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

August 3, 2010

Date of Report (Date of earliest event reported)

WEBMD HEALTH CORP.

(Exact name of registrant as specified in its charter)

Delaware	0-51547	20-2783228
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

111 Eighth Avenue
New York, New York 10011

(Address of principal executive offices, including zip code)

(212) 624-3700

(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))

Item 2.02. Results of Operations and Financial Condition.

     On August 3, 2010, WebMD Health Corp. issued a press release announcing its results for the quarter ended June 30, 2010. 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 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, as amended (the “Exchange Act”), nor shall any of those exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

     As previously disclosed, the merger of HLTH Corporation and WebMD (the “Merger”) was completed on October 23, 2009. The applicable accounting treatment for the Merger results in HLTH being treated as the acquiring entity, even though WebMD was the surviving company in the Merger. Accordingly, prior period financial information included in Exhibits 99.1 and 99.2 reflects the historical activity of HLTH, with the following adjustments:

• weighted-average shares outstanding used in computing income (loss) per common share are adjusted by multiplying the historical weighted-average shares outstanding for HLTH by the 0.4444 exchange ratio in the Merger; and

• basic and diluted income (loss) per common share are calculated to reflect the adjusted weighted-average shares outstanding.

     In the statement of operations for the three and six months ended June 30, 2009 included in Exhibit 99.2, “Net income attributable to Company stockholders” reflects an adjustment for the noncontrolling stockholders’ share of the net income of WebMD.

Item 7.01. Regulation FD Disclosure.

     Exhibit 99.3 to this Current Report includes forward-looking financial information that accompanied Exhibit 99.1. 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.

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Item 9.01. Financial Statements and Exhibits.

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

Exhibit
Number	Description
99.1	Press Release, dated August 3, 2010, regarding the Registrant’s results for the quarter ended June 30, 2010
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

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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.

	WEBMD HEALTH CORP.
Dated: August 3, 2010	By:	/s/ Lewis H. Leicher
		Lewis H. Leicher
		Senior Vice President

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EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release, dated August 3, 2010, regarding the Registrant’s results for the quarter ended June 30, 2010
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	Kate Hahn
rfisher@webmd.net	khahn@webmd.net
212-624-3817	212-624-3760

WebMD Announces Second Quarter Financial Results

WebMD Total Revenue Increased 24%; Advertising Revenue Increased 32%

WebMD Adjusted EBITDA Increased 71%

WebMD Increases 2010 Financial Guidance

New York, NY (August 3, 2010) - WebMD Health Corp. (Nasdaq: WBMD), the leading source of health information, today announced financial results for the three months ended June 30, 2010.

For the three months ended June 30, 2010:

• Revenue was $122.7 million, compared to $98.6 million in the prior year period, an increase of 24%.

• Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) was $34.3 million, compared to $20.0 million in the prior year period, an increase of 71%.

• Net income was $7.7 million or $0.13 per share, compared to a net loss of $(11.7) million or $(0.25) per share in the prior year period.

“WebMD is steadily establishing itself as an essential marketing channel for the nation’s largest biopharma and consumer products companies,” said Wayne Gattinella, President and CEO. “With advertising revenue growth of 32% and expanding operating margins, our core online business continues to outpace the growth of the online advertising markets overall.”

Financial Summary

Revenue for the second quarter was $122.7 million, compared to $98.6 million in the prior year period, an increase of 24%. Specifically:

• Public portal advertising and sponsorship revenue was $100.6 million for the second quarter, compared to $76.0 million in the prior year period, an increase of 32%. Traffic to the WebMD Health Network continued to grow, reaching an average of 80.7 million unique users per month and total traffic of 1.8 billion page views during the second quarter, increases of 35% and 22%, respectively, from a year ago. 1.5 million continuing medical education (CME) programs were completed on the WebMD Professional Network during the second quarter.

• Private portal services revenue was $22.1 million for the second quarter, a decrease of $500 thousand from the prior year period. The base of large employers and health plans using WebMD’s private Health and Benefits portals during the second quarter was 129 as compared to 137 in the prior year period.

Adjusted EBITDA for the second quarter was $34.3 million, compared to $20.0 million in the prior year period, an increase of 71%.

Net income was $7.7 million or $0.13 per share, compared to a net loss of $(11.7) million or $(0.25) per share in the prior year period. Net income in the current period included the after tax impact of a gain on investments of $3.6 million and a loss on convertible notes of $(6.6) million. Net loss in the prior year period included the after tax impact of a gain on convertible notes of $2.2 million, a loss from discontinued operations of $(13.3) million and non-controlling interest of $(0.4) million. Net income would have been $10.7 million in the current period as compared to a net loss of $(0.2) million in the prior year period excluding these items.

