WebMD with us, Kevin will add some color on the other business segments and then Marty will make some closing comments before we open it up for Q&A.

As we noted in the press release, we have labeled these results preliminary because we have identified a correction, which needs to be made to prior period's income tax expense. The company has recently identified errors in non-cash income tax expense and related deferred tax liabilities, which resulted in an understatement of non-cash income tax expense of a net amount estimated to be $4 million for prior periods. The company has netted the deferred tax liability resulting from amortization of goodwill against deferred tax assets relating to the Company's NOLs. Because the deferred tax liabilities have an indefinite life, they should not have been netted against deferred tax assets with a definite life.

The Company is in the process of determining whether the correction of this error will be reflected in the results for March 2007 quarter or will it be reflected by amending its financial statements for prior periods. The preliminary results for the current and prior period as well as the financial guidance discussed on the call today do not reflect the impact of the correction. The correction will not have any impact on revenue, adjusted EBIDTA or operating cash flows.

As a reminder, our press release including comparative financials and a summary of our 2007 guidance is available on our website.

In comparing our results for the quarter end of March 31, 2007 with the prior year period, please note the following. For the March 2007 quarter our 48% portion of Emdeon Business Services income is reflected in the line item, equity in earnings of EBS Master LLC. For the prior year period, the results of Emdeon Business Services are included in our consolidated revenue and earnings.

Because of this required presentation, our reporting regarding EBS as well as our consolidated results will not be comparable to the respective prior year periods, until after we reach the anniversary of the transaction.

Also, as we noted last quarter, our segment presentation reflects the reclassification of ViPS, as a separate business segment. Prior to the third quarter of 2006, ViPS had been reported as part of Emdeon Business Services segment. Prior period results have been reclassified to reflect the current presentation.

Looking at our segment results specifically, WebMD segment revenue was $73 million for the March quarter compared to $50.1 million a year ago, an increase of 45.8% driven by strong growth in online services.

WebMD segment adjusted EBITDA was $12.6 million versus $6.5 million in the prior year, an increase of 93.2% driven by the increase in revenues. Operating margins were 17.3% compared to 13% last year.

ViPS segment revenue was $26.7 million for the March quarter compared to $23.8 million a year ago, an increase of 11.8% reflecting an increase in consulting services into a lesser extent license revenue.

ViPS segment adjusted EBITDA was $4.8 million versus $5.2 million in the prior year, a decrease of 6.2%. Operating margins decreased to18.2% from 21.6% last year, primarily as a result of revenue mix.

Porex segment revenue was $22.7 million for the March quarter, compared to $20.6 million a year ago, an increase of 10.3%, driven primarily by sales of consumer products and favorable foreign currency exchange rates.

Porex segment adjusted EBITDA was $6.5 million versus $5.6 million in the prior year, an increase of 16.6%. Operating margins were 28.5% compared to 27% last year. The increase in EBITDA and operating margins were primarily driven by increased revenue.

Corporate expense for the March 2007 quarter was $6.7 million or approximately 5.5% of consolidated revenues compared to $11.1 million a year ago.

As we noted last quarter, we are providing certain transition services to EBS LLC and Sage. The fees we received for these services in the March 2007 quarter were $2.5 million and are included within the corporate segment as an offset to the cost of providing the related services. While not considered an operating segment anymore, we recorded $70.1 million of equity and earnings of EBS LLC in the March 2007 quarter, reflecting our 48% of their income.

Net interest income for the quarters was $5 million compared with net interest expense of $0.3 million in the first quarter of the prior year. The increase in interest income is primarily due to the interest earned on higher cash balances, largely the result of the proceeds from the EBS and EPS transactions less the cash we used to complete the tender offer in the December 2006 quarter.

Finally, while we do not project or include expenses related to the DOJ investigation in our guidance, our first quarter results did include $320,000 in expenses related to this investigation compared with $542,000 for the same period last year.

In summary, consolidated revenue for the March 2007 quarter was $122 million compared to $277.2 million a year ago. Adjusted EBITDA was $17.2 or $0.09 per share in the March 2007 quarter compared to $44.3 million or $0.15 per share a year ago.

And income from continuing operations in the March 2007 quarter was $6.1 million or $0.03 per share compared to $10.9 million or $0.04 per share a year ago.

