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

August 5, 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

	ITEM 5. OTHER EVENTS
	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
	ITEM 9. REGULATION FD DISCLOSURE
	ITEM 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SIGNATURE
EXHIBIT INDEX
EX-99.1 PRESS RELEASE DATED AUGUST 5, 2004
EX-99.2 FINANCIAL TABLES ACCOMPANYING EX-99.1
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 August 5, 2004, WebMD Corporation issued a press release announcing its results for the quarter ended June 30, 2004. 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.

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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 August 5, 2004, regarding WebMD’s results for the quarter ended June 30, 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.

     In addition, during the conference call today, WebMD expects to state that WebMD management, at the direction of its Board of Directors, has begun a process of exploring alternatives, with respect to WebMD Health, its Portal Services segment, relating to a possible public offering of equity in that business. No decision has been made regarding the form that any such transaction would take. WebMD intends to review all possibilities and to structure any transaction to maximize the benefit to WebMD’s stockholders.

ITEM 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On August 5, 2004, WebMD Corporation issued a press release announcing its results for the quarter ended June 30, 2004. A copy of the press release is attached as Exhibit 99.1. Exhibit 99.1 is being “furnished” 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: August 5, 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 August 5, 2004, regarding WebMD’s results for the quarter ended June 30, 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

Contact:
Jennifer Meyer
Media: 212-624-3912
Investors: 201-414-2002

WEBMD REPORTS SECOND QUARTER RESULTS

Revenue growth benefits from synergies between base business and acquired companies

ELMWOOD PARK, NJ (August 5, 2004) — WebMD Corporation (NASDAQ: HLTH) today announced financial results for the three months ended June 30, 2004.

Key Financial Highlights

Revenue for the second quarter was $281.9 million compared to $233.4 million a year ago, an increase of 20.8%. Income before taxes, non-cash and other items for the second quarter was $30.0 million or $0.09 per share compared to $30.1 million or $0.09 per share a year ago. Income from continuing operations for the second quarter was $5.8 million or $0.02 per share compared to income from continuing operations of $5.4 million or $0.02 per share a year ago. Net income for the second quarter was $5.8 million or $0.02 per share compared to a net loss of ($26.3) million or ($0.08) per share a year ago.

As of June 30, 2004, WebMD had approximately $800 million in cash, cash equivalents and long-term marketable debt securities.

“During the second quarter, we were encouraged by the revenue performance at WebMD Envoy, WebMD Health and Porex,” said Roger C. Holstein, CEO of WebMD Corporation. “Our revenue growth is beginning to benefit from the synergies between our base business and the acquired companies. Management is excited that key investment initiatives already underway should improve operating efficiency and help expand profit margins as we exit 2004.”

Segment Operating Results

WebMD Envoy revenues were $166.0 million for the second quarter compared to $118.0 million in the prior year, an increase of 40.7%. The $48.0 million increase in WebMD Envoy’s revenues includes $38.4 million of revenues from customers acquired in recent acquisitions. Income before taxes, non-cash and other items was $28.9 million compared to $22.3 million in the prior year. Operating margins declined primarily as a result of continuing costs related to our implementation efforts for HIPAA and higher transaction-related expenses, partially offset by higher operating margins of recent acquisitions. HIPAA and realignment expenses are expected to peak in the third quarter as WebMD Envoy substantially completes its remediation and integration efforts leading to expanded operating margins as it exits the year.

WebMD Practice Services revenues were $71.8 million for the second quarter compared to $76.8 million in the prior year. Income before taxes, non-cash and other items was $1.8 million compared to $6.4 million in the prior year. The results continue to be impacted by longer sales and installation cycles and lower system margins. However, as a result of key investments in customer service, information infrastructure and clinical software, WebMD Practice Services expects margins to expand in the second half of the year in a meaningful way.

WebMD Health revenues were $31.9 million for the second quarter compared to $26.5 million in the prior year, a gain of 20.0%, primarily driven by strong market acceptance of our promotional and educational programs. Income before taxes, non-cash and other items was $7.6 million compared to $6.2 million in the prior year.

Porex revenues were $20.7 million for the second quarter compared to $18.6 million in the prior year, an increase of 11.5%. Income before taxes, non-cash and other items was $6.3 million compared to $5.5 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.

“During the quarter, we have assumed a leadership role in bringing healthcare constituents together to ensure that HIPAA fulfills its promise of reducing healthcare administrative costs and increasing efficiency,” said Mr. Holstein. “In addition, the government’s proposal for transforming our healthcare system into a consumer-centric and information-rich system that connects providers, establishes electronic medical information records, and creates a portable consumer health record, rapidly aligns our business imperatives with public policy goals.”

Financial Guidance

WebMD provided updated financial guidance for the balance of 2004 in a Form 8-K furnished to the Securities and Exchange Commission today.

Analyst and Investor Conference Call

WebMD will hold a conference call with investors and analysts to discuss these results at 4:45 pm (eastern) on August 5, 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 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. Porex customers include both end-users of its finished products as well as manufacturers that include Porex components in their products.

