8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

March 4, 2004

Date of Report (Date of earliest event reported)

WEBMD CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-24975	94-3236644
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

669 River Drive, Center 2

Elmwood Park, New Jersey 07407-1361

(Address of principal executive offices, including zip code)

(201) 703-3400

(Registrant’s telephone number, including area code)

(Former name or address, if changed since last report)

     All statements contained in this Current Report on Form 8-K, other than statements of historical fact, are forward-looking statements, including those regarding WebMD’s guidance on future financial results and other projections or measures of future performance of WebMD; the amount and timing of the benefits expected from strategic initiatives and acquisitions or from deployment of new or updated technologies, products, services or applications; the prospects for new applications of porous plastics and other porous media; and other potential sources of additional revenue. These statements are based on WebMD’s current plans and expectations and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of WebMD’s products and services; operational difficulties relating to combining acquired companies and businesses; WebMD’s ability to form and maintain mutually beneficial relationships with customers and strategic partners; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries, including matters relating to the manner and timing of implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the healthcare industry’s responses; and the ability of WebMD to attract and retain qualified personnel. Further information about these matters can be found in WebMD’s other Securities and Exchange Commission filings. WebMD expressly disclaims any intent or obligation to update these forward-looking statements.

*       *       *       *

     Exhibit 99.1 furnished with this Current Report on Form 8-K includes both financial measures in accordance with accounting principles generally accepted in the United States of America, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures include income before taxes, non-cash, restructuring and other items and related per share amounts. WebMD believes that those non-GAAP measures, and changes in those measures, are meaningful indicators of WebMD’s performance and provide additional information that WebMD management finds useful in evaluating such performance and in planning for future periods. Accordingly, WebMD believes that such additional information may be useful to investors. The non-GAAP financial measures should be viewed as supplemental to, and not as an alternative for, the GAAP financial measures. Exhibit 99.2 to this Current Report on Form 8-K includes a reconciliation of the non-GAAP financial measures to the GAAP financial measures. Exhibit 99.3 to this Current Report includes a reconciliation of certain forward-looking non-GAAP information to GAAP financial information, each of which are expected to be discussed on the Analyst and Investor Conference Call referred to in Exhibit 99.1

     ITEM 5.       OTHER EVENTS

     On March 4, 2004, WebMD Corporation issued a press release announcing its results for the quarter and year ended December 31, 2003. Attached hereto as Exhibit 99.2 and incorporated by reference herein are financial tables that accompanied the press release issued by WebMD announcing the results.

*       *       *       *

2

     WebMD Corporation will hold its 2004 Annual Meeting of Stockholders on September 23, 2004. Proposals that WebMD’s stockholders intend to present at the 2004 Annual Meeting must be received by WebMD no later than the close of business on April 12, 2004, in order that they may be considered for possible inclusion in WebMD’s proxy statement and form of proxy for that meeting. In addition, WebMD’s Bylaws establish an advance notice procedure pursuant to which stockholder proposals not included in WebMD’s proxy statement may be brought before a meeting of stockholders. For nominations or other business to be properly brought before WebMD’s 2004 Annual Meeting by a stockholder, that stockholder must deliver written notice, complying with the requirements of WebMD’s Bylaws, to the Secretary of WebMD not later than the close of business on July 14, 2004. All notices of proposals by stockholders should be sent to: Secretary, WebMD Corporation, 669 River Drive, Center 2, Elmwood Park, New Jersey 07407-1361.

*       *       *       *

     ITEM 7.       FINANCIAL STATEMENTS AND EXHIBITS

     (c)       Exhibits

     The following exhibits are filed or furnished herewith:

99.1	Press Release issued by WebMD Corporation, dated March 4, 2004, regarding WebMD’s results for the quarter and year ended December 31, 2003
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Certain Forward-Looking Information — Reconciliation of Non-GAAP to GAAP

3

     ITEM 12.       DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On March 4, 2004, WebMD Corporation issued a press release announcing its results for the quarter and year ended December 31, 2003. A copy of the press release is attached as Exhibit 99.1. Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

     The press release was accompanied by the financial tables incorporated by reference into Item 5, above.