Turning to our balance sheet. As of March 31, 2007 we had approximately $701 million in cash in short-term investments on a consolidated basis, including $212 million in cash and short-term investments held by WebMD.

On February 6, 2007 Emdeon transferred $140 million to WebMD as reimbursement for Emdeon's estimated utilization of a portion of WebMD's net operating loss carry forwards, in connection with the Emdeon Practice Services and Emdeon Business Services sale transactions. This payment was made in accordance with the tax sharing agreement between the two companies and will be finalized upon filing of the tax returns.

The $23 million increase in prepaid expenses and other current assets, and the corresponding decline in other long-term assets, reflects the reclassication of a portion of the Sage Escrow balance receivable into current assets.

The decline in accrued expenses of approximately $64 million primarily relates to payments during the quarter for estimated income taxes, and to a lesser extent, bonuses and EBS transaction cost.

Operating cash flow used in continuing operations in the March 2007 quarter was $17.3 million compared to cash provided by continuing operations of $45.6 million a year ago. The decrease over the prior year period in cash flow from continuing operations is primarily due to the fact that EBS is treated as an equity investment in the current quarter. While we share in 48% of EBS' earnings, we did not receive cash distribution from this investment during the quarter. Operating cash flow was also impacted by the $24 million estimated tax payment I referenced a moment ago, which was largely related to the EBS transaction.

Financing cash flow during the March 2007 quarter includes the receipt of approximately $63 million from exercises of stock options of which $59 million related to Emdeon stock options.

We experienced a sharp increase in exercise activity of Emdeon stock options during the quarter as a result of the sale of Emdeon Business Services. Approximately $6.5 million shares were issued as a result of these option exercises during the quarter.

Additionally, we repurchased approximately 900,000 shares of our common stock during the quarter at an average price of $12.81 per share. The total outstanding share count as of March 31, 2007 is 167.8 million shares. As a reminder this share count does not include the 10.6 million shares into which Caliper's preferred stock is convertible.

Our capital expenditures for the March 2007 quarter were $5.6 million compared to $13.2 million a year-ago.

Now, I would like to turn it over to Wayne who will discuss WebMD's results. WebMD held a separate conference call this past Tuesday, although Wayne will review the highlights of these results today. I would encourage you to listen to a replay of WebMD's conference call, which is available on www.wbmd.com.

Wayne Gattinella

Thanks Mark. WebMD continued to extend its market lead as the most recognized and trusted brand of health information. Traffic to the WebMD network reached a record 41.7 million unique monthly users during the quarter and page views totaled a record 963 million pages, increases of 43% and 29% respectively over the same period a year-ago.

WebMD's online reach to physician also leads the industry reaching more than one million physician visits pre month. During the first quarter 690,000 continuing medical education or CME programs were completed on our professional site, an increase of 44%, compared to last year.

Online sales activity to biopharmaceuticals and consumer products companies was very strong in the quarter. WebMD is now expanding further its sales and marketing resources, as well as the infrastructure necessary to drive our continued success in each of the major markets.

During the quarter, we launched our next-generation consumer health portal, together with free access to the WebMD Personal Health Record. WebMD Health Portal delivers the next level of personalization, community and care, and we are delighted with the initial results.

We are seeing increased utilization in the newest areas of the site, especially the new interactive area, such as community, video and WebMD Health Search. Early results were also showing greater effectiveness from newly redesigned sponsored areas of our site.

An important feature of the new site is that more than 60 new health, wellness and lifestyle centers. Each center features original WebMD content and medically reviewed articles, news, communities, features and health assessments for each major topic. To help support our launch of 8 new wellness and lifestyle centers, WebMD has entered into new editorial partnerships with several leading publishers of consumer health, wellness, and lifestyle publications and it now includes Rodale, Hearst, Southern Progress and Martha Stewart Living Omnimedia.

Wellness and lifestyle areas, such as diet, nutrition, skin and beauty and parenting represent significant opportunities to extend the WebMD brand of health information to our users and to a growing base of new consumer health advertisers.

The technology platform that is now supporting our new consumer site is also being extended to support all other sites, creating a more efficient web publishing operation, with greater flexibility and speed to market for new online services.

In the private portals market, WebMD implemented online health platforms for Liberty Mutual and Lear Corporation as well as we entered into two new distribution agreements with Benefits Outsourcing Partners' Workscape and Mercer to market the WebMD platforms to their customer base. Mercer is the world's largest health and benefits consulting firm in the US and their outsourcing business is one of the fastest growing in the middle market.

