10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2011
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from            to

Commission File Number: 001-35337

WEBMD HEALTH CORP.

(Exact name of registrant as specified in its charter)

Delaware (State of incorporation)	20-2783228 (I.R.S. Employer Identification No.)
111 Eighth Avenue New York, New York (Address of principal executive office)	10011 (Zip code)

(212) 624-3700
(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes o     No þ

As of November 4, 2011, the Registrant had 56,971,112 shares of Common Stock (including unvested shares of restricted Common Stock).

WEBMD HEALTH CORP.

QUARTERLY REPORT ON FORM 10-Q
For the period ended September 30, 2011

TABLE OF CONTENTS

		Page
		Number
Forward-Looking Statements			3
PART I	Financial Information		4
Item 1.	Financial Statements:		4
	Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010		4
	Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010 (unaudited)		5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (unaudited)		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		49
Item 4.	Controls and Procedures		49
PART II	Other Information		50
Item 1.	Legal Proceedings		50
Item 1A.	Risk Factors		50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65
Item 6.	Exhibits		65
Signatures			66
Exhibit Index			E-1
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-99.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

WebMD^®, WebMD Health^®, Medscape^®, CME Circle^®, eMedicine^®, MedicineNet^®, theheart.org^®, RxList^®, Subimo^®, Summex^® and Medsite^® are among the trademarks of WebMD Health Corp. or its subsidiaries.

2

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be, forward-looking statements. For example, statements concerning projections, predictions, expectations, estimates or forecasts and statements that describe our objectives, future performance, plans or goals are, or may be, forward-looking statements. These forward-looking statements reflect management’s current expectations concerning future results and events and can generally be identified by the use of expressions such as “may,” “will,” “should,” “could,” “would,” “likely,” “predict,” “potential,” “continue,” “future,” “estimate,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” and other similar words or phrases, as well as statements in the future tense.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. The following important risks and uncertainties could affect our future results, causing those results to differ materially from those expressed in our forward-looking statements:

•  failure to achieve sufficient levels of usage of our public and private portals and mobile platforms;

•  the inability to successfully deploy new or updated applications or services;

•  competition in attracting consumers and healthcare professionals to our public portals and mobile platforms;

•  competition for advertisers and sponsors for our public portals and mobile platforms;

•  events or conditions that have a negative effect on promotional or educational spending by pharmaceutical and biotechnology companies or on the portion of that spending used for Internet-based services like ours;

•  the inability to attract and retain qualified personnel;

•  adverse economic conditions and disruptions in the capital markets;

•  adverse changes in general business or regulatory conditions affecting the healthcare, information technology and Internet industries; and

•  the other risks and uncertainties described in Part II, Item 1A of this Quarterly Report on Form 10-Q.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results.

The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Quarterly Report. Except as required by law or regulation, we do not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances.

3

PART I

FINANCIAL INFORMATION

ITEM 1.   Financial Statements

WEBMD HEALTH CORP.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

	September 30,			December 31,
	2011			2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,101,286		$	400,501
Accounts receivable, net of allowance for doubtful accounts of $1,161 at September 30, 2011 and $1,493 at December 31, 2010		117,938			134,448
Prepaid expenses and other current assets		13,172			12,161
Deferred tax assets		21,204			23,467
Total current assets		1,253,600			570,577
Property and equipment, net		58,064			61,516
Goodwill		202,104			202,104
Intangible assets, net		20,656			22,626
Deferred tax assets		62,613			71,125
Other assets		32,318			14,254
TOTAL ASSETS	$	1,629,355		$	942,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	51,141		$	53,181
Deferred revenue		90,673			97,043
Liabilities of discontinued operations		1,810			17,327
Total current liabilities		143,624			167,551
2.25% convertible notes due 2016		400,000			—
2.50% convertible notes due 2018		400,000			—
Other long-term liabilities		22,403			21,756
Commitments and contingencies
Stockholders’ equity:
Preferred stock, 50,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.01 par value per share, 650,000,000 shares authorized; 62,405,119 shares issued at September 30, 2011 and 62,401,272 shares issued at December 31, 2010		624			624
Additional paid-in capital		9,468,086			9,462,373
Treasury stock, at cost; 6,058,509 shares at September 30, 2011 and 2,485,391 shares at December 31, 2010		(280,243	)		(129,589	)
Accumulated deficit		(8,525,139	)		(8,580,513	)
Stockholders’ equity		663,328			752,895
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,629,355		$	942,202

See accompanying notes.

4

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Revenue	$	135,138		$	135,305		$	408,116		$	366,042
Cost of operations		49,097			47,610			148,698			135,972
Sales and marketing		29,597			28,957			94,161			86,789
General and administrative		22,787			22,964			67,614			62,350
Depreciation and amortization		6,781			6,935			19,929			20,268
Interest income		21			21			88			3,850
Interest expense		5,862			1,797			14,836			10,106
Loss on convertible notes		—			2,232			—			16,970
(Loss) gain on investments		(1,150	)		(131	)		14,679			(22,977	)
Other income (expense), net		—			107			(53	)		(92	)
Income from continuing operations before income tax provision (benefit)		19,885			24,807			77,592			14,368
Income tax provision (benefit)		8,645			10,193			32,606			(4,140	)
Income from continuing operations		11,240			14,614			44,986			18,508
Income (loss) from discontinued operations, net of a tax provision of $0 and $4,812 for the three and nine months ended September 30, 2011 and a tax benefit of $1,476 for the three and nine months ended September 30, 2010		2,994			(1,024	)		10,388			(1,024	)
Net income	$	14,234		$	13,590		$	55,374		$	17,484
Basic income (loss) per common share:
Income from continuing operations	$	0.19		$	0.25		$	0.77		$	0.33
Income (loss) from discontinued operations		0.06			(0.02	)		0.18			(0.01	)
Net income	$	0.25		$	0.23		$	0.95		$	0.32
Diluted income (loss) per common share:
Income from continuing operations	$	0.19		$	0.24		$	0.75		$	0.31
Income (loss) from discontinued operations		0.05			(0.02	)		0.17			(0.02	)
Net income	$	0.24		$	0.22		$	0.92		$	0.29
Weighted-average shares outstanding used in computing per share amounts:
Basic		57,461			58,095			57,913			54,602
Diluted		58,698			61,435			59,882			58,660

See accompanying notes.

5

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine Months Ended September 30,
	2011			2010
Cash flows from operating activities:
Net income	$	55,374		$	17,484
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
(Income) loss from discontinued operations, net of tax		(10,388	)		1,024
Depreciation and amortization		19,929			20,268
Non-cash interest, net		2,702			4,862
Non-cash stock-based compensation		28,969			23,605
Deferred income taxes		5,378			(17,260	)
Loss on convertible notes		—			16,970
(Gain) loss on investments		(14,679	)		22,977
Changes in operating assets and liabilities:
Accounts receivable		16,510			(2,206	)
Prepaid expenses and other, net		1,238			(3,006	)
Accrued expenses and other long-term liabilities		(176	)		1,695
Deferred revenue		(6,370	)		3,413
Net cash provided by continuing operations		98,487			89,826
Net cash used in discontinued operations		(136	)		(17,082	)
Net cash provided by operating activities		98,351			72,744
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		—			361,852
Proceeds received from ARS option		16,561			407
Purchases of property and equipment		(16,061	)		(20,329	)
Finalization of sale price of discontinued operations		—			(1,430	)
Net cash provided by investing activities		500			340,500
Cash flows from financing activities:
Proceeds from exercise of stock options		26,435			57,168
Cash used for withholding taxes due on stock-based awards		(6,730	)		(76,559	)
Net proceeds from issuance of 2.50% Notes and 2.25% Notes		774,745			—
Repurchases of 1.75% Notes and 31/8% Notes		—			(94,475	)
Purchases of treasury stock		(217,427	)		(420,948	)
Excess tax benefit on stock-based awards		24,911			14,003
Net cash provided by (used in) financing activities		601,934			(520,811	)
Net increase (decrease) in cash and cash equivalents		700,785			(107,567	)
Cash and cash equivalents at beginning of period		400,501			459,766
Cash and cash equivalents at end of period	$	1,101,286		$	352,199

See accompanying notes.

6

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data, unaudited)

1.   Summary of Significant Accounting Policies

Background

WebMD Health Corp. (the “Company” or “WebMD”) is a Delaware corporation that was incorporated on May 3, 2005. The Company completed an initial public offering on September 28, 2005. From the completion of the initial public offering through the completion of the Company’s merger with HLTH Corporation (“HLTH”) on October 23, 2009 (the “Merger”), the Company was more than 80% owned by HLTH. On October 23, 2009, the Merger was completed, with HLTH merging into WebMD and WebMD continuing as the surviving corporation. In the Merger, each share of HLTH Common Stock was converted into 0.4444 shares of WebMD Common Stock. In these Consolidated Financial Statements, the defined term “Company” refers not only to WebMD but also, where the context requires, to HLTH. The specific names of HLTH and WebMD are used only where there is a need to distinguish between the legal entities. In addition, all references in these Consolidated Financial Statements to amounts of shares of HLTH Common Stock and to market prices or purchase prices for HLTH Common Stock have been adjusted to reflect the 0.4444 exchange ratio in the Merger (the “Exchange Ratio”), and expressed as the number of shares of WebMD Common Stock into which the HLTH Common Stock would be converted in the Merger and the equivalent price per share of WebMD Common Stock. Similarly, the exercise price of options and warrants to purchase HLTH Common Stock and the number of shares subject to those options and warrants have been adjusted to reflect the Exchange Ratio.

The Company provides health information services to consumers, physicians and other healthcare professionals, employers and health plans through its public and private online portals, mobile platforms and health-focused publications. The Company’s public portals for consumers enable them to obtain health and wellness information (including information on specific diseases or conditions), check symptoms, locate physicians, store individual healthcare information, receive periodic e-newsletters on topics of individual interest and participate in online communities with peers and experts. The Company’s public portals for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (“CME”) credit and communicate with peers. The Company also provides mobile health information applications for use by consumers and physicians. The Company’s public portals generate revenue primarily through the sale of advertising and sponsorship products, including CME services. The public portals’ sponsors and advertisers include pharmaceutical, biotechnology, medical device and consumer products companies. The Company also generates revenue from the sale of e-detailing promotion and physician recruitment services and from advertising sold in WebMD the Magazine, a consumer magazine distributed to physician office waiting rooms. In addition, the Company generates revenue from the sale of certain information products. The Company’s private portals enable employers and health plans to provide their employees and members with access to personalized health and benefit information and decision-support technology that helps them to make more informed benefit, treatment and provider decisions. In addition, the Company offers clients of its private portals telephonic health coaching services on a per participant basis across an employee or plan population. The Company generates revenue from its private portals through the licensing of these portals and related services to employers and health plans either directly or through distributors.

Interim Financial Statements

The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2011. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted

7

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations.

The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2010, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Seasonality

The timing of the Company’s revenue is affected by seasonal factors. The Company’s public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of the Company’s public portals. This portion of the Company’s revenue is usually the lowest in the first quarter of each calendar year, and increases during each consecutive quarter throughout the year. The timing of revenue in relation to the Company’s expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing and general and administrative expenses as a percentage of revenue in each calendar quarter.

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the Consolidated Financial Statements. Significant estimates and assumptions by management affect: the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards.

Presentation of Segment Information

The Company generates its revenue through its public and private portals. Discrete financial information related to a measure of profit or loss for these two revenue streams is not available as they leverage many common expenses, and the Company does not separately allocate these common expenses in assessing the performance of its business. Accordingly, the Company views its business as one reportable operating segment.

8

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the revenues recognized related to the Company’s public portals and private portals during the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Public portal revenues	$	115,033	$	113,078	$	346,504	$	299,927
Private portal revenues		20,105		22,227		61,612		66,115
	$	135,138	$	135,305	$	408,116	$	366,042

Loss Contingencies

The Company accounts for loss contingencies in accordance with FASB ASC No. 450, “Contingencies.” Under ASC No. 450, accruals for loss contingencies are recorded when both (i) the information available indicates that it is probable that a liability has been incurred and (ii) the amount of the loss can be reasonably estimated. The Company records adjustments to these accruals to reflect the status of negotiations, settlements, advice of counsel and other information and events related to an individual matter.

9

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, adjusted to give effect to participating non-vested restricted stock during the periods it was outstanding. Diluted income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, increased to give effect to potentially dilutive securities and assumes that any dilutive convertible notes were converted, only in the periods in which such effect is dilutive (shares in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Numerator:
Income from continuing operations	$	11,240		$	14,614		$	44,986		$	18,508
Effect of participating non-vested restricted stock		(70	)		(152	)		(320	)		(222	)
Income from continuing operations- Basic and Diluted	$	11,170		$	14,462		$	44,666		$	18,286
Income (loss) from discontinued operations, net of tax	$	2,994		$	(1,024	)	$	10,388		$	(1,024	)
Effect of participating non-vested restricted stock		(19	)		12			(74	)		12
Income (loss) from discontinued operations, net of tax — Basic and Diluted	$	2,975		$	(1,012	)	$	10,314		$	(1,012	)
Denominator:
Weighted-average shares — Basic		57,461			58,095			57,913			54,602
Employee stock options and restricted stock		1,237			3,340			1,969			4,058
Adjusted weighted-average shares after assumed conversions — Diluted		58,698			61,435			59,882			58,660
Basic income (loss) per common share:
Income from continuing operations	$	0.19		$	0.25		$	0.77		$	0.33
Income (loss) from discontinued operations		0.06			(0.02	)		0.18			(0.01	)
Net income	$	0.25		$	0.23		$	0.95		$	0.32
Diluted income (loss) per common share:
Income from continuing operations	$	0.19		$	0.24		$	0.75		$	0.31
Income (loss) from discontinued operations		0.05			(0.02	)		0.17			(0.02	)
Net income	$	0.24		$	0.22		$	0.92		$	0.29

The Company has excluded its convertible notes, as well as certain outstanding stock options and restricted stock, from the calculation of diluted income per common share during the periods in which such securities were anti-dilutive. The following table presents the total weighted average number of potentially

10

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

dilutive common shares that were excluded from the computation of diluted income per common share during the periods presented (shares in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Options and restricted stock		4,747		1,798		2,842		1,812
Convertible notes		11,477		3,017		9,805		8,570
		16,224		4,815		12,647		10,382

Recent Accounting Pronouncements

Accounting Pronouncement Adopted During 2011

Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and distribution arrangements, information services and licenses of healthcare management tools and private portals as well as related health coaching services are recognized ratably over the term of the applicable agreement. Revenue from the sponsorship of CME is recognized over the period the Company substantially completes its contractual deliverables as determined by the applicable agreements.

For contracts that contain multiple deliverables that were entered into prior to January 1, 2011, revenue is allocated to each deliverable based on its relative fair value determined using vendor-specific objective evidence (“VSOE”). In certain instances where fair value did not exist for all the elements, the amount of revenue allocated to the delivered elements equals the total consideration less the fair value of the undelivered elements to the extent VSOE exists for the undelivered elements. In instances where fair value did not exist for the undelivered elements, the entire consideration is recognized over the period that the last element is delivered.

Contracts that contain multiple deliverables that were entered into subsequent to January 1, 2011 are subject to Accounting Standards Update No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also changes the level of evidence of selling price required to separate deliverables by allowing a company to make its best estimate of the standalone selling price of deliverables when more objective evidence of selling price is not available.

The Company adopted ASU 2009-13 on a prospective basis for arrangements entered into or materially modified on or subsequent to January 1, 2011. Beginning January 1, 2011, pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, the Company allocates revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on VSOE if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. The Company is not able to determine TPE of selling price as it is unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that its services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgemental process that considers multiple factors including, but not limited to, recent

11

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

As a result of the adoption of ASU 2009-13, revenue for the three months ended September 30, 2011 was lower by $300 and revenue during the nine months ended September 30, 2011 was higher by $3,400, than the revenue that would have been recognized under the previous accounting standard. The impact on diluted income per share was $(0.01) and $0.06 during the three and nine months ended September 30, 2011, respectively. This resulted from services that were provided or partially provided during the three and nine months ended September 30, 2011, for certain deliverables of the Company’s multiple deliverable arrangements for which the Company would have previously deferred the related revenue under the previous accounting standards. During the three and nine months ended September 30, 2011, the Company assigned value to these deliverables using its best estimate of selling price, and recognized revenue as they were delivered. The multiple deliverable arrangements that were impacted by ASU 2009-13 related to the Company’s public portal revenues and the services underlying such arrangements are generally delivered over periods of twelve months or less. The Company is not able to reasonably estimate the effect of adopting ASU 2009-13 on future periods as the impact will vary based on many factors including, but not limited to, the quantity and size of new or materially modified multiple-deliverable arrangements entered into, as well as the nature of the various services contained within those arrangements and the time periods over which those services are delivered.

Accounting Pronouncements to be Adopted in the Future

In September 2011, the Financial Accounting Standards Board (the “FASB”) issued an update to the existing guidance for goodwill and other intangible assets. The update simplifies how a company tests goodwill for impairment by allowing both public and nonpublic entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, an entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not anticipate that the adoption of these amendments will have a material impact on its financial condition, results of operations or cash flows.

In June 2011, the FASB issued an amendment to the existing guidance on the presentation of comprehensive income. Under the amended guidance, entities have the option to present the components of net income and other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Entities no longer have the option of presenting the components of other comprehensive income within the statement of changes in stockholders’ equity. For public entities, the amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2011, which for the Company is the first quarter in 2012. The adoption of this amendment will result in a change only to the Company’s current presentation of comprehensive income.

In May 2011, the FASB issued amendments to the existing guidance on fair value measurement. The amendments are intended to create consistency between U.S. generally accepted accounting standards and International Financial Reporting Standards on measuring fair value and disclosing information about fair value measurements. The amendments clarify the application of existing fair value measurement requirements including (i) the application of the highest and best use valuation premise concepts, (ii) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (iii) quantitative information required for fair value measurements categorized within Level 3. In addition, the amendments require additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011. These changes are required to be

12

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

applied prospectively. The Company is currently evaluating the impact that this amendment may have on its financial condition and results of operations.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.

2.   Discontinued Operations

EPS

On September 14, 2006, the Company completed the sale of Emdeon Practice Services, Inc. (together with its subsidiaries, “EPS”) to Sage Software, Inc. an indirect wholly owned subsidiary of The Sage Group plc (the “EPS Sale”). The Company had certain indemnity obligations to advance amounts for reasonable defense costs for initially ten, and later four, former officers and directors of EPS (the “EPS Indemnification Obligations”) who were indicted in connection with the previously disclosed investigation by the United States Attorney for the District of South Carolina (the “Investigation”), which is more fully described in Note 9. In connection with the EPS Sale, the Company agreed to retain the responsibility for the EPS Indemnification Obligations. During the years ended December 31, 2007, 2008 and 2009, the Company recorded aggregate pre-tax charges of $116,792, which represented the Company’s estimate of its costs related to the EPS Indemnification Obligations. As described in more detail in Note 9, two of the former officers and directors of EPS were found guilty; however, the Court set the verdict aside on May 27, 2010 and entered a judgment of acquittal. The government entered a notice of appeal with respect to the Court’s order. At that time, two other former officers of EPS were awaiting trial in Tampa, Florida, which was scheduled to begin on October 4, 2010; however, on July 9, 2010 the Court in Tampa placed the case against those defendants on hold pending resolution of the appeal of the South Carolina ruling. On June 8, 2011, upon the motion of the government, the United States Court of Appeals for the Fourth Circuit dismissed the government’s appeal of the District Court’s rulings, thereby ending the government’s case against Messrs. Kang and Sessions, the two defendants in South Carolina. On July 8, 2011, upon the motion of the government, the United States District Court for the Middle District of Florida granted a motion to dismiss the government’s case against the remaining two defendants in Florida. As a result of these two decisions, it is the Company’s understanding that the Investigation has concluded. As of December 31, 2010, the remaining accrual with respect to the EPS Indemnification Obligations was $7,527, and was included within liabilities of discontinued operations on the accompanying consolidated balance sheet. During the three months ended June 30, 2011, the Company reversed the remainder of this accrual as it determined it no longer has any remaining liability with respect to the EPS Indemnification Obligations as a result of the June 8, 2011 and July 8, 2011 decisions described above. The reversal of the remaining accrual of $7,206 is included in income from discontinued operations, net of tax, within the accompanying consolidated statements of operations during the nine months ended September 30, 2011.

Also included within liabilities of discontinued operations related to this matter was $5,000 as of December 31, 2010, which represented certain reimbursements received from the Company’s insurance carriers between July 31, 2008 and December 31, 2010. The Company deferred recognizing these insurance reimbursements within the consolidated statement of operations because of the possibility they might have to be repaid to the insurance carriers under the terms of the applicable policies. However, as a result of the June 8, 2011 and July 8, 2011 dismissals described above, the Company believes that the insurance carriers do not have the ability to recover this amount and accordingly, the Company reversed this accrual during the three months ended June 30, 2011. The reversal of $5,000 is included in income from discontinued operations, net of tax, within the accompanying consolidated statements of operations during the nine months ended September 30, 2011.

13

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Porex

In connection with the sale of its Porex business in October 2009, the Company agreed to indemnify Porex for certain tax matters, which were estimated at the time of sale to be approximately $4,800. As a result of the completion of a tax audit for one of the related matters under such indemnification, the Company reduced its indemnification liability by $2,994. This amount is reflected within income from discontinued operations during the three and nine months ended September 30, 2011. The remaining estimate of the Company’s tax indemnification liability related to Porex is $1,810 and is included within liabilities of discontinued operations within the accompanying balance sheet as of September 30, 2011.

3.   Convertible Notes

Repurchase and Conversions of 1.75% and 31/8% Notes

During the nine months ended September 30, 2010, the Company repurchased $32,446 principal amount of its 1.75% Notes for $42,107 in cash and the holders of the 1.75% Notes converted $232,137 principal amount into 6,703,129 shares of WebMD common stock. Also during the three and nine months ended September 30, 2010, the Company repurchased $9,942 and $42,118 principal amount of its 31/8% Notes for $13,113 and $52,368 in cash, respectively, and holders of the 31/8% Notes converted $26,228 and $122,855 principal amount into 748,812 and 3,507,527 shares of WebMD common stock, respectively. The Company recognized an aggregate pre-tax loss of $2,232 and $16,970 related to the repurchase of the 1.75% Notes and the repurchase and conversions of the 31/8% Notes, which is reflected within loss on convertible notes in the accompanying consolidated statement of operations during the three and nine months ended September 30, 2010, respectively. The loss includes the expensing of remaining deferred issuance costs outstanding related to the repurchased and converted notes. No 1.75% Notes or 31/8% Notes were outstanding at December 31, 2010.

2.50% Convertible Notes due 2018

On January 11, 2011, the Company issued $400,000 aggregate principal amount of 2.50% Convertible Notes due 2018 (the “2.50% Notes”) in a private offering. Unless previously converted, the 2.50% Notes will mature on January 31, 2018. Net proceeds from the sale of the 2.50% Notes were approximately $387,345, after deducting the related offering expenses, of which approximately $100,000 was used to repurchase 1,920,490 shares of the Company’s Common Stock at a price of $52.07 per share, the last reported sale price of the Company’s Common Stock on January 5, 2011, which repurchase settled on January 11, 2011. Interest on the 2.50% Notes is payable semi-annually on January 31 and July 31 of each year, commencing July 31, 2011. Under the terms of the 2.50% Notes, holders may surrender their 2.50% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 15.1220 shares of Common Stock per thousand dollars principal amount of the 2.50% Notes. This is equivalent to an initial conversion price of approximately $66.13 per share of Common Stock. In the aggregate, the 2.50% Notes are convertible into 6,048,800 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances. Under the terms of the 2.50% Notes, if the Company undergoes certain change of control transactions prior to the maturity date of the 2.50% Notes, holders of the 2.50% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.50% Notes at a repurchase price equal to 100% of the principal amount of the 2.50% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. At the Company’s option, and to the extent permitted by the applicable rules of the Nasdaq Global Select Market (or the applicable rules of such other exchange on which the Company’s Common Stock may be listed), instead of paying the repurchase price in cash, the Company may pay the repurchase price in shares of its Common Stock or a combination of cash and shares of its Common Stock. However, in the case of certain change of control transactions in which the Company is acquired by a public company, the Company may elect to provide for conversion of the 2.50% Notes into acquirer common stock, in which case the repurchase option would not apply.

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2.25% Convertible Notes due 2016

On March 14, 2011, the Company issued $400,000 aggregate principal amount of 2.25% Convertible Notes due 2016 (the “2.25% Notes”) in a private offering. Unless previously converted, the 2.25% Notes will mature on March 31, 2016. Net proceeds from the sale of the 2.25% Notes were approximately $387,400, after deducting the related offering expenses, of which approximately $50,000 was used to repurchase 868,507 shares of the Company’s Common Stock at a price of $57.57 per share, the last reported sale price of the Company’s Common Stock on March 8, 2011, which repurchase settled on March 14, 2011. Interest on the 2.25% Notes is payable semi-annually on March 31 and September 30 of each year, commencing September 30, 2011. Under the terms of the 2.25% Notes, holders may surrender their 2.25% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 13.5704 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This is equivalent to an initial conversion price of approximately $73.69 per share of Common Stock. In the aggregate, the 2.25% Notes are convertible into 5,428,160 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances. Under the terms of the 2.25% Notes, if the Company undergoes certain change of control transactions prior to the maturity date of the 2.25% Notes, holders of the 2.25% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.25% Notes at a repurchase price equal to 100% of the principal amount of the 2.25% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. At the Company’s option, and to the extent permitted by the applicable rules of the Nasdaq Global Select Market (or the applicable rules of such other exchange on which the Company’s Common Stock may be listed), instead of paying the repurchase price in cash, the Company may pay the repurchase price in shares of its Common Stock or a combination of cash and shares of its Common Stock. However, in the case of certain change of control transactions in which the Company is acquired by a public company, the Company may elect to provide for conversion of the 2.25% Notes into acquirer common stock, in which case the repurchase option would not apply.

4.   Related Party Transaction

Fidelity Employer Services Company LLC

Fidelity Employer Services Company LLC (“FESCO”) is a distributor of the Company’s private portals, integrating the private portals product into the human resources administration and benefit administration services that FESCO provides to its employer clients. The Company recorded revenue of $1,026 and $3,864 during the three and nine months ended September 30, 2011, respectively, and $1,421 and $4,317 during the three and nine months ended September 30, 2010, respectively. Included in accounts receivable as of September 30, 2011 and December 31, 2010 was $677 and $1,587, respectively, related to the FESCO agreement. FESCO is an affiliate of FMR LLC, which reported beneficial ownership, as of July 31, 2011, of shares that would represent approximately 7.1% of the Company’s Common Stock as of September 30, 2011. Affiliates of FMR LLC also provide administrative and recordkeeping services to the Company in connection with the Company’s 401(k) plan, stock-based compensation plans and the health savings accounts of Company employees.

