WebMD (NASDAQ:WBMD) shares were reeling Wednesday morning after the company reduced its guidance for the third quarter.
Late Tuesday, the company said that revenue in the third quarter is now expected to be $86 million to $87 million, down from previous guidance of $89 million to $94 million. The Street was at $92.6 million. The company said adjusted EBITDA is now seen at $22.8 million to $23.8 million, narrowing from its old forecast of $22 million to $24.5 million. Net income is now seen at $10.8 million to $11.7 million, which is actually up from the old guidance of $8.2 million to $10.6 million.
In its announcement, WebMD said that it continues to see strong growth of advertising and sponsorship programs in the pharma, biotech and medical device markets, but that the timing of launch of these programs “is more weighted to 2008 than we had expected.” The company also repeated a previous comment that it is seeing “a lengthened sales and implementation cycle” in its private portals business.”
Bank of America analysts Brian Pitz and Brian Fitzgerald point out in a research note Wednesday morning that the higher net income guidance reflects increased income and lower taxes. They also note that the company provided no updates on full year guidance, and wonder if the company has less visibility on revenue than in the past. They maintain a Neutral rating on the stock.
WBMD 1-yr chart: