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

May 6, 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)

TABLE OF CONTENTS

EX-99.1 PRESS RELEASE

EX-99.2 FINANCIAL TABLES

EX-99.3 UPDATED 2004 FINANCIAL GUIDANCE

     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 WebMD’s income before taxes, non-cash and other items and related per share amounts. 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 forward-looking non-GAAP information to forward-looking GAAP financial information, each of which is expected to be discussed on the Analyst and Investor Conference Call referred to in Exhibit 99.1. WebMD believes that the above 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.

     ITEM 5.     OTHER EVENTS

     On May 6, 2004, WebMD Corporation issued a press release announcing its results for the quarter ended March 31, 2004. Attached hereto as Exhibit 99.2 and incorporated by reference

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herein are financial tables that accompanied the press release issued by WebMD announcing the results.

     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 May 6, 2004, regarding WebMD’s results for the quarter ended March 31, 2004
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Updated 2004 Financial Guidance

     ITEM 9.     REGULATION FD DISCLOSURE

     Exhibit 99.3 to this Current Report includes forward-looking financial information expected to be discussed on the previously announced conference call with investors and analysts to be held by WebMD at 4:45 pm (Eastern time) today. The call can be accessed at www.webmd.com (in the About WebMD section). Exhibit 99.3 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange 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.

     ITEM 12.     DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On May 6, 2004, WebMD Corporation issued a press release announcing its results for the quarter ended March 31, 2004. A copy of the press release is attached as Exhibit 99.1. Exhibit 99.1 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange 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.

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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: May 6, 2004	By:	/s/ Lewis H. Leicher
		Lewis H. Leicher Senior Vice President

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EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release issued by WebMD Corporation, dated May 6, 2004, regarding WebMD’s results for the quarter ended March 31, 2004
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Updated 2004 Financial Guidance

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EX-99.1

Exhibit 99.1

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

WEBMD REPORTS FIRST QUARTER RESULTS

ELMWOOD PARK, NJ (May 6, 2004) — WebMD Corporation (NASDAQ: HLTH) today announced financial results for the three months ended March 31, 2004.

Key Financial Highlights
Revenue for the first quarter was $271.2 million compared to $221.5 million a year ago, an increase of 22.4%. Income before taxes, non-cash and other items for the first quarter was $28.2 million or $0.09 per share compared to $28.8 million or $0.10 per share a year ago. Income from continuing operations for the first quarter was $5.7 million or $0.02 per share compared to a loss from continuing operations of ($8.8) million or ($0.03) per share a year ago. Net income for the first quarter was $5.7 million or $0.02 per share compared to a net loss of ($7.4) million or ($0.02) per share a year ago.

As of March 31, 2004, WebMD had approximately $846 million in cash and short and long-term marketable debt securities.

Roger C. Holstein, CEO of WebMD, stated, “As we entered 2004, we expected that the industry challenges and our own company challenges would be great but that the opportunity would be even greater. In the first quarter, we saw results consistent with or slightly better than our expectations at WebMD Envoy, WebMD Health and Porex, offsetting a disappointing quarter at WebMD Practice Services. Although our company-wide investments in talent and technology will be seen in the expense line in the short-term, we believe these investments will yield revenue growth and margin expansion in the future.”

Segment Operating Results
WebMD Envoy revenues were $163.8 million for the first quarter compared to $115.5 million in the prior year. The $48.3 million increase in WebMD Envoy’s revenues includes $39.8 million of revenues from customers acquired in recent acquisitions. Income before taxes, non-cash and other items was $29.9 million compared to $24.1 million in the prior year. Operating margins declined primarily as a result of increased costs related to our implementation efforts for HIPAA and our all-payer service and higher transaction-related sales expenses, partially offset by higher operating margins of recent acquisitions.

WebMD Practice Services revenues were $71.0 million for the first quarter compared to $72.0 million in the prior year. Revenues, particularly in the month of March, were impacted by lower system sales resulting from longer and more complex sales cycles and HIPAA and other transition challenges related to Network Services product offerings. Income before taxes, non-cash and other items was $1.4 million compared to $6.3 million in the prior year, reflecting the lower system sales and the continued spending necessary to support our all-payer network services infrastructure.

WebMD Health revenues were $26.3 million for the first quarter compared to $22.2 million in the prior year, driven by strong market acceptance of our pharmaceutical, medical device and employer-sponsored programs. Income before taxes, non-cash and other items was $4.5 million compared to $4.0 million in the prior year.

Porex revenues were $18.4 million for the first quarter compared to $17.3 million in the prior year. Income before taxes, non-cash and other items was $5.0 million compared to $4.7 million in the prior year. These

results do not include the revenues or earnings from the two Porex operating units which were divested on August 1, 2003.

Financial Guidance
In a Form 8-K furnished to the Securities and Exchange Commission today, WebMD provided modified financial guidance. Consolidated revenue and earnings guidance remains unchanged. However, the relative contribution of each business segment has been adjusted.

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 May 6, 2004. The call can be accessed at www.webmd.com (in the About WebMD section). A replay of the audio webcast will be available at the same web address.

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 leading provider of electronic data interchange services for healthcare providers and commercial health plans.

Porex is a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications. Porex customers include both end-users of its finished products as well as manufacturers that include Porex components in their products.

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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: WebMD’s income before taxes, non-cash 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, unaudited)

	Three Months Ended
	March 31,
	2004		2003
Revenue	$	271,214	$	221,531
Costs and expenses:
Cost of operations		162,642		125,845
Development and engineering		11,096		10,917
Sales, marketing, general and administrative		76,994		68,108
Depreciation, amortization and other		12,585		26,920
Legal expense		2,037		—
Interest income		5,483		5,048
Interest expense		4,748		2,815
Other income, net		37		183
Income (loss) from continuing operations before income tax provision		6,632		(7,843	)
Income tax provision		931		987
Income (loss) from continuing operations		5,701		(8,830	)
Income from discontinued operations, net of income taxes		—		1,472
Net income (loss)	$	5,701	$	(7,358	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	0.02	$	(0.03	)
Income from discontinued operations		—		0.01
Net income (loss)	$	0.02	$	(0.02	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.02	$	(0.03	)
Income from discontinued operations		—		0.01
Net income (loss)	$	0.02	$	(0.02	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		309,491		302,892
Diluted		327,402		302,892

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

	Three Months Ended
	March 31,
	2004			2003
Revenues
Transaction services	$	163,779		$	115,493
Physician services		71,006			72,011
Portal services		26,309			22,180
Plastic technologies (a)		18,421			17,326
Inter-segment eliminations		(8,301	)		(5,479	)
	$	271,214		$	221,531
Income (loss) before taxes, non-cash and other items
Transaction services	$	29,850		$	24,051
Physician services		1,351			6,297
Portal services		4,542			4,018
Plastic technologies (a)		5,042			4,660
Corporate		(13,305	)		(12,462	)
Interest income		5,483			5,048
Interest expense		(4,748	)		(2,815	)
	$	28,215		$	28,797
Basic income per common share before taxes, non-cash and other items (b)	$	0.09		$	0.10
Diluted income per common share before taxes, non-cash and other items (b)	$	0.09		$	0.10
Taxes, non-cash and other items (c)
Depreciation, amortization and other	$	(12,585	)	$	(26,920	)
Amortization of prepaid content and services (included in cost of operations)		(255	)		—
Amortization of prepaid content and services (included in sales, marketing, general and administrative)		(5,038	)		(6,146	)
Non-cash stock compensation (included in sales, marketing, general and administrative)		(1,705	)		(3,757	)
Legal expense		(2,037	)		—
Income tax provision		(931	)		(987	)
Other income, net		37			183
Income (loss) from continuing operations		5,701			(8,830	)
Income from discontinued operations, net of income taxes		—			1,472
Net income (loss)	$	5,701		$	(7,358	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	0.02		$	(0.03	)
Income from discontinued operations		—			0.01
Net income (loss)	$	0.02		$	(0.02	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.02		$	(0.03	)
Income from discontinued operations		—			0.01
Net income (loss)	$	0.02		$	(0.02	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		309,491			302,892
Diluted		327,402			302,892

(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 prior period.
(b)	Basic and diluted income per common share before 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 taxes, non-cash and other items to income (loss) from continuing operations.

WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	March 31,		December 31,
	2004		2003
	(Unaudited)		(Audited)
Assets
Cash and cash equivalents	$	442,518	$	63,298
Short-term investments		2,637		207,383
Accounts receivable, net		182,479		181,173
Inventory		11,957		12,158
Current portion of prepaid content and distribution services		16,342		18,116
Other current assets		21,863		25,973
Total current assets		677,796		508,101
Marketable debt securities		401,234		451,290
Marketable equity securities		4,051		4,744
Property and equipment, net		76,318		77,278
Prepaid content and distribution services		28,155		31,992
Goodwill		844,501		844,448
Intangible assets, net		178,201		184,130
Other assets		33,140		33,323
	$	2,243,396	$	2,135,306
Liabilities and Stockholders’ Equity
Accounts payable	$	8,843	$	10,390
Accrued expenses		205,282		208,430
Deferred revenue		89,878		86,708
Total current liabilities		304,003		305,528
Convertible subordinated notes		649,999		649,999
Other long-term liabilities		1,056		1,182
Convertible redeemable exchangeable preferred stock		98,123		—
Stockholders’ equity		1,190,215		1,178,597
	$	2,243,396	$	2,135,306

WebMD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

	Three Months Ended
	March 31,
	2004			2003
Cash flows from operating activities:
Net income (loss)	$	5,701		$	(7,358	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Income from discontinued operations		—			(1,472	)
Depreciation, amortization and other		12,585			26,920
Amortization of debt issuance costs		746			375
Non-cash content and distribution services		5,293			6,146
Non-cash stock-based compensation		1,705			3,757
Loss (gain) on investments		84			(183	)
Gain on sale of property and equipment		(121	)		—
Changes in operating assets and liabilities:
Accounts receivable		(1,306	)		(5,781	)
Inventory		201			6
Prepaid content and distribution services		318			(191	)
Accounts payable		(1,548	)		(134	)
Accrued expenses		(3,177	)		(4,399	)
Deferred revenue		3,155			4,112
Other, net		6,020			9,653
Net cash provided by continuing operations		29,656			31,451
Net cash provided by discontinued operations		—			2,499
Net cash provided by operating activities		29,656			33,950
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		276,551			801
Proceeds from maturities and redemptions of held-to-maturity securities		—			101,919
Purchases of available-for-sale securities		(24,600	)		(1,164	)
Purchases of held-to-maturity securities		—			(75,119	)
Purchases of property and equipment		(6,568	)		(3,706	)
Proceeds received from sale of property and equipment		417			—
Cash paid in business combinations, net of cash acquired		(70	)		(344	)
Other changes in equity of discontinued operations		—			(3,347	)
Net cash provided by continuing operations		245,730			19,040
Net cash provided by discontinued operations		—			3,031
Net cash provided by investing activities		245,730			22,071
Cash flows from financing activities:
Proceeds from issuance of common stock		10,885			17,025
Net proceeds from issuance of preferred shares		98,115			—
Payments of notes payable and other		(95	)		(15	)
Purchases of treasury shares		(4,877	)		(93	)
Net cash provided by continuing operations		104,028			16,917
Net cash used in discontinued operations		—			(4	)
Net cash provided by financing activities		104,028			16,913
Effect of exchange rates on cash		(194	)		177
Net increase in cash and cash equivalents		379,220			73,111
Changes in cash attributable to discontinued operations		—			(5,526	)
Cash and cash equivalents at beginning of period		63,298			175,596
Cash and cash equivalents at end of period	$	442,518		$	243,181

EX-99.3

Exhibit 99.3

Updated 2004 Financial Guidance

					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 and other items		150,000		158,000		18	%		21	%		27	%		34	%
Depreciation and amortization		56,000		57,000		22	%		25	%		26	%		27	%
Non-cash content and stock compensation		27,000		27,000		26	%		27	%		26	%		21	%
Income tax provision		13,000		14,000
Net income	$	54,000	$	60,000		10	%		15	%		30	%		45	%

Segment Information

Revenues:

• Envoy — Approximately 58% of consolidated revenues for the balance of the year.

• Practice Services – Approximately 26% of consolidated revenues for the year.

• Health – Approximately 11% of consolidated revenue in Q2, increasing sequentially to approximately 13% by year-end.

• Porex – Approximately 7% of consolidated revenues for the year.

• Eliminations – Approximately 3% of net revenues.

Operating Margin:

• Envoy – Increasing to the low 20% range over the balance of the year.

• Practice Services – Increasing to 10% or 11% by year-end.

• Health – 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.

• This guidance does not include any expense relating to the pending investigation by the Department of Justice and SEC.