5.   Fair Value of Financial Instruments and Non-Recourse Credit Facilities

The Company accounts for certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:   Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Level 2:  Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:   Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company did not have any Level 2 assets as of September 30, 2011 and December 31, 2010. The following table sets forth the Company’s Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis as of September 30, 2011 and December 31, 2010:

			September 30, 2011						December 31, 2010
	Fair Value		Amortized				Gross		Amortized				Gross
	Estimate		Cost		Fair		Unrealized		Cost		Fair		Unrealized
	Using:		Basis		Value		Gains		Basis		Value		Gains
Cash and cash equivalents		Level 1	$	1,101,286	$	1,101,286	$	—	$	400,501	$	400,501	$	—
ARS Option		Level 3		2,363		2,363		—		4,245		4,245		—

The following table reconciles the beginning and ending balances of the Company’s Level 3 assets:

	Nine Months Ended September 30,
	2011			2010
	ARS			ARS			Auction Rate			Senior
	Option			Option			Securities			Secured Notes
Fair value as of the beginning of the period	$	4,245		$	—		$	279,701		$	63,826
Redemptions		(16,561	)		(407	)		(290,999	)		(65,475	)
Gain (loss) included in earnings		14,679			1,252			(29,508	)		1,362
Interest income accretion included in earnings		—			—			—			287
Changes in unrealized gains/losses included in other comprehensive income		—			—			40,806			—
Fair value as of the end of the period	$	2,363		$	845		$	—		$	—

Through April 20, 2010, the Company held investments in auction rate securities (“ARS”) which had been classified as Level 3 assets as described above. The types of ARS holdings the Company owned were backed by student loans, 97% guaranteed under the Federal Family Education Loan Program (FFELP), and had credit ratings of AAA or Aaa when purchased. Historically, the fair value of the Company’s ARS holdings approximated par value due to the frequent auction periods, generally every 7 to 28 days, which provided liquidity to these investments. However, since February 2008, substantially all auctions involving these securities have been unsuccessful. The result of an unsuccessful auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets develop. Additionally, during 2009, approximately one-half of the auction rate securities the Company held were either downgraded below AAA or placed on “watch” status by one or more of the major credit rating agencies. As of March 31, 2008, the Company concluded that the estimated fair value of its ARS no longer approximated the face value. The Company concluded the fair value of its ARS holdings was $302,842 compared to a face value of $362,950. The impairment in value, of $60,108, was considered to be other-than-temporary and, accordingly, was recorded as an impairment charge within the statement of operations during the three months ended March 31, 2008.

Effective April 1, 2009, the Company was required to adopt new authoritative guidance which amended the recognition guidance for other-than-temporary impairments of debt securities and changed the presentation of other-than-temporary impairments in the financial statements. In accordance with this new guidance, if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount

16

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of impairment must be charged to earnings. Otherwise, losses on securities which are other-than-temporarily impaired are separated into two categories, the portion of loss which is considered credit loss and the portion of loss which is due to other factors. The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income. This new guidance requires a cumulative effect adjustment to be reported as of the beginning of the period of adoption to reclassify the non-credit component of previously recognized other-than-temporary impairments on debt securities held at that date, from retained earnings to accumulated other comprehensive income, if the entity does not intend to sell the debt security and it is not more likely than not that the entity will be required to sell the debt security before recovery of its amortized cost basis.

Since the Company had no current intent to sell the auction rate securities that it held as of April 1, 2009, and it was not more likely than not that the Company would be required to sell the securities prior to recovery of the amortized cost basis, the Company estimated the present value of the cash flows expected to be collected related to the auction rate securities it held. The difference between the present value of the estimated cash flows expected to be collected and the amortized cost basis as of April 1, 2009, the date this new guidance was adopted, was $26,848, or $24,697 net of the effect of noncontrolling interest. This represented the cumulative effect of initially adopting this new guidance and has been reflected as an increase to the cost basis of its investment and an increase to accumulated other comprehensive loss and an increase to retained earnings in the Company’s balance sheet effective as of April 1, 2009.

Historically, the Company estimated the fair value of its ARS holdings using an income approach valuation technique. Using this approach, expected future cash flows are calculated over the expected life of each security and are discounted to a single present value using a market required rate of return. Some of the more significant assumptions made in the present value calculations were (i) the estimated weighted average lives for the loan portfolios underlying each individual ARS, which ranged from 4 to 14 years as of March 31, 2008 and (ii) the required rates of return used to discount the estimated future cash flows over the estimated life of each security, which consider both the credit quality for each individual ARS and the market liquidity for these investments. Additionally, as discussed above, during 2009, certain of the auction rate securities the Company holds were downgraded below AAA by one or more of the major credit rating agencies. These revised credit ratings were a significant consideration in determining the cash flows expected to be collected. Substantial judgment and estimation factors are necessary in connection with making fair value estimates of Level 3 securities, including estimates related to expected credit losses as these factors are not currently observable in the market due to the lack of trading in the securities.

Effective April 20, 2010, the Company entered into an agreement pursuant to which the Company sold all of its holdings of ARS for an aggregate of $286,399. Under the terms of the agreement, the Company retained an option (the “ARS Option”), for a period of two years from the date of the agreement: (a) to repurchase from the purchaser the same principal amount of any or all of the various series of ARS sold, at the agreed upon purchase prices received on April 20, 2010; and (b) to receive additional proceeds from the purchaser upon certain redemptions of the various series of ARS sold.

As described above, while the Company originally recorded a loss of $60,108 relating to its holdings of ARS in the March 2008 quarter, the Company was required to reclassify $26,848 of that charge as an unrealized loss through stockholders’ equity when WebMD was required to adopt new authoritative guidance related to other-than-temporary impairments effective April 1, 2009, which had the effect of increasing the cost basis of the ARS by that amount. As a result, during 2010, the Company recorded an additional charge of $29,508, representing the difference between the cost basis of its ARS holdings and the proceeds received on April 20, 2010. In connection with the sale of the ARS, the Company recorded a deferred income tax benefit of approximately $22,000 primarily related to the reversal of income tax valuation allowance attributable to its ARS. Additionally the Company recognized gains of $14,712 and $14,679 related to the ARS Option described above during the period from April 20, 2010 through December 31, 2010 and during the nine

17

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

months ended September 30, 2011, respectively. Through the ARS Option, the Company received cash proceeds of $10,467 and $16,561 during the period from April 20, 2010 through December 31, 2010 and during the nine months ended September 30, 2011, respectively. The value of the ARS Option as of September 30, 2011 is estimated to be $2,363 and is reflected in prepaid expenses and other current assets within the accompanying balance sheet. The ARS Option has been classified as a Level 3 asset as its valuation requires substantial judgment. The historical redemption activity of the specific ARS underlying the ARS Option was the most significant assumption used to determine an estimated value of the ARS Option. The Company is required to reassess the value of the ARS Option at each reporting period, and any changes in value will be recorded within the statement of operations in future periods.

The Company’s other Level 3 asset during 2010 was $67,500 principal amount of Senior Secured Notes that the Company received in connection with its sale of Porex on October 19, 2009. The Senior Secured Notes were secured by certain assets of the acquirer of Porex and accrued interest at a rate of 8.75% per annum, payable quarterly. The Senior Secured Notes were issued in four series: the Senior Secured Notes of the first, second and third series had an aggregate principal amount of $10,000 each and were scheduled to mature on the first, second and third anniversaries of the closing, respectively; and the Senior Secured Notes of the fourth series had an aggregate principal amount of $37,500 and were scheduled to mature on the fourth anniversary of the closing. The Company estimated that the fair value of the Senior Secured Notes was $63,826 as of December 31, 2009. On April 1, 2010, the Company sold the Senior Secured Notes for $65,475 plus accrued interest and recorded a gain of $1,362 representing the excess of this amount over the adjusted cost basis of the Senior Secured Notes, which is reflected in (loss) gain on investments in the accompanying consolidated statement of operations during the nine months ended September 30, 2010.

The Company also holds an investment in a privately held company which is carried at cost, and not subject to fair value measurements. However, if events or circumstances indicate that its carrying amount may not be recoverable, it would be reviewed for impairment. The total amount of this investment is $6,471 and it is included in other assets on the accompanying consolidated balance sheets.

For disclosure purposes, the Company is required to measure the outstanding value of its debt on a recurring basis. The following table presents the carrying value and estimated fair value of the Company’s convertible notes that were carried at historical cost as of September 30, 2011:

	Carrying Amount		Fair Value
2.25% Notes	$	400,000	$	360,440
2.50% Notes		400,000		327,920

6.   Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes certain changes in equity that are excluded from net income, such as changes in unrealized losses on securities. During the three and nine months ended September 30, 2011 and during the three months ended September 30, 2010, comprehensive income was equivalent to net income. The following table presents the components of comprehensive income during the nine months ended September 30, 2010:

Unrealized holding gains	$	13,177
Unrealized losses recognized in earnings		24,248
Other comprehensive income		37,425
Net income		17,484
Comprehensive income	$	54,909

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.   Stock Repurchase Program, 2010 Tender Offers and Other Repurchases

In 2008, the Board of Directors established a stock repurchase program (the “2008 Program”), at which time the Company was authorized to use up to $30,000, which was subsequently increased by $15,331 in July 2011, to purchase shares of WebMD Common Stock, from time to time, in the open market, through block trades or in private transactions, depending on market conditions and other factors. During August 2011, the Board of Directors terminated the 2008 Program and established a new stock repurchase program (the “2011 Program” and, collectively with the 2008 Program, the “Programs”) through which the Company was authorized to use up to $75,000 to purchase shares of WebMD Common Stock. During the nine months ended September 30, 2010, the Company repurchased 352,572 shares, at an aggregate cost of $14,914, and no shares were repurchased during the three months ended September 30, 2010. During the three and nine months ended September 30, 2011, the Company repurchased 2,055,784 and 2,064,784 shares, respectively, at an aggregate cost of $67,011 and $67,428, respectively, under the Programs. During October 2011, the Company’s Board of Directors authorized a $75,000 increase to the 2011 Program. Additionally, during the period from October 1, 2011 through November 2, 2011, the Company repurchased 775,464 shares at an aggregate cost of $22,476. As of November 2, 2011, $90,431 remained available for repurchase under the 2011 Program. Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying consolidated balance sheets.

On April 8, 2010, the Company completed a tender offer through which it repurchased 5,172,204 shares of WebMD Common Stock at a price of $46.80 per share for total consideration of $242,795 which includes $736 of costs directly attributable to the purchase. On September 8, 2010, the Company completed a tender offer through which it repurchased 3,000,000 shares of its Common Stock at a price of $52.00 per share for total consideration of $156,421 which includes $421 of costs directly attributable to the purchase.

On January 5, 2011, the Company used $100,000 of the proceeds of the 2.50% Notes to repurchase 1,920,490 shares of the Company’s Common Stock at a price of $52.07 per share. Additionally, on March 8, 2011, the Company used $50,000 of the proceeds of the 2.25% Notes to repurchase 868,507 shares of the Company’s Common Stock at a price of $57.57 per share. See Note 3 for further discussion of the Company’s 2.50% Notes and 2.25% Notes. Neither of these share repurchases were made under the Programs.

8.   Intangible Assets

Intangible assets subject to amortization consist of the following:

	September 30, 2011									December 31, 2010
								Weighted									Weighted
	Gross							Average		Gross							Average
	Carrying		Accumulated					Remaining		Carrying		Accumulated					Remaining
	Amount		Amortization			Net		Useful Life(a)		Amount		Amortization			Net		Useful Life(a)
Content	$	15,954	$	(15,954	)	$	—		—	$	15,954	$	(15,954	)	$	—		—
Customer relationships		34,057		(20,329	)		13,728		6.7		34,057		(18,760	)		15,297		7.5
Technology and patents		14,700		(14,700	)		—		—		14,700		(14,700	)		—		—
Trade names-definite lives		6,030		(3,566	)		2,464		4.7		6,030		(3,165	)		2,865		5.4
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	75,205	$	(54,549	)	$	20,656			$	75,205	$	(52,579	)	$	22,626

(a) The calculation of the weighted average remaining useful life is based on the net book value and the remaining amortization period of each respective intangible asset.

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amortization expense was $657 and $1,970 during the three and nine months ended September 30, 2011, respectively, and $778 and $2,632 during the three and nine months ended September 30, 2010, respectively. Aggregate amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2011 (October 1st to December 31st)	$	657
2012	$	2,627
2013	$	2,627
2014	$	2,627
2015	$	2,617
Thereafter	$	5,037

9.   Commitments and Contingencies

Legal Proceedings

Canson v. WebMD Health Corp., Malland v. WebMD Health Corp., Solomon v. Wygod, Gordon v. Wygod, Wargula v. Wygod, Garber v. Wygod

Six shareholder lawsuits, each of which is described below, have been filed in federal and state court in New York. The lawsuits relate to certain forward-looking information made publicly available by the Company.

On August 2, 2011 and August 26, 2011, federal securities class action complaints entitled Canson v. WebMD Health Corp., et al. and Malland v. WebMD Health Corp., et al., respectively, were filed in the United States District Court for the Southern District of New York on behalf of purchasers of the Company’s common stock between February 23, 2011 and July 15, 2011. The complaints in the two cases (the “Federal Securities Action”) are substantially similar and allege that the Company and certain of its officers made false and misleading statements in violation of the Securities Exchange Act of 1934 and seek unspecified damages and costs. On November 7, 2011, the two cases were consolidated under the caption In re WebMD Health Corp. Securities Litigation and lead plaintiff and lead counsel were appointed. A pretrial conference has been scheduled for November 29, 2011.

On August 31, 2011, a shareholder derivative action entitled Solomon, et anno. v. Wygod, et al. was filed in the Supreme Court of the State of New York, New York County (the “State Court Derivative Action”). The State Court Derivative Action purports to assert claims on behalf of the Company, alleging breach of fiduciary duties, abuse of control, gross mismanagement, corporate waste and unjust enrichment by certain of the Company’s officers and directors. The State Court Derivative Action seeks unspecified damages, corporate governance changes, restitution, disgorgement and costs. The parties have agreed to stay the State Court Derivative Action until such time as the Federal Securities Action is dismissed with prejudice or any of the named defendants in the Federal Securities Action files an answer in that action.

On September 19, 2011 and September 28, 2011, shareholder derivative actions entitled Gordon v. Wygod, et al. and Wargula v. Wygod, et al., respectively, were filed in the United States District Court for the Southern District of New York (the “Federal Derivative Action”). The complaints in the Federal Derivative Action purport to assert claims on behalf of the Company, alleging violations of the Securities Exchange Act of 1934, breach of fiduciary duties, corporate waste and unjust enrichment by certain of the Company’s officers and directors, and seek unspecified damages, corporate governance changes, restitution, disgorgement and costs. The two actions have been consolidated. Pursuant to a stipulated order, a consolidated complaint shall be filed not later than thirty (30) days after entry of an order on a motion to dismiss in the Federal Securities Action and the defendants need not respond to any prior filed complaints in the consolidated actions.

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On October 25, 2011, a shareholder derivative action entitled Garber v. Wygod, et al. was filed in United States District Court for the Southern District of New York (the “Related Federal Derivative Action”). The complaint purports to assert claims on behalf of the Company, alleging breach of fiduciary duties, gross mismanagement, abuse of control and corporate waste by certain of the Company’s officers and directors, and seeks contribution and indemnification from each of those officers and directors, as well as unspecified damages and costs.

The Company believes that the Federal Securities Action, the State Court Derivative Action, the Federal Derivative Action and the Related Federal Derivative Action are without merit and intends to vigorously defend against them. The Company is unable to predict the outcomes of these actions or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein.

Investigations by United States Attorney for the District of South Carolina and the SEC

As previously disclosed, the United States Attorney for the District of South Carolina conducted an investigation of HLTH, which HLTH first learned about on September 3, 2003. The investigation related principally to issues of financial accounting improprieties relating to Medical Manager Corporation, a predecessor of HLTH (by its merger into HLTH in September 2000), and, more specifically, HLTH’s former Medical Manager Health Systems, Inc. subsidiary. Medical Manager Health Systems was a predecessor to Emdeon Practice Services, Inc. (“EPS”), a subsidiary that HLTH sold to Sage Software in September 2006 (the “EPS Sale”). HLTH and the Company have fully cooperated with the U.S. Attorney’s Office. As previously reported, the Board of Directors of HLTH formed a special committee consisting solely of independent directors to oversee this matter with the sole authority to direct HLTH’s response to the allegations that have been raised and that special committee was continued as a committee of the Board of Directors of the Company from the Merger until May 2011. As previously disclosed, the Company understands that the SEC also conducted a formal investigation into this matter. In connection with the EPS Sale, HLTH retained responsibility for liabilities relating to this matter and the Company assumed that obligation in the Merger.

The United States Attorney for the District of South Carolina announced on January 10, 2005 that three former employees of Medical Manager Health Systems each had agreed to plead guilty to one count of mail fraud and that one such employee had agreed to plead guilty to one count of tax evasion for acts committed while they were employed by Medical Manager Health Systems. According to the Informations, Plea Agreements and Factual Summaries filed by the United States Attorney in, and available from, the District Court of the United States for the District of South Carolina — Beaufort Division, on January 7, 2005, the three former employees and other then unnamed co-schemers were engaged in schemes between 1997 and 2002 that included causing companies acquired by Medical Manager Health Systems to pay the former vice president in charge of acquisitions and co-schemers kickbacks which were funded through increases in the purchase price paid by Medical Manager Health Systems to the acquired companies and that included fraudulent accounting practices to artificially inflate the quarterly revenues and earnings of Medical Manager Health Systems when it was an independent public company called Medical Manager Corporation from 1997 through 1999, when and after it was acquired by Synetic, Inc. in July 1999, and when and after it became a subsidiary of HLTH in September 2000. A fourth former officer of Medical Manager Health Systems pled guilty to similar activities later in 2005.

On December 15, 2005, the United States Attorney announced indictments of ten former officers and employees of Medical Manager Health Systems including Michael A. Singer, a former Chief Executive Officer of Medical Manager Health Systems and a former director of HLTH, who was last employed by HLTH as its Executive Vice President, Physician Software Strategies until February 2005, John H. Kang, a former President of Medical Manager Health Systems, who was employed until May 2001, and John P. Sessions, a former President and Chief Operating Officer of Medical Manager Health Systems, who was employed until

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

September 2003. The indictment initially charged the defendants with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h) but the second count was dismissed in 2009. The allegations set forth in the indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements. One of the defendants passed away in 2008 and was dismissed from the indictment. Four of the defendants were dismissed from the case and two defendants were severed from the case and their cases were transferred to Tampa, Florida. In addition, Mr. Singer has entered into a Deferred Prosecution Agreement with the United States pursuant to which all charges were dismissed against Mr. Singer on July 26, 2010. The trial of John Kang and John Sessions, former officers of Medical Manager Health Systems, began on January 19, 2010 and on March 1, 2010 both men were found guilty by the jury; however, the Court set the verdict aside on May 27, 2010 and entered a judgment of acquittal. The government entered a notice of appeal with respect to the Court’s order. On January 19, 2011, the Court granted the motion of Messrs. Kang and Sessions for a new trial in the event that the government’s appeal of the Court’s ruling to set aside the verdict is successful. The trial of the remaining two defendants was scheduled to begin on October 4, 2010; however, on July 9, 2010, the Court in Tampa placed the case against those defendants on hold pending resolution of the appeal of the South Carolina ruling. On June 8, 2011, upon the motion of the government, the United States Court of Appeals for the Fourth Circuit dismissed the government’s appeal of the District Court’s rulings, thereby ending the government’s case against Messrs. Kang and Sessions. On July 8, 2011, upon the motion of the government, the United States District Court for the Middle District of Florida granted a motion to dismiss the government’s case against the remaining two defendants in Florida. As a result of these two dismissals, it is the Company’s understanding that the government’s investigation into this matter has concluded.

The Company has not uncovered information that it believes would require a restatement for any of the years covered by HLTH’s financial statements. In addition, the Company believes that the amounts of the kickback payments referred to in the court documents have already been reflected in the financial statements of HLTH to the extent required.

HLTH had (and the Company has assumed in the Merger) certain indemnity obligations to advance amounts for reasonable defense costs for the former officers and directors of EPS. See Note 2 for a more detailed discussion regarding these indemnification obligations.

Directors & Officers Liability Insurance Coverage Litigation

On July 23, 2007, HLTH commenced litigation (the “Coverage Litigation”) in the Court of Chancery of the State of Delaware in and for New Castle County against ten insurance companies in which HLTH was seeking to compel the defendant companies (collectively, the “Defendants”) to honor their obligations under certain directors and officers liability insurance policies (the “Policies”). WebMD succeeded to HLTH as plaintiff in this action as a result of the Merger. HLTH was seeking an order requiring the Defendants to advance and/or reimburse expenses that HLTH had incurred and expected to continue to incur for the EPS Indemnification Obligations, which are described in Note 2.

Pursuant to a stipulation among the parties, the Coverage Litigation was transferred on September 13, 2007 to the Superior Court of the State of Delaware in and for New Castle County. The Policies were issued to HLTH and to EPS, which is a co-plaintiff with the Company in the Coverage Litigation (collectively, the “Plaintiffs”). When EPS was sold in September 2006 to Sage Software, HLTH retained responsibility for the EPS Indemnification Obligations and the Company assumed the EPS Indemnification Obligations as a result of the Merger. HLTH retained (and the Company succeeded to as a result of the Merger) the right to assert claims and recover proceeds under the Policies.

Prior to the filing of the Second Amended Complaint which is discussed below, the Policies at issue in the Coverage Litigation consisted of two separate groups of insurance policies. Each group of policies consists

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of several layers of coverage, with different insurers having agreed to provide specified amounts of coverage at various levels. The first group of policies was issued to EPS in the amount of $20,000 (the “EPS Policies”) and the second group of policies was issued to Synetic, Inc. (the former parent of EPS, which merged into HLTH) in the amount of $100,000, of which approximately $3,600 was paid by the primary carrier with respect to another unrelated matter (the “Synetic Policies”).

The carrier with the third level of coverage in the Synetic Policies filed a motion for summary judgment in the Coverage Litigation, which most of the carriers who have issued the Synetic Policies joined, which sought summary judgment that any liability to pay defense costs should be allocated among the three sets of policies available to the Company (including the policies with respect to which the Coverage Litigation relates and a third set of policies the issuers of which had not yet been named by the Company) such that the Synetic Policies would only be liable to pay about $23,000 of the $96,400 total coverage available under such policies. HLTH filed its opposition to the motion together with its motion for summary judgment against such carrier and several other carriers who have issued the Synetic Policies seeking to require such carriers to advance payment of the defense costs that the Company is obligated to pay while the Coverage Litigation is pending. On July 31, 2008, the Superior Court for the State of Delaware denied the motion filed by the carriers seeking allocation and granted HLTH’s motion for partial summary judgment to enforce the duty of such carriers to advance and reimburse these costs. Pursuant to the Court’s order, the issuers of the Synetic Policies began reimbursing the Company for its costs as described below.

On September 9, 2008 and February 4, 2009, respectively, the eighth and ninth level carriers of the Synetic Policies notified HLTH that they believed that they were not bound by the Court’s July 31, 2008 order regarding the duty of the Synetic carriers to advance and reimburse defense costs. This resulted in HLTH making a motion to the Court on February 23, 2009 to require such eighth and ninth level carriers to advance and reimburse defense costs. HLTH later settled with the eighth level carrier. Under the terms of the settlement such carrier has paid, in full and final settlement, an agreed-upon percentage of the policy amount against each payment of defense costs made by the Company as such policy was implicated. On April 15, 2009, the ninth level carrier made a cross-motion for summary judgment claiming that, in light of a policy endorsement applicable only to the ninth level carrier, because of the time period during which the conspiracy charged in the Second Superseding Indictment is alleged to have taken place, the Synetic Policy issued by such carrier does not cover the EPS Indemnification Obligations. HLTH believed that such carrier’s motion was without merit and responded to the motion. On July 15, 2009, the Court granted summary judgment in favor of the ninth level carrier. Accordingly, the ninth level carrier was not liable to pay any portion of the $10,000 total coverage of its policy with respect to the EPS Indemnification Obligations. Approximately $84,200 has been paid by insurance companies representing the EPS Policies and the Synetic Policies through a combination of payment under the terms of the Policies, payment under reservation of rights or through settlement. Of this amount, $62,800 represents the portion received through settlement.

On November 17, 2008, HLTH filed a Second Amended Complaint which added four new insurance companies as defendants in the Coverage Action. These carriers are the issuers of a third set of policies (the “Emdeon Policies”) that provide coverage with respect to the EPS Indemnification Obligations. All but one of the carriers who issued the Emdeon Policies moved for summary judgment asserting that exclusions in the Emdeon Policies preclude coverage for the EPS Indemnification Obligations and HLTH filed motions seeking to compel such carriers to advance the costs incurred by HLTH with respect to the EPS Indemnification Obligations. On August 31, 2009, the Court issued two opinions. In the first opinion, the Court granted summary judgment in favor of HLTH with respect to one of the exclusions asserted by the carriers who issued the Emdeon Policies. In the second opinion, the Court granted summary judgment in favor of the carriers with respect to the other exclusion asserted by such carriers. The Company and the carriers who issued the Emdeon Policies (with the exception of the second level carrier with whom the Company has settled) each appealed the trial Court’s August 31, 2009 rulings to the Supreme Court of Delaware and, on April 22, 2010, the Supreme Court decided both appeals in favor of the carriers who issued the Emdeon Policies. The implication of this

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

decision was that the Company had effectively exhausted its insurance coverage with respect to the EPS Indemnification Obligations.

The insurance carriers had also asserted that the Company’s insurance policies provided that, under certain circumstances, amounts advanced by the insurance companies in connection with the EPS Indemnification Obligations would have to have been repaid to the insurance carriers by the Company, although the amounts that the Company received in settlement from certain carriers were not subject to being repaid. As discussed more fully in Note 2 above, as a result of the manner in which the Investigation ended, the Company believes that the insurance carriers do not have the ability to recover any amounts they have previously advanced.

In addition to the Coverage Litigation, on December 22, 2009, TIG Specialty Insurance Company (“TIG”), the second level issuer of the EPS Policies, commenced an action against the Company to recover the $5,000 that TIG advanced to the Company in 2006. The Company and TIG settled the matter in 2010.