During the second quarter:

• WebMD received cash proceeds of $65.5 million from the sale of the Senior Secured Notes it received as consideration in the sale of HLTH’s Porex business.

• WebMD received $286 million in cash from the sale of its auction rate securities investments and has retained the ability to receive the upside on the auction rate securities through April 2012.

• WebMD repurchased $32.4 million face amount and had conversions of $232.1 million face amount of the Company’s 1.75% convertible notes.

• WebMD repurchased $12.9 million face amount and had conversions of $12.7 million face amount of the Company’s 3 1/8% convertible notes.

• WebMD completed a tender offer to repurchase approximately 5.2 million shares for $242 million in cash.

As of June 30, 2010, WebMD had $535 million in cash and investments and had approximately $121 million in aggregate principal amount of its 3 1/8% convertible notes outstanding.

WebMD Mobile

WebMD’s penetration into the mobile health information market continued to expand this quarter:

• WebMD Mobile for iPhone/iTouch has generated nearly two million downloads since launch and the newest release introduces an improved user interface and new features including local health listings.

• WebMD Mobile for the iPad launched during the quarter with over 400,000 downloads to date. WebMD Mobile for the iPad allows users to check their symptoms, access drug and treatment information, get first aid essentials and check local health listings on the go.

• Medscape Mobile for physicians has attracted over 450,000 users since launch and, with availability on both the iPhone/iTouch and Blackberry, it is becoming the premier clinical reference tool at the point of care.

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Financial Guidance

WebMD is increasing its financial guidance for 2010 today.

• The range for revenue guidance increases to $515 million to $535 million (from $510 million to $525 million).

• The range for Adjusted EBITDA guidance increases to $158 million to $168 million (from $150 million to $158 million).

WebMD is providing a schedule (attached to this press release) to reflect these increases as well as updates for non-cash and other items primarily to reflect the impact of the sale of investments and convertible note conversions and repurchases completed by WebMD during the second quarter of 2010.

For the third quarter of 2010, WebMD expects:

• Revenue to be in excess of $133 million, an increase in excess of 19% from last year. Public portal advertising and sponsorship revenue is expected to grow in excess of 24%.

• Adjusted EBITDA to be in excess of 32% of revenue.

• Net income to be in excess of 9% of revenue.

Analyst and Investor Conference Call

As previously announced, WebMD will hold a conference call with investors and analysts to discuss its second quarter results at 4:45 p.m. (Eastern) today. The call can be accessed at www.wbmd.com (in the Investor Relations section). A replay of the audio webcast will be available at the same web address.

About WebMD
WebMD Health Corp. (Nasdaq: WBMD) is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through our public and private online portals and health-focused publications. Approximately 80 million unique visitors access the WebMD Health Network each month.

The WebMD Health Network includes WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList, theHeart.org and drugs.com.

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

All statements contained in this press release and the related analyst and investor conference call, 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; market opportunities and our ability to capitalize on them; the benefits expected from new or updated products or services and from other potential sources of additional revenue; and expectations regarding the market for investments in auction rate securities (ARS). These statements speak only as of the date of this press release, are based on our 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 our products and services; our relationships with customers and strategic partners; changes in the markets for ARS; and changes in economic, political or

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regulatory conditions or other trends affecting the healthcare, Internet and information technology industries. 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.

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

WebMD^®, Medscape^®, eMedicine^®, MedicineNet^®, RxList^®, Subimo^®, Medsite^®, Summex^®, WebMD^® Health Exchange and Medscape^® Mobile are trademarks of WebMD Health Corp. or its subsidiaries.

