8-K

UNITED STATES 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 3, 2007

Date of Report (Date of earliest event reported)

EMDEON 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)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

TABLE OF CONTENTS

EX-99.1 PRESS RELEASE DATED MAY 3, 2007

EX-99.2 FINANCIAL TABLES

EX-99.3 FINANCIAL GUIDANCE SUMMARY

EX-99.4 ANNEX A TO EXHIBITS 99.1 THROUGH 99.3

     All statements contained in this Current Report on Form 8-K, other than statements of historical fact, are forward-looking statements, including those regarding: guidance on our future financial results and other projections or measures of our future performance; and the amount and timing of the benefits expected from acquisitions, from new products or services and from other potential sources of additional revenue. These statements speak only as of the date of this Current Report and are based on our current plans and expectations, and they 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 our products and services; relationships with customers and strategic partners; difficulties in integrating acquired businesses; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries; and our ability to attract and retain qualified personnel. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.

Item 2.02. Results of Operations and Financial Condition

     On May 3, 2007, we issued a press release announcing our preliminary results for the quarter ended March 31, 2007. A copy of the press release is attached as Exhibit 99.1 to this Current Report. Exhibit 99.2 to this Current Report contains the financial tables that accompanied the press release. Exhibit 99.4 to this Current Report contains an Annex to the press release (and related attachments) entitled “Explanation of Non-GAAP Financial Measures.” Exhibits 99.1, 99.2 and 99.4 are being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall any of those exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure

     Exhibit 99.3 to this Current Report includes forward-looking financial information that accompanied the press release furnished as Exhibit 99.1 and that is expected to be discussed on the previously announced conference call with investors and analysts to be held by Emdeon at 4:45 p.m., Eastern time, today (May 3, 2007). The call can be accessed at www.emdeon.com (in the About Emdeon section) at that time. A replay of the call will be available at the same web address. Exhibit 99.3 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

2

Item 9.01. Financial Statements and Exhibits

(d) Exhibits. The following exhibits are furnished herewith:

99.1	Press Release, dated May 3, 2007, regarding the Registrant’s preliminary results for the quarter ended March 31, 2007
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Financial Guidance Summary accompanying Exhibit 99.1
99.4	Annex A to Exhibits 99.1 through 99.3

3

SIGNATURE

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

	EMDEON CORPORATION
Dated: May 3, 2007	By:	/s/ Lewis H. Leicher
		Lewis H. Leicher
		Senior Vice President

4

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release, dated May 3, 2007, regarding the Registrant’s preliminary results for the quarter ended March 31, 2007
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Financial Guidance Summary accompanying Exhibit 99.1
99.4	Annex A to Exhibits 99.1 through 99.3

EX-99.1

EXHIBIT 99.1

Contacts:
Investors:	Media:
Risa Fisher	Jennifer Newman
rfisher@emdeon.com	jnewman@emdeon.com
201-414-2002	212-624-3912

EMDEON ANNOUNCES PRELIMINARY FIRST QUARTER RESULTS

ELMWOOD PARK, NJ (May 3, 2007) — Emdeon Corporation (NASDAQ: HLTH) today announced preliminary financial results for the three months ended March 31, 2007.

Kevin Cameron, Chief Executive Officer of Emdeon, said: “I am very pleased with our results for the first quarter. Each of our business segments delivered strong results. WebMD, in particular, clearly demonstrated its continuing market leadership with growth in revenue and Adjusted EBITDA of 46% and 93%, respectively.”

Consolidated Financial Highlights

Revenue for the first quarter was $122.0 million. Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) for the first quarter was $17.2 million or $0.09 per share. Preliminary income from continuing operations for the first quarter was $6.1 million or $0.03 per share and preliminary net income was $6.0 million or $0.03 per share.

On November 16, 2006, Emdeon completed the sale of a 52% interest in its Emdeon Business Services segment (excluding the ViPS business) to an affiliate of General Atlantic LLC. The Company’s 48% portion of EBS’ income is reflected in the line item “Equity in earnings of EBS Master LLC” for the March 2007 quarter. For the prior year period, the results of Emdeon Business Services are included in the Company’s consolidated revenues and earnings. As a result, our consolidated results will not be comparable to the respective prior year periods until after the anniversary of the transaction is reached.