Other Legal Proceedings

In the normal course of business, the Company and its subsidiaries are involved in various claims and legal proceedings. While the ultimate resolution of certain of these matters, including certain of those discussed in Note 9 to the Consolidated Financial Statements included in the Company’s 2010 Annual Report on Form 10-K, has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

10.   Stock-Based Compensation

Prior to the Merger on October 23, 2009, HLTH had various stock-based compensation plans (collectively, the “HLTH Plans”) under which directors, officers and other eligible employees received awards of options to purchase HLTH Common Stock and restricted shares of HLTH Common Stock. WebMD also had similar stock-based compensation plans (the “WebMD Plans”) that provide for the grant of stock options, restricted stock awards, and other awards based on WebMD Common Stock. In connection with the Merger, all outstanding stock options and restricted stock awards under the HLTH Plans were converted into outstanding stock options and restricted stock awards of WebMD based on the Merger exchange ratio of 0.4444. The following sections of this note present the historical activity of the HLTH Plans (on a converted basis after giving effect to the Merger exchange ratio of 0.4444) combined with the historical activity of the WebMD Plans, which are collectively referred to as the “Plans”.

The 2005 Long-Term Incentive Plan, (as amended, the “2005 Plan”) is the only plan under which future grants can be made. The maximum number of shares of the Company’s Common Stock that may be subject to awards under the 2005 Plan was 18,200,000 as of September 30, 2011, subject to adjustment in accordance with the terms of the 2005 Plan. The Company had an aggregate of 761,543 shares of Common Stock available for future grants under the 2005 Plan at September 30, 2011.

Stock Options

Generally, options under the Plans vest and become exercisable ratably over periods ranging from four to five years based on their individual grant dates, subject to continued employment on the applicable vesting dates, and generally expire within ten years from the date of grant. Options are granted at prices not less than

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the fair market value of the Company’s Common Stock on the date of grant. The following table summarizes stock option activity for the Plans:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise Price		Contractual		Intrinsic
	Shares			per Share		Life (In Years)		Value(1)
Outstanding at January 1, 2011		10,227,755		$	30.79
Granted		3,077,150			36.22
Exercised		(1,441,941	)		27.15
Cancelled		(565,119	)		33.59
Outstanding at September 30, 2011		11,297,845		$	32.59		7.6	$	36,601
Vested and exercisable at the end of the period		3,822,675		$	30.51		5.6	$	18,111

(1) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on September 30, 2011, which was $30.15, less the applicable exercise price of the underlying option. This aggregate intrinsic value represents the amount that would have been realized if all the option holders had exercised their options on September 30, 2011.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model considering the weighted average assumptions noted in the following table. Expected volatility is based on implied volatility from traded options of the Company’s Common Stock combined with historical volatility of the Company’s Common Stock. The expected term represents the period of time that options are expected to be outstanding following their grant date, and was determined using historical exercise data combined with assumptions for future exercise activity. The risk-free rate is based on the U.S. Treasury yield curve for periods equal to the expected term of the options on the grant date.

	Nine Months Ended September 30,
	2011			2010
Expected dividend yield		0.0	%		0.0	%
Expected volatility		0.37			0.33
Risk-free interest rate		1.11	%		2.04	%
Expected term (years)		4.6			4.8
Weighted average fair value of options granted during the period	$	11.77		$	14.53

Restricted Stock Awards

The Company’s Restricted Stock consists of shares of the Company’s Common Stock which have been awarded to employees with restrictions that cause them to be subject to substantial risk of forfeiture and restrict their sale or other transfer by the employee until they vest. Generally, the Company’s Restricted Stock awards vest ratably over periods ranging from three to five years from their individual award dates subject to

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

continued employment on the applicable vesting dates. The following table summarizes the activity of the Company’s Restricted Stock:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Balance at January 1, 2011		1,106,751		$	33.13
Granted		564,367			38.82
Vested		(208,618	)		32.78
Forfeited		(54,250	)		32.25
Balance at September 30, 2011		1,408,250		$	35.50

Proceeds received from the exercise of options to purchase shares of the Company’s Common Stock were $1,382 and $26,435 during the three and nine months ended September 30, 2011, respectively, and $9,054 and $57,168 during the three and nine months ended September 30, 2010, respectively. Additionally, in connection with the exercise of certain stock options and the vesting of restricted stock, the Company made payments of $98 and $6,730 during the three and nine months ended September 30, 2011, respectively, and $36,831 and $76,559 during the three and nine months ended September 30, 2010, respectively, related to employee statutory withholding taxes that were satisfied by withholding shares of Common Stock of equal value from the respective employees. The proceeds and payments described above are reflected within cash flows from financing activities within the accompanying consolidated statements of cash flows.

The intrinsic value related to stock options that were exercised, combined with the fair value of shares of restricted stock that vested, aggregated $985 and $47,223 for the three and nine months ended September 30, 2011, respectively, and $93,637 and $226,338 for the three and nine months ended September 30, 2010, respectively.

Other

Each year, the Company issues shares of its Common Stock to each WebMD non-employee director with a value equal to their annual board and committee retainers. The Company recorded $86 and $259 of stock-based compensation expense for the three and nine months ended September 30, 2011, respectively, and $94 and $280 for the three and nine months ended September 30, 2010, respectively, in connection with these issuances.

26

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summary of Stock-Based Compensation Expense

The following table summarizes the components and classification of stock-based compensation expense:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Stock options	$	6,159	$	5,996	$	18,832	$	16,631
Restricted stock		3,563		2,714		9,878		6,694
Other		86		94		259		280
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605
Included in:
Cost of operations	$	1,718	$	1,889	$	5,677	$	5,153
Sales and marketing		2,286		1,867		6,865		5,749
General and administrative		5,804		5,048		16,427		12,703
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605

As of September 30, 2011, approximately $95,300 of unrecognized stock-based compensation expense related to unvested awards (net of estimated forfeitures) is expected to be recognized over a weighted-average period of approximately 2.9 years, related to the Plans.

Tax benefits attributable to stock-based compensation represented 39% of stock-based compensation expense for all periods presented.

11.   Other Income (Expense), Net

Other income (expense), net consists of the following items:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011			2010
Reduction of tax contingencies(a)	$	—	$	177		$	—		$	533
Legal expense(b)		—		(70	)		(53	)		(625	)
Other income (expense), net	$	—	$	107		$	(53	)	$	(92	)

(a)	Represents the reduction of certain sales and use tax contingencies resulting from the expiration of various statutes of limitations.
(b)	Represents the costs and expenses incurred by the Company related to the investigation by the United States Attorney for the District of South Carolina and the SEC and the related Coverage Litigation.

12.   Subsequent Event — Stockholder Rights Plan

The Company has entered into a Stockholder Rights Agreement, dated as of November 2, 2011 (the “Rights Agreement”), by and between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent. Pursuant to the terms of the Rights Agreement, which has a one-year term, one preferred stock purchase right (a “Right”) will be attached to each outstanding share of the Company’s Common Stock held by holders of record as of the close of business on November 14, 2011 and the Company will issue one Right with each new share of Common Stock issued after that date. The Rights will initially trade with and be inseparable from the Company’s Common Stock and will not be evidenced by separate certificates unless they become exercisable. The Rights will expire at the close of business on November 1, 2012, unless earlier redeemed by the Company or unless the Rights Agreement is amended. Each Right entitles its holder to

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WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

purchase from the Company one one-thousandth of a share (a “Unit”) of Series A Junior Preferred Stock, par value $0.01 per share (the “Preferred Stock”), at an exercise price of $153.00 per Unit, subject to adjustment in accordance with the terms of the Rights Agreement, once the Rights become exercisable.

In general terms, under the Rights Agreement, the Rights become exercisable if any person or group acquires beneficial ownership of 12% or more of the Common Stock or commences a tender or exchange offer which, upon consummation, would result in such person or group being the beneficial owner of 12% or more of the Company’s outstanding common stock. For purposes of the Rights Agreement, beneficial ownership is defined to include ownership of the shares underlying options, warrants, convertible securities, stock appreciation rights, swap agreements or other securities or contract rights or certain derivative positions, whether or not currently exercisable. If any person or group becomes the beneficial owner of 12% or more of the Company’s Common Stock, then each Right not owned by such person (or certain related parties) will entitle its holder to purchase, at the Right’s then-current exercise price, Units of Preferred Stock (or, in certain circumstances, Company Common Stock, cash, property or other securities of the Company) having a market value equal to twice the then-current exercise price of the Right. In addition, if the Company is involved in a merger or other business combination transactions with another person after which its Common Stock does not remain outstanding, or sells 50% or more of its assets or earning power to another person, each Right will entitle its holder to purchase, at the Right’s then-current exercise price, shares of common stock of the ultimate parent of such other person having a market value equal to twice the then-current exercise price of the Right. Each Unit of Preferred Stock, if issued:

•  will be non-redeemable and subordinate to any other shares of preferred stock that may be issued by the Company;

•  will entitle holders to certain dividend and liquidation payments;

•  will have one vote, voting together with the Company Common Stock;

•  will entitle holders to elect two directors if dividends are in arrears for six consecutive fiscal quarters;

•  if shares of Company Common Stock are exchanged via merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of Company Common Stock; and

•  is protected by customary anti-dilution provisions with respect to dividends, liquidation and voting rights, and in the event of mergers and consolidations.

Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the economic value of one Unit of Preferred Stock that may be acquired upon the exercise of each Right should approximate the economic value of one share of Company Common Stock.

The Rights will cause substantial dilution to a person or group that attempts to acquire the Company on terms not approved by the Company’s Board of Directors. However, the Rights should not interfere with any merger or other business combination approved by the Company’s Board of Directors because (i) the Rights may be redeemed by the Board at a nominal price of $0.01 per Right at any time on or prior to the public announcement made by either the Company or the Acquiring Person that such Acquiring Person has acquired beneficial ownership of 12% or more of the Company Common Stock and (ii) the Rights Agreement may be amended prior to the Rights becoming exercisable so that it does not interfere with such merger or other business combination. Thus, the Rights are intended to encourage persons who may seek to acquire control of the Company to initiate such an acquisition through negotiations with the Company’s Board of Directors. However, the effect of the Rights may be to discourage a third party from making a tender offer or otherwise attempting to obtain a substantial equity position in the equity securities of, or seeking to obtain control of, the Company.

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ITEM 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Item 2 contains forward-looking statements with respect to possible events, outcomes or results that are, and are expected to continue to be, subject to risks, uncertainties and contingencies, including those identified in this Item. See “Forward-Looking Statements” on page 3.

Overview

Management’s discussion and analysis of financial condition and results of operations, or MD&A, is provided as a supplement to the Consolidated Financial Statements and notes thereto included elsewhere in this Quarterly Report and is intended to provide an understanding of our results of operations, financial condition and changes in our results of operations and financial condition. Our MD&A is organized as follows:

•  Introduction.  This section provides: a general description of our company and its business; background information on certain trends, transactions and other developments affecting our company; and a discussion of how seasonal factors may impact the timing of our revenue.

•  Critical Accounting Estimates and Policies.  This section discusses those accounting policies that are considered important to the evaluation and reporting of our financial condition and results of operations, and whose application requires us to exercise subjective and often complex judgments in making estimates and assumptions. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 2 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission (which we refer to as the SEC).

•  Results of Operations and Supplemental Financial and Operating Information.  These sections provide our analysis and outlook for the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis.

•  Liquidity and Capital Resources.  This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of September 30, 2011.

•  Recent Accounting Pronouncements.  This section provides a summary of the most recent authoritative accounting standards and guidance that have either been recently adopted by our company or may be adopted in the future.

Introduction

Our Company.  WebMD Health Corp. is a Delaware corporation that was incorporated on May 3, 2005. We completed an initial public offering on September 28, 2005. Our Common Stock trades under the symbol “WBMD” on the Nasdaq Global Select Market.

Our Business.  We are a leading provider of health information services to consumers, physicians and other healthcare professionals, employers and health plans through our public and private online portals, mobile platforms and health-focused publications.

Our public portals for consumers enable them to obtain health and wellness information (including information on specific diseases or conditions), check symptoms, locate physicians, store individual healthcare information, receive periodic e-newsletters on topics of individual interest and participate in online communities with peers and experts. Our public portals for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (which we refer to as CME) credit and communicate with peers. We also provide mobile health information applications for use by consumers and physicians. We generate revenue from our public portals primarily through the sale of advertising and sponsorship products, including CME services. Our public portals’ sponsors and advertisers include pharmaceutical, biotechnology, medical device and consumer products companies. We also generate revenue from the sale of e-detailing promotion and physician recruitment services and from advertising sold in WebMD the Magazine, a consumer

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magazine distributed to physician office waiting rooms. In addition, we generate revenue from the sale of certain information products.

Our private portals enable employers and health plans to provide their employees and members with access to personalized health and benefit information and decision-support technology that helps them to make more informed benefit, treatment and provider decisions. In addition, we offer clients of our private portals telephonic health coaching services on a per participant basis across an employee or plan population. We generate revenue from our private portals through the licensing of these portals and related services to employers and health plans either directly or through distributors.

Background Information on Certain Trends Influencing the Use of Our Services.  Several key trends in the healthcare, consumer products and Internet industries are influencing the use of healthcare information services of the types we provide or are developing. Those trends are described briefly below:

•  Use of the Internet by Consumers and Physicians.  The Internet has emerged as a major communications medium and has already fundamentally changed many sectors of the economy, including the marketing and sales of financial services, travel, and entertainment, among others. The Internet is also changing the healthcare industry and has transformed how consumers and physicians find and utilize healthcare information.

—  Healthcare consumers increasingly seek to educate themselves online about their healthcare-related issues, motivated in part by the larger share of healthcare costs they are being asked to bear due to changes in the benefit designs being offered by health plans and employers. The Internet has fundamentally changed the way consumers obtain health and wellness information, enabling them to have immediate access to searchable information and dynamic interactive content to check symptoms, assess risks, understand diseases, find providers and evaluate treatment options.

—  The Internet has also become a primary source of information for physicians seeking to improve clinical practice and is growing relative to traditional information sources, such as conferences, meetings and offline journals.

•  Online Marketing and Education Spending for Healthcare Products.  Pharmaceutical, biotechnology and medical device companies spend large amounts each year marketing their products and educating consumers and physicians about them; however, only a small portion is currently spent on online services. We believe that these companies, which comprise the majority of the advertisers and sponsors of our public portals, are becoming increasingly aware of the effectiveness of the Internet relative to traditional media in providing health, clinical and product-related information to consumers and physicians, and this increasing awareness will, over time, result in increasing demand for our services. In addition, in an effort to improve operating efficiencies, some pharmaceutical companies have been reducing their field sales forces in the past several years. We believe that, in their effort to achieve greater overall marketing efficiency, pharmaceutical companies will, over time, increase the use of online promotional marketing to physicians and other healthcare professionals, including through the use of our services. However, notwithstanding our general expectation for increased future demand, we cannot predict how long it will take for pharmaceutical, biotechnology and medical device companies to shift a more significant portion of their marketing expenditures to online services. In addition, our advertising and sponsorship revenue may vary significantly from quarter to quarter due to a number of factors, including general economic and regulatory conditions and the following:

—  The majority of our advertising and sponsorship contracts are for terms of approximately four to twelve months. We have relatively few longer term advertising and sponsorship contracts.

—  The time between the date of initial contact with a potential advertiser or sponsor regarding a specific program and the execution of a contract with the advertiser or sponsor for that program, as well as the additional time period before our services are delivered, may be subject to delays over which we have little or no control, including as a result of budgetary constraints of the advertiser or sponsor or their need for internal approvals, including internal approvals relating to compliance with the laws and regulations applicable to the marketing of healthcare products. Recently, we have been

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experiencing a lengthening of this internal review process by pharmaceutical companies, which has resulted in delays in contracting as well as delays in recognizing expected revenue under executed contracts and which may continue to cause such delays.

Other factors that may affect the timing of contracting for specific programs with advertisers and sponsors, or receipt of revenue under such contracts, include: the timing of FDA approval for new products or for new approved uses for existing products; the timing of FDA approval of generic products that compete with existing brand name products and any increase in the number or significance of such approvals or of withdrawals of products from the market; the timing of roll-outs of new or enhanced services on our public portals; seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that may affect the timing of promotional campaigns for specific products; and the scheduling of conferences for physicians and other healthcare professionals.

•  Reaching Health-Conscious Consumers.  More than half of the traffic to our consumer portals is in areas of health and wellness that are not related solely to diseases and conditions. The demand for reaching health-conscious consumers is growing significantly. In addition to pharmaceutical, biotechnology and medical device companies, our public portals advertisers and sponsors include consumer products companies whose products relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention. We plan to continue to focus on increasing sponsorship revenues from consumer products companies, retailers and other companies that are interested in communicating health-related or safety-related information about their products or services to our audience. However, our services for these clients are subject to competition from traditional media, Internet search engines, social media Internet sites, general purpose consumer sites, and numerous other alternatives. In addition, revenues from consumer products companies are more likely to reflect general economic conditions, and to be reduced to a greater extent during economic downturns or recessions, than revenues from pharmaceutical, biotechnology and medical device companies. Accordingly, revenues from this portion of our business may develop more slowly than we expect and may be subject to significant quarter-to-quarter variations.

•  Recent Changes in the Business Outlook for Our Public Portals.  Notwithstanding our general expectation for increased future demand for our public portal services, we have recently experienced a slowing of the rate of growth in our public portal advertising and sponsorship revenue as a result of what we believe is a more cautious business outlook by many of our larger customers in the second half of 2011. In addition, we are currently experiencing uncertainty regarding expectations for 2012 because the marketing budgets for 2012 of many of our larger clients are being finalized later than in prior years and may possibly reflect a continuation of the cautious business outlook those customers have had in the second half of 2011.

•  Use of Health and Benefits Applications.  In a healthcare market where a greater share of the responsibility for healthcare costs and decision-making has been shifting to consumers, use of information technology to assist consumers in making informed decisions about healthcare has also increased. We believe that through our WebMD Health and Benefits Manager tools, including our personal health record application, we are well positioned to play a role in this environment. However, our strategy depends, in part, on increasing usage of our private portal services by our employer and health plan clients’ employees and members and being able to demonstrate a sufficient return on investment and other benefits for our private portals clients from those services. Increasing usage of our private portal services requires us to continue to develop new and updated applications, features and services. In addition, we face competition in the area of healthcare decision-support tools and online health management applications and health information services. Many of our competitors have greater financial, technical, product development, marketing and other resources than we do, and may be better known than we are. We also expect that, for clients and potential clients that have been adversely affected by general economic conditions or are seeking to reduce expenses for other reasons, we may continue to experience some reductions in initial contracts, contract expansions and contract renewals for our private portal services, as well as reductions in the size of existing contracts.

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•  Developments in Social Media and Other Applications.  In the past several years, video and multi-media applications have become an increasingly important part of what users expect from Internet sites. In addition, consumers are increasingly using the Internet to access social media as a means to communicate and exchange information, including regarding health and wellness. Similarly, physicians and other healthcare professionals are increasingly participating in condition or topic specific community groups and other interactive applications. Consumers and healthcare professionals are also increasingly using mobile devices to access the Internet, with physicians increasingly using mobile devices in diagnosis and treatment at the point of care. Mobile, while not yet a meaningful source of revenue for us, is expected to be an important area of growth for the future. We are focused on delivering a multi-screen platform that extends the user experience beyond the desktop portal onto the mobile device. We have invested and intend to continue to invest in software and systems that allow us to meet the demands of our users and sponsors, including customized content management and publishing technology to deliver interactive content, multimedia programming and personalized health applications that engage our users. The following are some of our recent and current initiatives to improve the user experience on our Websites, expand our services and increase our user base:

—  Physician Connect, our social networking platform for physicians, allows them to exchange information online on a range of topics, including patient care, drug information, healthcare-related legislation and practice management. Physicians can also create polls to assess the opinions of their colleagues on a range of topics. We also offer third parties the opportunity to sponsor Physician Connect discussions and polls so that they can gain insights into physicians’ perspectives and areas of interest. As of September 30, 2011, Physician Connect had attracted approximately 155,000 physician members. Medscape from WebMD also offers a variety of sponsored and unsponsored blogs where healthcare professionals can share their thoughts and opinions with the Medscape from WebMD community.

—  In March 2010, we launched The WebMD Community, a social networking initiative that gives consumers the ability to connect with health experts and with other WebMD members to exchange information, experiences and support. The WebMD Community is being integrated throughout each of the core content areas of WebMD.com, giving members the ability to safely and easily connect with others on topics that are most relevant to them. In addition to expert-led communities, members are empowered to create their own communities and to exchange information with other users. The WebMD Community also enables third party sponsors to create branded experiences and to host consumer discussions on specific health and wellness topics most important to them.

—  Medscape Mobile is a free medical application that includes Medscape’s specialty-specific news, comprehensive drug information and clinical reference tools. Medscape Mobile also includes CME activities organized by specialty and designed for use on a mobile device. Medscape Mobile was launched for iPhone^® and iPod touch^® users in 2009, for Blackberry^® users in April 2010 and for iPad^tm and Android^tm users in January 2011. As of September 30, 2011, Medscape Mobile had attracted approximately 1.6 million registered users.

—  WebMD for iPhone and WebMD for iPad are free applications for consumers that provide mobile access to certain WebMD content and tools on an iPhone^® or iPad^tm, including Symptom Checker, First Aid, and Pill Identifier applications, as well as other health information. In May 2011, WebMD launched WebMD for Android, with similar content and tools. As of October 31, 2011, these mobile applications had been downloaded a total of approximately 8.1 million times. We also provide access to our consumer content and tools through a version of our WebMD.com site tailored for viewing through mobile browsers at www.m.webmd.com.

—  We are pursuing opportunities to expand the reach of our brands outside the United States. Generally, we expect that we would accomplish this through partnerships or joint ventures with other companies having expertise in the specific country or region. In October 2009, we launched our first major consumer portal outside the United States in partnership with Boots, the UK’s leading pharmacy-led

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health and beauty retailer. In addition, in certain markets outside of the U.S., we expect to provide some of our online services directly to healthcare professionals and, to a lesser extent, consumers.

•  Healthcare Reform Legislation.  The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (which we refer to as the Reform Legislation), was signed into law in March 2010. The Reform Legislation makes extensive changes to the system of healthcare insurance and benefits in the U.S. In general, the Reform Legislation seeks to reduce healthcare costs and decrease the number of uninsured legal U.S. residents by, among other things, requiring individuals to carry, and certain employers to offer, health insurance or be subject to penalties. The Reform Legislation also imposes new regulations on health insurers, including guaranteed coverage requirements, prohibitions on certain annual and all lifetime limits on amounts paid on behalf of or to plan members, increased restrictions on rescinding coverage, establishment of minimum medical loss ratio requirements, a requirement to cover certain preventive services on a first dollar basis, the establishment of state insurance exchanges and essential benefit packages, and greater limitations on how health insurers price certain of their products. The Reform Legislation also contains provisions that will affect the revenues and profits of pharmaceutical and medical device companies, including new taxes on certain sales of their products. Many of the provisions of the Reform Legislation that expand insurance coverage will not become effective until 2014, and many provisions require regulations and interpretive guidance to be issued before they will be fully implemented. Some provisions do not apply to health plans that were in place when the Reform Legislation was enacted and have not been substantially changed since. In addition, it is difficult to foresee how individuals and businesses will respond to the choices available to them under the Reform Legislation. Furthermore, the Reform Legislation will result in future state legislative and regulatory changes, which we are unable to predict at this time, in order for states to comply with certain provisions of the Reform Legislation and to participate in grants and other incentive opportunities. In addition, a number of parties have filed lawsuits challenging the constitutionality of certain provisions of the Reform Legislation. As of October 20, 2011, there were six distinct petitions for writs of certiorari pending at the Supreme Court relating to the constitutionality of the Reform Legislation. These petitions, in turn, ask the Court to grant review on a number of different questions including the constitutionality of the requirement that individuals carry insurance. The likelihood that the Court will actually take up these various questions varies considerably; however, the Court is expected to take up the individual mandate question this term and render its decision by June 2012.

While we do not currently anticipate any significant adverse effects on WebMD as a direct result of the application of the Reform Legislation to our businesses or on our company in its capacity as an employer, we are unable to predict what the indirect impacts of the Reform Legislation will be on WebMD’s businesses through its effects on other healthcare industry participants, including pharmaceutical and medical device companies that are advertisers and sponsors of our public portals and employers and health plans that are clients of our private portals. Healthcare industry participants may respond to the Reform Legislation or to uncertainties created by the Reform Legislation by reducing their expenditures or postponing expenditure decisions, including expenditures for our services, which could have a material adverse effect on our business. However, we believe that certain aspects of the Reform Legislation and future implementing regulations that seek to reduce healthcare costs may create opportunities for WebMD, including with respect to our personal health record applications and health and benefits decision-support tools and, more generally, with respect to our capabilities in providing health and wellness information and education. For example, the Reform Legislation encourages use of wellness programs through grants to small employers to establish such programs, permission for employers to offer rewards, in the form of waivers of cost-sharing, premium discounts, or additional benefits, to employees for participating in these programs and meeting certain standards, and the inclusion of wellness services and chronic disease management among the essential health benefits that certain plans are required to provide. However, we cannot yet determine the scope of any such opportunities or what competition we may face in our efforts to pursue such opportunities.

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The healthcare industry in the United States and relationships among healthcare payers, providers and consumers are very complicated. In addition, the Internet and the market for online services are relatively new and still evolving. Accordingly, there can be no assurance that the trends identified above will continue or that the expected benefits to our businesses from our responses to those trends will be achieved. In addition, the market for healthcare information services is highly competitive and not only are our existing competitors seeking to benefit from these same trends, but the trends may also attract additional competitors.

Background Information on Certain Transactions and Other Significant Developments

Merger with HLTH.  From the completion of our initial public offering until the completion of our merger with HLTH Corporation (which we refer to as HLTH) on October 23, 2009 (which we refer to as the Merger), WebMD was more than 80% owned by HLTH. On October 23, 2009, the transaction was completed, with HLTH merging into WebMD and WebMD continuing as the surviving corporation. In the Merger, each share of HLTH common stock was converted into 0.4444 shares of WebMD common stock. The key reasons for the Merger included allowing HLTH’s stockholders to participate directly in the ownership of WebMD, while eliminating HLTH’s controlling interest in WebMD and the inefficiencies associated with having two separate public companies, increasing the ability of WebMD to raise capital and to obtain financing, and improving the liquidity of WebMD common stock by significantly increasing the number of shares held by public stockholders. WebMD was the only operating business of HLTH at the time the Merger closed. Accordingly, the completion of the Merger did not have a significant effect on the operations of WebMD since there were no HLTH business operations to combine with WebMD’s business operations. In this MD&A, “WebMD” (or the use of “we,” “our,” or similar words) refers not only to WebMD itself but also, where the context requires, to HLTH. The specific names of HLTH and WebMD are used only where there is a need to distinguish between the legal entities.