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EX-99.2

Exhibit 99.2

WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenue	$	122,707		$	98,631		$	230,737		$	188,895
Cost of operations		45,368			39,229			88,362			75,794
Sales and marketing		29,425			26,797			57,832			54,358
General and administrative		20,577			22,003			39,386			43,851
Depreciation and amortization		6,318			6,956			13,333			14,059
Interest income		420			1,958			3,829			4,220
Interest expense		3,170			5,781			8,309			12,317
(Loss) gain on convertible notes		(11,011	)		3,473			(14,738	)		10,120
Gain (loss) on investments		6,002			—			(22,846	)		—
Other income (expense), net		99			(552	)		(199	)		(821	)
Income (loss) from continuing operations before income tax provision (benefit)		13,359			2,744			(10,439	)		2,035
Income tax provision (benefit)		5,675			750			(14,333	)		(467	)
Consolidated income from continuing operations		7,684			1,994			3,894			2,502
Consolidated loss from discontinued operations, net of tax		—			(13,284	)		—			(12,767	)
Consolidated net income (loss) inclusive of noncontrolling interest		7,684			(11,290	)		3,894			(10,265	)
Income attributable to noncontrolling interest		—			(387	)		—			(997	)
Net income (loss) attributable to Company stockholders	$	7,684		$	(11,677	)	$	3,894		$	(11,262	)
Amounts attributable to Company stockholders:
Income from continuing operations	$	7,684		$	703		$	3,894		$	509
Loss from discontinued operations		—			(12,380	)		—			(11,771	)
Net income (loss) attributable to Company stockholders	$	7,684		$	(11,677	)	$	3,894		$	(11,262	)
Basic income (loss) per common share:
Income from continuing operations	$	0.14		$	0.02		$	0.07		$	0.01
Loss from discontinued operations		—			(0.28	)		—			(0.26	)
Net income (loss) attributable to Company stockholders	$	0.14		$	(0.26	)	$	0.07		$	(0.25	)
Diluted income (loss) per common share:
Income from continuing operations	$	0.13		$	0.01		$	0.07		$	0.01
Loss from discontinued operations		—			(0.26	)		—			(0.25	)
Net income (loss) attributable to Company stockholders	$	0.13		$	(0.25	)	$	0.07		$	(0.24	)
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		53,521			45,599			52,856			45,408
Diluted		62,504			46,733			57,272			46,446

WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, except per share data, unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenue
Public portal advertising and sponsorship	$	100,592		$	75,992		$	186,849		$	143,281
Private portal services		22,115			22,639			43,888			45,614
	$	122,707		$	98,631		$	230,737		$	188,895
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)	$	34,301		$	20,021		$	59,958		$	35,282
Interest, taxes, non-cash and other items (b)
Interest income		420			1,958			3,829			4,220
Interest expense		(3,170	)		(5,781	)		(8,309	)		(12,317	)
Income tax (provision) benefit		(5,675	)		(750	)		14,333			467
Depreciation and amortization		(6,318	)		(6,956	)		(13,333	)		(14,059	)
Non-cash stock-based compensation		(6,964	)		(9,412	)		(14,801	)		(18,566	)
Non-cash advertising		—			—			—			(1,753	)
(Loss) gain on convertible notes		(11,011	)		3,473			(14,738	)		10,120
Gain (loss) on investments		6,002			—			(22,846	)		—
Other income (expense), net		99			(559	)		(199	)		(892	)
Consolidated income from continuing operations		7,684			1,994			3,894			2,502
Consolidated loss from discontinued operations, net of tax		—			(13,284	)		—			(12,767	)
Consolidated net income (loss) inclusive of noncontrolling interest		7,684			(11,290	)		3,894			(10,265	)
Income attributable to noncontrolling interest		—			(387	)		—			(997	)
Net income (loss) attributable to Company stockholders	$	7,684		$	(11,677	)	$	3,894		$	(11,262	)

(a)	See Annex A-Explanation of Non-GAAP Financial Measures.
(b)	Reconciliation of Adjusted EBITDA to consolidated income from continuing operations.

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WEBMD HEALTH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

	June 30, 2010		December 31, 2009
Assets
Cash and cash equivalents	$	534,705	$	459,766
Accounts receivable, net		104,907		118,155
Prepaid expenses and other current assets		14,197		11,419
Investments		—		9,932
Deferred tax asset		30,011		—
Total current assets		683,820		599,272
Investments		—		338,446
Property and equipment, net		51,953		52,194
Goodwill		202,104		202,104
Intangible assets, net		24,166		26,020
Deferred tax asset		82,119		50,789
Other assets		18,074		19,723
Total Assets	$	1,062,236	$	1,288,548
Liabilities and Equity
Accrued expenses	$	52,426	$	63,721
Deferred revenue		113,070		98,474
1.75% convertible notes		—		264,583
Deferred tax liability		—		12,955
Liabilities of discontinued operations		19,655		34,197
Total current liabilities		185,151		473,930
3⅛% convertible notes, net of discount of $9,083 at June 30, 2010 and $22,641 at December 31, 2009		112,414		227,659
Other long-term liabilities		22,220		22,191
Stockholders’ equity		742,451		564,768
Total Liabilities and Equity	$	1,062,236	$	1,288,548

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WEBMD HEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