*****************************

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					Six Months Ended
	June 30,					June 30,
	2004		2003			2004		2003
Revenue	$	281,881	$	233,418		$	553,095	$	454,949
Costs and expenses:
Cost of operations		163,961		135,441			326,603		261,286
Development and engineering		12,991		10,403			24,087		21,320
Sales, marketing, general and administrative		83,298		69,359			160,292		137,467
Depreciation, amortization and other		13,148		14,944			25,733		41,864
Legal expense		2,215		—			4,252		—
Interest income		4,511		4,985			9,994		10,033
Interest expense		4,838		2,926			9,586		5,741
Other income, net		447		1,118			484		1,301
Income (loss) from continuing operations before income tax provision		6,388		6,448			13,020		(1,395	)
Income tax provision		613		1,001			1,544		1,988
Income (loss) from continuing operations		5,775		5,447			11,476		(3,383	)
Loss from discontinued operations, net of income taxes		—		(31,717	)		—		(30,245	)
Net income (loss)	$	5,775	$	(26,270	)	$	11,476	$	(33,628	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	0.02	$	0.02		$	0.04	$	(0.01	)
Loss from discontinued operations		—		(0.11	)		—		(0.10	)
Net income (loss)	$	0.02	$	(0.09	)	$	0.04	$	(0.11	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.02	$	0.02		$	0.03	$	(0.01	)
Loss from discontinued operations		—		(0.10	)		—		(0.10	)
Net income (loss)	$	0.02	$	(0.08	)	$	0.03	$	(0.11	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		312,281		304,001			310,886		303,447
Diluted		337,763		325,796			332,582		303,447

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Revenues
Transaction services	$	166,037		$	118,021		$	329,816		$	233,514
Physician services		71,773			76,797			142,779			148,808
Portal services		31,852			26,538			58,161			48,718
Plastic technologies (a)		20,737			18,596			39,158			35,922
Inter-segment eliminations		(8,518	)		(6,534	)		(16,819	)		(12,013	)
	$	281,881		$	233,418		$	553,095		$	454,949
Income (loss) before taxes, non-cash and other items
Transaction services	$	28,914		$	22,342		$	58,764		$	46,393
Physician services		1,771			6,359			3,122			12,656
Portal services		7,626			6,192			12,168			10,210
Plastic technologies (a)		6,275			5,507			11,317			10,167
Corporate		(14,228	)		(12,381	)		(27,533	)		(24,843	)
Interest income		4,511			4,985			9,994			10,033
Interest expense		(4,838	)		(2,926	)		(9,586	)		(5,741	)
	$	30,031		$	30,078		$	58,246		$	58,875
Basic income per common share before taxes, non-cash and other items (b)	$	0.10		$	0.10		$	0.19		$	0.19
Diluted income per common share before taxes, non-cash and other items (b)	$	0.09		$	0.09		$	0.18		$	0.19
Taxes, non-cash and other items (c)
Depreciation, amortization and other	$	(13,148	)	$	(14,944	)	$	(25,733	)	$	(41,864	)
Amortization of prepaid content and services (included in cost of operations)		(346	)		(827	)		(601	)		(827	)
Amortization of prepaid content and services (included in sales, marketing, general and administrative)		(5,645	)		(5,176	)		(10,683	)		(11,322	)
Non-cash stock compensation (included in sales, marketing, general and administrative)		(2,736	)		(3,801	)		(4,441	)		(7,558	)
Legal expense		(2,215	)		—			(4,252	)
Income tax provision		(613	)		(1,001	)		(1,544	)		(1,988	)
Other income, net		447			1,118			484			1,301
Income (loss) from continuing operations		5,775			5,447			11,476			(3,383	)
Loss from discontinued operations, net of income taxes		—			(31,717	)		—			(30,245	)
Net income (loss)	$	5,775		$	(26,270	)	$	11,476		$	(33,628	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	0.02		$	0.02		$	0.04		$	(0.01	)
Loss from discontinued operations		—			(0.11	)		—			(0.10	)
Net income (loss)	$	0.02		$	(0.09	)	$	0.04		$	(0.11	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.02		$	0.02		$	0.03		$	(0.01	)
Loss from discontinued operations		—			(0.10	)		—			(0.10	)
Net income (loss)	$	0.02		$	(0.08	)	$	0.03		$	(0.11	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		312,281			304,001			310,886			303,447
Diluted		337,763			325,796			332,582			303,447

(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 periods.
(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 before taxes, non-cash and other items to income (loss) from continuing operations.