Convertible Notes.  During the nine months ended September 30, 2010, we repurchased $32,446 principal amount of our 1.75% Convertible Subordinated Notes Due 2023 (which we refer to as the 1.75% Notes) for $42,107 in cash and the holders of the 1.75% Notes converted $232,137 principal amount into 6,703,129 shares of WebMD common stock. The majority of these conversions occurred following a Notice of Redemption that we delivered in May 2010. Also during the three and nine months ended September 30, 2010, we repurchased $9,942 and $42,118 principal amount of our 31/8% Convertible Notes due 2025 (which we refer to as the 31/8% Notes) for $13,113 and $52,368 in cash, respectively, and the holders of the 31/8% Notes converted $26,228 and $122,855 principal amount into 748,812 and 3,507,527 shares of WebMD common stock, respectively. We recognized an aggregate pre-tax loss of $2,232 and $16,970 related to the repurchase of the 1.75% Notes and the repurchase and conversions of the 31/8% Notes during the three and nine months ended September 30, 2010, respectively. The loss includes the expensing of remaining deferred issuance costs outstanding related to the repurchased and converted notes.

As a result of the conversion and repurchase activity described above, as of September 30, 2010, the only convertible notes that remained outstanding were $85,327 principal amount of the 31/8% Notes, which were convertible into approximately 2.4 million shares of WebMD common stock. As a result of additional conversions and repurchase activity with respect to the 31/8% Notes in the fourth quarter of 2010, no convertible notes remained outstanding as of December 31, 2010.

On January 11, 2011, we issued $400,000 aggregate principal amount of 2.50% Convertible Notes due 2018 (which we refer to as the 2.50% Notes) in a private offering. Unless previously converted, the 2.50% Notes will mature on January 31, 2018. Net proceeds from the sale of the 2.50% Notes were approximately $387,345, after deducting the related offering expenses, of which approximately $100,000 was used by us to repurchase 1,920,490 shares of WebMD Common Stock at a price of $52.07 per share, the last reported sale price of WebMD Common Stock on January 5, 2011, which repurchase settled on January 11, 2011. Interest on the 2.50% Notes is payable semiannually on January 31 and July 31 of each year, commencing July 31, 2011. Under the terms of the 2.50% Notes, holders may surrender their 2.50% Notes for conversion into WebMD Common Stock at an initial conversion rate of 15.1220 shares of WebMD Common Stock per thousand dollars principal amount of 2.50% Notes. This is equivalent to an initial conversion price

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of approximately $66.13 per share of Common Stock. In the aggregate, the 2.50% Notes are convertible into 6,048,800 shares of Common Stock.

On March 14, 2011, we issued $400,000 aggregate principal amount of 2.25% Convertible Notes due 2016 (which we refer to as the 2.25% Notes) in a private offering. Unless previously converted, the 2.25% Notes will mature on March 31, 2016. Net proceeds from the sale of the 2.25% Notes were approximately $387,400, after deducting the related offering expenses, of which approximately $50,000 was used to repurchase 868,507 shares of WebMD’s Common Stock at a price of $57.57 per share, the last reported sale price of WebMD Common Stock on March 8, 2011, which repurchase settled on March 14, 2011. Interest on the 2.25% Notes is payable semi-annually on March 31 and September 30 of each year, commencing September 30, 2011. Under the terms of the 2.25% Notes, holders may surrender their 2.25% Notes for conversion into WebMD Common Stock at an initial conversion rate of 13.5704 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This is equivalent to an initial conversion price of approximately $73.69 per share of Common Stock. In the aggregate, the 2.25% Notes are convertible into 5,428,160 shares of Common Stock.

Stock Repurchase Programs.  During the nine months ended September 30, 2011, we repurchased 2,064,784 shares at an aggregate cost of $67,428 through our stock repurchase programs.

Tender Offers.  On September 8, 2010, we completed a tender offer for our common stock and repurchased 3,000,000 shares at a price of $52.00 per share. In this MD&A, we refer to this tender offer as the September 2010 Tender Offer. The total cost of the September 2010 Tender Offer was $156,421, which includes $421 of costs directly attributable to the purchase. On April 8, 2010, we completed a tender offer for our common stock and repurchased 5,172,204 shares at a price of $46.80 per share for total consideration of $242,795, which includes $736 of costs directly attributable to the purchase. In this MD&A, we refer to this tender offer as the April 2010 Tender Offer and, together with the September 2010 Tender Offer as the Tender Offers. The Tender Offers represented an opportunity for WebMD to return capital to stockholders who elected to tender their shares of WebMD common stock, while stockholders who chose not to participate in the Tender Offers automatically increased their relative percentage interest in our company at no additional cost to them.

Sale of Porex; Senior Secured Notes.  SNTC Holding, Inc., a wholly-owned subsidiary of our company, entered into a stock purchase agreement, dated as of September 17, 2009, for the sale of our Porex business (which we refer to as Porex) for which we received $74,378 in cash at closing, received $67,500 in senior secured notes (which we refer to as the Senior Secured Notes) and incurred approximately $4,900 of transaction expenses. The sale was completed on October 19, 2009. During the three months ended March 31, 2010, we also paid $1,430 to Porex related to the finalization of a customary working capital adjustment. On April 1, 2010, we sold the Senior Secured Notes to their issuer for $65,475 (which represented 97% of the aggregate principal amount) and received accrued interest through that date. We recognized a pre-tax gain of $1,362 related to the sale of the Senior Secured Notes during the nine months ended September 30, 2010.

Auction Rate Securities.  Effective April 20, 2010, we entered into an agreement pursuant to which we sold our holdings of auction rate securities (which we refer to as ARS), for an aggregate of $286,399. Under the terms of the agreement, we retained an option (which we refer to as the ARS Option), for a period of two years from the date of the agreement: (a) to repurchase from the purchaser the same principal amount of any or all of the various series of ARS sold at the agreed upon purchase prices received on April 20, 2010; and (b) to receive from the purchaser additional proceeds upon certain redemptions of the various series of ARS sold. Through the ARS Option, we received cash proceeds of $10,467 during the period from April 20, 2010 through December 31, 2010 and $16,561 during the nine months ended September 30, 2011.

Indemnification Obligations to Former Officers and Directors of EPS.  HLTH had certain indemnity obligations to advance amounts for reasonable defense costs for initially ten, and later four, former officers and directors of HLTH’s former Emdeon Practice Services subsidiary (which we refer to as EPS) who were indicted in connection with the investigation by United States Attorney for the District of South Carolina (which we refer to as the Investigation) described in Note 9, “Commitments and Contingencies” located in the Notes to the Consolidated Financial Statements included in this Quarterly Report. In connection with the sale of EPS to Sage Software in 2006, HLTH had retained responsibility for the obligations to advance amounts for

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reasonable defense costs for the former officers and directors of EPS who were indicted (which we refer to as the EPS Indemnification Obligations). During the years ended December 31, 2007, 2008 and 2009, we recorded aggregate pre-tax charges of $116,792, which represented the estimate of our costs related to the EPS Indemnification Obligations. As described in more detail in Note 9, “Commitments and Contingencies” located in the Notes to the Consolidated Financial Statements included in this Quarterly Report, two of the former officers and directors of EPS were found guilty; however, the Court set the verdict aside on May 27, 2010 and entered a judgment of acquittal. On January 19, 2011, the Court granted the motion of those two individuals for a new trial in the event that the government’s appeal of the Court’s ruling to set aside the verdict is successful. At that time, two other former officers of EPS were awaiting trial in Tampa, Florida, which was scheduled to begin on October 4, 2010; however, on July 9, 2010, the Court in Tampa placed the case against those defendants on hold pending resolution of the appeal of the South Carolina ruling. On June 8, 2011, upon the motion of the government, the United States Court of Appeals for the Fourth Circuit dismissed the government’s appeal of the District Court’s rulings, thereby ending the government’s case against Messrs. Kang and Sessions, the two defendants in South Carolina. On July 8, 2011, upon the motion of the government, the United States District Court for the Middle District of Florida granted a motion to dismiss the government’s case against the remaining two defendants in Florida. As a result of these two dismissals, it is our understanding that the Investigation has concluded.

As of December 31, 2010, the remaining accrual with respect to the EPS Indemnification Obligations was $7,527, and was included within liabilities of discontinued operations on our Consolidated Balance Sheet as of that date. During the nine months ended September 30, 2011, we reversed the remainder of this accrual as we have determined that we no longer have any remaining liability with respect to the EPS Indemnification Obligations as a result of the June 8, 2011 and July 8, 2011 dismissals described above. The reversal of the remaining accrual of $7,206 is included in income from discontinued operations, net of tax, within the consolidated statements of operations for the nine months ended September 30, 2011 included in this Quarterly Report. Also included within liabilities of discontinued operations related to this matter was $5,000 as of December 31, 2010, which represented certain reimbursements received from our insurance carriers between July 31, 2008 and December 31, 2010. We deferred recognizing these insurance reimbursements within the consolidated statement of operations because of the possibility they might have to be repaid to the insurance carriers under the terms of the applicable policies. However, as a result of the June 8, 2011 and July 8, 2011 dismissals described above, we believe that the insurance carriers do not have the ability to recover this amount and accordingly, we reversed this accrual. The reversal of $5,000 is included in income from discontinued operations, net of tax, within the consolidated statements of operations for the nine months ended September 30, 2011 included in this Quarterly Report.

Directors & Officers Liability Insurance Coverage Litigation.  On July 23, 2007, HLTH commenced litigation (which we refer to as the Coverage Litigation) in the Court of Chancery of the State of Delaware in and for New Castle County against ten insurance companies in which HLTH was seeking to compel the defendant companies (which we refer to collectively as the Defendants) to honor their obligations under certain directors and officers liability insurance policies (which we refer to as the Policies). WebMD succeeded to HLTH as plaintiff in this action as a result of the Merger. HLTH was seeking an order requiring the Defendants to advance and/or reimburse expenses that HLTH had incurred and expected to continue to incur for the EPS Indemnification Obligations. The Policies were issued to HLTH and to EPS, which was a co-plaintiff with WebMD in the Coverage Litigation (which we refer to collectively as the Plaintiffs). HLTH retained (and WebMD succeeded to as a result of the Merger) the right to assert claims and recover proceeds under the Policies on behalf of EPS.

Pursuant to a stipulation among the parties, the Coverage Litigation was transferred on September 13, 2007 to the Superior Court of the State of Delaware in and for New Castle County. The Policies were issued to HLTH and to EPS, which is a co-plaintiff with WebMD in the Coverage Litigation (which we refer to collectively as the Plaintiffs). When EPS was sold in September 2006 to Sage Software, HLTH retained responsibility for the EPS Indemnification Obligations and we assumed the EPS Indemnification Obligations as a result of the Merger. HLTH retained (and we succeeded to as a result of the Merger) the right to assert claims and recover proceeds under the Policies.

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Prior to the filing of the Second Amended Complaint which is discussed below, the Policies at issue in the Coverage Litigation consisted of two separate groups of insurance policies. Each group of policies consists of several layers of coverage, with different insurers having agreed to provide specified amounts of coverage at various levels. The first group of policies was issued to EPS in the amount of $20,000 (which we refer to as the EPS Policies) and the second group of policies was issued to Synetic, Inc. (the former parent of EPS, which merged into HLTH) in the amount of $100,000, of which approximately $3,600 was paid by the primary carrier with respect to another unrelated matter (which we refer to as the Synetic Policies).

The carrier with the third level of coverage in the Synetic Policies filed a motion for summary judgment in the Coverage Litigation, which most of the carriers who have issued the Synetic Policies joined, which sought summary judgment that any liability to pay defense costs should be allocated among the three sets of policies available to us (including the policies with respect to which the Coverage Litigation relates and a third set of policies the issuers of which had not yet been named by us) such that the Synetic Policies would only be liable to pay about $23,000 of the $96,400 total coverage available under such policies. HLTH filed its opposition to the motion together with its motion for summary judgment against such carrier and several other carriers who have issued the Synetic Policies seeking to require such carriers to advance payment of the defense costs that we are obligated to pay while the Coverage Litigation is pending. On July 31, 2008, the Superior Court for the State of Delaware denied the motion filed by the carriers seeking allocation and granted HLTH’s motion for partial summary judgment to enforce the duty of such carriers to advance and reimburse these costs. Pursuant to the Court’s order, the issuers of the Synetic Policies began reimbursing us for our costs as described below.

On September 9, 2008 and February 4, 2009, respectively, the eighth and ninth level carriers of the Synetic Policies notified HLTH that they believe that they were not bound by the Court’s July 31, 2008 order regarding the duty of the Synetic carriers to advance and reimburse defense costs. This resulted in HLTH making a motion to the Court on February 23, 2009 to require such eighth and ninth level carriers to advance and reimburse defense costs. HLTH later settled with the eighth level carrier. Under the terms of the settlement such carrier has paid, in full and final settlement, an agreed-upon percentage of the policy amount against each payment of defense costs made by us as such policy was implicated. On April 15, 2009, the ninth level carrier made a cross-motion for summary judgment claiming that, in light of a policy endorsement applicable only to the ninth level carrier, because of the time period during which the conspiracy charged in the Second Superseding Indictment is alleged to have taken place, the Synetic Policy issued by such carrier does not cover the EPS Indemnification Obligations. HLTH believed that such carrier’s motion was without merit and responded to the motion. On July 15, 2009, the Court granted summary judgment in favor of the ninth level carrier. Accordingly, the ninth level carrier was not liable to pay any portion of the $10,000 total coverage of its policy with respect to the EPS Indemnification Obligations. Approximately $84,200 had been paid by insurance companies representing the EPS Policies and the Synetic Policies through a combination of payment under the terms of the Policies, payment under reservation of rights or through settlement. Of this amount, $62,800 represents the portion received through settlement.

On November 17, 2008, HLTH filed a Second Amended Complaint which added four new insurance companies as defendants in the Coverage Action. These carriers are the issuers of a third set of policies (which we refer to as the Emdeon Policies) that provided coverage with respect to the EPS Indemnification Obligations. All but one of the carriers who issued the Emdeon Policies moved for summary judgment asserting that exclusions in the Emdeon Policies preclude coverage for the EPS Indemnification Obligations and HLTH filed motions seeking to compel such carriers to advance the costs incurred by HLTH with respect to the EPS Indemnification Obligations. On August 31, 2009, the Court issued two opinions. In the first opinion, the Court granted summary judgment in favor of HLTH with respect to one of the exclusions asserted by the carriers who issued the Emdeon Policies. In the second opinion, the Court granted summary judgment in favor of the carriers with respect to the other exclusion asserted by such carriers. We and the carriers who issued the Emdeon Policies (with the exception of the second level carrier with whom we have settled) each appealed the trial Court’s August 31, 2009 rulings to the Supreme Court of Delaware and, on April 22, 2010, the Supreme Court decided both appeals in favor of the carriers who issued the Emdeon Policies. The

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implication of this decision was that we had effectively exhausted our insurance coverage with respect to the EPS Indemnification Obligations.

The insurance carriers had also asserted that our insurance policies provided that under certain circumstances, amounts advanced by the insurance companies in connection with the EPS Indemnification Obligations would have to be repaid to the insurance carriers by us, although the amounts that we received in settlement from certain carriers were not subject to being repaid. As a result of the manner in which the Investigation ended, we believe that the insurance carriers do not have the ability to recover any amounts they have previously advanced.

In addition to the Coverage Litigation, on December 22, 2009, TIG Specialty Insurance Company (which we refer to as TIG), the second level issuer of the EPS Policies, commenced an action against us to recover the $5,000 that TIG advanced to us in 2006. Our company and TIG settled this matter in 2010.

Seasonality

The timing of our revenue is affected by seasonal factors. Our public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of our public portals. This portion of our revenue is usually the lowest in the first quarter of each calendar year, and increases during each consecutive quarter throughout the year. The timing of revenue in relation to our expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing and general and administrative expenses as a percentage of revenue in each calendar quarter.

Critical Accounting Estimates and Policies

Critical Accounting Estimates

Our MD&A is based upon our Consolidated Financial Statements and Notes to Consolidated Financial Statements, which were prepared in conformity with U.S. generally accepted accounting principles. The preparation of the Consolidated Financial Statements requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and the disclosure of contingent assets and liabilities. We are subject to uncertainties such as the impact of future events, economic and political factors, and changes in our business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of our financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to our Consolidated Financial Statements.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and indefinite lived intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued expenses, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards.

Critical Accounting Policies

We believe the following reflects our critical accounting policies and our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements:

•  Revenue Recognition.  Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and

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distribution arrangements, information services and licenses of healthcare management tools and private portals as well as related health coaching services are recognized ratably over the term of the applicable agreement. Revenue from the sponsorship of CME is recognized over the period that we substantially complete our contractual deliverables as determined by the applicable agreements.

For contracts that contain multiple deliverables that were entered into prior to January 1, 2011, revenue is allocated to each deliverable based on its relative fair value determined using vendor-specific objective evidence (“VSOE”). In certain instances where fair value did not exist for all the elements, the amount of revenue allocated to the delivered elements equals the total consideration less the fair value of the undelivered elements to the extent VSOE exists for the undelivered elements. In instances where fair value did not exist for the undelivered elements, the entire consideration is recognized over the period that the last element is delivered.

Contracts that contain multiple deliverables that were entered into subsequent to January 1, 2011 are subject to Accounting Standards Update No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also changes the level of evidence of selling price required to separate deliverables by allowing a company to make its best estimate of the standalone selling price of deliverables when more objective evidence of selling price is not available.

We adopted ASU 2009-13 on a prospective basis for arrangements entered into or materially modified on or subsequent to January 1, 2011. Beginning January 1, 2011, pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, we allocate revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on VSOE if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. We then recognize revenue on each deliverable in accordance with our revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, we require that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. We are generally not able to determine TPE of selling price as we are unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that our services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgmental process that considers multiple factors including, but not limited to, recent selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

As a result of the adoption of ASU 2009-13, revenue for the three months ended September 30, 2011 was lower by $300 and revenue during the nine months ended September 30, 2011 was higher by $3,400, than the revenue that would have been recorded under the previous accounting standards. This resulted from services that were provided or partially provided during the three and nine months ended September 30, 2011, for certain deliverables of our multiple deliverable arrangements for which we would have previously deferred the related revenue under the previous accounting standards. During the three and nine months ended September 30, 2011, we assigned value to these deliverables using our best estimate of selling price, and recognized revenue as they were delivered. The multiple deliverable arrangements that were impacted by ASU 2009-13 related to our public portal revenues and the services underlying such arrangements are generally delivered over periods of twelve months or less. We are not able to reasonably estimate the effect of adopting ASU 2009-13 on future periods as the impact will vary based on many factors including, but not limited to, the quantity and size of new or materially modified multiple-deliverable arrangements entered into, as well as the nature of the various services contained within those arrangements and the time periods over which those services are delivered.

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•  Long-Lived Assets.  Our long-lived assets consist of property and equipment, goodwill and other intangible assets. Goodwill and other intangible assets arise from the acquisitions we have made. The amount assigned to intangible assets is subjective and based on fair value using exit price and market participant view, such as discounted cash flow and replacement cost models. Our long-lived assets, excluding goodwill and indefinite lived intangible assets, are amortized over their estimated useful lives, which we determine based on the consideration of several factors including the period of time the asset is expected to remain in service. We evaluate the carrying value and remaining useful lives of long-lived assets, excluding goodwill and indefinite lived intangible assets, whenever indicators of impairment are present. We evaluate the carrying value of goodwill and indefinite lived intangible assets annually, or whenever indicators of impairment are present. We use a discounted cash flow approach to determine the fair value of goodwill and indefinite lived intangible assets. Long-lived assets held for sale are reported at the lower of cost or fair value less cost to sell. There was no impairment of goodwill or indefinite lived intangible assets noted as a result of our impairment testing in 2010.

•  Fair Value of Investments in Auction Rate Securities (ARS).  Through April 20, 2010, we held investments in ARS which were backed by student loans, 97% guaranteed under the Federal Family Education Loan Program (FFELP), and had credit ratings of AAA or Aaa when purchased. Historically, the fair value of these ARS holdings approximated par value due to the frequent auction periods, generally every 7 to 28 days, which provided liquidity to these investments. However, since February 2008, substantially all auctions involving these securities have failed. The result of a failed auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets develop. Additionally, approximately one-half of the auction rate securities we held were, during 2009, either downgraded below AAA or placed on “watch” status by one or more of the major credit rating agencies.

During the periods that we held them, we estimated the fair value of our ARS holdings using an income approach valuation technique. Using this approach, expected future cash flows are calculated over the expected life of each security and are discounted to a single present value using a market required rate of return. Some of the more significant assumptions made in the present value calculations included (i) the estimated weighted average lives for the loan portfolios underlying each individual ARS and (ii) the required rates of return used to discount the estimated future cash flows over the estimated life of each security, which considered both the credit quality for each individual ARS and the market liquidity for these investments. Additionally, effective April 1, 2009, we adopted new authoritative guidance which required us to separate losses associated with our ARS into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors. As discussed above, certain of the auction rate securities we held were, during 2009, downgraded below AAA by one or more of the major credit rating agencies. These revised credit ratings were a significant consideration in determining the estimated credit loss associated with our ARS.

Our ARS were classified as Level 3 assets as their valuation, including the portion of their valuation attributable to credit losses, required substantial judgment and estimation of factors that were not currently observable in the market due to the lack of trading in the securities. If different assumptions were used for the various inputs to the valuation approach including, but not limited to, assumptions involving the estimated lives of the ARS holdings, the estimated cash flows over those estimated lives, and the estimated discount rates applied to those cash flows, the estimated fair value of those investments could have been significantly higher or lower than the fair value we determined. In connection with the sale of our ARS on April 20, 2010, we retained an option (which we refer to as the ARS Option), for a period of two years: (a) to repurchase from the purchaser the same principal amount of any or all of the various series of ARS sold, at the agreed upon purchase prices received on April 20, 2010; and (b) to receive additional proceeds from the purchaser upon certain redemptions of the various series of ARS sold. During 2010, we recognized an aggregate gain of $14,712 related to the

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ARS Option, and received cash proceeds of $10,467 during the period from April 20, 2010 through December 31, 2010. During the nine months ended September 30, 2011, we recorded an aggregate gain of $14,679 related to the ARS Option and we received cash proceeds of $16,561. The value of the ARS Option as of September 30, 2011 is estimated to be $2,363 and has been classified as a Level 3 asset as its valuation requires substantial judgment. The historical redemption activity of the specific ARS underlying the ARS Option was the most significant assumption used to determine an estimated value of the ARS Option. We are required to reassess the value of this ARS Option at each reporting period, and any changes in value will be recorded within the statement of operations in future periods. See Note 5 in the Notes to the Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our ARS Option.

•  Stock-Based Compensation.  Stock-based compensation expense for all share-based payment awards granted is determined based on the grant-date fair value. The grant-date fair value for stock options is estimated using the Black-Scholes Option Pricing Model. We recognize these compensation costs net of an estimated forfeiture rate on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the share-based payment awards. As of September 30, 2011, there was approximately $95.3 million of unrecognized stock-based compensation expense (net of estimated forfeitures) related to unvested stock options and restricted stock awards held by employees, which is expected to be recognized over a weighted-average period of approximately 2.9 years, related to our stock-based compensation plans.

•  Deferred Taxes.  Our deferred tax assets are comprised primarily of net operating loss carryforwards and federal tax credits. These net operating loss carryforwards and federal tax credits may be used to offset taxable income in future periods, reducing the amount of taxes we might otherwise be required to pay. A significant portion of our net deferred tax assets, including the portion related to excess tax benefits of stock-based awards, are reserved for by a valuation allowance as required by relevant accounting literature. The remaining portion of our net deferred tax assets are no longer reserved for by a valuation allowance. Management determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration factors including historical operating results, expectations of future earnings and taxable income. Management will continue to evaluate the need for a valuation allowance in the future.

•  Tax Contingencies.  Our tax contingencies are recorded to address potential exposures involving tax positions we have taken that could be challenged by tax authorities. These potential exposures result from applications of various statutes, rules, regulations and interpretations. Our estimates of tax contingencies reflect assumptions and judgments about potential actions by taxing jurisdictions. We believe that these assumptions and judgments are reasonable. However, our accruals may change in the future due to new developments in each matter and the ultimate resolution of these matters may be greater or less than the amount that we have accrued. Consistent with our historical financial reporting, we have elected to reflect interest and penalties related to uncertain tax positions as part of the income tax provision (benefit).

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Results of Operations

The following table sets forth our consolidated statements of operations data and expresses that data as a percentage of revenue for the periods presented:

	Three Months Ended September 30,												Nine Months Ended September 30,
	2011						2010						2011					2010
	$			%(a)			$			%(a)			$			%(a)		$			%(a)
Revenue	$	135,138			100.0		$	135,305			100.0		$	408,116			100.0	$	366,042			100.0
Cost of operations		49,097			36.3			47,610			35.2			148,698			36.4		135,972			37.1
Sales and marketing		29,597			21.9			28,957			21.4			94,161			23.1		86,789			23.7
General and administrative		22,787			16.9			22,964			17.0			67,614			16.6		62,350			17.0
Depreciation and amortization		6,781			5.0			6,935			5.1			19,929			4.9		20,268			5.5
Interest income		21			—			21			—			88			—		3,850			1.1
Interest expense		5,862			4.3			1,797			1.3			14,836			3.6		10,106			2.8
Loss on convertible notes		—			—			2,232			1.6			—			—		16,970			4.6
(Loss) gain on investments		(1,150	)		(0.9	)		(131	)		(0.1	)		14,679			3.6		(22,977	)		(6.3	)
Other income (expense), net		—			—			107			0.1			(53	)		—		(92	)		—
Income from continuing operations before income tax provision (benefit)		19,885			14.7			24,807			18.3			77,592			19.0		14,368			3.9
Income tax provision (benefit)		8,645			6.4			10,193			7.5			32,606			8.0		(4,140	)		(1.1	)
Income from continuing operations		11,240			8.3			14,614			10.8			44,986			11.0		18,508			5.1
Income (loss) from discontinued operations, net of a tax provision of $0 and $4,812 for the three and nine months ended September 30, 2011 and a tax benefit of $1,476 for the three and nine months ended September 30, 2010		2,994			2.2			(1,024	)		(0.8	)		10,388			2.5		(1,024	)		(0.3	)
Net income	$	14,234			10.5		$	13,590			10.0		$	55,374			13.6	$	17,484			4.8

(a) Amounts may not add due to rounding.

Revenue from our public portal advertising and sponsorship is derived from online advertising, sponsorship (including online CME services), e-detailing promotion and physician recruitment services, content syndication and distribution, information services and other print services (including advertisements in WebMD the Magazine). Revenue from our private portal services is derived from licensing our private online portals to employers, healthcare payers and others, along with related services including lifestyle education and personalized telephonic coaching. Our customers include pharmaceutical, biotechnology, medical device and consumer products companies, as well as employers and health plans.