4

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, WebMD Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WEBMD CORPORATION
Dated: March 4, 2004	By:	/s/ Lewis H. Leicher
		Lewis H. Leicher
		Senior Vice President

5

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release issued by WebMD Corporation, dated March 4, 2004, regarding WebMD’s results for the quarter and year ended December 31, 2003
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Certain Forward-Looking Information — Reconciliation of Non-GAAP to GAAP

6

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:
Investors:	Media:
Risa Fisher	Jennifer Meyer
rfisher@webmd.net	jmeyer@webmd.net
201-414-2002	212-624-3912

WEBMD REPORTS FOURTH QUARTER RESULTS

Revenues Increase 12.6%

Records Net Income of $0.03 per share

Positioned as industry leader with leading assets, solid management team, strong financial resources

ELMWOOD PARK, NJ (March 4, 2004) — WebMD Corporation (NASDAQ: HLTH) today announced financial results for the quarter and year ended December 31, 2003.

Key Financial Highlights
Revenue for the fourth quarter was $258.4 million compared to $229.5 million a year ago, an increase of 12.6%. Income before taxes, non-cash, restructuring and other items for the fourth quarter was $30.4 million or $0.09 per share compared to $35.4 million or $0.12 per share a year ago. Income from continuing operations for the fourth quarter was $10.5 million or $0.03 per share compared to a loss from continuing operations of ($3.6) million or ($0.01) per share a year ago. Net income for the fourth quarter was $10.5 million or $0.03 per share compared to a net loss of ($2.4) million or ($0.01) per share a year ago.

Revenue for the year ended December 31, 2003 was $964.0 million compared to $871.7 million a year ago, an increase of 10.6%. Income before taxes, non-cash, restructuring and other items for the year ended December 31, 2003 was $118.0 million or $0.36 per share compared to $97.1 million or $0.32 per share a year ago. Income from continuing operations for the year ended December 31, 2003 was $16.6 million or $0.05 per share compared to a loss from continuing operations of ($53.1) million or ($0.17) per share a year ago. Net loss for the year ended December 31, 2003 was ($17.0) million or ($0.05) per share compared to ($49.7) million or ($0.16) per share a year ago.

As of December 31, 2003, WebMD had $722 million in cash and short and long-term marketable debt securities.

Roger C. Holstein, CEO of WebMD, stated, “Each of our businesses performed in line with expectations in the fourth quarter and we continue to make progress in a challenging environment. I believe strongly in our vision and in our strategic plan. WebMD is emerging as the primary source of health information; the acquisitions of ABF and Medifax have begun to transform our clearinghouse; and our new products for physicians have been well received. Although our plan is not without its execution challenges, I feel confident that with our capable management team and significant financial resources that we will achieve our goals.”

Segment Operating Results

WebMD Envoy revenues were $140.2 million for the fourth quarter, an increase of 20.2% from last year, primarily related to the acquisition of Advanced Business Fulfillment. Income before taxes, non-cash, restructuring and other items was $26.1 million, an increase of 4.1% from prior year. The reduction in operating margins is primarily the result of our continued investment to help our payer and provider customers comply with their HIPAA obligations.

WebMD Practice Services revenues were $78.3 million for the fourth quarter, an increase of 8.0% from prior year, driven by continued strong sales of the Company’s Network Services products. Income before taxes, non-cash, restructuring and other items was $4.6 million, a decrease of approximately 35% from prior year, reflecting the increased investment associated with HIPAA, installation of the Company’s Network Services solutions and lower margins on new systems sales.

WebMD Health revenues were $30.8 million for the fourth quarter, an increase of 5.0% from the prior year, driven by continued demand for pharmaceutical, medical device and employer-sponsored programs. Income before taxes, non-cash, restructuring and other items was $6.0 million, a decrease of 34.0% from prior year, primarily reflecting the additional $1.9 million of membership acquisition costs associated with the purchase of certain portal resources of Physicians’ Online, LLC.