WebMD's installed base of companies using our private portal platform at the end of the first quarter, totaled 103 organizations compared to 80 one year ago. As the health marketplace continues to trend towards greater consumer accountability and control, WebMD introduced several new products to employer payer markets that are integrated with our health and benefits platform. WebMD's new provider in treatment decision supports suite combines our proprietary provider directory services with cost, quality, and treatment information in a user-friendly, online application.

This new product is designed to give consumers greater transparency, when selecting a doctor or hospital by using objective, accurate and meaningful information. WebMD Health Alerts is a new product that integrates with the WebMD Personal Health Record to securely message consumers potential gaps in their care, using the latest evidence-based guidelines.

WebMD Heath Alerts provides a powerful way to keep employees and health plan members informed of personal health situations and to facilitate a structured discussion with their physician or care provider.

Lastly, WebMD Health Coach is an integrated suite of online and telephonic lifestyle management program. Our new Health Coach product creates an innovative solution for large employers [Technical Difficulty]

Risa Fisher

Hello.

Marty Wygod

The noise coming through the all lines there.

Wayne Gattinella

It was.

Risa Fisher

Operator, are we still on? Wayne, I think you can continue.

Operator

You are still connected.

Risa Fisher

Operator, we hear a buzzing, I don't know, if everyone on the line is hearing it also.

Operator

We are determining where it's coming from.

Wayne Gattinella

Okay, clear now.

Marty Wygod

It seems clear now go ahead.

Wayne Gattinella

So lastly, the last of the three products is WebMD Health Coach, which is an integrated suite of online and telephonic lifestyle management program. Our new Health Coach product creates an innovative solution for large employers and plans to efficiently reduce modifiable health risk behaviors across their employee and member populations.

These newest products are an exciting addition to our private portal platform and represent an important opportunity to continue to increase revenue penetration of both our current and prospective employer and health plan customers.

WebMD expects to announce its first set of customers for these new services in the coming month. However, due to the added complexity of these integrated service offerings, we are experiencing a somewhat longer sales and implementation cycle for our private portal platform than what we have typically seen in the past.

In closing, we are very excited about the growth opportunities for WebMD in 2007 and beyond. Our market position in online health information services has never been stronger. The investments that we've been making in our technology infrastructure position us well for continued expansion with continuing expanded margins. And our organization of more than 1,000 highly experienced health information professionals is far ahead of anyone else in the industry.

We'll continue to invest in the new products and applications that improve experience of our users and the value for our plan sponsors.

Now, I would like to turn it over to Kevin Cameron.

Kevin Cameron

Thanks Wayne. Turning to our ViPS business segment. ViPS Government Solutions Group is continuing to work on a number of key CMS projects at this time including the Retiree Drug Subsidy program, Medicare Secondary Payer National Recovery System, Medicare Eligibility Integration, Integrated Data Repository for Part D and the ViPS Medicare System.

Within ViPS Health Payer Solutions Group, sales of ViPS Solutions are steady. Last quarter, we announced the ViPS was selected in partnership with CSC for the design, development, and implementation of Blue Health Intelligence or BHI.

As a Multiplan data warehouse, BHI will let participating Blue Plans capture and access clinical data derived from patient care to enhance best practices, reduce costs, and improve patient safety. Initially, the warehouse will store clinical records for 20 Blue Plan operations and 79 million people. Expandable data house records for 100 million people, we believe BHI will be the largest data warehouse in the United States healthcare market.

There is the significant opportunity to provide a related set of services to the 20 Blues and any others who join. This related work has begun with two plans and the pipeline is growing. We continue to see a strong renewal rate in our health payer customer base. During the quarter, we renewed all five of the contracts that were up for renewal.

Additionally, during the first quarter, ViPS began work with Massachusetts Health Quality Partners or MHQP on a pilot program. They will allow MHQP to evaluate physician performance based on specified quality measures by aggregating commercial, Medicare and Medicaid claims data and analyzing that data using ViPS proprietary performance measurement software. The program is part of the CMS project known as Better Quality Information to improve care for Medicare beneficiaries or BQI.