Cost of operations consists of salaries and related expenses, and non-cash stock-based compensation expense related to providing and distributing services and products we provide to customers and costs associated with the operation and maintenance of our public and private portals. Cost of operations also consists of editorial and production costs, Website operations costs, non-capitalized Website development costs, costs we pay to our distribution partners, costs associated with our lifestyle education and personalized telephonic coaching services, and costs related to the production and distribution of our publications, including costs related to creating and licensing content, telecommunications, leased properties and printing and distribution.

Sales and marketing expense consists primarily of advertising, product and brand promotion, as well as selling expenses including salaries and related expenses, and non-cash stock-based compensation for account executives and account management. These expenses include items related to salaries and related expenses of marketing personnel, costs and expenses for marketing programs, and fees for professional marketing and advertising services.

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General and administrative expense consists primarily of salaries, non-cash stock-based compensation and other salary-related expenses of administrative, finance, legal, information technology, human resources and executive personnel. Also included in general and administrative expense are general insurance and costs of accounting and internal control systems to support our operations.

Our discussions throughout MD&A make references to certain non-cash expenses. Our principal non-cash expenses related to the awards of all share-based payments to employees and non-employee directors, such as grants of employee stock options and restricted stock. Non-cash stock-based compensation expense is reflected in the same expense captions as the related salary cost of the respective employee.

The following table is a summary of our non-cash expenses included in the respective statements of operations captions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Stock-based compensation expense included in:
Cost of operations	$	1,718	$	1,889	$	5,677	$	5,153
Sales and marketing		2,286		1,867		6,865		5,749
General and administrative		5,804		5,048		16,427		12,703
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605

Three and Nine Months Ended September 30, 2011 and 2010

The following discussion is a comparison of our results of operations on a consolidated basis for the three and nine months ended September 30, 2011 and 2010.

Revenue

Our total revenue for the three months ended September 30, 2011 was $135,138, which was generally consistent with revenue of $135,305 in the prior year period. Our total revenue during the nine months ended September 30, 2011 increased 11.5% to $408,116, from $366,042 during the nine months ended September 30, 2010. This increase was due to higher revenue from our public portals offset by a decrease in revenue from our private portal services. A more detailed discussion regarding changes in revenue is included below under “— Supplemental Financial and Operating Information.”

Costs and Expenses

Cost of Operations.  Cost of operations increased to $49,097 and $148,698 in the three and nine months ended September 30, 2011, respectively, from $47,610 and $135,972 in the prior year periods. As a percentage of revenue, cost of operations was 36.3% and 36.4% in the three and nine months ended September 30, 2011, compared to 35.2% and 37.1% for the prior year periods. Included in cost of operations was non-cash expense related to stock-based compensation of $1,718 and $5,677 during the three and nine months ended September 30, 2011, respectively, compared to $1,889 and $5,153 in the prior year periods. Cost of operations excluding such non-cash expense was $47,379 and $143,021 in the three and nine months ended September 30, 2011, respectively, or 35.1% and 35.0% of revenue, compared to $45,721 and $130,819, or 33.8% and 35.7% of revenue for the prior year periods. The increase in absolute dollars during the three and nine months ended September 30, 2011 compared to the prior year periods was primarily attributable to an increase of approximately $2,635 and $14,612, respectively, of Website operations expense associated with the delivery of our advertising and sponsorship arrangements and increased traffic to our Websites, and a decrease of approximately $1,464 and $3,448 in development and distribution expense.

Sales and Marketing.  Sales and marketing expense increased to $29,597 and $94,161 in the three and nine months ended September 30, 2011, respectively, from $28,957 and $86,789 in the prior year periods. As a percentage of revenue, sales and marketing expense was 21.9% and 23.1% in the three and nine months

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ended September 30, 2011, compared to 21.4% and 23.7% for the prior year periods. Included in sales and marketing expense was non-cash expense related to stock-based compensation of $2,286 and $6,865 during the three and nine months ended September 30, 2011, respectively, compared to $1,867 and $5,749 in the prior year periods. Sales and marketing expense, excluding such non-cash expense, was $27,311 and $87,296 in the three and nine months ended September 30, 2011, respectively, or 20.2% and 21.4% of revenue, compared to $27,090 and $81,040, or 20.0% and 22.1% of revenue for the prior year periods. The increase in absolute dollars was primarily attributable to an increase in compensation related costs due to increased staffing.

General and Administrative.  General and administrative expense decreased to $22,787 for the three months ended September 30, 2011 and increased to $67,614 for the nine months ended September 30, 2011, respectively, from $22,964 and $62,350 in the prior year periods. As a percentage of revenue, general and administrative expense was 16.9% and 16.6% in the three and nine months ended September 30, 2011, respectively, compared to 17.0% and 17.0% for the prior year periods. Included in general and administrative expense was non-cash stock-based compensation expense of $5,804 and $16,427 during the three and nine months ended September 30, 2011, respectively, compared to $5,048 and $12,703 in the prior year periods. The increase in non-cash stock-based compensation expense was primarily due to certain stock options and restricted stock awards that were granted during 2010 and 2011, for which there was expense in the 2011 periods, but no expense or only partial expense in the 2010 periods. General and administrative expense, excluding such non-cash expense, was $16,983 and $51,187 in the three and nine months ended September 30, 2011, respectively, or 12.6% and 12.5% of revenue, compared to $17,916 and $49,647, or 13.2% and 13.6% of revenue during for the prior year periods. The decrease in general and administrative expense as a percentage of revenue, excluding the non-cash expense discussed above, for the nine months ended September 30, 2011 compared to the prior year period, was primarily due to our ability to achieve the increase in revenue without incurring a proportional increase in general and administrative expense.

Depreciation and Amortization.  Depreciation and amortization expense was $6,781 and $19,929 in the three and nine months ended September 30, 2011, respectively, compared to $6,935 and $20,268 in the prior year periods. Amortization expense decreased by $121 and $662 during the three and nine months ended September 30, 2011 over the prior year period resulting from certain intangible assets becoming fully amortized. The decrease in amortization expense during the nine months ended September 30, 2011 compared to the prior year period was offset in part by an increase in depreciation expense of $323 relating to capital expenditures in 2011 and 2010.

Interest Income.  Interest income decreased to $21 and $88 in the three and nine months ended September 30, 2011, respectively, from $21 and $3,850 in the prior year periods. The higher interest income during the nine months ended September 30, 2010 was attributable to our investments in auction rate securities and the Senior Secured Notes related to Porex, both of which were sold in April 2010.

Interest Expense.  Interest expense was $5,862 and $14,836 in the three and nine months ended September 30, 2011, respectively, compared to $1,797 and $10,106 in the prior year periods. Interest expense in the three and nine months ended September 30, 2011 included non-cash interest expense of $1,103 and $2,702, respectively, related to the amortization of the debt issuance costs for our 2.50% Notes and our 2.25% Notes. Interest expense in the three and nine months ended September 30, 2010 included non-cash interest expense of $977 and $5,149 related to the amortization of the debt discount for our 31/8% Notes and our 1.75% Notes. The increase in interest expense is a result of higher debt outstanding during 2011 when compared to 2010.

Loss on Convertible Notes.  During the nine months ended September 30, 2010, we repurchased $32,446 principal amount of our 1.75% Notes. Additionally, during the three and nine months ended September 30, 2010, we repurchased $9,942 and $42,118 principal amount of our 31/8% Notes and the holders of the 31/8% Notes converted $26,228 and $122,855 principal amount into shares of our common stock, respectively. As a result of these repurchases and conversions, we recognized a net loss of $2,232 and $16,970 during the three and nine months ended September 30, 2010, respectively. No 1.75% Notes or 31/8% Notes were outstanding at December 31, 2010.

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(Loss) Gain on Investments.  On April 20, 2010, we sold our holdings of ARS for an aggregate of $286,399. See “— Introduction — Background Information on Certain Transactions and Other Significant Developments — Auction Rate Securities” for additional information. As a result, during the three months ended March 31, 2010 we recorded a charge of $28,848, representing the difference between the adjusted cost basis of our ARS holdings and the proceeds received on April 20, 2010. Also during the nine months ended September 30, 2010, we recorded gains of $5,871 related to the sale of our remaining equity investments, the sale of our Senior Secured Notes and adjustments in the value of our ARS Option. During the three and nine months ended September 30, 2011, we recorded a (loss) gain on investments of $(1,150) and $14,679, respectively, related to adjustments in the value of our ARS Option.

Other Income (Expense), Net.  Included in other income (expense), net was $0 and $53 for the three and nine months ended September 30, 2011 compared to $70 and $625 in the prior periods of external legal costs and expenses we incurred related to the investigation by the United States Attorney for the District of South Carolina and the SEC and the related Coverage Litigation. Also included in other income (expense), net for the three and nine months ended September 30, 2010 was $177 and $533, respectively, related to the reversal of certain sales and use tax contingencies resulting from the expiration of various statutes of limitations.

Income Tax Provision (Benefit).  The income tax provision was $8,645 and $32,606 for the three and nine months ended September 30, 2011, compared to an income tax provision of $10,193 for the three months ended September 30, 2010 and a benefit of $4,140 for the nine months ended September 30, 2010. Included in the income tax benefit for the nine months ended September 30, 2010 is a deferred tax benefit of approximately $22,000 primarily related to the reversal of income tax valuation allowance attributable to the sale of our investments in ARS.

Income (Loss) from Discontinued Operations, Net of Tax.  Income from discontinued operations, net of tax, was $2,994 and $10,388 for the three and nine months ended September 30, 2011, respectively, compared to a loss from discontinued operations, net of tax, of $1,024 for the three and nine months ended September 30, 2010. Included in income from discontinued operations during the three and nine months ended September 30, 2011 is $2,994 related to an adjustment of the tax indemnification liability of our former Porex business as a result of the completion of an audit for one of the related matters. Also included in income from discontinued operations during the current and prior periods are adjustments to our indemnity obligations related to the investigation by the United States Attorney for the District of South Carolina and the SEC and the related Coverage Litigation. The Company understands that the government’s investigation into this matter has ended. For additional information, see “Introduction — Background Information on Certain Transactions and other Significant Developments — EPS Indemnification Obligations” and “— Directors & Officers Liability Insurance Coverage Litigation.”

Supplemental Financial and Operating Information

The following table and the discussion that follows presents information for groups of revenue based on similar services we provide, as well as information related to a non-GAAP performance measure that we use to monitor the performance of our business which we refer to as “Earnings before interest, taxes, non-cash and

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other items” or “Adjusted EBITDA.” Due to the fact that Adjusted EBITDA is a non-GAAP measure, we have also included a reconciliation from Adjusted EBITDA to net income.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenue
Public portal advertising and sponsorship	$	115,033		$	113,078		$	346,504		$	299,927
Private portal services		20,105			22,227			61,612			66,115
	$	135,138		$	135,305		$	408,116		$	366,042
Earnings before interest, taxes, non-cash and other items (Adjusted EBITDA)	$	43,465		$	44,578		$	126,612		$	104,536
Interest, taxes, non-cash and other items
Interest income		21			21			88			3,850
Interest expense		(5,862	)		(1,797	)		(14,836	)		(10,106	)
Income tax (provision) benefit		(8,645	)		(10,193	)		(32,606	)		4,140
Depreciation and amortization		(6,781	)		(6,935	)		(19,929	)		(20,268	)
Non-cash stock-based compensation		(9,808	)		(8,804	)		(28,969	)		(23,605	)
Loss on convertible notes		—			(2,232	)		—			(16,970	)
(Loss) gain on investments		(1,150	)		(131	)		14,679			(22,977	)
Other income (expense), net		—			107			(53	)		(92	)
Income from continuing operations		11,240			14,614			44,986			18,508
Income (loss) from discontinued operations, net of tax		2,994			(1,024	)		10,388			(1,024	)
Net income	$	14,234		$	13,590		$	55,374		$	17,484

The following discussion is a comparison of the results of operations for our two groups of revenue and our Adjusted EBITDA for the three and nine months ended September 30, 2011 and 2010.

Public Portal Advertising and Sponsorship.  Public portal advertising and sponsorship revenue was $115,033 and $346,504 in the three and nine months ended September 30, 2011, respectively, an increase of $1,955 or 1.7% and $46,577 or 15.5%, respectively, from the prior year periods. As a result of the adoption of a new revenue recognition standard that impacts the timing of revenue related to multiple deliverable revenue arrangements, revenue for the three months ended September 30, 2011 was lower by $300 and revenue during the nine months ended September 30, 2011 was higher by $3,400, than the revenue that would have been recognized under the previous accounting standard. For a more detailed description of the impact of this new accounting guidance, see “— Critical Accounting Estimates and Policies — Critical Accounting Policies — Revenue Recognition”. In general, pricing remained relatively stable for our advertising and sponsorship programs and was not a significant source of the change in revenue.

Private Portal Services.  Private portal services revenue was $20,105 and $61,612 in the three and nine months ended September 30, 2011, respectively, a decrease of $2,122 or 9.5% and $4,503 or 6.8%, respectively, from the prior year periods. The number of companies using our private portal platform was 121 as of September 30, 2011, compared to 124 in the prior year period. The decline in revenue was primarily due to a decline in the number of employees and health plan members of our customers and a reduction in the overall number of customers. In general, pricing remained relatively stable for our private portal services and was not a significant source of the revenue decrease. As of September 30, 2011, we also had approximately 121 additional customers who purchase stand-alone decision support services from us, compared to 130 customers at September 30, 2010.

Adjusted EBITDA.  Adjusted EBITDA increased to $43,465 and $126,612 in the three and nine months ended September 30, 2011, respectively, from $44,578 and $104,536 in the prior year periods. As a percentage of revenue, Adjusted EBITDA was 32.2% and 31.0% for the three and nine months ended September 30,

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2011, respectively, compared to 32.9% and 28.6% in the prior year periods. As a percentage of revenue, Adjusted EBITDA decreased during the three months ended September 30, 2011 compared to the prior year period, as overall revenue was slightly lower in 2011 as compared to 2010. As a percentage of revenue, Adjusted EBITDA increased during the nine months ended September 30, 2011, compared to the prior year period, primarily due to higher revenue, specifically related to the revenue of our public portals, without incurring a proportionate increase in overall expenses.

Explanatory Note Regarding Adjusted EBITDA.  Adjusted EBITDA is a non-GAAP financial measure and should be viewed as supplemental to, and not as an alternative for, “income (loss) from continuing operations” or “net income (loss)” calculated in accordance with GAAP. Our management uses Adjusted EBITDA as an additional measure of 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 financial results that may not be shown solely by period-to-period comparisons of income (loss) from continuing operations or net income (loss). In addition, we use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees in order to evaluate our performance. 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 our management in light of the performance metrics used in making those decisions. In addition, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to income (loss) from continuing operations or to net income (loss), helps investors make comparisons between us 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. Please see the “Explanation of Non-GAAP Financial Measures” filed as Exhibit 99.1 to this Quarterly Report for additional background information regarding our use of Adjusted EBITDA. Exhibit 99.1 is incorporated in this MD&A by this reference.

Liquidity and Capital Resources

As of September 30, 2011, we had $1.1 billion of cash and cash equivalents, and working capital of $1.1 billion. Our cash and cash equivalents and working capital are affected by the timing of each period end in relation to items such as payments received from customers, payments made to vendors, the timing of interest payments related to our convertible debt and internal payroll and billing cycles, as well as the seasonality within our business. Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.

Cash provided by operating activities from our continuing operations during the nine months ended September 30, 2011 was $98,487, which related to consolidated net income of $55,374, adjusted for the income from discontinued operations of $10,388, the gain on investments of $14,679, the non-cash income tax provision of $5,378 related to deferred income taxes, and other non-cash expenses of $51,600, which include depreciation and amortization expense, non-cash interest expense and non-cash stock-based compensation expense. Additionally, changes in operating assets and liabilities provided cash flow of $11,202, primarily due to cash provided by a decrease in accounts receivable of $16,510 and a decrease in prepaid expenses and other assets of $1,238, offset in part by a decrease in deferred revenue of $6,370.

Cash provided by operating activities from our continuing operations during the nine months ended September 30, 2010 was $89,826, which related to consolidated net income of $17,484, adjusted for a loss from discontinued operations of $1,024, for the losses on investments and convertible notes aggregating $39,947, for the non-cash deferred income tax benefit of $17,260, and for other non-cash expenses of $48,735, which include depreciation and amortization expense, non-cash interest expense and non-cash stock-based compensation expense. Additionally, changes in operating assets and liabilities used cash flow of $104, primarily due to cash provided by an increase in deferred revenue of $3,413 and an increase in accrued liabilities and other long-term liabilities of $1,695 offset by cash used as a result of an increase in prepaid expenses of $3,006 and an increase in accounts receivable of $2,206.

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Cash provided by investing activities was $500 during the nine months ended September 30, 2011, compared to cash provided by investing activities of $340,500 in the prior period. We received $16,561 related to our ARS Option during the nine months ended September 30, 2011 compared to $362,259 received in the 2010 period from to the sale of our auction rate securities and other available-for-sale securities. We used $16,061 in connection with purchases of property and equipment during the nine months ended September 30, 2011 compared to $20,329 of purchases of property and equipment in the prior year period.

Cash provided by financing activities was $601,934 during the nine months ended September 30, 2011, compared to cash used in financing activities of $520,811 in the prior period. Cash provided by financing activities in the 2011 period principally related to the issuance of $400,000 aggregate principal amount 2.50% Notes and $400,000 aggregate principal amount 2.25% Notes. After deducting the related issuance costs, the issuance of our 2.50% Notes and 2.25% Notes resulted in an aggregate cash inflow of $774,745. Other sources of cash during the nine months ended September 30, 2011 included $26,435 of proceeds received from the exercise of stock options and $24,911 of a tax benefit on stock-based awards. Cash used in financing activities in the 2011 period principally related to $217,427 used for the repurchase of our Common Stock and $6,730 used for withholding taxes on stock-based awards. Cash used in financing activities in the 2010 period principally related $420,948 used in connection with the repurchase of our common shares through tender offers and through our repurchase program, $94,475 used for the repurchase of our 1.75% and 31/8% Notes, and cash used for withholding taxes due on stock-based awards of $76,559. These uses of cash were offset by proceeds of $57,168 from the exercise of stock options and related excess tax benefit on stock-based awards of $14,003.

Included in our consolidated statements of cash flows for the nine months ended September 30, 2011 are cash flows related to our discontinued operations which include $136 and $17,082 in payments made in the 2011 and 2010 periods, respectively, in connection with the defense costs of the former officers and directors of our former EPS subsidiary in connection with the investigation by the United States Attorney for the District of South Carolina and the SEC. For additional information, see “Introduction — Background Information on Certain Transactions and other Significant Developments — EPS Indemnification Obligations” and “— Directors & Officers Liability Insurance Coverage Litigation.”

Potential future uses of cash include repurchases of our Common Stock and our anticipated capital expenditure requirements for the fourth quarter of 2011, which we currently estimate to be $5,000 to $10,000 and which relate to expansion of our facilities and improvements that will be deployed across our public and private portal Websites in order to enable us to service future growth in unique users and page views, as well as to create new sponsorship areas for our customers, and to improve the systems used to provide our private portal applications.

Based on our plans and expectations, we believe that our available cash resources and future cash flow from operations will provide sufficient cash resources to meet the cash commitments of our Convertible Notes and to fund our currently anticipated working capital and capital expenditure requirements for at least the next twenty-four months. Our future liquidity and capital requirements will depend upon numerous factors, including retention of customers at current volume and revenue levels, implementation of new or updated application and service offerings, competing technological and market developments and potential future acquisitions. In addition, our ability to generate cash flow is subject to numerous factors beyond our control, including general economic, regulatory and other matters affecting us and our customers. We plan to continue to enhance our online services and to continue to invest in acquisitions, strategic relationships, facilities and technological infrastructure and product development. We intend to grow each of our existing businesses and enter into complementary ones through both internal investments and acquisitions. We may need to raise additional funds to support expansion, develop new or enhanced applications and services, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. If required, we may raise such additional funds through public or private debt or equity financing, strategic relationships or other arrangements. We cannot assure that such financing will be available on acceptable terms, if at all, or that such financing will not be dilutive to our stockholders. Future indebtedness may impose various restrictions and covenants on us that could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities.

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Accounting Pronouncements to be Adopted in the Future

In September 2011, the Financial Accounting Standards Board (the “FASB”) issued an update to the existing guidance for goodwill and other intangible assets. The update simplifies how a company tests goodwill for impairment by allowing both public and nonpublic entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, an entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. We do not anticipate that the adoption of these amendments will have a material impact on our financial condition, results of operations or cash flows.

In June 2011, the FASB issued an amendment to the existing guidance on the presentation of comprehensive income. Under the amended guidance, entities have the option to present the components of net income and other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Entities no longer have the option of presenting the components of other comprehensive income within the statement of changes in stockholders’ equity. For public entities, the amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this amendment will result in a change only to our current presentation of comprehensive income.

In May 2011, the FASB issued amendments to the existing guidance on fair value measurement. The amendments are intended to create consistency between U.S. generally accepted accounting standards and International Financial Reporting Standards on measuring fair value and disclosing information about fair value measurements. The amendments clarify the application of existing fair value measurement requirements including (i) the application of the highest and best use valuation premise concepts, (ii) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (iii) quantitative information required for fair value measurements categorized within Level 3. In addition, the amendments require additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011. These changes are required to be applied prospectively. We are currently evaluating the impact that this amendment may have on our financial condition and results of operations.

ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

The primary objective of our investment activities is to preserve principal and maintain adequate liquidity.

Our cash and cash equivalents are invested in money market investments, which approximate $1.1 billion at September 30, 2011, and are not subject to changes in interest rates.

The 2.50% Notes and the 2.25% Notes have fixed interest rates; therefore, changes in interest rates will not impact our results of operations or financial position.

ITEM 4.   Controls and Procedures

As required by Exchange Act Rule 13a-15(b), WebMD management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of WebMD’s disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of September 30, 2011. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that WebMD’s disclosure controls and procedures were effective as of September 30, 2011.

In connection with the evaluation required by Exchange Act Rule 13a-15(d), WebMD management, including the Chief Executive Officer and Chief Financial Officer, concluded that no changes in WebMD’s internal control over financial reporting occurred during the third quarter of 2011 that have materially affected, or are reasonably likely to materially affect, WebMD’s internal control over financial reporting.

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PART II
OTHER INFORMATION

ITEM 1.   Legal Proceedings

The information relating to legal proceedings contained in Note 9 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report is incorporated herein by this reference.

ITEM 1A.   Risk Factors

This section describes circumstances or events that could have a negative effect on our financial results or operations or that could change, for the worse, existing trends in some or all of our businesses. The occurrence of one or more of the circumstances or events described below could have a material adverse effect on our financial condition, results of operations and cash flows or on the trading prices of our Common Stock and Convertible Notes or of securities that we may issue in the future. The risks and uncertainties described in this Quarterly Report are not the only ones facing us. Additional risks and uncertainties that are not currently known to us, or that we currently believe are immaterial, may also adversely affect our business and operations.

Risks Related to Our Operations and the Healthcare Content We Provide

If we are unable to provide content and services that attract and retain users to The WebMD Health Network on a consistent basis, our advertising and sponsorship revenue could be reduced

Users of The WebMD Health Network have numerous other online and offline sources of healthcare information and related services. Our ability to compete for user traffic on our public portals depends upon our ability to make available a variety of health and medical content, decision-support applications and other services that meet the needs of a variety of types of users, including consumers, physicians and other healthcare professionals, with a variety of reasons for seeking information. Our ability to do so depends, in turn, on:

•  our ability to hire and retain qualified authors, journalists and independent writers;

•  our ability to license quality content from third parties; and

•  our ability to monitor and respond to increases and decreases in user interest in specific topics.

We cannot assure you that we will be able to continue to develop or acquire needed content, applications and tools at a reasonable cost. In addition, since consumer users of our public portals may be attracted to The WebMD Health Network as a result of a specific condition or for a specific purpose, it is difficult for us to predict the rate at which they will return to the public portals.

In addition to providing quality health content and tools, we seek to design our Websites to deliver that content and tools in ways that will cause them to rank well in algorithmic search engine results, which makes it more likely that people using search engines will come to our Websites. This is commonly referred to as search engine optimization, or SEO. However, there can be no assurance that our SEO efforts will succeed in improving the ranking of our content or, even if they do result in such improvement, that the improved ranking will result in increased numbers of users and page views for our Websites. In addition, search engines frequently change the criteria that determine which sites rank well in their results and our SEO efforts will not be successful if we do not respond to those changes appropriately and on a timely basis. The failure to successfully manage SEO across The WebMD Health Network could result in a substantial decrease in traffic to The WebMD Health Network.

Because we generate revenue by, among other things, selling sponsorships of specific pages, sections or events on The WebMD Health Network, a decline in user traffic levels or a reduction in the number of pages viewed by users could cause our revenue to decrease and could have a material adverse effect on our results of operations.

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Developing and implementing new and updated features and services for our public and private portals and our mobile applications may be more difficult than expected, may take longer and cost more than expected, and may not result in sufficient increases in revenue to justify the costs

Attracting and retaining users of our public portals and our mobile applications and clients for our private portals requires us to continue to improve the technology underlying those portals and applications and to continue to develop new and updated features and services for those portals and applications. If we are unable to do so on a timely basis or if we are unable to implement new features and services without disruption to our existing ones, we may lose potential users and clients.

We rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our portals, mobile applications and related features and services. Our development and/or implementation of new technologies, features and services may cost more than expected, may take longer than originally expected, may require more testing than originally anticipated and may require the acquisition of additional personnel and other resources. There can be no assurance that the revenue opportunities from any new or updated technologies, applications, features or services will justify the amounts spent.

We face significant competition for our healthcare information products and services

The markets for healthcare information products and services are intensely competitive, continually evolving and, in some cases, subject to rapid change.

•  Our public portals and mobile applications face competition from numerous other companies, both in attracting users and in generating revenue from advertisers and sponsors. We compete for users with online services and Websites that provide health-related information, including both commercial sites and not-for-profit sites. We compete for advertisers and sponsors with: health-related Websites; general purpose consumer Websites that offer specialized health sub-channels; other high-traffic Websites that include both healthcare-related and non-healthcare-related content and services; search engines that provide specialized health search; and advertising networks that aggregate traffic from multiple sites. Our public portals also face competition from offline publications and information services.

•  Our private portals compete with providers of healthcare decision-support tools and online health management applications, including personal health records; wellness and disease management vendors; and health information services and health management offerings of healthcare benefits companies and their affiliates.

Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations may be better known than we are and have more customers or users than we do. We cannot provide assurance that we will be able to compete successfully against these organizations or any alliances they have formed or may form. In addition, we expect that competitors will continue to enter these markets.