Emdeon has recently identified errors in non-cash income tax expense and related deferred tax liabilities which resulted in an understatement of non-cash income tax expense of a net amount estimated to be $4.0 million for prior periods. Emdeon has netted the deferred tax liability resulting from amortization of goodwill against deferred tax assets relating to Emdeon’s net operating loss carryforwards (NOL’s). Because the deferred tax liabilities have an indefinite life, they should not have been netted against deferred tax assets with a definite life. Emdeon is in the process of determining whether the correction of this error will be reflected in the results for the March 2007 quarter or will be reflected by amending its financial statements for prior periods. The preliminary results for the current and prior period as well as the financial guidance included with this release do not reflect the impact of the correction. The correction will not have any impact on revenue, Adjusted EBITDA or operating cash flows.

As of March 31, 2007, Emdeon had approximately $701 million in cash and short-term investments on a consolidated basis, including $212 million in cash and short-term investments held by WebMD Health Corp., its 84.3% owned subsidiary.

Segment Operating Results

WebMD segment revenue was $73.0 million for the first quarter compared to $50.1 million in the prior year period, an increase of 45.8%, driven by continued growth in online services. Segment Adjusted EBITDA was

$12.6 million compared to $6.5 million in the prior year period, an increase of 93.2% over the prior year, primarily as a result of the increase in revenues.

ViPS segment revenue was $26.7 million for the first quarter compared to $23.8 million in the prior year period, an increase of 11.8%. The increase was attributable to an increase in consulting services and license revenue. Segment Adjusted EBITDA was $4.8 million compared to $5.2 million in the prior year period, a decrease of 6.2%. Operating margins decreased slightly to 18.2% primarily as a result of revenue mix.

Porex segment revenue was $22.7 million for the first quarter compared to $20.6 million in the prior year period, an increase of 10.3%. The increase was primarily attributable to strength in sales of consumer products and favorable foreign currency exchange rates. Segment Adjusted EBITDA was $6.5 million compared to $5.6 million in the prior year period, an increase of 16.6%. Operating margins increased to 28.5% compared to 27.0% a year ago primarily as a result of the increase in revenues.

Investment in Emdeon Business Services

Revenue for Emdeon Business Services (which is not a segment and is not included in the Company’s consolidated revenue) was a record $198 million for the first quarter. Emdeon Business Services continues to generate strong year over year growth and we are pleased with its performance.

Financial Guidance

Emdeon reiterated its previously announced financial guidance for the remainder of 2007. A schedule outlining Emdeon’s financial guidance for 2007 is attached to this press release.

Analyst and Investor Conference Call

As previously announced, Emdeon will host a conference call at 4:45 pm (ET) on May 3, 2007 to discuss its first quarter results. Investors can access the call via webcast at www.emdeon.com (in the About Emdeon section). A replay of the call will be available at the same web address.

About Emdeon

Emdeon Corporation’s (Nasdaq: HLTH) businesses are comprised of WebMD Health Corp, (Nasdaq: WBMD), ViPS and Porex. WebMD provides health information services for consumers, physicians, healthcare professionals, employers and health plans through its public and private online portals and health-focused publications. ViPS provides healthcare data management, analytics, decision-support and process automation solutions and related information technology services to governmental, Blue Cross Blue Shield and commercial healthcare payers. ViPS’ solutions and services help its clients improve patient outcomes, increase customer satisfaction and reduce costs. Porex is a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications. In addition, Emdeon owns a 48% minority interest in EBS Master LLC, which provides solutions that automate key business and administrative functions for healthcare payers and providers.

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All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding: guidance on our future financial results and other projections or measures of our future performance; our expectations concerning market opportunities and our ability to capitalize on them; and the amount and timing of the benefits expected from acquisitions, from new products or services and from other potential sources of additional revenue. These statements speak only as of the date of this press release and are based on our current plans and expectations, and they 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 our products and services; difficulties in integrating acquired businesses; 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; and our ability to attract and retain qualified personnel. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.