CMS is implementing its programs through six regional collaboratives, including MHQP. Working with MHQP, ViPS will gather data from six healthcare payers. This data will be aggregated into a claims data warehouse, which will allow evaluation of all data related to a specific physician or provider performance using quality measures published by the Ambulatory Quality Care Association as well as the MCQA.

We are pleased with ViPS' performance this quarter as well as how they are tracking for the balance of the year.

Turning to Porex, Porex continues to generate consistent year-over-year revenue and earnings growth. Several new product applications in the consumer and filtration markets are expected to positively impact near-term revenue with a more significant contribution expected in '08 and beyond.

In addition, Porex is continuing to improve its manufacturing processes in order to generate efficiencies, reduce cost, and improve the quality of its products. With its facilities located in Unites States, Europe, and Asia, Porex is strategically positioned now to meet the needs of its customers as they transition their business globally.

Briefly touching on our investment in Emdeon Business Services, EBS delivered record results in the first quarter and we continue to be pleased with its performance. EBS' result continue to fueled by sales as well as cost efficiencies as it improves its infrastructure and technology platform.

Looking ahead we expect additional growth from the newer transactions, particularly in the payment area. At the end of the quarter, we appointed George Lazenby, CEO of EBS. George who joined EBS when Medifax was acquired by EBS in 2003, he is a seasoned executive with a proven track record and a deep understanding of EBS' businesses. He has a strong team supporting him. We are very optimistic about EBS' prospects and our 48% ownership position.

Turning to corporate, during the first quarter we continued to reduce the size and change the structure of our corporate overhead to better reflect our current ongoing operations. Overall I am pleased with the strong results we delivered at this quarter.

Before I turn it back to Mark to review our financial guidance I also want to announce that we will be changing the name of our company from Emdeon Corporation to HLTH Corporation. In connection with the sales 52% of Emdeon Business Services, we agreed that the Emdeon name would go to Emdeon Business Services and that we would change our corporate name.

Our new name HLTH Corporation will formally take effect at some point in the next few weeks. As we finish all the steps necessary to legally adopt our new name. In choosing our new name we'd look for something that we could own with respect to copyrights and URLs and of course one that our investors would recognize.

Our ticker symbol not surprisingly will remain HLTH. The change affects only our corporate name and not the names of our business segments or the brands they use for their products or services. Our corporate website will be redirected in a few weeks to www.hlth.com. Mark will now walk you through our financial guidance for 2007.

Mark Funston

We've updated our financial guidance to take the first quarter preliminary results into account. The guidance for the balance of the year is consistent with what we provided on our last call. There is a summary of the guidance attached to the press release we issued today, so you can refer to that document as I proceed.

Our guidance reflects the following assumptions. Our guidance does not include any potential repurchases of shares of our outstanding securities, which may occur during the balance of 2007. Cash and GAAP earnings per share are both calculated based on an assumed weighted average share count of 190 million diluted shares for full year 2007.

We have included estimates of the impact in 2007 as the cost associated with transition service agreements discussed above. However, pursuant to the transition service agreements, the period of transition services maybe extended and this would impact the timing of costs and reimbursements associated with these agreements.

Our guidance does not include any expenses related to the Department of Justice Investigation or other income, but does reflect actual Q1 results for these items. As I mentioned previously, the income tax expense and net income do not reflect the impact related to the correction I mentioned earlier.

2007 consolidated revenues are expected to be between $537 million and $556 million, an increase of approximately 23% to 27% from 2006, if you exclude Business Services from 2006 results. We expect consolidated adjusted EBITDA to be between $99 million and $109 million or $0.52 to $0.58 per share, representing an increase of approximately 80% to 98% over the prior year. If you exclude Business Services results from the 2006 results. We are expecting 2007 income from continuing operations to be $40 million to $51 million or $0.21 to $0.27 per share.

More specifically by segment, WebMD revenue is expected to be between $340 million and $354 million, an increase of 34% to 39% over the prior year. Adjusted EBITDA is expected to be between $79 million and $85 million, an increase of 49% to 61% over the prior year.

WebMD provided comprehensive 2007 guidance on its conference call on Tuesday and additional details on WebMD's guidance can be found in an exhibit attached to the press release they issued on that day.

ViPS revenue is expected to be approximately $107 million to $109 million, an increase of 8% to 11% over the prior year. Adjusted EBITDA margins, as a percentage of segment revenue are expected to be approximately 21% over the balance of the year.