Failure to maintain and enhance the “WebMD” brand could have a material adverse effect on our business

We believe that the “WebMD” brand identity that we have developed has contributed to the success of our business and has helped us achieve recognition as a trusted source of health and wellness information. We also believe that maintaining and enhancing that brand is important to expanding the user base for our public portals, to our relationships with sponsors and advertisers, and to our ability to gain additional employer and healthcare payer clients for our private portals. We have expended considerable resources on establishing and enhancing the “WebMD” brand and our other brands, and we have developed policies and procedures designed to preserve and enhance our brands, including editorial procedures designed to provide quality control of the information we publish. We expect to continue to devote resources and efforts to maintain and enhance our brands. However, we may not be able to successfully maintain or enhance our brands, and events outside of our control may have a negative effect on our brands. If we are unable to maintain or enhance our brands, and do so in a cost-effective manner, our business could be adversely affected.

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Our online businesses have a limited operating history

Our online businesses have a limited operating history and participate in relatively new markets. These markets, and our online businesses, have undergone significant changes during their short history and can be expected to continue to change. Many companies with business plans based on providing healthcare information and related services through the Internet have failed to be profitable and some have filed for bankruptcy or ceased operations. Even if demand from users exists, we cannot assure you that our businesses will continue to be profitable.

Our failure to attract and retain qualified executives and employees may have a material adverse effect on our business

Our business depends largely on the skills, experience and performance of key members of our management team. We also depend, in part, on our ability to attract and retain qualified writers and editors, software developers and other technical personnel and sales and marketing personnel. Competition for qualified personnel in the healthcare information services and Internet industries is intense. We cannot assure you that we will be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or that we will be able to do so at costs that are acceptable to us. Failure to do so may have an adverse effect on our business.

Our advertising and sponsorship revenue may vary significantly from quarter to quarter and its amount and timing may be subject to factors beyond our control, including regulatory changes affecting advertising and promotion of drugs and medical devices and general economic conditions

Our advertising and sponsorship revenue may vary significantly from quarter to quarter due to a number of factors, many of which are not within our control, and some of which may be difficult to forecast accurately, including potential effects on demand for our services as a result of regulatory changes affecting advertising and promotion of drugs and medical devices and general economic conditions. The majority of our advertising and sponsorship programs are for terms of approximately four to twelve months. We have relatively few longer term advertising and sponsorship programs. We cannot assure you that our current advertisers and sponsors will continue to use our services beyond the terms of their existing contracts or that they will enter into any additional contracts.

The time between the date of initial contact with a potential advertiser or sponsor regarding a specific program and the execution of a contract with the advertiser or sponsor for that program, as well as the additional time period before our services are delivered, may be longer than expected, especially for larger contracts, and may be subject to delays over which we have little or no control, including as a result of budgetary constraints of the advertiser or sponsor or their need for internal approvals, including internal approvals relating to compliance with the laws and regulations applicable to the marketing of healthcare products. Recently, we have been experiencing a lengthening of this internal review process by pharmaceutical companies, which has resulted in delays in contracting as well as delays in expected revenue under executed contracts and which may continue to cause such delays. Other factors that could affect the timing of contracting for specific programs with advertisers and sponsors, or receipt of revenue under such contracts, include:

•  the timing of FDA approval for new products or for new approved uses for existing products;

•  the timing of FDA approval of generic products that compete with existing brand name products;

•  the timing of withdrawals of products from the market;

•  the timing of rollouts of new or enhanced services on our public portals;

•  seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that may affect the timing of promotional campaigns for specific products; and

•  the scheduling of conferences for physicians and other healthcare professionals.

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We may be unsuccessful in our efforts to increase advertising and sponsorship revenue from consumer products companies

Much of our advertising and sponsorship revenue has, in the past, come from pharmaceutical, biotechnology and medical device companies. We have been focusing on increasing sponsorship revenue from consumer products companies that are interested in communicating health-related or safety-related information about their products to our audience. However, while many consumer products companies are increasing the portion of their promotional spending used on the Internet, we cannot assure you that these advertisers and sponsors will find our consumer Websites to be as effective as other Websites or traditional media for promoting their products and services. In addition, revenues from consumer products companies are more likely to reflect general economic conditions, and to be reduced to a greater extent during economic downturns or recessions, than revenues from pharmaceutical, biotechnology and medical device companies. Accordingly, revenues from this portion of our business may develop more slowly than we expect and may be subject to significant quarter-to-quarter variations.

Increasingly, individuals are using mobile devices to access the Internet and, if we fail to capture a significant share of this portion of the market for online health information services, our business could be adversely affected

The number of people who access the Internet through mobile devices has increased dramatically in the past few years, including the number of physicians and other healthcare professionals who do so. New devices and new platforms continue to be developed and released. It is difficult to predict the problems we may encounter in developing and maintaining versions of our services for use on these devices and we may need to devote significant resources to their creation, maintenance and support. If we fail to capture a significant share of this increasingly important portion of the market for online health information services (including the market for information services for physicians and other healthcare professionals), it could adversely affect our business. In addition, even if demand for our mobile applications exists and we achieve a significant share of the market for mobile health information services, we cannot assure you that we will be able to achieve significant revenue or profits from these services.

Lengthy sales and implementation cycles for our private online portals make it difficult to forecast our revenues from these applications and may have an adverse impact on our business

The period from our initial contact with a potential client for a private online portal and the first purchase of our solution by the client is difficult to predict. In the past, this period has generally ranged from six to twelve months, but in some cases has been longer. Potential sales may be subject to delays or cancellations due to a client’s internal procedures for approving large expenditures and other factors beyond our control, including the effect of general economic conditions on the willingness of potential clients to commit to licensing our private portals. The time it takes to implement a private online portal is also difficult to predict and has lasted as long as six months from contract execution to the commencement of live operation. Implementation may be subject to delays based on the availability of the internal resources of the client that are needed and other factors outside of our control. As a result, we have limited ability to forecast the timing of revenue from new clients. This, in turn, makes it more difficult to predict our financial performance from quarter to quarter.

During the sales cycle and the implementation period, we may expend substantial time, effort and money preparing contract proposals, negotiating contracts and implementing the private online portal without receiving any related revenue. In addition, many of the expenses related to providing private online portals are relatively fixed in the short term, including personnel costs and technology and infrastructure costs. If our private portal revenue is lower than expected, we may not be able to reduce related short-term spending in response. Any shortfall in such revenue would have a direct impact on our results of operations.

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Our ability to renew existing agreements with employers and health plans will depend, in part, on our ability to continue to increase usage of our private portal services by their employees and plan members

In a healthcare market where a greater share of the responsibility for healthcare costs and decision-making has been shifting to consumers, use of information technology (including personal health records) to assist consumers in making informed decisions about healthcare has also increased. We believe that through our WebMD Health and Benefits Manager platform, including our personal health record application, we are well positioned to play a role in this environment. However, our strategy depends, in part, on increasing usage of our private portal services by our employer and health plan clients’ employees and members and being able to demonstrate a sufficient return on investment and other benefits for our private portals clients from those services. Increasing usage of our private portal services requires us to continue to develop new and updated applications, features and services. In addition, we face competition in the area of healthcare decision-support tools and online health management applications and health information services. Many of our competitors have greater financial, technical, product development, marketing and other resources than we do, and may be better known than we are. We cannot provide assurance that we will be able to meet our development and implementation goals or that we will be able to compete successfully against other vendors offering competitive services and, if we are unable to do so, we may experience static or diminished usage for our private portal services and possible non-renewals of our customer agreements.

We may be subject to claims brought against us as a result of content we provide

Consumers access health-related information through our online services, including information regarding particular medical conditions and possible adverse reactions or side effects from medications. If our content, or content we obtain from third parties, contains inaccuracies, it is possible that consumers, employees, health plan members or others may sue us for various causes of action. Although our Websites and mobile applications contain terms and conditions, including disclaimers of liability, that are intended to reduce or eliminate our liability, the law governing the validity and enforceability of online agreements and other electronic transactions is evolving. We could be subject to claims by third parties that our online agreements with consumers and physicians that provide the terms and conditions for use of our public or private portals or mobile applications are unenforceable. A finding by a court that these agreements are invalid and that we are subject to liability could harm our business and require costly changes to our business.

We have editorial procedures in place to provide quality control of the information that we publish or provide. However, we cannot assure you that our editorial and other quality control procedures will be sufficient to ensure that there are no errors or omissions in particular content. Even if potential claims do not result in liability to us, investigating and defending against these claims could be expensive and time consuming and could divert management’s attention away from our operations. In addition, our business is based on establishing the reputation of our portals as trustworthy and dependable sources of healthcare information. Allegations of impropriety or inaccuracy, even if unfounded, could harm our reputation and business.

Expansion to markets outside the United States will subject us to additional risks

One element of our growth strategy is to seek to expand our online services to markets outside the United States. Generally, we expect that we would accomplish this through partnerships or joint ventures with other companies having expertise in the specific country or region. In addition, in certain markets outside of the U.S., we expect to provide some of our online services directly to healthcare professionals and, to a lesser extent, consumers. Our participation in international markets will still be subject to certain risks beyond those applicable to our operations in the United States, such as:

•  challenges caused by language and cultural differences;

•  difficulties in staffing and managing operations from a distance;

•  uncertainty regarding liability for services and content;

•  burdens of complying with a wide variety of legal, regulatory and market requirements;

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•  variability of economic and political conditions, including the extent of the impact of adverse economic conditions in markets outside the United States;

•  tariffs or other trade barriers;

•  fluctuations in currency exchange rates;

•  potentially adverse tax consequences, including restrictions on repatriation of earnings; and

•  difficulties in protecting intellectual property.

Risks Related to the Internet and Our Technological Infrastructure

Any service interruption or failure in the systems that we use to provide online services could harm our business

Our online services are designed to operate 24 hours a day, seven days a week, without interruption. However, we have experienced and expect that we will in the future experience interruptions and delays in services and availability from time to time. We rely on internal systems as well as third-party vendors, including data center providers, bandwidth providers and mobile carriers, to provide our online services. We may not maintain redundant systems or facilities for some of these services. In the event of a catastrophic event with respect to one or more of these systems or facilities, we may experience an extended period of system unavailability, which could negatively impact our relationship with users. In addition, system failures may result in loss of data, including user registration data, content, and other data critical to the operation of our online services, which could cause significant harm to our business and our reputation.

To operate without interruption or loss of data, both we and our service providers must guard against:

•  damage from fire, power loss and other natural disasters;

•  communications failures;

•  software and hardware errors, failures and crashes;

•  security breaches, computer viruses and similar disruptive problems; and

•  other potential service interruptions.

Any disruption in the network access or co-location services provided by third-party providers to us or any failure by these third-party providers or our own systems to handle current or higher volume of use could significantly harm our business. We exercise little control over these third-party vendors, which increases our vulnerability to problems with services they provide.

Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services or our own systems could negatively impact our relationships with users and adversely affect our brand and our business and could expose us to liabilities to third parties. Although we maintain insurance for our business, the coverage under our policies may not be adequate to compensate us for all losses that may occur. In addition, we cannot provide assurance that we will continue to be able to obtain adequate insurance coverage at an acceptable cost.

Implementation of additions to or changes in hardware and software platforms used to deliver our online services may result in performance problems and may not provide the additional functionality that was expected

From time to time, we implement additions to or changes in the hardware and software platforms we use for providing our online services. During and after the implementation of additions or changes, a platform may not perform as expected, which could result in interruptions in operations, an increase in response time or an inability to track performance metrics. In addition, in connection with integrating acquired businesses, we may move their operations to our hardware and software platforms or make other changes, any of which could result in interruptions in those operations. Any significant interruption in our ability to operate any of our

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online services could have an adverse effect on our relationships with users and clients and, as a result, on our financial results. We rely on a combination of purchasing, licensing, internal development, and acquisitions to develop our hardware and software platforms. Our implementation of additions to or changes in these platforms may cost more than originally expected, may take longer than originally expected, and may require more testing than originally anticipated. In addition, we cannot provide assurance that additions to or changes in these platforms will provide the additional functionality and other benefits that were originally expected.

If the systems we use to provide online portals experience security breaches or are otherwise perceived to be insecure, our business could suffer

We retain and transmit confidential information, including personal health records, in the processing centers and other facilities we use to provide online services. It is critical that these facilities and infrastructure remain secure and be perceived by the marketplace as secure. A security breach could damage our reputation or result in liability. We may be required to expend significant capital and other resources to protect against security breaches and hackers or to alleviate problems caused by breaches. Despite the implementation of security measures, this infrastructure or other systems that we interface with, including the Internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks or other attacks by third parties or similar disruptive problems. Any compromise of our security, whether as a result of our own systems or the systems that they interface with, could reduce demand for our services and could subject us to legal claims from our clients and users, including for breach of contract or breach of warranty.

Our online services are dependent on the development and maintenance of the Internet infrastructure

Our ability to deliver our online services is dependent on the development and maintenance of the infrastructure of the Internet by third parties. The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. The Internet has also experienced, and is likely to continue to experience, significant growth in the number of users and the amount of traffic. If the Internet continues to experience increased usage, the Internet infrastructure may be unable to support the demands placed on it. In addition, the reliability and performance of the Internet may be harmed by increased usage or by denial-of-service attacks. Any resulting interruptions in our services or increases in response time could, if significant, result in a loss of potential or existing users of and advertisers and sponsors on our Websites and, if sustained or repeated, could reduce the attractiveness of our services.

Customers who utilize our online services depend on Internet service providers and other Website operators for access to our Websites. All of these providers have experienced significant outages in the past and could experience outages, delays and other difficulties in the future due to system failures unrelated to our systems. Any such outages or other failures on their part could reduce traffic to our Websites.

Third parties may challenge the enforceability of our online agreements

The law governing the validity and enforceability of online agreements and other electronic transactions is evolving. We could be subject to claims by third parties that the online terms and conditions for use of our Websites, including disclaimers or limitations of liability, are unenforceable. A finding by a court that these terms and conditions or other online agreements are invalid could harm our business.

We could be subject to breach of warranty or other claims by clients of our online portals if the software and systems we use to provide them contain errors or experience failures

Errors in the software and systems we use could cause serious problems for clients of our online portals. We may fail to meet contractual performance standards or client expectations. Clients of our online portals may seek compensation from us or may seek to terminate their agreements with us, withhold payments due to us, seek refunds from us of part or all of the fees charged under those agreements or initiate litigation or other dispute resolution procedures. In addition, we could face breach of warranty or other claims by clients or

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additional development costs. Our software and systems are inherently complex and, despite testing and quality control, we cannot be certain that they will perform as planned.

We attempt to limit, by contract, our liability to our clients for damages arising from our negligence, errors or mistakes. However, contractual limitations on liability may not be enforceable in certain circumstances or may otherwise not provide sufficient protection to us from liability for damages. We maintain liability insurance coverage, including coverage for errors and omissions. However, it is possible that claims could exceed the amount of our applicable insurance coverage, if any, or that this coverage may not continue to be available on acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them would be expensive and time consuming and could divert management’s attention away from our operations. In addition, negative publicity caused by these events may delay or hinder market acceptance of our services, including unrelated services.

Risks Related to the Healthcare Industry, Healthcare Regulation and Internet Regulation

Developments in the healthcare industry could adversely affect our business

Most of our revenue is derived from the healthcare industry and could be affected by changes affecting healthcare spending. We are particularly dependent on pharmaceutical, biotechnology and medical device companies for our advertising and sponsorship revenue. General reductions in expenditures by healthcare industry participants could result from, among other things:

•  government regulation or private initiatives that affect the manner in which healthcare providers interact with patients, payers or other healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services;

•  consolidation of healthcare industry participants;

•  reductions in governmental funding for healthcare; and

•  adverse changes in business or economic conditions affecting healthcare payers or providers, pharmaceutical, biotechnology or medical device companies or other healthcare industry participants.

Federal and state legislatures and agencies periodically consider reforming aspects of the United States healthcare system. Significant federal healthcare reform legislation was enacted in March 2010, as discussed in the next risk factor.

Even if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result in reduced spending in some or all of the specific market segments that we serve or are planning to serve. For example, use of our products and services could be affected by:

•  changes in the design of health insurance plans;

•  the timing of FDA approvals of generic products that compete with existing brand name products and any increase in the number or significance of such approvals or of withdrawals of brand name products from the market;

•  the timing of FDA approvals for new products or few new approved uses for existing products and any decrease in the number or significance of new drugs or medical devices coming to market or new approved uses for existing such products; and

•  decreases in marketing expenditures by pharmaceutical or medical device companies, including as a result of governmental regulation or private initiatives that discourage or prohibit advertising, sponsorship or educational activities by pharmaceutical or medical device companies or that discourage or prohibit their use of online services for some or all such activities.

In addition, our customers’ expectations regarding pending or potential industry developments may also affect their budgeting processes and spending plans with respect to products and services of the types we provide.

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The healthcare industry has changed significantly in recent years, and we expect that significant changes will continue to occur. However, the timing and impact of developments in the healthcare industry are difficult to predict. We cannot assure you that the markets for our products and services will continue to exist at current levels or that we will have adequate technical, financial and marketing resources to react to changes in those markets.

Federal health care reform legislation enacted in 2010 could adversely affect our healthcare industry customers and clients, causing them to reduce expenditures, including expenditures for our services

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (which we refer to as the Reform Legislation), was signed into law in March 2010. The Reform Legislation makes extensive changes to the system of healthcare insurance and benefits in the U.S. In general, the Reform Legislation seeks to reduce healthcare costs and decrease the number of uninsured legal U.S. residents by, among other things, requiring individuals to carry, and certain employers to offer, health insurance or be subject to penalties. The Reform Legislation also imposes new regulations on health insurers, including guaranteed coverage requirements, prohibitions on certain annual and all lifetime limits on amounts paid on behalf of or to plan members, increased restrictions on rescinding coverage, establishment of minimum medical loss ratio requirements, a requirement to cover certain preventive services on a first dollar basis, the establishment of state insurance exchanges and essential benefit packages, and greater limitations on how health insurers price certain of their products. The Reform Legislation also contains provisions that will affect the revenues and profits of pharmaceutical and medical device companies, including new taxes on certain sales of their products.

Many of the provisions of the Reform Legislation that expand insurance coverage will not become effective until 2014, and many provisions require regulations and interpretive guidance to be issued before they will be fully implemented. Some provisions do not apply to health plans that were in place when the Reform Legislation was enacted and have not been substantially changed since. In addition, it is difficult to foresee how individuals and businesses will respond to the choices available to them under the Reform Legislation. Furthermore, the Reform Legislation will result in future state legislative and regulatory changes, which we are unable to predict at this time, in order for states to comply with certain provisions of the Reform Legislation and to participate in grants and other incentive opportunities. In addition, a number of parties have filed lawsuits challenging the constitutionality of certain provisions of the Reform Legislation. As of October 20, 2011, there are six distinct petitions for writs of certiorari pending at the Supreme Court relating to the constitutionality of the Reform Legislation. These petitions, in turn, ask the Court to grant review on a number of different questions including the constitutionality of the requirement that individuals carry insurance. The likelihood that the Court will actually take up these various questions varies considerably; however, the Court is expected to take up the individual mandate question this term and render its decision by June 2012. Accordingly, while we do not currently anticipate any significant adverse effects on WebMD as a direct result of application of the Reform Legislation to our businesses or on our company in its capacity as an employer, we are unable to predict what the indirect impacts of the Reform Legislation will be on WebMD’s businesses through its effects on other healthcare industry participants, including pharmaceutical and medical device companies that are advertisers and sponsors of our public portals and employers and health plans that are clients of our private portals. Healthcare industry participants may respond to the Reform Legislation or to uncertainties created by the Reform Legislation by reducing their expenditures or postponing expenditure decisions, including expenditures for our services, which could have a material adverse effect on our business.

Government regulation of healthcare creates risks and challenges with respect to our compliance efforts and our business strategies

The healthcare industry is highly regulated and is subject to changing political, legislative, regulatory and other influences. Existing and new laws and regulations affecting the healthcare industry could create unexpected liabilities for us, could cause us to incur additional costs and could restrict our operations. Many healthcare laws are complex, and their application to specific products and services may not be clear. In particular, many existing healthcare laws and regulations, when enacted, did not anticipate the healthcare information services that we provide. However, these laws and regulations may nonetheless be applied to our

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products and services. Our failure to accurately anticipate the application of these laws and regulations, or other failure to comply, could create liability for us, result in adverse publicity and negatively affect our businesses. Some of the risks we face from healthcare regulation are as follows:

•  Regulation of Drug and Medical Device Advertising and Promotion.  The WebMD Health Network provides services involving advertising and promotion of prescription and over-the-counter drugs and medical devices and claims of nutritional supplements. If the Food and Drug Administration (FDA) or the Federal Trade Commission (FTC) finds that any of our products and services or any information on The WebMD Health Network, in our mobile applications, or in WebMD the Magazine violates applicable regulations, they may take regulatory or judicial action against us and/or the advertiser or sponsor of that information. State attorneys general may take similar action based on their state’s consumer protection statutes. Any increase or change in regulation of drug or medical device advertising and promotion could make it more difficult for us to contract for sponsorships and advertising. We cannot predict what actions the FDA or industry participants may take in the future. It is also possible that new laws would be enacted that impose restrictions on such advertising. In addition, recent private industry initiatives have resulted in voluntary restrictions, which advertisers and sponsors have agreed to follow. Our advertising and sponsorship revenue could be materially reduced by additional restrictions on the advertising of prescription drugs and medical devices to consumers, whether imposed by law or regulation or required under policies adopted by industry members.

•  Anti-kickback Laws.  There are federal and state laws that govern patient referrals, physician financial relationships and inducements to healthcare providers and patients. The federal healthcare programs anti-kickback law prohibits any person or entity from offering, paying, soliciting or receiving anything of value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and other federal healthcare programs or the leasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good, facility or service covered by these programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a federal healthcare program. These laws are applicable to manufacturers and distributors and, therefore, may restrict how we and some of our customers market products to healthcare providers, including e-details. Any determination by a state or federal regulatory agency that any of our practices violate any of these laws could subject us to civil or criminal penalties and require us to change or terminate some portions of our business and could have an adverse effect on our business. Even an unsuccessful challenge by regulatory authorities to our practices could result in adverse publicity and be costly for us to respond to.

•  False Claims Laws.  The Federal False Claims Act imposes liability on any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a Federal healthcare program. In addition, various states have enacted false claim laws analogous to the Federal False Claims Act, and many of these state laws apply where a claim is submitted to any third-party payor and not merely a federal healthcare program. When an entity is determined to have violated the Federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government plus civil penalties. In recent years an increasing number of Federal False Claims Act cases have been brought against drug manufacturers and resulted in significant monetary settlements and imposition of federally supervised corporate integrity agreements in circumstances that include allegations that company sponsored CME was unlawful off label promotion. Any action against us for violation of these laws could cause us to incur significant legal expenses and may adversely affect our ability to operate our business. Similarly, False Claims Act actions and resulting Corporate Integrity Agreements involving our customers may influence their willingness to continue to use our services.

•  Medical Professional Regulation.  The practice of most healthcare professions requires licensing under applicable state law. In addition, the laws in some states prohibit business entities from practicing medicine. If a state determines that some portion of our business violates these laws, it may seek to have us discontinue those portions or subject us to penalties or licensure requirements. Any

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determination that we are a healthcare provider and have acted improperly as a healthcare provider may result in liability to us.

•  GINA.  The Genetic Information Nondiscrimination Act (GINA) prohibits discrimination based on genetic information in employment and in health insurance coverage. The law applies to our private portal customers, including both employers and group health plans. WebMD’s Health Risk Assessment (or HRA), HealthQuotient, is typically offered to employees as a voluntary component of their employer-sponsored wellness program. Title I of GINA can have significant implications for wellness programs offered by group health plans in that it prohibits the collection of genetic information, which includes an individual’s family medical history, prior to or in connection with enrollment or for underwriting purposes. Underwriting purposes include providing incentives or rewards for completion of an HRA that requests genetic information. Title II of GINA prohibits employment discrimination based on genetic information as well as the request or purchase of genetic information of employees or their family members with limited exceptions, including a limited exception for voluntary wellness programs. WebMD may face challenges as a result of varying interpretations of the law by our customers and by the multiple enforcing agencies including the U.S. Departments of Health and Human Services (HHS), Labor and Treasury and the Equal Employment Opportunity Commission. Interpretations of the law have required us to modify the HealthQuotient product and we could experience increases in operational costs or decreases in demand for our products. Recent legislation in California prohibits any form of discrimination by businesses based on genetic information, including in housing, public accommodation, and the provision of emergency services, and could have additional implications for service we provide in that state.

Government regulation of the Internet could adversely affect our business

The Internet and its associated technologies are subject to government regulation. However, whether and how existing laws and regulations in various jurisdictions, including privacy and consumer protection laws, apply to the Internet is still uncertain. Our failure, or the failure of our business partners or third-party service providers, to accurately anticipate the application of these laws and regulations to our products and services and the manner in which we deliver them, or any other failure to comply with such laws and regulations, could create liability for us, result in adverse publicity and negatively affect our business. In addition, new laws and regulations, or new interpretations of existing laws and regulations, may be adopted with respect to the Internet and online services, including in areas such as: user privacy, confidentiality, consumer protection, marketing, pricing, content, copyrights and patents, and characteristics and quality of products and services. We cannot predict how these laws or regulations will affect our business.

Internet user privacy, personal data security and the use of consumer information to track online activities are major issues both in the United States and abroad. For example, in February 2009, the FTC published Self-Regulatory Principles to govern the tracking of consumers’ activities online in order to deliver advertising targeted to the interests of individual consumers (sometimes referred to as behavioral advertising). These principles serve as guidelines to the industry. In December 2010, following a series of workshops, the FTC issued a preliminary staff report containing a proposed framework for businesses and policymakers for online consumer privacy issues. The U.S. Department of Commerce issued a similar draft green paper on privacy issues. Both agencies expressed a willingness to support legislation and the FTC favors legislative solutions if it determines that self-regulatory approaches are not adequately protecting consumers. The FTC has otherwise been active in investigating and entering into consent decrees under its current unfair or deceptive trade practices authority with companies because of their online privacy practices. There is a possibility of legislation, regulation and increased enforcement activities relating to privacy and behavioral advertising. Some bills have been introduced in Congress, and more are expected, that, if passed, could impose substantial new regulations on online behavioral advertising activities. We have privacy policies posted on our Websites that we believe comply with existing applicable laws requiring notice to users about our information collection, use and disclosure practices. We also notify users about our information collection, use and disclosure practices relating to data we receive through offline means such as paper health risk assessments. Moreover, we take steps to reasonably protect certain sensitive personal information we hold. We cannot assure you that the

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privacy policies and other statements we provide to users of our products and services, or our practices will be found sufficient to protect us from liability or adverse publicity in this area. A determination by a state or federal agency or court that any of our practices do not meet applicable standards, or the implementation of new standards or requirements, could adversely affect our business.