Porex revenues were $16.9 million for the fourth quarter, an increase of $0.7 million from prior year. Income before taxes, non-cash, restructuring and other items was $4.7 million, an increase of 7.1% from prior year. These results do not include the revenues or earnings from the subsidiaries of Porex that were divested on August 1, 2003.

Financial Guidance
WebMD today also announced updated financial guidance for 2004. Revenues for 2004 are expected to be between $1.145 billion and $1.175 billion, an increase of approximately 19% to 22% over 2003. Income before taxes, non-cash, restructuring and other items is expected to be between $150 and $158 million, an increase of approximately 27% to 34% over 2003. Net income is expected to be between $54 and $60 million, compared to a net loss of ($17.0) million or ($0.05) per share in 2003. This financial guidance does not include any expenses related to the previously announced government investigation.

Recent Events
After year end, WebMD Health signed an agreement with Fidelity Employer Services Company (FESCo), a subsidiary of Fidelity Investments. FESCo provides benefits and human resources administration, workforce effectiveness, payroll solutions and stock plan services to 16.7 million employees in the U.S as of January 31, 2004. The long-term agreement provides for FESCo to integrate WebMD’s flagship employer product, Personal Health Manager, into the services it provides to clients. Personal Health Manager helps employees make informed benefit, provider and treatment decisions and allows employers to better manage their administrative costs of providing the benefit, while improving the quality of care for employees and their family members. In addition, WebMD’s Personal Health Manager service will be rolled out to the Fidelity employee base. Financial benefits will largely begin in 2005.

Analyst and Investor Conference Call
As previously announced, WebMD will hold a conference call with investors and analysts to discuss these results at 4:45 pm (eastern) on March 4, 2004. The call can be accessed at www.webmd.com (in the About WebMD section).

ABOUT WEBMD
WebMD Corporation provides services that help physicians, consumers, providers and health plans navigate the complexity of the healthcare system. Our products and services streamline administrative and clinical processes, promote efficiency and reduce costs by facilitating information exchange, communication and electronic transactions between healthcare participants.

WebMD Health is a leading provider of online information, educational services and communities for physicians and consumers. WebMD Practice Services is a leading provider of physician practice management software and related services. WebMD Envoy is a leader in payer and healthcare provider transaction processing and reimbursement cycle management services.

Porex is a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications.

All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding our guidance on future financial results and other projections or measures of future performance of WebMD; the amount and timing of the benefits expected from strategic initiatives and acquisitions or from deployment of new or updated technologies, products, services or applications; the prospects for new applications of porous plastics and other porous media; and other potential sources of additional revenue. These statements are based on WebMD’s current plans and expectations and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of WebMD’s products and services; operational difficulties relating to combining acquired companies and businesses; WebMD’s ability to form and maintain mutually beneficial relationships with customers and strategic partners; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries, including matters relating to the manner and timing of implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the healthcare industry’s responses; and the ability of WebMD to attract and retain qualified personnel. Further information about these matters can be found in WebMD’s Securities and Exchange Commission filings. WebMD expressly disclaims any intent or obligation to update these forward-looking statements.

This press release includes both financial measures in accordance with accounting principles generally accepted in the United States of America, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures include: income before taxes, non-cash, restructuring and other items; and related per share amounts. WebMD believes that those non-GAAP measures, and changes in those measures, are meaningful indicators of WebMD’s performance and provide additional information that WebMD management finds useful in evaluating such performance and in planning for future periods. Accordingly, WebMD believes that such additional information may be useful to investors. The non-GAAP financial measures should be viewed as supplemental to, and not as an alternative for, the GAAP financial measures. The tables attached to this press release contain historical GAAP financial measures and a reconciliation between historical GAAP and non-GAAP financial measures. WebMD is filing a Current Report on Form 8-K today containing this press release. Exhibit 99.3 to that Current Report includes a reconciliation of certain forward-looking non-GAAP information to GAAP financial information.