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

This press release, and the accompanying tables, include both financial measures in accordance with accounting principles generally accepted in the United States of America, or GAAP, as well as certain non-GAAP financial measures. The tables attached to this press release include reconciliations of these non-GAAP financial measures to GAAP financial measures. In addition, an “Explanation of Non-GAAP Financial Measures” is attached to this press release as Annex A.

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WebMD^®, WebMD Health^®, POREX^® and ViPS^SM are trademarks of Emdeon Corporation or its subsidiaries.

Emdeon^tm and Emdeon Business Services^tm are trademarks of Emdeon Business Services, LLC or its subsidiaries.

EX-99.2

Exhibit 99.2

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

	Preliminary
	Three Months Ended
	March 31,
	2007			2006
Revenue:
Services	$	97,943		$	252,745
Products		24,082			24,449
Total revenue		122,025			277,194
Cost of operations:
Services		44,514			156,359
Products		9,915			10,815
Total cost of operations		54,429			167,174
Development and engineering		4,574			8,864
Sales, marketing, general and administrative		60,399			70,180
Depreciation and amortization		10,727			16,554
Legal expense		320			542
Interest income		9,674			4,418
Interest expense		4,717			4,691
Transition services income		2,456			—
Other income		746			—
(Loss) income from continuing operations before income tax provision		(265	)		13,607
Income tax provision		648			3,372
Minority interest in WHC income (loss)		115			(629	)
Equity in earnings of EBS Master LLC		7,099			—
Income from continuing operations		6,071			10,864
(Loss) income from discontinued operations, net of tax		(27	)		5,567
Net income	$	6,044		$	16,431
Basic income (loss) per common share:
Income from continuing operations	$	0.03		$	0.04
(Loss) income from discontinued operations		(0.00	)		0.02
Net income	$	0.03		$	0.06
Diluted income (loss) per common share:
Income from continuing operations	$	0.03		$	0.04
(Loss) income from discontinued operations		(0.00	)		0.02
Net income	$	0.03		$	0.06
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		176,011			287,195
Diluted		186,355			295,492

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

	Preliminary Three Months Ended
	March 31,
	2007			2006
Revenue
Emdeon Business Services	$	—		$	182,851
WebMD		72,962			50,051
ViPS		26,659			23,836
Porex		22,709			20,587
Inter-segment eliminations		(305	)		(131	)
	$	122,025		$	277,194
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”)
Emdeon Business Services	$	—		$	38,207
WebMD		12,607			6,527
ViPS		4,840			5,158
Porex		6,474			5,554
Corporate		(6,731	)		(11,138	)
	$	17,190		$	44,308
Adjusted EBITDA per diluted common share (a)	$	0.09		$	0.15
Interest, taxes, non-cash and other items (b)
Depreciation and amortization	$	(10,727	)	$	(16,554	)
Non-cash stock-based compensation		(9,791	)		(11,727	)
Non-cash advertising		(2,320	)		(1,605	)
Legal expense		(320	)		(542	)
Interest income		9,674			4,418
Interest expense		(4,717	)		(4,691	)
Income tax provision		(648	)		(3,372	)
Minority interest in WHC (income) loss		(115	)		629
Equity in earnings of EBS Master LLC		7,099			—
Other income		746			—
Income from continuing operations		6,071			10,864
(Loss) income from discontinued operations, net of tax		(27	)		5,567
Net income	$	6,044		$	16,431
Basic income (loss) per common share:
Income from continuing operations	$	0.03		$	0.04
(Loss) income from discontinued operations		(0.00	)		0.02
Net income	$	0.03		$	0.06
Diluted income (loss) per common share:
Income from continuing operations	$	0.03		$	0.04
(Loss) income from discontinued operations		(0.00	)		0.02
Net income	$	0.03		$	0.06
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		176,011			287,195
Diluted		186,355			295,492

(a)	Adjusted EBITDA per diluted common share is based on the weighted-average shares outstanding used in computing diluted income per common share.
(b)	Reconciliation of Adjusted EBITDA to net income (see Annex A — Explanation of Non-GAAP Financial Measures).