Failure to comply with laws relating to privacy and security of personal information, including personal health information, could result in liability to us and concerns about privacy-related issues could damage our reputation and our business

Privacy and security of personal information stored or transmitted electronically, including personal health information, is a major issue in the United States. While we strive to comply with all applicable privacy and security laws and regulations, as well as our own posted privacy policies, any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, or could cause us to lose users and customers, which could have a material adverse effect on our business. There has been an increase in the number of private privacy-related lawsuits filed against companies in recent months. In addition, we are unable to predict what additional legislation or regulation in the area of privacy of personal information, including personal health information, could be enacted and what effect that could have on our operations and business. Concerns about our practices with regard to the collection, use, disclosure, or security of personal information or other privacy-related matters, even if unfounded and even if we are in compliance with applicable laws, could damage our reputation and harm our business.

The Privacy Standards and Security Standards under the Health Insurance Portability and Accountability Act of 1996 (or HIPAA) establish a set of national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses and healthcare providers (referred to as covered entities) and their business associates. Previously, only covered entities were directly subject to potential civil and criminal liability under these Standards. However, the Health Information Technology for Economic and Clinical Health (HITECH) Act, which was enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA) amended the HIPAA Privacy and Security Standards and made certain provisions applicable to those portions of our business, such as those managing employee or plan member health information for employers or health plans, that are business associates of covered entities. Currently, we are bound by certain contracts and agreements to use and disclose protected health information in a manner consistent with the Privacy Standards and Security Standards. Beginning on February 17, 2010, some provisions of the HIPAA Privacy and Security Standards began to apply directly to us. For periods prior to that, depending on the facts and circumstances, we could potentially be subject to criminal liability for aiding and abetting or conspiring with a covered entity to violate the Privacy Standards or Security Standards. As of February 17, 2010, we became directly subject to HIPAA’s criminal and civil penalties. HITECH increased civil penalty amounts for violations of HIPAA and significantly strengthens enforcement by requiring HHS to conduct periodic audits to confirm compliance and authorizing state attorneys general to bring civil actions seeking either injunctions or damages in response to violations of HIPAA Privacy and Security Standards that threaten the privacy of state residents. It is expected that HHS will issue additional regulations to implement many of the HITECH amendments. We cannot assure you that we will adequately address the risks created by these amended HIPAA Privacy and Security Standards. In addition, we are unable to predict what changes to these Standards might be made in the future or how those changes, or other changes in applicable laws and regulations, could affect our business.

Failure to maintain CME accreditation could adversely affect Medscape, LLC’s ability to provide online CME offerings

Medscape, LLC’s continuing medical education (or CME) activities are planned and implemented in accordance with the current Essential Areas and Elements and the Policies of the Accreditation Council for Continuing Medical Education, or ACCME, which oversees providers of CME credit, and other applicable accreditation standards. ACCME’s standards for commercial support of CME are intended to assure, among other things, that CME activities of ACCME-accredited providers, such as Medscape, LLC, are independent of “commercial interests,” which are defined as entities that produce, market, re-sell or distribute healthcare

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goods and services, excluding certain organizations. “Commercial interests,” and entities owned or controlled by “commercial interests,” are ineligible for accreditation by the ACCME.

From time to time, the ACCME revises its standards for commercial support of CME. As a result of certain past ACCME revisions, we adjusted our corporate structure and made changes to our management and operations intended to allow Medscape, LLC to provide CME activities that are developed independently from programs developed by its sister companies, which may not be independent of “commercial interests.” We believe that these changes allow Medscape, LLC to satisfy the applicable standards.

Medscape, LLC’s current ACCME accreditation expires in 2016. In order for Medscape, LLC to renew its accreditation, it will be required to demonstrate to the ACCME that it continues to meet ACCME requirements. If Medscape, LLC fails to maintain its status as an accredited ACCME provider (whether at the time of such renewal or at an earlier time as a result of a failure to comply with existing or additional ACCME standards), it would not be permitted to accredit CME activities for physicians and other healthcare professionals. Instead, Medscape, LLC would be required to use third parties to provide such CME-related services. That, in turn, could discourage potential supporters from engaging Medscape, LLC to develop CME or education-related activities, which could have a material adverse effect on our business.

Government regulation and industry initiatives could adversely affect the volume of sponsored online CME programs implemented through our Websites or require changes to how Medscape, LLC offers CME

CME activities may be subject to government oversight or regulation by Congress, the FDA, HHS, and state regulatory agencies. Medscape, LLC and/or the sponsors of the CME activities that Medscape, LLC accredits may be subject to enforcement actions if any of these CME activities are deemed improperly promotional, potentially leading to the termination of sponsorships. Medscape, LLC and/or the sponsors of the CME activities that Medscape, LLC accredits also could be affected by industry initiatives regarding funding for CME.

During the past several years, educational activities, including CME, directed at physicians have been subject to increased governmental scrutiny to ensure that sponsors do not influence or control the content of the activities. In response, pharmaceutical and medical device companies have developed and implemented internal controls and procedures that promote adherence to applicable regulations and requirements. In implementing these controls and procedures, supporters of CME may interpret the regulations and requirements differently and may implement varying procedures or requirements. These controls and procedures:

•  may discourage pharmaceutical companies from providing grants for independent educational activities;

•  may slow their internal approval for such grants;

•  may reduce the volume of sponsored educational programs that Medscape, LLC produces to levels that are lower than in the past, thereby reducing revenue; and

•  may require Medscape, LLC to make changes to how it offers or provides educational programs, including CME.

In June 2011, the American Medical Association’s House of Delegates approved a report entitled, “Financial Relationships with Industry in Continuing Medical Education,” that largely adopts the CME ethical principles already espoused by other industry and accreditation organizations, including ACCME, PhRMA, and AdvaMed. Although the report recognizes that industry support of CME may help make CME more accessible and affordable, the report proposes that CME should, when possible, be provided without commercial support and without the participation of individuals who have financial interest in the educational subject matter. Although we do not anticipate that this will have a material impact on our business, it is possible that this report, or other voluntary industry guidelines, will negatively influence the availability of commercial support for Medscape CME programs and/or physician participation in Medscape CME programs funded by commercial support.

In addition, future changes to laws, regulations or accreditation standards, or to the internal compliance programs of supporters or potential supporters, may further discourage, significantly limit, or prohibit

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supporters or potential supporters from engaging in educational activities with Medscape, LLC, or may require Medscape, LLC to make further changes in the way it offers or provides educational activities.

Other Risks Applicable to Our Company and to Ownership of Our Securities

Our Stockholder Rights Plan and provisions in our organizational documents and Delaware law may inhibit a takeover, which could adversely affect the value of our Common Stock

Our Board of Directors has adopted a Stockholder Rights Plan, which could prevent or delay a takeover of WebMD by causing substantial dilution to a potential acquirer that attempts to acquire beneficial ownership of more than 12% of the outstanding shares of WebMD Common Stock on terms not approved by our Board of Directors. In addition, our Restated Certificate of Incorporation and Bylaws, as well as Delaware corporate law, contain provisions that could delay or prevent a change of control or changes in our management and board of directors that holders of our Common Stock might consider favorable and may prevent them from receiving a takeover premium for their shares. These provisions include, for example, our classified board structure and the authorization of our board of directors to issue up to 50 million shares of preferred stock without a stockholder vote. In addition, our Restated Certificate of Incorporation provides that stockholders may not act by written consent and may not call special meetings. These provisions apply even if an offer to purchase our company may be considered beneficial by some of our stockholders. If a change of control or change in management is delayed or prevented, the market price of our Common Stock could decline.

If certain transactions occur with respect to our capital stock, limitations may be imposed on our ability to utilize net operating loss carryforwards and tax credits to reduce our income taxes

WebMD has substantial accumulated net operating loss (NOL) carryforwards and tax credits available to offset taxable income in future tax periods. If certain transactions occur with respect to WebMD’s capital stock (including issuances, redemptions, recapitalizations, exercises of options, conversions of convertible debt, purchases or sales by 5%-or-greater shareholders and similar transactions) that result in a cumulative change of more than 50% of the ownership of capital stock over a three-year period (as determined under rules prescribed by the U.S. Internal Revenue Code and applicable Treasury regulations), an annual limitation would be imposed with respect to the ability to utilize WebMD’s NOL carryforwards and federal tax credits.

In November 2008, HLTH repurchased shares of its Common Stock in a tender offer. The tender offer resulted in a cumulative change of more than 50% of the ownership of HLTH’s capital, as determined under the applicable rules and regulations. As a result of this ownership change, there is an annual limitation imposed on the ability to utilize our NOL carryforwards and federal tax credits.

Because substantially all of WebMD’s NOL carryforwards have already been reduced by a valuation allowance for financial accounting purposes, we would not expect an annual limitation on the utilization of the NOL carryforwards to significantly reduce the net deferred tax asset, although the timing of cash flows may be impacted to the extent any such annual limitation deferred the utilization of NOL carryforwards to future tax years.

We may not be successful in protecting our intellectual property and proprietary rights

Our intellectual property and proprietary rights are important to our businesses. The steps that we take to protect our intellectual property, proprietary information and trade secrets may prove to be inadequate and, whether or not adequate, may be expensive. We rely on a combination of trade secret, patent and other intellectual property laws and confidentiality procedures and non-disclosure contractual provisions to protect our intellectual property. We cannot assure you that we will be able to detect potential or actual misappropriation or infringement of our intellectual property, proprietary information or trade secrets. Even if we detect misappropriation or infringement by a third party, we cannot assure you that we will be able to enforce our rights at a reasonable cost, or at all. In addition, our rights to intellectual property, proprietary information and trade secrets may not prevent independent third-party development and commercialization of competing products or services.

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Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from providing certain services, which may harm our business

We could be subject to claims that we are misappropriating or infringing intellectual property or other proprietary rights of others. These claims, even if not meritorious, could be expensive to defend and divert management’s attention from our operations. If we become liable to third parties for infringing these rights, we could be required to pay a substantial damage award and to develop non-infringing technology, obtain a license or cease selling the products or services that use or contain the infringing intellectual property. We may be unable to develop non-infringing products or services or obtain a license on commercially reasonable terms, or at all. We may also be required to indemnify our customers if they become subject to third-party claims relating to intellectual property that we license or otherwise provide to them, which could be costly.

Acquisitions, business combinations and other transactions may be difficult to complete and, if completed, may have negative consequences for our business and our security holders

WebMD has been built, in part, through acquisitions. We intend to continue to seek to acquire or to engage in business combinations with companies engaged in complementary businesses. In addition, we may enter into joint ventures, strategic alliances or similar arrangements with third parties. These transactions may result in changes in the nature and scope of our operations and changes in our financial condition. Our success in completing these types of transactions will depend on, among other things, our ability to locate suitable candidates and negotiate mutually acceptable terms with them, and to obtain adequate financing. Significant competition for these opportunities exists, which may increase the cost of and decrease the opportunities for these types of transactions. Financing for these transactions may come from several sources, including:

•  cash and cash equivalents on hand and marketable securities;

•  proceeds from the incurrence of indebtedness; and

•  proceeds from the issuance of common stock, preferred stock, convertible debt or of other securities.

The issuance of additional equity or debt securities could:

•  cause substantial dilution of the percentage ownership of our stockholders at the time of the issuance;

•  cause substantial dilution of our earnings per share;

•  subject us to the risks associated with increased leverage, including a reduction in our ability to obtain financing or an increase in the cost of any financing we obtain;

•  subject us to restrictive covenants that could limit our flexibility in conducting future business activities; and

•  adversely affect the prevailing market price for our outstanding securities.

We do not intend to seek security holder approval for any such acquisition or security issuance unless required by applicable law, regulation or the terms of then-existing securities.

Our business will suffer if we fail to successfully integrate acquired businesses and technologies or to assess the risks in particular transactions

We have in the past acquired, and may in the future acquire, businesses, technologies, services, product lines and other assets. The successful integration of the acquired businesses and assets into our operations, on a cost-effective basis, can be critical to our future performance. The amount and timing of the expected benefits of any acquisition, including potential synergies between our company and the acquired business, are subject to significant risks and uncertainties. These risks and uncertainties include, but are not limited to, those relating to:

•  our ability to maintain relationships with the customers of the acquired business;

•  our ability to retain or replace key personnel of the acquired business;

•  potential conflicts in sponsor or advertising relationships or in relationships with strategic partners;

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•  our ability to coordinate organizations that are geographically diverse and may have different business cultures; and

•  compliance with regulatory requirements.

We cannot guarantee that any acquired businesses will be successfully integrated with our operations in a timely or cost-effective manner, or at all. Failure to successfully integrate acquired businesses or to achieve anticipated operating synergies, revenue enhancements or cost savings could have a material adverse effect on our business, financial condition and results of operations.

Although our management attempts to evaluate the risks inherent in each transaction and to value acquisition candidates appropriately, we cannot assure you that we will properly ascertain all such risks or that acquired businesses and assets will perform as we expect or enhance the value of our company as a whole. In addition, acquired companies or businesses may have larger than expected liabilities that are not covered by the indemnification, if any, that we are able to obtain from the sellers.

We may not be able to raise additional funds when needed for our business or to exploit opportunities

Our future liquidity and capital requirements will depend upon numerous factors, including the success of our service offerings, market developments, and repurchases of our Common Stock. We may need to raise additional funds to support expansion, develop new or enhanced applications and services, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. If required, we may raise such additional funds through public or private debt or equity financing, strategic relationships or other arrangements. There can be no assurance that such financing will be available on acceptable terms, if at all, or that such financing will not be dilutive to our stockholders.

ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table provides information about purchases by WebMD during the three months ended September 30, 2011 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

Issuer Purchases of Equity Securities

					Total Number of Shares			Approximate Dollar Value of
	Total Number		Average		Purchased as Part of			Shares that May Yet Be
	of Shares		Price Paid		Publicly Announced			Purchased Under the Plans
Period	Purchased(1)		per Share		Plans or Programs(2)			or Programs(2)
07/01/11 — 07/31/11		814,468	$	34.70		814,468		$	1,739,715
08/01/11 — 08/31/11		433,436	$	32.72		432,588	(2)	$	62,503,945
09/01/11 — 09/30/11		810,552	$	30.42		808,728		$	37,907,651
Total		2,058,456	$	32.60		2,055,784

(1)

Includes the following number of shares withheld from WebMD Restricted Common Stock that vested during the respective periods in order to satisfy withholding tax requirements related to the vesting of the awards: 848 in August and 1,824 in September. The value of these shares was determined based on the closing price of WebMD Common Stock on the date of vesting.

(2)

During July 2011, the repurchase program authorization of the repurchase program originally established in 2008 (the “2008 Program”) was increased by $15,330,939 to $30,000,000. During August 2011, the 2008 Program was terminated and a new repurchase program (the “2011 Program” and, collectively with the 2008 Program, the “Programs”) was established through which WebMD was authorized to use up to $75,000,000 to purchase shares of its common stock. The number of shares repurchased in August 2011 refers to the aggregate number of shares under both Programs, while the dollar value remaining available for use at the end of each month is the amount available under the Program in effect at that time. For additional information and for information regarding the status of the 2011 Program after September 30, 2011, see Note 7 to the Consolidated Financial Statements included in this Quarterly Report.

ITEM 6.   Exhibits

The exhibits listed in the accompanying Exhibit Index on page E-1 are filed or furnished as part of this Quarterly Report.

65

SIGNATURES

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.

By:  /s/  Anthony Vuolo

Anthony Vuolo

Chief Operating Officer and

Chief Financial Officer

Date: November 9, 2011

66

EXHIBIT INDEX

Exhibit No.			Description
	3	.1	Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162651))
	3	.2	Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162651))
	3	.3	Certificate of Designation, Preferences and Rights of Series A Junior Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 3, 2011, as amended on November 7, 2011)
	4	.1	Rights Agreement, dated as of November 2, 2011, between the Registrant and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A filed on November 3, 2011)
	10	.1	Letter Amendment, dated as of July 23, 2011, between the Registrant and Steven Zatz, M.D.*
	10	.2	Letter Amendment, dated as of July 23, 2011, between the Registrant and William Pence*
	10	.3	Letter Agreement, dated as of September 25, 2011, between the Registrant and Wayne Gattinella*
	10	.4	Letter Agreement, dated as of September 25, 2011, between the Registrant and Anthony Vuolo*
	10	.5	Letter Agreement, dated as of September 25, 2011, between the Registrant and Kevin Cameron*
	10	.6	Letter Agreement, dated as of September 25, 2011, between the Registrant and Martin J. Wygod*
	10	.7	Letter Amendment, dated as of September 21, 2011, between the Registrant and Martin J. Wygod*
	31	.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Registrant
	31	.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Registrant
	32	.1	Section 1350 Certification of Chief Executive Officer of Registrant
	32	.2	Section 1350 Certification of Chief Financial Officer of Registrant
	99	.1	Explanation of Non-GAAP Financial Measures
	100	.INS	XBRL Instance Document
	100	.SCH	XBRL Taxonomy Extension Schema Document
	100	.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	100	.LAB	XBRL Taxonomy Extension Label Linkbase Document
	100	.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
	100	.DEF	XBRL Taxonomy Extension Definition Linkbase Document

* Agreement relates to executive compensation.

E-1

EX-10.1

EXHIBIT 10.1

111 Eighth Avenue
7^th Floor
New York, NY 10011
212.624.3700 Phone

As of July 23, 2011

Steven Zatz, M.D.
c/o WebMD Health Corp.
111 Eighth Avenue
New York, NY 10011-5201

Dear Steve:

     The purpose of this letter is to amend the letter agreement between you and WebMD Health Corp. (“WebMD Health” or the “Company”) dated as of July 14, 2005 and as amended as of December 14, 2008 (collectively, the “Letter Agreement”) and to describe the material terms of equity grants made to you on July 23, 2011 (the “Date of Grant”).

     1. Stock Options. On the Date of Grant, the Compensation Committee approved the grant to you of a non-qualified option (the “Option”) to purchase 75,000 shares of common stock of WebMD Health Corp. under the terms and conditions of the WebMD Health Corp. Amended and Restated 2005 Long Term Incentive Plan (the “Equity Plan”). The per share exercise price of the Option is the closing price of the common stock on July 22, 2011. The Option will have a term of ten (10) years, subject to earlier termination in the event of the termination of your employment. The Option shall vest and become exercisable, subject to your continued employment on the applicable dates as follows: 25% of the Option on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Option shall be evidenced by and subject to the terms of the Company’s form of stock option agreement, which will be sent to you separately.

     2. Restricted Stock. On the Date of Grant, the Compensation Committee approved the grant to you of 12,000 shares of restricted stock of WebMD Health (the “Shares”) under the terms of the Equity Plan. The Shares shall vest and the restrictions thereon lapse, subject to your continued employment on the applicable dates as follows: 25% of the Shares on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant. The Shares shall be evidenced by and subject to the terms of the Company’s form restricted stock agreement, which will be sent to you separately.

     3. Termination of Employment. Section 6(a) of the Employment Agreement is amended to read in its entirety as follows:

     “ (a) In the event of the termination of your employment by the Company without Cause or by you for Good Reason (as such terms are defined on Annex A of the Letter Agreement), in either case within twelve (12) months following a Change of Control of WebMD, subject to Section 6(b) below and your continued compliance with all restrictive covenant agreements to which you are bound: (i) you will continue to receive, as severance, your base salary in effect on the date hereof for a period of one year (the “Severance Period”), payable as set forth in Section 6(c) of the Letter Agreement, (ii) if such termination occurs after the end of a calendar year but before the payment of the annual bonus for such prior year, you shall be entitled to the bonus that you would have

received for such year at the time that bonuses are paid to other executive officers of the Company, but in no event later than December 31 of the year in which your employment terminates, and (iii) if you timely elect to continue your health coverage through COBRA, the Company shall pay that portion of the COBRA premium that it would pay if you were an active employee with the same type of coverage through the Severance Period or, if earlier, until you are eligible for comparable coverage with a subsequent employer, and (iv) any of your option grants to purchase shares of WebMD Health made on or before July 23, 2011, which remain outstanding at the time of such termination, to the extent unvested, shall remain outstanding and continue to vest as if you remained in the employ of the Company until the first anniversary of such date of termination. The term “Change of Control of WebMD” shall have the meaning ascribed to such term in the Equity Plan. In the event of termination of your employment for any other reason, you shall receive compensation earned through the date of termination and your rights with respect to options and restricted stock will be as specified in the applicable option or restricted stock agreements.”

     You acknowledge that you continue to be bound by, and you hereby reaffirm your obligations under the Trade Secret & Proprietary Information Agreement previously annexed as part of the Letter Agreement and as Annex A to this Letter Agreement and the restrictive covenant agreements you have signed in connection with your employment, including those annexed as part of your equity agreements. Defined terms will have the meaning ascribed to them in the Letter Agreement, unless separately defined herein. Except as set forth herein, the Letter Agreement remains in full force and effect.

Sincerely,

/s/ Douglas W. Wamsley

Douglas W. Wamsley

EVP-General Counsel

Agreed to:

/s/ Steven Zatz, M.D.

Steven Zatz, M.D.

2

EX-10.2

EXHIBIT 10.2

111 Eighth Avenue
7^th Floor
New York, NY 10011
212.624.3700 Phone

As of July 23, 2011

William E. Pence
c/o WebMD Health Corp.
111 Eighth Avenue
New York, NY 10011-5201

Dear Bill:

     The purpose of this letter is to amend the letter agreement between you and WebMD Health Corp. (“WebMD Health” or the “Company”) dated as of October 1, 2007 and as amended as of December 10, 2008 and February 11, 2011 (collectively, the “Letter Agreement”) and to describe the material terms of equity grants made to you on July 23, 2011 (the “Date of Grant”).

     1. Stock Options. On the Date of Grant, the Compensation Committee approved the grant to you of a non-qualified option (the “Option”) to purchase 75,000 shares of common stock of WebMD Health Corp. under the terms and conditions of the WebMD Health Corp. Amended and Restated 2005 Long Term Incentive Plan (the “Equity Plan”). The per share exercise price of the Option is the closing price of the common stock on July 22, 2011. The Option will have a term of ten (10) years, subject to earlier termination in the event of the termination of your employment. The Option shall vest and become exercisable, subject to your continued employment on the applicable dates as follows: 25% of the Option on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Option shall be evidenced by and subject to the terms of the Company’s form of stock option agreement, which will be sent to you separately.

     2. Restricted Stock. On the Effective Date, the Compensation Committee approved the grant to you of 12,000 shares of restricted stock of WebMD Health (the “Shares”) under the terms of the Equity Plan. The Shares shall vest and the restrictions thereon lapse, subject to your continued employment on the applicable dates as follows: 25% of the Shares on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Shares shall be evidenced by and subject to the terms of the Company’s form restricted stock agreement, which will be sent to you separately.

     3. Termination of Employment. The following two sentences are added immediately before the last sentence of the current Section 5(a) of the Employment Agreement:

“In addition, in the event of the termination of your employment by the Company without Cause or by you for Good Reason, in either case within twelve (12) months following a Change of Control of WebMD, any of your option grants to purchase shares of WebMD Health Corp. made on or before July 23, 2011, which remain outstanding at the time of such termination, to the extent unvested, shall remain outstanding and continue to vest as if you remained in the employ of the Company until the first

anniversary of such date of termination. The term “Change of Control of WebMD” shall have the meaning ascribed to such term in the Equity Plan. “

     You acknowledge that you continue to be bound by, and you hereby reaffirm your obligations under the Trade Secret & Proprietary Information Agreement annexed as part of the Letter Agreement and as Annex A to this Letter Agreement and the restrictive covenant agreements you have signed in connection with your employment, including those annexed as part of your equity agreements. Except as set forth herein, the Letter Agreement remains in full force and effect.

Sincerely,

/s/ Douglas W. Wamsley

Douglas W. Wamsley

EVP-General Counsel

Agreed to:

/s/ William E. Pence

William E. Pence

2

EX-10.3

EXHIBIT 10.3

CONFORMED COPY

As of September 25, 2011

Wayne Gattinella
c/o WebMD Health Corp.
111 Eighth Avenue
New York, New York 10011

Dear Wayne:

     Reference is made to the Amended and Restated Employment Agreement between you and WebMD Health Corp. (“WebMD Health” or the “Company”), dated April 28, 2005 (as previously amended, the “Employment Agreement”). This letter is intended to describe the material terms of equity grants made to you on September 25, 2011 (the “Date of Grant”), including the Change in Control provisions.

     1. Stock Options. On the Date of Grant, the Compensation Committee approved the grant to you of a non-qualified option (the “Option”) to purchase 75,000 shares of common stock of WebMD Health Corp. under the terms and conditions of the WebMD Health Corp. Amended and Restated 2005 Long Term Incentive Plan (the “Equity Plan”). The per share exercise price of the Option is the closing price of the common stock on September 23, 2011. The Option will have a term of ten (10) years, subject to earlier termination in the event of the termination of your employment. The Option shall vest and become exercisable, subject to your continued employment on the applicable dates as follows: 25% of the Option on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Option shall be evidenced by and subject to the terms of the Company’s form of stock option agreement, which will be sent to you separately.

     2. Restricted Stock. On the Date of Grant, the Compensation Committee approved the grant to you of 35,000 shares of restricted stock of WebMD Health (the “Shares”) under the terms of the Equity Plan. The Shares shall vest and the restrictions thereon lapse, subject to your continued employment on the applicable dates as follows: 25% of the Shares on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Shares shall be evidenced by and subject to the terms of the Company’s form restricted stock agreement, which will be sent to you separately.

     3. Change of Control. Notwithstanding the foregoing, at any time after the first anniversary of a Change of Control (as defined in the Equity Plan), you may resign, in which case: (a) this stock option grant will remain outstanding and continue to vest as if you had remained in the employ of the

Company until the second anniversary of the resignation, or until the expiration of its original term if sooner, and (b) that portion of this restricted share grant that would have vested within two years of the resignation shall accelerate to the date of resignation. In addition, if you are terminated “without cause” or resign for “good reason” (as those terms are defined in Annex A hereto, except that changes in your duties, title or responsibilities that are solely attributable to the Change of Control shall not trigger “good reason” for termination) within 12 months after a Change of Control, (a) this stock option grant will remain outstanding and continue to vest as if you remained in the employ of WebMD through the third anniversary of the Change of Control, or until the expiration of its original term if sooner, and (b) that portion of this restricted share grant that would have vested through the third anniversary of the Change of Control shall accelerate to the date of termination.

     You acknowledge that you continue to be bound by, and you hereby reaffirm your obligations under the Trade Secret & Proprietary Information Agreement and the restrictive covenant agreements you have signed in connection with your employment, including those annexed as part of your equity agreements, and in consideration of the foregoing, you agree to extend the terms of your existing non-competition and non-solicitation obligations to two (2) years following your termination of employment following a Change in Control under circumstances described in Section 3 above.