-Tables Follow-

EX-99.2

EXHIBIT 99.2

WebMD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

	Three Months Ended					Years Ended
	December 31,					December 31,
	2003		2002			2003			2002
	(Unaudited)		(Unaudited)			(Unaudited)			(Audited)
Revenue	$	258,396	$	229,476		$	963,980		$	871,696
Costs and expenses:
Cost of operations		154,383		130,643			564,939			509,744
Development and engineering		10,331		10,827			42,985			43,467
Sales, marketing, general and administrative		72,565		64,923			282,482			283,424
Depreciation, amortization and other		9,473		30,018			62,434			125,593
Legal expense		3,466		—			3,959			—
Restructuring and integration benefit		—		—			—			(5,850	)
(Gain) loss on investments		1,563		—			(1,659	)		(6,547	)
Interest income		6,467		5,249			22,901			19,590
Interest expense		4,770		2,814			15,214			8,491
Other income, net		3,100		1,521			4,218			3,844
Income (loss) from continuing operations before income tax provision (benefit)		11,412		(2,979	)		20,745			(63,192	)
Income tax provision (benefit)		879		621			4,140			(10,079	)
Income (loss) from continuing operations		10,533		(3,600	)		16,605			(53,113	)
Income (loss) from discontinued operations, net of income taxes		—		1,171			(33,611	)		3,411
Net income (loss)	$	10,533	$	(2,429	)	$	(17,006	)	$	(49,702	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	0.03	$	(0.01	)	$	0.05		$	(0.17	)
Income (loss) from discontinued operations		—		0.00			(0.11	)		0.01
Net income (loss)	$	0.03	$	(0.01	)	$	(0.06	)	$	(0.16	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.03	$	(0.01	)	$	0.05		$	(0.17	)
Income (loss) from discontinued operations		—		0.00			(0.10	)		0.01
Net income (loss)	$	0.03	$	(0.01	)	$	(0.05	)	$	(0.16	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		307,069		298,188			304,858			304,168
Diluted		324,058		298,188			325,811			304,168

WebMD CORPORATION
CONSOLIDATED SEGMENT INFORMATION
(In thousands, except per share data)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2003			2002			2003			2002
	(Unaudited)			(Unaudited)			(Unaudited)			(Audited)
Revenues
Transaction services	$	140,238		$	116,653		$	505,729		$	466,810
Physician services		78,345			72,568			302,640			275,306
Portal services		30,783			29,305			110,665			84,296
Plastic technologies(a)		16,925			16,259			71,940			65,811
Inter-segment eliminations		(7,895	)		(5,309	)		(26,994	)		(20,527	)
	$	258,396		$	229,476		$	963,980		$	871,696
Income (loss) before restructuring, taxes, non-cash and other items
Transaction services	$	26,058		$	25,025		$	94,218		$	85,154
Physician services		4,582			7,025			20,924			26,685
Portal services		5,976			9,053			24,898			5,574
Plastic technologies(a)		4,675			4,365			20,532			19,891
Corporate		(12,599	)		(12,531	)		(50,251	)		(51,272	)
Interest income		6,467			5,249			22,901			19,590
Interest expense		(4,770	)		(2,814	)		(15,214	)		(8,491	)
	$	30,389		$	35,372		$	118,008		$	97,131
Basic income per common share before restructuring,
taxes, non-cash and other items(b)	$	0.10		$	0.12		$	0.39		$	0.32
Diluted income per common share before restructuring, taxes,
non-cash and other items(b)	$	0.09		$	0.12		$	0.36		$	0.32
Restructuring, taxes, non-cash and other items(c)
Depreciation, amortization and other	$	(9,473	)	$	(30,018	)	$	(62,434	)	$	(125,593	)
Amortization of prepaid content and services (included in cost of operations)		(425	)		(2,588	)		(2,356	)		(4,765	)
Amortization of prepaid content and services (included in sales, marketing, general and administrative)		(5,650	)		(3,560	)		(21,942	)		(20,941	)
Non-cash stock compensation (included in sales, marketing, general and administrative)		(1,500	)		(3,706	)		(12,449	)		(25,265	)
Restructuring and integration benefit		—			—			—			5,850
Legal expense		(3,466	)		—			(3,959	)		—
Gain (loss) on investments		(1,563	)		—			1,659			6,547
Income tax (provision) benefit		(879	)		(621	)		(4,140	)		10,079
Other income, net		3,100			1,521			4,218			3,844
Income (loss) from continuing operations		10,533			(3,600	)		16,605			(53,113	)
Income (loss) from discontinued operations, net of income taxes		—			1,171			(33,611	)		3,411
Net income (loss)	$	10,533		$	(2,429	)	$	(17,006	)	$	(49,702	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	0.03		$	(0.01	)	$	0.05		$	(0.17	)
Income (loss) from discontinued operations		—			0.00			(0.11	)		0.01
Net income (loss)	$	0.03		$	(0.01	)	$	(0.06	)	$	(0.16	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.03		$	(0.01	)	$	0.05		$	(0.17	)
Income (loss) from discontinued operations		—			0.00			(0.10	)		0.01
Net income (loss)	$	0.03		$	(0.01	)	$	(0.05	)	$	(0.16	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		307,069			298,188			304,858			304,168
Diluted		324,058			298,188			325,811			304,168