	Six Months Ended
	June 30,
	2010			2009
Cash flows from operating activities:
Consolidated net income (loss) inclusive of noncontrolling interest	$	3,894		$	(10,265	)
Adjustments to reconcile consolidated net income (loss) inclusive of noncontrolling interest to net cash provided by operating activities:
Consolidated loss from discontinued operations, net of tax		—			12,767
Depreciation and amortization		13,333			14,059
Non-cash interest, net		3,885			5,310
Non-cash advertising		—			1,753
Non-cash stock-based compensation		14,801			18,566
Deferred income taxes		(27,729	)		(2,363	)
Loss (gain) on convertible notes		14,738			(10,120	)
Loss on investments		22,846			—
Changes in operating assets and liabilities:
Accounts receivable		13,248			14,408
Prepaid expenses and other, net		(2,144	)		(3,775	)
Accrued expenses and other long-term liabilities		(4,801	)		(9,544	)
Deferred revenue		14,596			6,648
Net cash provided by continuing operations		66,667			37,444
Net cash (used in) provided by discontinued operations		(15,501	)		5,509
Net cash provided by operating activities		51,166			42,953
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		362,206			1,100
Purchases of property and equipment		(9,719	)		(10,955	)
Finalization of sale price of discontinued operations		(1,430	)		250
Net cash provided by (used in) continuing operations		351,057			(9,605	)
Net cash used in discontinued operations		—			(2,356	)
Net cash provided by (used in) investing activities		351,057			(11,961	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of cash used for employee withholding taxes		8,386			18,194
Repurchases of convertible notes		(81,362	)		(123,857	)
Purchase of treasury stock under repurchase program		(14,914	)		—
Payment for shares tendered in 2009, delivered in 2010		(6,818	)		—
Purchase of treasury stock in tender offer		(242,795	)		—
Tax benefit on stock-based awards		10,219			—
Net cash used in financing activities		(327,284	)		(105,663	)
Effect of exchange rates on cash		—			70
Net increase (decrease) in cash and cash equivalents		74,939			(74,601	)
Cash and cash equivalents at beginning of period		459,766			629,848
Cash and cash equivalents at end of period	$	534,705		$	555,247

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EX-99.3

Exhibit 99.3

FINANCIAL GUIDANCE SUMMARY

WebMD Health Corp.
2010 Financial Guidance
(in millions, except per share amounts)

	Year Ended
	December 31, 2010
	Guidance Range
Revenue	$	515.0		$	535.0
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)	$	158.0		$	168.0
Interest, taxes, non-cash and other items (b)
Interest income		4.0			4.0
Interest expense		(13.0	)		(12.0	)
Depreciation and amortization		(30.0	)		(28.0	)
Non-cash stock-based compensation		(33.0	)		(31.0	)
Loss on convertible notes		(14.7	)		(14.7	)
Loss on investments		(22.8	)		(22.8	)
Other expenses, net		(0.2	)		(0.2	)
Consolidated pre-tax income from continuing operations		48.3			63.3
Income tax provision		(11.0	)		(17.0	)
Consolidated income from continuing operations	$	37.3		$	46.3
Income from continuing operations per share
Basic	$	0.65		$	0.80
Diluted	$	0.59		$	0.73
Weighted-average shares outstanding used in computing income from continuing operations per common share:
Basic		57.0			57.0
Diluted		65.0			65.0

(a)	See Annex A — Explanation of Non-GAAP Financial Measures
(b)	Reconciliation of Adjusted EBITDA to consolidated income from continuing operations

Additional information regarding forecast for third quarter of 2010:

• Revenue is forecasted to be in excess of $133 in quarter ending September 30, 2010, an increase in excess of 19% from last year.

Advertising revenue is expected to grow in excess of 24% over the prior year period.

• Adjusted EBITDA as a percentage of revenue is forecasted to be in excess of 32% in quarter ending September 30, 2010.

• Consolidated income from continuing operations as a percentage of revenue is forecasted to be in excess of 9% in quarter ending September 30, 2010.

Additional information regarding full year 2010 forecast:

• Income tax rate is forecasted to be approximately 43% of pretax income for the third and fourth quarters of 2010.

• The distribution of the annual revenue is expected to be approximately 83% public portal advertising and sponsorship and 17% private portal services.

• Advertising revenue is expected to grow 23% to 29%, while private portals revenue is expected to decline 5%. Quarterly revenue distributions may vary from this annual estimate.

The above table reflects actual amounts through June 30, 2010 for “loss on convertible notes,” “loss on investments” and “other expenses” but does not reflect guidance for these items in any future quarter. We do not make projections for these items, although they may recur in future quarters.