Porex revenue is expected to be approximately $91 million to $93 million, an increase of 6% to 9% over the prior year. Adjusted EBIDTA margins are expected to be approximately 31% in Q2, 30% in Q3 and 29% in Q4.

Corporate expense was 5.5% of consolidated revenue and is expected to decline to approximately 4.1% of consolidated revenue by Q4. Capital expenditures are expected to be between $23 million and $28 million with WebMD comprising 65% to 70% of this amount. As I said, there is a guidance schedule attached to our press release, so please refer to that for additional data points.

I would now like to turn the call over to our Chairman, Marty Wygod.

Marty Wygod

Thanks Mark. Everything was very well covered here. I just wanted to briefly reiterate that we are pleased with the results announced today. Emdeon continues to demonstrate success in its 84% owned subsidiary WebMD as well as its other businesses.

At this time it is our objective to continue to shrink the capitalization of Emdeon whenever we believe there is an advantageous opportunity. The strong operating results to the series of financial transactions, we have been able to deliver significant returns to shareholders. Leveraging the tremendous long-term opportunities at WebMD, we expect to be able to continue to create substantial value for shareholders in the future.

Operator, at this time we would like to take questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). One moment for our first question. Sandy Draper with Raymond James. Your line is open.

Sandy Draper - Raymond James

Thank you very much, just a couple of quick questions. One on the share count, I missed whether you said the Calipers preferred are in the share count or not in the share count?

Kevin Cameron

They are not in the $167 million share number but they are included in the fully diluted $119 million that we're estimating for the year.

Sandy Draper - Raymond James

Okay.

Marty Wygod

90 million shares.

Sandy Draper - Raymond James

Yeah. Okay, great, that's helpful. And into some on the share count, Marty following up to your comment about continuing to shrink the capitalization, you obviously have cash on the balance sheet, you also have debt, is this something you just look to use current cash, would you be willing to lever up more if a real opportunity came up? Maybe just help me to understand what the thought process would be in terms of the change in the capital structure?

Marty Wygod

We haven't made any definite decisions, we are extremely flexible. And if the right opportunity made itself available, I am sure the Board would be kindly disposed to even lever up the Company to shrink the capitalization. But at this time, we have no plans to do any of that.

Sandy Draper - Raymond James

Okay, great thanks Marty. And then, one final question maybe for Kevin. Obviously, it sounds like the Emdeon Business Services segment is, sort of, that piece of business is doing very, very well, in terms as an investor, or as an analyst trying to track that, just can we really only look at the growth of that minority interest line or the equity earnings line or is there any other metrics where we'll get to sort of track how that business is growing because obviously things are continuing to improve at that segment?

Kevin Cameron

Yeah, well and it's obviously a private investment with General Atlantic, there will be additional disclosures in our Q around revenue, operating expense, and then that equity interest, essentially at net income, that equity interest you are talking about. But you won't be able to have the same visibility that you had in the past.

Sandy Draper - Raymond James

Okay, thanks, and congratulations on the good quarter guys.

Operator

Thank you. Corey Tobin with William Blair & Company, you may ask your question. Corey Tobin, your line is open. Please check your mute button. Our next question comes from Rob Kelly with Smith Barney. Your line is open.

Risa Fisher

Operator, are you there still?

Operator

Yes, I am. Rob Kelly, your line is open. Please check your mute button.

Kevin Cameron

Operator, I don't think it's Rob Kelly. Is there anyone else in the line?

Operator

Anthony Vendetti, your line is open, with Maxim Group.

Kevin Cameron

Operator, I would assume that you got the issue on your end.

Operator

One moment. (Operator Instructions) We do apologies we are having some technical difficulties. One moment please. Corey Tobin, your line is open, with William Blair. You may ask your question.

Wayne Gattinella

Hey, Kevin why don't you sing a song until while we wait.

Kevin Cameron

We will give this another minute or two. Operator, are you going to fix this or should we end this call?

Operator

We have several people looking at it at this time. Sandy Draper with Raymond James, your line is open.

Sandy Draper - Raymond James

Did I get back in the queue here?

Kevin Cameron

You're back in.

Sandy Draper - Raymond James

I must be really special, if the only one to ask a question. I just had a quick follow-up on the guidance. In the press release, you said you are reiterating your guidance for the balance of 2007. But if I look at the old numbers, it's actually higher. Is that basically you are saying, you are taking your upside in the first quarter and just slowing it through because the numbers actually look a little bit better in the new guidance than they did in the old. I just want to make sure I have got that straight?

Kevin Cameron

Yes. That's exactly what it says. So the balance of the year didn't change but we did add the actuals for the first quarter, which was better than our guidance.

Sandy Draper - Raymond James

Okay, great. Thank you very much.

Marty Wygod

The only comment made on the WebMd side on the call prior was that there is the possibility that we may see higher margins in the second half of the year from incremental revenues.

Sandy Draper - Raymond James

Great, thanks Marty.

Operator

Thank you. Corey Tobin, your line is open. You may ask your question.

Corey Tobin - William Blair & Company

Hi, can you hear me?

Marty Wygod

We do. We could hear you before. You didn’t say you are there.

Corey Tobin - William Blair & Company

Very quickly. Kevin, you mentioned on the cash coming from EDS that the cash was not brought back to the company this quarter. Is there a set formula or a plan in place, or how often your cash will be sent back to the Emdeon?

Kevin Cameron

It was Mark who said that. But it's an independent Company that's held as an asset on our balance sheet. There is no expectation that there will be cash distributions other than for tax purposes as a result of the LLC structure.

Corey Tobin - William Blair & Company

Okay, thank you.

Operator

And I am showing no further questions at this time. (Operator Instructions) Rob Kelly with Smith Barney, you may ask your question.

Rob Kelly - Smith Barney

You stated that you fully understand that the primary objective for many Emdeon shareholders, [not wanting] Emdeon as to participate in the success of WebMD. And although the risk performance of Emdeon stock has been impressive it's trading at a substantial discount to its in hand value based on the current price of WebMD. Besides the potential stock buybacks you alluded to do you have any plan address this?

Marty Wygod

Kevin you want to take a shot at that, I don’t fully understand it.

Kevin Cameron

I think I am going to stick with our previous answer, which is that, we are, it was really Marty's previous answer. We've got a lot of flexibility and how we look at these things and we'll take advantage of opportunities as and when they present themselves.

Rob Kelly - Smith Barney

Thanks.

Operator

Thank you. Len Podolsky with Piper Jaffray, your line is open.

Operator

Len Podolsky, you may want to check your mute button.

Len Podolsky - Piper Jaffray

Do you guys hear me?

Mark Funston

We can.

Len Podolsky - Piper Jaffray

Okay, thank you. Thanks for taking the question. Real quick on the guidance, for the full the press release is showing $0.7 million, that's correct on the other income?

Kevin Cameron

On the other income, yeah that's just the Q1 actual we don't actually guide for that line item.

Len Podolsky - Piper Jaffray

Okay, that was my question. Thanks for the clarification.

Operator

Anthony Petrone with Maxim Group, your line is open.

Anthony Petrone - Maxim Group

Thanks guys. Just if you can give a little color on the margin mix within ViPS. The margin breakout of Consultant Services and was the [actual] margin is on license revenue?

Kevin Cameron

We don't really breakout those line items. You did see a margin decline at ViPS, which is really a mix issue based on the mix of business and the government business.

Anthony Petrone - Maxim Group

Thank you.

Operator

And I am showing no further questions at this time.

Kevin Cameron

Okay, thank you everybody.

Operator

Thank you. As a reminder, if necessary there is a replay available of this call, which can be accessed toll free at 1-800-753-0364, or if you are calling from outside the U.S., at 203-369-3125. There is no pass code required. There is also the webcast replay available on the Company's website as well. Thank you for joining us today.

TRANSCRIPT SPONSOR

lipoviro-techlogo

LipidViro Tech, Inc. – Developing a New Stroke Treatment

LipidViro Tech, Inc. (OTCBB: LPVT) is a medical device company engaged in commercial development of d-OSAB—a new anti-inflammatory therapy for acute and chronic inflammation. Initial targets are Ischemic Brain Stroke and Chronic Heart Failure, diseases with limited treatment options and markets exceeding $20 billion. d-OSAB is based on a therapy with a 20+ year profile of safety and non-toxicity. During 2007, LipidViro is scheduled to commence a 100-patient Phase IIa trial treating stroke patients with d-OSAB.

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Source: Emdeon Q1 2007 Earnings Call Transcript
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