WebMD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	June 30,		December 31,
	2004		2003
	(Unaudited)		(Audited)
Assets
Cash and cash equivalents	$	206,611	$	63,298
Short-term investments		606		207,383
Accounts receivable, net		187,149		181,173
Inventory		12,022		12,158
Current portion of prepaid content and distribution services		16,114		18,116
Other current assets		24,934		25,973
Total current assets		447,436		508,101
Marketable debt securities		592,105		451,290
Marketable equity securities		3,206		4,744
Property and equipment, net		75,128		77,278
Prepaid content and distribution services		22,667		31,992
Goodwill		891,406		844,448
Intangible assets, net		185,175		184,130
Other assets		37,221		33,323
	$	2,254,344	$	2,135,306
Liabilities and Stockholders’ Equity
Accounts payable	$	9,767	$	10,390
Accrued expenses		190,716		208,430
Deferred revenue		101,516		86,708
Total current liabilities		301,999		305,528
Convertible subordinated notes		649,999		649,999
Other long-term liabilities		1,078		1,182
Convertible redeemable exchangeable preferred stock		98,181		—
Stockholders’ equity		1,203,087		1,178,597
	$	2,254,344	$	2,135,306

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

	Six Months Ended
	June 30,
	2004			2003
Cash flows from operating activities:
Net income (loss)	$	11,476		$	(33,628	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss from discontinued operations		—			30,245
Depreciation, amortization and other		25,733			41,864
Amortization of debt issuance costs		1,498			774
Non-cash content and distribution services		11,284			12,149
Non-cash stock based compensation		4,441			7,558
Gain on investments		(363	)		(183	)
Gain on sale of property and equipment		(121	)		—
Changes in operating assets and liabilities:
Accounts receivable		(3,389	)		(5,743	)
Inventory		136			(896	)
Prepaid content and distribution services		79			(445	)
Accounts payable		(900	)		1,930
Accrued expenses		(19,179	)		(26,283	)
Deferred revenue		10,899			478
Other, net		(946	)		4,946
Net cash provided by continuing operations		40,648			32,766
Net cash provided by discontinued operations		—			4,553
Net cash provided by operating activities		40,648			37,319
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		329,163			2,631
Proceeds from maturities and redemptions of held-to-maturity securities		—			102,919
Purchases of available-for-sale securities		(274,600	)		(6,730	)
Purchases of held-to-maturity securities		—			(124,931	)
Purchases of property and equipment		(12,047	)		(8,861	)
Proceeds received from sale of property and equipment		417			—
Cash paid in business combinations, net of cash acquired		(58,060	)		(14,701	)
Other changes in equity of discontinued operations		—			(4,596	)
Net cash used in continuing operations		(15,127	)		(54,269	)
Net cash provided by discontinued operations		—			3,886
Net cash used in investing activities		(15,127	)		(50,383	)
Cash flows from financing activities:
Proceeds from issuance of common stock		25,011			28,578
Net proceeds from issuance of preferred shares		98,115			—
Payments of notes payable and other		(257	)		(25	)
Purchases of treasury shares		(4,877	)		(18,125	)
Net proceeds from issuance of convertible debt		—			290,500
Net cash provided by continuing operations		117,992			300,928
Net cash used in discontinued operations		—			(6,538	)
Net cash provided by financing activities		117,992			294,390
Effect of exchange rates on cash		(200	)		663
Net increase in cash and cash equivalents		143,313			281,989
Changes in cash attributable to discontinued operations		—			(1,901	)
Cash and cash equivalents at beginning of period		63,298			175,596
Cash and cash equivalents at end of period	$	206,611		$	455,684

EX-99.3

EXHIBIT 99.3

Updated 2004 Financial Guidance

Table presented in millions, except per share data

	Q3		Q4		Full Year 2004				Full Year 2004
	(excluding ViPS)		(excluding ViPS)		(excluding ViPS)		ViPS (2)		(including ViPS)
Revenues	$	290 - $295	$	300 - $305	$	1,145 - $1,155	$	22 - $24	$	1,167 - $1,179
Income before taxes, non-cash and other items	$	34 - $35	$	40 - $43	$	132 - $136	$	5	$	137 - $141
Depreciation and amortization		14		14		54		4		58
Non-cash content and stock compensation		6		6		28		—		28
Legal expense (1)		—		—		4		—		4
Income tax provision		2		2		5		—		5
Net income	$	12 - $13	$	18 - $21	$	41 - $45	$	1	$	42 - $46
Earnings per share:
Income before taxes, non-cash and other items	$	0.10	$	0.12 - $0.13	$	0.39 - $0.40	$	0.02	$	0.41 - $0.42
Net income	$	0.04	$	0.05 - $0.06	$	0.12 - $0.13		—	$	0.12 - $0.13

(1)	Legal expense reflects actual results for the six months ended June 30, 2004; no guidance has been provided for Q3 or Q4
(2)	Reflects the operating results of ViPS since the date of acquisition; estimated to be mid-August

*          *          *

Segment Information (excluding ViPS):

• Envoy – expected to represent approximately 57% of consolidated revenues for the balance of the year; with operating margins of approximately 16% in Q3 and 18% in Q4.

• Practice Services — expected to represent approximately 26% of consolidated revenues for the balance of the year; with operating margins that are anticipated to improve to 6% in Q3 and 8% in Q4.

• Health — expected to represent approximately 13% of consolidated revenues for the balance of the year; with operating margins increasing to the high 20% range.

• Porex — expected to represent approximately 7% of consolidated revenues for the balance of the year; with operating margins of approximately 25-30%.

• Inter-segment eliminations should be approximately 3% of net revenues for the balance of the year.

• Corporate expenses should be approximately 5% of net revenues for the balance of the year.