EMDEON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

	Preliminary
	March 31, 2007		December 31, 2006
Assets
Cash and cash equivalents	$	668,558	$	614,691
Short-term investments		32,386		34,140
Accounts receivable, net		120,999		121,608
Inventory		10,478		9,922
Due from EBS Master LLC		325		30,716
Prepaid expenses and other current assets		53,452		31,871
Total current assets		886,198		842,948
Marketable equity securities		2,543		2,633
Property and equipment, net		73,147		72,040
Goodwill		337,677		337,669
Intangible assets, net		123,369		129,473
Investment in EBS Master LLC		9,534		1,521
Other assets		40,033		65,659
Total Assets	$	1,472,501	$	1,451,943
Liabilities and Stockholders’ Equity
Accounts payable	$	2,970	$	3,996
Accrued expenses		49,611		113,175
Deferred revenue		95,117		87,438
Total current liabilities		147,698		204,609
Convertible notes		650,000		650,000
Other long-term liabilities		21,446		14,420
Minority interest in WebMD Health Corp. (WHC)		106,944		102,294
Convertible redeemable exchangeable preferred stock		98,826		98,768
Stockholders’ equity		447,587		381,852
Total Liabilities and Stockholders’ Equity	$	1,472,501	$	1,451,943

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

	Preliminary
	Three Months Ended
	March 31,
	2007			2006
Cash flows from operating activities:
Net income	$	6,044		$	16,431
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Loss (income) from discontinued operations, net of tax		27			(5,567	)
Depreciation and amortization		10,727			16,554
Minority interest in WHC income (loss)		115			(629	)
Equity in earnings of EBS Master LLC		(7,099	)		—
Amortization of debt issuance costs		721			728
Non-cash advertising		2,320			1,605
Non-cash stock-based compensation		9,791			11,727
EBS working capital adjustment		(399	)		—
Reversal of income tax valuation allowance applied to goodwill		250			1,669
Changes in operating assets and liabilities:
Accounts receivable		1,418			(2,666	)
Inventory		(505	)		241
Prepaid expenses and other, net		324			(951	)
Accounts payable		(1,027	)		(117	)
Accrued expenses and other long-term liabilities		(47,684	)		(4,407	)
Deferred revenue		7,679			10,951
Net cash (used in) provided by continuing operations		(17,298	)		45,569
Net cash provided by discontinued operations		—			1,192
Net cash (used in) provided by operating activities		(17,298	)		46,761
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		67,922			166,228
Purchases of available-for-sale securities		(65,932	)		(137,815	)
Purchases of property and equipment		(5,627	)		(13,248	)
Cash paid in business combinations, net of cash acquired		—			(27,328	)
Proceeds from the sale of EBS		2,898			—
Proceeds from advances to EBS Master LLC		19,691			—
Other changes in equity of discontinued operations		—			1,588
Net cash provided by (used in) continuing operations		18,952			(10,575	)
Net cash used in discontinued operations		—			(2,508	)
Net cash provided by (used in) investing activities		18,952			(13,083	)
Cash flows from financing activities:
Proceeds from issuance of Emdeon and WebMD Health common stock		63,404			10,565
Purchases of treasury stock under repurchase program		(11,322	)		(66,633	)
Payments of notes payable and other		(53	)		(94	)
Net cash provided by (used in) financing activities		52,029			(56,162	)
Effect of exchange rates on cash		184			119
Net increase (decrease) in cash and cash equivalents		53,867			(22,365	)
Change in cash attributable to discontinued operations		—			1,316
Cash and cash equivalents at beginning of period		614,691			155,616
Cash and cash equivalents at end of period	$	668,558		$	134,567

EX-99.3

Exhibit 99.3

2007 Consolidated Financial Guidance Summary
(in millions, except per share data)

	Year Ended				Quarterly Revenue Range
	December 31, 2007				Q1		Q2				Q3				Q4
	Range				Preliminary		Range				Range				Range
WebMD	$	340.0	$	354.0
ViPS		106.9		109.4
Porex		90.5		93.0
Total revenue	$	537.4	$	556.4	$	122.4	$	126.0	$	130.0	$	138.0	$	145.0	$	151.0	$	159.0
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”)(a)	$	99.2	$	109.3