EX-99.4

Exhibit 99.4

ANNEX A

Explanation of Non-GAAP Financial Measures
(All dollar amounts in thousands)

     The accompanying WebMD Health Corp. press release and financial tables 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, “consolidated income (loss) from continuing operations” or “net income (loss) attributable to Company stockholders” calculated in accordance with GAAP. The accompanying financial tables include reconciliations of non-GAAP financial measures to GAAP financial measures.

     Adjusted EBITDA is used by our management as an additional measure of our company’s 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 our management identify additional trends in our company’s financial results that may not be shown solely by period-to-period comparisons of consolidated income (loss) from continuing operations or net income (loss) attributable to Company stockholders. In addition, we use Adjusted EBITDA in the incentive compensation programs applicable to many of our employees in order to evaluate our company’s performance. Our 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 consolidated income (loss) from continuing operations or net income (loss) attributable to Company stockholders, 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 consolidated income (loss) from continuing operations or to net income (loss) attributable to Company stockholders that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the accompanying financial tables.

     We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to consolidated income (loss) from continuing operations or to net income (loss) attributable to Company stockholders, helps investors make comparisons between our company 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 our company with other public companies and is not intended as a substitute for comparisons based on “consolidated income (loss) from continuing operations” or “net income (loss) attributable to Company stockholders” 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 us from Adjusted EBITDA but included in consolidated income (loss) 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. We exclude depreciation and amortization expense from Adjusted EBITDA because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our 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, we believe that 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-based awards to employees. We believe 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 (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our 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, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our 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. Stock-based compensation expenses included in the Consolidated Statement of Operations are summarized as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Non-cash stock-based compensation included in:
Cost of operations	$	1,475	$	1,555	$	3,264	$	3,178
Sales and marketing	$	1,689	$	2,001	$	3,882	$	3,551
General and administrative	$	3,800	$	5,856	$	7,655	$	11,837
Income (loss) from discontinued operations	$	—	$	225	$	—	$	542

• 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 in 2000. The advertising was available only on various Newscorp properties, primarily its television network and cable channels, without any cash cost to us and expired in 2009. We exclude 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 we may otherwise incur and (iii) to assist management and investors in comparing its operating results over multiple periods. Investors should note that it is likely that we derived some benefit from such advertising. Non-cash advertising expenses included in the Consolidated Statement of Operations in Sales and Marketing expense were $1,753 for the six months ended June 30, 2009.

• Interest Income and Expense. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which we invest, as well as with interest expense arising from our company’s capital structure (including non-cash interest expense relating to our convertible notes). Interest income and expense varies over time due to a variety of financing transactions and due to

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acquisitions and divestitures that we have entered into or may enter into in the future. We have, in the past, issued convertible debentures, repurchased shares in cash tender offers and repurchased shares and convertible debentures through other repurchase transactions, and completed the divestiture of certain businesses. We exclude interest income and interest expense from Adjusted EBITDA (i) because these items are not directly attributable to the performance of our 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. The following provides detail of the components of interest expense of our convertible notes:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Non-cash interest expense
1.75% Convertible Notes	$	580	$	303	$	885	$	667
3 1/8% Convertible Notes	$	1,215	$	2,208	$	3,287	$	4,643
Cash interest expense
1.75% Convertible Notes	$	406	$	1,190	$	1,564	$	2,603
3 1/8% Convertible Notes	$	968	$	2,078	$	2,572	$	4,399

• Income Tax Provision (Benefit). We maintain a valuation allowance on a portion of our net deferred tax assets (including our net operating loss carryforwards), the amount of which may change from quarter to quarter based on factors that are not directly related to our results for the quarter. The valuation allowance is either reversed through the statement of operations or additional paid-in capital. The timing of such reversals has not been consistent and as a result, our income tax expense can fluctuate significantly from period to period in a manner not directly related to our operating performance. We exclude the income tax provision (benefit) from Adjusted EBITDA (i) because we believe that the income tax provision (benefit) is not directly attributable to the underlying performance of our 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 (benefit) will recur in future periods.

• Other Items. We engage in other activities and transactions that can impact our overall consolidated income (loss) from continuing operations. In recent periods, these other items have included, but were not limited to, (i) legal expenses relating to the ongoing Department of Justice investigation, (ii) gain or loss on repurchases and conversions of our convertible notes, (iii) a reduction of certain sales and use tax contingencies resulting from the expiration of certain applicable statutes of limitations, (iv) advisory expenses relating to the merger of HLTH Corporation into our company in 2009, (v) gain or loss on investments, and (vi) restructuring charge. We exclude these other items from Adjusted EBITDA because we believe these activities or transactions are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.

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