(a)	Effective August 1, 2003, the Company completed the sale of two operating units of its Plastic Technologies segment, Porex Bio Products, Inc. and Porex Medical Products, Inc., in two separate transactions. Beginning in the quarter ended September 30, 2003, the Company’s consolidated financial statements reflect these operating units as discontinued operations for all prior periods. The above segment information reflects these operating units as discontinued operations for the current and prior periods.
(b)	Basic and diluted income (loss) per common share before restructuring, taxes, non-cash and other items is based on the weighted-average shares outstanding used in computing basic and diluted income (loss) per common share.
(c)	Reconciliation of income (loss) before restructuring, taxes, non-cash and other items to income (loss) from continuing operations.

WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	December 31,		December 31,
	2003		2002
	(Unaudited)		(Audited)
Assets
Cash and cash equivalents	$	63,298	$	175,596
Short-term investments		207,383		10,888
Accounts receivable, net		181,173		163,244
Inventory		12,158		9,976
Current portion of prepaid content and distribution services		18,116		25,406
Assets of discontinued operations		—		94,056
Other current assets		25,973		25,814
Total current assets		508,101		504,980
Marketable debt securities		451,290		449,289
Marketable equity securities		4,744		7,427
Property and equipment, net		77,278		70,488
Prepaid content and distribution services		31,992		48,532
Goodwill		844,448		586,043
Intangible assets, net		184,130		73,222
Other assets		33,323		26,267
	$	2,135,306	$	1,766,248
Liabilities and Stockholders’ Equity
Accounts payable	$	10,390	$	10,063
Accrued expenses		208,430		208,342
Deferred revenue		86,708		81,179
Liabilities of discontinued operations		—		12,365
Total current liabilities		305,528		311,949
Convertible subordinated notes		649,999		300,000
Other long-term liabilities		1,182		498
Stockholders’ equity		1,178,597		1,153,801
	$	2,135,306	$	1,766,248

