WebMD Rises After Report

The company met expectations but said it wasn't able to meet all of the increased demand.
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Updated from Nov. 6

Shares of

WebMD

(HLTH)

were rising after the company reported it increased its third-quarter revenue by 15% and met Wall Street estimates.

Shares were up 46 cents, or 5.5%, to $8.84 in recent trading.

In a report after the bell Thursday, the company said revenue would have risen more but it was unable to meet demand.

Net income for the September quarter was $6.1 million, or 2 cents per share, compared to $4.5 million, or a penny a share, a year ago. Revenue was $250.5 million, up from $217 million a year ago. Both earnings and revenue were in line with Wall Street's expectations.

But not to those of CEO Roger Holstein.

"I am disappointed in our third-quarter results," Holstein said in a prepared statement. "The results, particularly in the month of September, reflect the difficulties we encountered responding to increased demand for our physician software and services and the challenges of assisting thousands of providers and payers to implement the HIPAA transaction standards."

WebMD sells software to help physicians manage their practices, supplies electronic data interchange services to health care providers, and runs a Web site that provides medical information.

The quarterly results were not a surprise -- the company updated its guidance in October.

Excluding acquisition and stock-compensation costs, the Elmwood Park, N.J., company earned $28.7 million, or 9 cents a share, compared to $31.1 million, or 10 cents a share, in the third quarter of 2002. Earnings from continuing operations rose to $9.5 million, or 3 cents a share, from $3.4 million, or a penny a share, in the same period last year.

The company's guidance for the fourth quarter -- earnings of 10 cents a share from continuing operations on sales of $258 million -- was in line with expectations.

Shares of WebMD closed the day at $8.38, a loss of 7 cents, or 1%, and were off another 3 cents in after-hours trading.