							Quarterly Mix
							Q1			Q2			Q3			Q4
Reconciliation of Adjusted EBITDA to income from continuing operations:
Interest income, net		20.0			21.0			24	%		24	%		25	%		27	%
Depreciation and amortization		(49.0	)		(49.5	)		22	%		25	%		26	%		27	%
Non-cash stock-based advertising		(5.5	)		(5.3	)		43	%		0	%		0	%		57	%
Non-cash stock-based compensation		(41.0	)		(40.0	)		24	%		26	%		27	%		23	%
Income tax provision (b)		(10.5	)		(12.5	)		6	%		17	%		31	%		46	%
Equity in earnings of EBS Master LLC		29.5			32.0			23	%		24	%		24	%		29	%
Minority interest in WHC income		(3.6	)		(4.5	)		2	%		11	%		30	%		57	%
Litigation expense(c)		(0.3	)		(0.3	)		100	%		N/A			N/A			N/A
Other income(c)		0.7			0.7			100	%		N/A			N/A			N/A
Income from continuing operations	$	39.5		$	50.9
Adjusted EBITDA per share	$	0.52		$	0.58
Net income per share	$	0.21		$	0.27
Weighted average shares — Diluted		190.0			190.0

(a)	See Annex A — Explanation of Non-GAAP Financial Measures
(b)	The income tax provision has not been adjusted to reflect the deferred tax liability correction described in the accompanying press release.
(c)	This table reflects actual expense for Q1 2007 for “litigation expense” (for the ongoing Department of Justice investigation) and “other income”, but does not reflect amounts for these items in any later quarter. We do not make projections for these items, although they may recur in future periods.

Operating Segments

Revenue

*	WebMD — Refer to WebMD Health Corp. Financial Guidance Summary included in its May 1, 2007 press release.
*	ViPS — Approximately 25% of segment revenue in Q2 and Q3, increasing to 26% in Q4.
*	Porex — Approximately 26% of segment revenue in Q2, 25% in Q3, and 24% in Q4.

Adjusted EBITDA

*	WebMD — Refer to WebMD Health Corp. Financial Guidance Summary included in its May 1, 2007 press release.
*	ViPS — Approximately 21% of segment revenue.
*	Porex — Approximately 31% of segment revenue in Q2, 30% in Q3, and 29% in Q4.
*	Corporate — 5.5% of consolidated revenue in Q1 decreasing to approximately 4.1% by Q4.

Other Assumptions

* Additional details on WebMD’s guidance can be found in the press release issued by WebMD Health Corp. on May 1, 2007.

EX-99.4

Exhibit 99.4

ANNEX A

Explanation of Non-GAAP Financial Measures

     The accompanying Emdeon Corporation press release, financial tables and financial guidance summary include both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, non-cash and other items (which we refer to as “Adjusted EBITDA”) and related per share amounts. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, “income from continuing operations” calculated in accordance with GAAP. The tables and the financial guidance summary attached to the accompanying press release include reconciliations of non-GAAP financial measures to GAAP financial measures.

     Adjusted EBITDA is used by Emdeon’s management as an additional measure of Emdeon’s overall performance and its reporting segments’ performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help Emdeon’s management identify additional trends in Emdeon’s and its reporting segments’ financial results that may not be shown solely by period-to-period comparisons of income from continuing operations. In addition, Emdeon uses Adjusted EBITDA in the incentive compensation programs applicable to many of its employees in order to evaluate Emdeon’s performance. Emdeon management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in income from continuing operations, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to income from continuing operations included in the tables and the financial guidance summary attached to the accompanying press release.

     Emdeon believes that the presentation of Adjusted EBITDA is useful to investors in their analysis of Emdeon’s results for reasons similar to the reasons why Emdeon’s management finds it useful and because it helps facilitate investor understanding of decisions made by Emdeon’s management in light of the performance metrics used in making those decisions. In addition, as more fully described below, Emdeon believes that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to income from continuing operations, helps investors make comparisons between Emdeon and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITDA is intended to provide a supplemental way of comparing Emdeon with other public companies and is not intended as a substitute for comparisons based on “income from continuing operations” or “net income” calculated in accordance with GAAP. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

     The following is an explanation of the items excluded by Emdeon from Adjusted EBITDA but included in income from continuing operations:

• Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. Emdeon excludes depreciation and amortization expense from Adjusted EBITDA because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of Emdeon’s business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, Emdeon believes this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.

• Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock awards to employees. Emdeon believes that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in its operating performance because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of Emdeon’s business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, Emdeon believes that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between Emdeon’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

• Non-Cash Advertising Expense. This expense relates to the usage of non-cash advertising obtained from News Corporation (“Newscorp”) in exchange for equity securities issued by Emdeon in 2000. The advertising is available only on various Newscorp properties, primarily its television network and cable channels without any cash cost to Emdeon. The amount of advertising that can be used in any year is subject to annual contractual limitation and expires in 2010. Emdeon does not incur any other cash expenses related to airing of television advertising. Emdeon excludes this expense from Adjusted EBITDA (i) because it is a non-cash expense, (ii) because it is incremental to other non-television cash advertising expense that Emdeon otherwise incurs, (iii) because Emdeon has not and believes it will not incur cash expenses relating to television advertising in the future and (iv) to assist management and investors in comparing its operating results over multiple periods. Investors should note that it is likely that Emdeon derives some benefit from such advertising and that such expenses will recur in the future.

• Interest Income and Expense. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which Emdeon invests, as well as with interest expenses arising from the capital structure of Emdeon. Interest income and expense varies over time due to a variety of financing transactions and due to acquisitions and divestitures that Emdeon has entered into or may enter into in the future. Emdeon has, in the past several years,

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	issued convertible debentures and preferred stock, repurchased shares in cash tender offers and through other repurchase transactions, conducted an initial public offering of equity in its WebMD subsidiary and completed the sale of Emdeon Practice Services and the sale of a 52% interest in Emdeon Business Services. Emdeon excludes interest income and interest expense from Adjusted EBITDA (i) because these items are not directly attributable to the performance of Emdeon’s business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income and expense will recur in future periods.
•	Income Tax Provision. Emdeon had a net operating loss (NOL) carryforward of approximately $1.2 billion as of the year ended December 31, 2006. Due to a limited history of generating taxable income, Emdeon maintains a full valuation allowance on these NOL carryforwards. As Emdeon uses these NOL carryforwards, the related valuation allowances are either reversed through the income statement or reversed to goodwill, to the extent those tax benefits were acquired through business combinations. The timing of such reversals is not consistent and as a result, Emdeon’s income tax expense can fluctuate significantly from period to period in a manner not directly related to Emdeon’s operating performance. Emdeon excludes the income tax provision from Adjusted EBITDA (i) because it believes that the income tax provision is not directly attributable to the underlying performance of Emdeon’s business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes. Investors should note that income tax provision will recur in future periods.
•	Minority Interest in WebMD Health Corp. This represents the minority stockholders’ proportionate share of net income or net loss of Emdeon’s majority-owned WebMD subsidiary. The size of this Minority Interest is related to Emdeon’s percentage ownership of WebMD. Changes in that percentage ownership may result from changes in WebMD’s capital structure, including as a result of sales of WebMD equity securities by WebMD or Emdeon or as a result of exercise of WebMD employee stock options. Emdeon excludes Minority Interest from Adjusted EBITDA (i) because it believes that the size of the Minority Interest can vary for reasons not attributable to the underlying performance of Emdeon’s business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that Minority Interest in WebMD Health Corp. will recur in future periods.
•	Other Items. Emdeon engages in other activities and transactions that can impact Emdeon’s overall income from continuing operations. These other items included, but were not limited to, (i) “Legal Expense,” which relates to the on-going Department of Justice investigation, (ii) equity in earnings of EBS Master LLC, which represents 48% portion of EBS’s income, (iii) working capital adjustment from the sale of 52% of the Emdeon Business Services segment on November 16, 2006 and (iv) a reduction of certain sales and use tax contingencies resulting from the expiration of certain applicable statutes of limitations. Emdeon excludes these other items from Adjusted EBITDA because it believes these activities or transactions are not directly attributable to the performance of Emdeon’s business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that these other items may recur in future periods.

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