WebMD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Years Ended
	December 31,
	2003			2002
	(Unaudited)			(Audited)
Cash flows from operating activities:
Net loss	$	(17,006	)	$	(49,702	)
Adjustments to reconcile net loss to net cash provided by operating activities:
(Income) loss from discontinued operations		33,611			(3,411	)
Depreciation, amortization and other		62,434			125,593
Amortization of debt issuance costs		2,246			1,109
Non-cash content and distribution services		24,298			25,706
Non-cash stock based compensation		12,449			25,265
Gain on investments		(1,659	)		(6,547	)
Gain on sale of fixed assets		(3,100	)		—
Changes in operating assets and liabilities:
Accounts receivable		5,515			(2,631	)
Inventory		(2,176	)		(872	)
Prepaid content and distribution services		(467	)		753
Accounts payable		(651	)		(7,541	)
Accrued expenses		(42,419	)		(32,651	)
Deferred revenue		(225	)		12,530
Other assets		4,259			(4,416	)
Net cash provided by continuing operations		77,109			83,185
Net cash provided by discontinued operations		5,130			9,912
Net cash provided by operating activities		82,239			93,097
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		247,294			108,991
Proceeds from maturities and redemptions of held-to-maturity securities		157,919			59,095
Purchases of available-for-sale securities		(8,254	)		(207,833	)
Purchases of held-to-maturity securities		(590,113	)		(300,970	)
Purchases of property and equipment		(18,385	)		(26,267	)
Proceeds received from sale of fixed assets		9,779			—
Proceeds received from sale of discontinued operations		46,500			—
Cash paid in business combinations, net of cash acquired		(400,491	)		(33,471	)
Other changes in equity of discontinued operations		1,754			10,369
Net cash used in continuing operations		(553,997	)		(390,086	)
Net cash used in discontinued operations		(2,529	)		(12,577	)
Net cash used in investing activities		(556,526	)		(402,663	)
Cash flows from financing activities:
Proceeds from issuance of common stock		44,719			28,765
Payments of notes payable and other		(361	)		(2,904	)
Redemption of Series B Preferred Stock		—			(10,000	)
Purchase of treasury shares		(20,316	)		(104,960	)
Net proceeds from issuance of convertible debt		339,125			292,000
Net cash provided by continuing operations		363,167			202,901
Net cash used in discontinued operations		(6,546	)		(1,150	)
Net cash provided by financing activities		356,621			201,751
Effect of exchange rates on cash		1,423			1,083
Net decrease in cash and cash equivalents		(116,243	)		(106,732	)
Changes in cash attributable to discontinued operations		3,945			3,815
Cash and cash equivalents at beginning of period		175,596			278,513
Cash and cash equivalents at end of period	$	63,298		$	175,596

EX-99.3

Exhibit 99.3

     Certain Forward-Looking Information — Reconciliation of Non-GAAP to GAAP

					Quarterly Mix
Consolidated	Range				Q1			Q2			Q3			Q4
Revenues	$	1,145,000	$	1,175,000		23%-24	%		24%-25	%		25%-26	%		26%-27	%
Income before taxes, non-cash, restructuring and other items		150,000		158,000		19	%		21	%		26	%		34	%
Depreciation and amortization		56,000		57,000		23	%		25	%		26	%		26	%
Non-cash content and stock compensation		27,000		27,000		28	%		27	%		25	%		20	%
Income tax provision		13,000		14,000
Net income	$	54,000	$	60,000		10	%		15	%		30	%		45	%

Revenues:

• Envoy — Approximately 59% of consolidated revenue in Q1 and approximately 57% of revenues for the balance of the year.

• Practice Services – Approximately 28% of consolidated revenues in Q1 and approximately 27% for the balance of the year.

• Health – Approximately 10% of consolidated revenue in Q1, increasing sequentially to approximately 13% by year-end.

• Porex – Approximately 7% of consolidated revenues throughout 2004.

• Eliminations – Approximately 3% of net revenues.

Operating Margin:

• Envoy – Approximately 18% in Q1 increasing to the low 20% range over the balance of the year.

• Practice Services – Low to mid single digits in Q1 to 10% or 11% by the end of 2004.

• Health – Approximately 15% in Q1 and increasing up to the high 20% range by year-end.

• Porex – Approximately 27-30% throughout the year.

• Corporate – Corporate expenses should be approximately 5% of net revenues.