     Defined terms will have the meaning ascribed to them in the Employment Agreement, unless separately defined herein. Except as set forth herein, the Employment Agreement remains in full force and effect.

WebMD Health Corp.

/s/ Lewis H. Leicher

By: Lewis H. Leicher

Title: Senior Vice President

Agreed to:

/s/ Wayne Gattinella

Wayne Gattinella

2

ANNEX A
DEFINITIONS

“ Cause ” shall mean any of the following:

(i) your willful failure to perform your duties following written notice from the Company detailing the specific acts and a thirty (30) day period of time to remedy such failure;

(ii) any willful misconduct, violence or threat of violence that is injurious to the Company in a material respect or any misconduct relating to your business affairs, at any time, which shall demonstrably reflect negatively upon the Company or otherwise impair or impede its operations or reputation in any material respect;

(iii) your breach of a material Company policy, which breach is not remedied (if susceptible to remedy) following written notice by the Company detailing the specific breach and a thirty (30) day period of time to remedy such breach;

(iv) any material breach by you of the Employment Agreement or the Trade Secret and Proprietary Information Agreement, which breach is not remedied (if susceptible to remedy) following written notice by the Company or its designee detailing the specific breach and a thirty (30) day period of time to remedy such breach; and

(v) your conviction of a felony in respect of a dishonest or fraudulent act or other crime of moral turpitude.

“Good Reason” means any of the following conditions or events that remain in effect 30 days after written notice is provided by you to the Company detailing such condition or event (i) any reduction in your base salary, (ii) a material reduction in your authority with the Company, and (iii) any material breach by the Company of the Employment Agreement.

EX-10.4

EXHIBIT 10.4

CONFORMED COPY

As of September 25, 2011

Anthony Vuolo
c/o WebMD Health Corp.
111 Eighth Avenue
New York, New York 10011

Dear Tony:

     Reference is made to the Amended and Restated Employment Agreement between you and WebMD Health Corp. (“WebMD Health” or the “Company”), dated July 14, 2005 (as previously amended, the “Employment Agreement”). This letter is intended to describe the material terms of equity grants made to you on September 25, 2011 (the “Date of Grant”), including the Change in Control provisions.

     1. Stock Options. On the Date of Grant, the Compensation Committee approved the grant to you of a non-qualified option (the “Option”) to purchase 70,000 shares of common stock of WebMD Health Corp. under the terms and conditions of the WebMD Health Corp. Amended and Restated 2005 Long Term Incentive Plan (the “Equity Plan”). The per share exercise price of the Option is the closing price of the common stock on September 23, 2011. The Option will have a term of ten (10) years, subject to earlier termination in the event of the termination of your employment. The Option shall vest and become exercisable, subject to your continued employment on the applicable dates as follows: 25% of the Option on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Option shall be evidenced by and subject to the terms of the Company’s form of stock option agreement, which will be sent to you separately.

     2. Restricted Stock. On the Date of Grant, the Compensation Committee approved the grant to you of 27,500 shares of restricted stock of WebMD Health (the “Shares”) under the terms of the Equity Plan. The Shares shall vest and the restrictions thereon lapse, subject to your continued employment on the applicable dates as follows: 25% of the Shares on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Shares shall be evidenced by and subject to the terms of the Company’s form restricted stock agreement, which will be sent to you separately.

     3. Change of Control. Notwithstanding the foregoing, at any time after the first anniversary of a Change of Control (as defined in the Equity Plan), you may resign, in which case: (a) this stock option grant will remain outstanding and continue to vest as if you had remained in the employ of the

Company until the second anniversary of the resignation, or until the expiration of its original term if sooner, and (b) that portion of this restricted share grant that would have vested within two years of the resignation shall accelerate to the date of resignation. In addition, if you are terminated “without cause” or resign for “good reason” (as those terms are defined in your Employment Agreement, except that changes in your duties, title or responsibilities that are solely attributable to the Change of Control shall not trigger “good reason” for termination) within 12 months after a Change of Control, (a) this stock option grant will remain outstanding and continue to vest as if you remained in the employ of WebMD through the third anniversary of the Change of Control, or until the expiration of its original term if sooner, and (b) that portion of this restricted share grant that would have vested through the third anniversary of the Change of Control shall accelerate to the date of termination.

     You acknowledge that you continue to be bound by, and you hereby reaffirm your obligations under your Employment Agreement and any restrictive covenant agreements you have signed in connection with your employment, including those annexed as part of your equity agreements.

     Defined terms will have the meaning ascribed to them in the Employment Agreement, unless separately defined herein. Except as set forth herein, the Employment Agreement remains in full force and effect.

Sincerely,

WebMD Health Corp.

/s/ Lewis H. Leicher

By: Lewis H. Leicher

Title: Senior Vice President

Agreed to:

/s/ Anthony Vuolo Anthony Vuolo

2

EX-10.5

EXHIBIT 10.5

CONFORMED COPY

As of September 25, 2011

Kevin Cameron
c/o WebMD Health Corp.
669 River Drive
Elmwood Park, NJ 07407

Dear Kevin:

     Reference is made to the Amended and Restated Employment Agreement between you and WebMD Health Corp. (“WebMD Health” or the “Company”), dated February 1, 2006 (as previously amended, the “Employment Agreement”). This letter is intended to describe the material terms of equity grants made to you on September 25, 2011 (the “Date of Grant”), including the Change in Control provisions.

     1. Stock Options. On the Date of Grant, the Compensation Committee approved the grant to you of a non-qualified option (the “Option”) to purchase 60,000 shares of common stock of WebMD Health Corp. under the terms and conditions of the WebMD Health Corp. Amended and Restated 2005 Long Term Incentive Plan (the “Equity Plan”). The per share exercise price of the Option is the closing price of the common stock on September 23, 2011. The Option will have a term of ten (10) years, subject to earlier termination in the event of the termination of your employment. The Option shall vest and become exercisable, subject to your continued employment on the applicable dates as follows: 25% of the Option on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Option shall be evidenced by and subject to the terms of the Company’s form of stock option agreement, which will be sent to you separately.

     2. Restricted Stock. On the Date of Grant, the Compensation Committee approved the grant to you of 22,500 shares of restricted stock of WebMD Health (the “Shares”) under the terms of the Equity Plan. The Shares shall vest and the restrictions thereon lapse, subject to your continued employment on the applicable dates as follows: 25% of the Shares on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Shares shall be evidenced by and subject to the terms of the Company’s form restricted stock agreement, which will be sent to you separately.

     3. Change of Control. Notwithstanding the foregoing, at any time after the first anniversary of a Change of Control (as defined in the Equity Plan), you may resign, in which case: (a) this stock option grant will remain outstanding and continue to vest as if you had remained in the employ of the

Company until the second anniversary of the resignation, or until the expiration of its original term if sooner, and (b) that portion of this restricted share grant that would have vested within two years of the resignation shall accelerate to the date of resignation. In addition, if you are terminated “without cause” or resign for “good reason” (as those terms are defined in your Employment Agreement, except that changes in your duties, title or responsibilities that are solely attributable to the Change of Control shall not trigger “good reason” for termination) within 12 months after a Change of Control, (a) this stock option grant will remain outstanding and continue to vest as if you remained in the employ of WebMD through the third anniversary of the Change of Control, or until the expiration of its original term if sooner, and (b) that portion of this restricted share grant that would have vested through the third anniversary of the Change of Control shall accelerate to the date of termination.

     You acknowledge that you continue to be bound by, and you hereby reaffirm your obligations under your Employment Agreement and any restrictive covenant agreements you have signed in connection with your employment, including those annexed as part of your equity agreements.

     Defined terms will have the meaning ascribed to them in the Employment Agreement, unless separately defined herein. Except as set forth herein, the Employment Agreement remains in full force and effect.

Sincerely,

WebMD Health Corp.

/s/ Lewis H. Leicher

By: Lewis H. Leicher

Title: Senior Vice President

Agreed to:

/s/ Kevin M. Cameron

Kevin M. Cameron

2

EX-10.6

EXHIBIT 10.6

CONFORMED COPY

As of September 25, 2011

Martin J. Wygod
c/o WebMD Health Corp.
669 River Drive

Elmwood Park, New Jersey 07407

Dear Marty:

     Reference is made to the Amended and Restated Employment Agreement between you and WebMD Health Corp. (“WebMD Health” or the “Company”), dated August 3, 2005 (as previously amended, the “Employment Agreement”). This letter is intended to describe the material terms of a non-qualified stock option grant made to you on September 25, 2011 (the “Date of Grant”), including the Change in Control provisions.

     1. Stock Options. On the Date of Grant, the Compensation Committee approved the grant to you of a non-qualified option (the “Option”) to purchase 350,000 shares of common stock of WebMD Health Corp. under the terms and conditions of the WebMD Health Corp. Amended and Restated 2005 Long Term Incentive Plan (the “Equity Plan”). The per share exercise price of the Option is the closing price of the common stock on September 23, 2011. The Option will have a term of ten (10) years, subject to earlier termination in the event of the termination of your employment. The Option shall vest and become exercisable, subject to your continued employment on the applicable dates (except as set forth in the Employment Agreement), as follows: 25% of the Option on each of the first, second, third and fourth anniversaries of the Date of Grant (full vesting occurring on the fourth anniversary of the Date of Grant). The Option shall be evidenced by and subject to the terms of the Company’s form of stock option agreement, which will be sent to you separately; provided, that, notwithstanding anything to the contrary contained in the stock option agreement, the Option shall be treated as “Outstanding Equity” for purposes of the Employment Agreement and subject to the provisions set forth therein.

     2. Waiver of Previously Granted Restricted Stock. Effective as of the date hereof, you hereby agree to waive your right to receive 7,133 shares of restricted stock of WebMD Health (the “Shares”) that were granted to you by the Compensation Committee in February 2011 (no portion of which has yet become vested in accordance with its terms), as such number of Shares inadvertently exceeded the per person annual value limit for restricted share grants under the terms of the Equity Plan.

     You acknowledge that you continue to be bound by, and you hereby reaffirm your obligations under Section 6 of the Employment Agreement.

     Defined terms will have the meaning ascribed to them in the Employment Agreement, unless separately defined herein. Except as set forth herein, the Employment Agreement remains in full force and effect.

Sincerely,

WebMD Health Corp.

/s/ Lewis H. Leicher

By: Lewis H. Leicher

Title: Senior Vice President

Agreed to:

/s/ Martin J. Wygod

Martin J. Wygod

2

EX-10.7

EXHIBIT 10.7

CONFORMED COPY

As of September 21, 2011

Martin J. Wygod
c/o WebMD Health Corp.
16092 San Dieguito Road
P.O. Box 676306
Rancho Santa Fe, CA 92067-6306

Dear Marty:

     The purpose of this letter is to amend your Employment Agreement with WebMD Health Corp. (the “Company”) dated August 3, 2005, as amended on each of February 1, 2006, December 1, 2008, December 29, 2008 and July 9, 2009 (as so amended, the “Employment Agreement”).

     The Compensation Committee of the Board of Directors approved an increase in your annual base salary from $120,000 to $490,000. Accordingly, the first and second sentences of Section 2.1 of the Employment Agreement are amended to read as follows: “Effective September 21, 2011, the Company shall pay Executive for services during the Employment Period a base salary at the annual rate of $490,000”.

     Except as set forth herein, the Employment Agreement remains in full force and effect and is hereby ratified in all respects. All references to the Employment Agreement shall be deemed a reference to the Employment Agreement as amended hereby.

Sincerely,

WebMD Health Corp.

/s/ Lewis H. Leicher By: Lewis H. Leicher

Title: Senior Vice President

Agreed to:

/s/ Martin J. Wygod Martin J. Wygod

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Wayne T. Gattinella, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of WebMD Health Corp.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2011

     /s/ Wayne T. Gattinella

Wayne T. Gattinella

Chief Executive Officer

(Principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Anthony Vuolo, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of WebMD Health Corp.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2011

     /s/ Anthony Vuolo

Anthony Vuolo

Chief Operating Officer and
     Chief Financial Officer

(Principal financial and accounting officer)

EX-32.1

Exhibit 32.1

STATEMENT OF CHIEF EXECUTIVE OFFICER OF
WEBMD HEALTH CORP.
PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of WebMD Health Corp. (“WebMD”) on Form 10-Q for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wayne T. Gattinella, Chief Executive Officer of WebMD, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of WebMD.

Dated: November 9, 2011	/s/ Wayne T. Gattinella
	Wayne T. Gattinella
	Chief Executive Officer

The foregoing certification is being furnished to accompany WebMD’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (the “Report”) solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report or as a separate disclosure document and shall not be deemed incorporated by reference into any other filing of WebMD that incorporates the Report by reference. A signed original of this written certification required by Section 906 has been provided to WebMD and will be retained by WebMD and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

STATEMENT OF CHIEF FINANCIAL OFFICER OF
WEBMD HEALTH CORP.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of WebMD Health Corp. (“WebMD”) on Form 10-Q for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Vuolo, Chief Operating Officer and Chief Financial Officer of WebMD, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of WebMD.

Dated: November 9, 2011	/s/ Anthony Vuolo
	Anthony Vuolo
	Chief Operating Officer and
	Chief Financial Officer

The foregoing certification is being furnished to accompany WebMD’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (the “Report”) solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report or as a separate disclosure document and shall not be deemed incorporated by reference into any other filing of WebMD that incorporates the Report by reference. A signed original of this written certification required by Section 906 has been provided to WebMD and will be retained by WebMD and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

Explanation of Non-GAAP Financial Measures

     Item 2 of Part I (the “MD&A”) of the Quarterly Report on Form 10-Q to which this is filed as Exhibit 99.1 includes 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” or “net income” calculated in accordance with GAAP. The MD&A also includes 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 income from continuing operations or net income. In addition, we use Adjusted EBITDA in the incentive compensation programs applicable to some 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 income from continuing operations or net income, 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 or to net income that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the MD&A.

     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 income from continuing operations or to net income, 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 income from continuing operations or net income. 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 income from continuing operations and net income:

• 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.
•	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 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.
•	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 income from continuing operations and net income. In recent periods, these other items have included, but were not limited to, (i) legal expenses relating to the 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, and (iv) gain or loss on investments. 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.

2

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Accounts receivable, net of allowance for doubtful accounts	$ 1,161	$ 1,493
Stockholders' equity:
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	650,000,000	650,000,000
Common stock, shares issued	62,405,119	62,401,272
Treasury stock, shares	6,058,509	2,485,391

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Consolidated Statements of Operations [Abstract]
Revenue	$ 135,138	$ 135,305	$ 408,116	$ 366,042
Cost of operations	49,097	47,610	148,698	135,972
Sales and marketing	29,597	28,957	94,161	86,789
General and administrative	22,787	22,964	67,614	62,350
Depreciation and amortization	6,781	6,935	19,929	20,268
Interest income	21	21	88	3,850
Interest expense	5,862	1,797	14,836	10,106
Loss on convertible notes		2,232		16,970
(Loss) gain on investments	(1,150)	(131)	14,679	(22,977)
Other income (expense), net	0	107	(53)	(92)
Income from continuing operations before income tax provision (benefit)	19,885	24,807	77,592	14,368
Income tax provision (benefit)	8,645	10,193	32,606	(4,140)
Income from continuing operations	11,240	14,614	44,986	18,508
Income (loss) from discontinued operations, net of a tax provision of $0 and $4,812 for the three and nine months ended September 30, 2011 and a tax benefit of $1,476 for the three and nine months ended September 30, 2010	2,994	(1,024)	10,388	(1,024)
Net income	$ 14,234	$ 13,590	$ 55,374	$ 17,484
Basic income (loss) per common share:
Income from continuing operations	$ 0.19	$ 0.25	$ 0.77	$ 0.33
Income (loss) from discontinued operations	$ 0.06	$ (0.02)	$ 0.18	$ (0.01)
Net income	$ 0.25	$ 0.23	$ 0.95	$ 0.32
Diluted income (loss) per common share:
Income from continuing operations	$ 0.19	$ 0.24	$ 0.75	$ 0.31
Income (loss) from discontinued operations	$ 0.05	$ (0.02)	$ 0.17	$ (0.02)
Net income	$ 0.24	$ 0.22	$ 0.92	$ 0.29
Weighted-average shares outstanding used in computing per share amounts:
Basic	57,461	58,095	57,913	54,602
Diluted	58,698	61,435	59,882	58,660

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Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2011

Comprehensive Income [Abstract]

Comprehensive Income

The following table presents the components of comprehensive income during the nine months ended September 30, 2010:

Unrealized holding gains	$	13,177
Unrealized losses recognized in earnings		24,248
Other comprehensive income		37,425
Net income		17,484
Comprehensive income	$	54,909

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Document and Entity Information (USD $) In Thousands, except Share data	9 Months Ended
	Sep. 30, 2011	Nov. 04, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	WebMD Health Corp.
Entity Central Index Key	0001326583
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2,531,640
Entity Common Stock, Shares Outstanding		56,971,112

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Subsequent Event - Stockholder Rights Plan (Details) (USD $)	Nov. 02, 2011
Subsequent Event Stockholder Rights Plan (Additional Textual) [Abstract]
Minimum percentage of beneficial ownership acquired under right agreement	12.00%
Minimum percentage of assets under rights agreement	50.00%
Nominal Price at which Rights redeemed	0.01
Junior Preferred Stock [Member]
Subsequent Event Stockholder Rights Plan (Textual) [Abstract]
Preferred stock, par value	$ 0.01
Preferred stock, exercise price	153.00

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Other Income (Expense), Net (Tables)

9 Months Ended

Sep. 30, 2011

Other Income (Expense), Net [Abstract]

Other Income (Expense), Net

Other income (expense), net consists of the following items:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011			2010
Reduction of tax contingencies(a)	$	—	$	177		$	—		$	533
Legal expense(b)		—		(70	)		(53	)		(625	)
Other income (expense), net	$	—	$	107		$	(53	)	$	(92	)

(a)	Represents the reduction of certain sales and use tax contingencies resulting from the expiration of various statutes of limitations.
(b)	Represents the costs and expenses incurred by the Company related to the investigation by the United States Attorney for the District of South Carolina and the SEC and the related Coverage Litigation.

XML

Other Income (Expense), Net (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Other Income (Expense), Net
Reduction of tax contingencies	$ 0	$ 177	$ 0	$ 533
Legal expense	0	(70)	(53)	(625)
Other income (expense), net	$ 0	$ 107	$ (53)	$ (92)

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Fair Value of Financial Instruments and Non-Recourse Credit Facilities

9 Months Ended

Sep. 30, 2011

Fair Value of Financial Instruments and Non-Recourse Credit Facilities [Abstract]

Fair Value of Financial Instruments and Non-Recourse Credit Facilities

5.   Fair Value of Financial Instruments and Non-Recourse Credit Facilities

The Company accounts for certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:   Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

Level 2:  Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:   Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company did not have any Level 2 assets as of September 30, 2011 and December 31, 2010. The following table sets forth the Company’s Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis as of September 30, 2011 and December 31, 2010:

			September 30, 2011						December 31, 2010
	Fair Value		Amortized				Gross		Amortized				Gross
	Estimate		Cost		Fair		Unrealized		Cost		Fair		Unrealized
	Using:		Basis		Value		Gains		Basis		Value		Gains
Cash and cash equivalents		Level 1	$	1,101,286	$	1,101,286	$	—	$	400,501	$	400,501	$	—
ARS Option		Level 3		2,363		2,363		—		4,245		4,245		—

The following table reconciles the beginning and ending balances of the Company’s Level 3 assets:

	Nine Months Ended September 30,
	2011			2010
	ARS			ARS			Auction Rate			Senior
	Option			Option			Securities			Secured Notes
Fair value as of the beginning of the period	$	4,245		$	—		$	279,701		$	63,826
Redemptions		(16,561	)		(407	)		(290,999	)		(65,475	)
Gain (loss) included in earnings		14,679			1,252			(29,508	)		1,362
Interest income accretion included in earnings		—			—			—			287
Changes in unrealized gains/losses included in other comprehensive income		—			—			40,806			—
Fair value as of the end of the period	$	2,363		$	845		$	—		$	—

Through April 20, 2010, the Company held investments in auction rate securities (“ARS”) which had been classified as Level 3 assets as described above. The types of ARS holdings the Company owned were backed by student loans, 97% guaranteed under the Federal Family Education Loan Program (FFELP), and had credit ratings of AAA or Aaa when purchased. Historically, the fair value of the Company’s ARS holdings approximated par value due to the frequent auction periods, generally every 7 to 28 days, which provided liquidity to these investments. However, since February 2008, substantially all auctions involving these securities have been unsuccessful. The result of an unsuccessful auction is that these ARS holdings will continue to pay interest in accordance with their terms at each respective auction date; however, liquidity of the securities will be limited until there is a successful auction, the issuer redeems the securities, the securities mature or until such time as other markets develop. Additionally, during 2009, approximately one-half of the auction rate securities the Company held were either downgraded below AAA or placed on “watch” status by one or more of the major credit rating agencies. As of March 31, 2008, the Company concluded that the estimated fair value of its ARS no longer approximated the face value. The Company concluded the fair value of its ARS holdings was $302,842 compared to a face value of $362,950. The impairment in value, of $60,108, was considered to be other-than-temporary and, accordingly, was recorded as an impairment charge within the statement of operations during the three months ended March 31, 2008.

Effective April 1, 2009, the Company was required to adopt new authoritative guidance which amended the recognition guidance for other-than-temporary impairments of debt securities and changed the presentation of other-than-temporary impairments in the financial statements. In accordance with this new guidance, if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings. Otherwise, losses on securities which are other-than-temporarily impaired are separated into two categories, the portion of loss which is considered credit loss and the portion of loss which is due to other factors. The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income. This new guidance requires a cumulative effect adjustment to be reported as of the beginning of the period of adoption to reclassify the non-credit component of previously recognized other-than-temporary impairments on debt securities held at that date, from retained earnings to accumulated other comprehensive income, if the entity does not intend to sell the debt security and it is not more likely than not that the entity will be required to sell the debt security before recovery of its amortized cost basis.

Since the Company had no current intent to sell the auction rate securities that it held as of April 1, 2009, and it was not more likely than not that the Company would be required to sell the securities prior to recovery of the amortized cost basis, the Company estimated the present value of the cash flows expected to be collected related to the auction rate securities it held. The difference between the present value of the estimated cash flows expected to be collected and the amortized cost basis as of April 1, 2009, the date this new guidance was adopted, was $26,848, or $24,697 net of the effect of noncontrolling interest. This represented the cumulative effect of initially adopting this new guidance and has been reflected as an increase to the cost basis of its investment and an increase to accumulated other comprehensive loss and an increase to retained earnings in the Company’s balance sheet effective as of April 1, 2009.

Historically, the Company estimated the fair value of its ARS holdings using an income approach valuation technique. Using this approach, expected future cash flows are calculated over the expected life of each security and are discounted to a single present value using a market required rate of return. Some of the more significant assumptions made in the present value calculations were (i) the estimated weighted average lives for the loan portfolios underlying each individual ARS, which ranged from 4 to 14 years as of March 31, 2008 and (ii) the required rates of return used to discount the estimated future cash flows over the estimated life of each security, which consider both the credit quality for each individual ARS and the market liquidity for these investments. Additionally, as discussed above, during 2009, certain of the auction rate securities the Company holds were downgraded below AAA by one or more of the major credit rating agencies. These revised credit ratings were a significant consideration in determining the cash flows expected to be collected. Substantial judgment and estimation factors are necessary in connection with making fair value estimates of Level 3 securities, including estimates related to expected credit losses as these factors are not currently observable in the market due to the lack of trading in the securities.

Effective April 20, 2010, the Company entered into an agreement pursuant to which the Company sold all of its holdings of ARS for an aggregate of $286,399. Under the terms of the agreement, the Company retained an option (the “ARS Option”), for a period of two years from the date of the agreement: (a) to repurchase from the purchaser the same principal amount of any or all of the various series of ARS sold, at the agreed upon purchase prices received on April 20, 2010; and (b) to receive additional proceeds from the purchaser upon certain redemptions of the various series of ARS sold.

As described above, while the Company originally recorded a loss of $60,108 relating to its holdings of ARS in the March 2008 quarter, the Company was required to reclassify $26,848 of that charge as an unrealized loss through stockholders’ equity when WebMD was required to adopt new authoritative guidance related to other-than-temporary impairments effective April 1, 2009, which had the effect of increasing the cost basis of the ARS by that amount. As a result, during 2010, the Company recorded an additional charge of $29,508, representing the difference between the cost basis of its ARS holdings and the proceeds received on April 20, 2010. In connection with the sale of the ARS, the Company recorded a deferred income tax benefit of approximately $22,000 primarily related to the reversal of income tax valuation allowance attributable to its ARS. Additionally the Company recognized gains of $14,712 and $14,679 related to the ARS Option described above during the period from April 20, 2010 through December 31, 2010 and during the nine months ended September 30, 2011, respectively. Through the ARS Option, the Company received cash proceeds of $10,467 and $16,561 during the period from April 20, 2010 through December 31, 2010 and during the nine months ended September 30, 2011, respectively. The value of the ARS Option as of September 30, 2011 is estimated to be $2,363 and is reflected in prepaid expenses and other current assets within the accompanying balance sheet. The ARS Option has been classified as a Level 3 asset as its valuation requires substantial judgment. The historical redemption activity of the specific ARS underlying the ARS Option was the most significant assumption used to determine an estimated value of the ARS Option. The Company is required to reassess the value of the ARS Option at each reporting period, and any changes in value will be recorded within the statement of operations in future periods.

The Company’s other Level 3 asset during 2010 was $67,500 principal amount of Senior Secured Notes that the Company received in connection with its sale of Porex on October 19, 2009. The Senior Secured Notes were secured by certain assets of the acquirer of Porex and accrued interest at a rate of 8.75% per annum, payable quarterly. The Senior Secured Notes were issued in four series: the Senior Secured Notes of the first, second and third series had an aggregate principal amount of $10,000 each and were scheduled to mature on the first, second and third anniversaries of the closing, respectively; and the Senior Secured Notes of the fourth series had an aggregate principal amount of $37,500 and were scheduled to mature on the fourth anniversary of the closing. The Company estimated that the fair value of the Senior Secured Notes was $63,826 as of December 31, 2009. On April 1, 2010, the Company sold the Senior Secured Notes for $65,475 plus accrued interest and recorded a gain of $1,362 representing the excess of this amount over the adjusted cost basis of the Senior Secured Notes, which is reflected in (loss) gain on investments in the accompanying consolidated statement of operations during the nine months ended September 30, 2010.

The Company also holds an investment in a privately held company which is carried at cost, and not subject to fair value measurements. However, if events or circumstances indicate that its carrying amount may not be recoverable, it would be reviewed for impairment. The total amount of this investment is $6,471 and it is included in other assets on the accompanying consolidated balance sheets.

For disclosure purposes, the Company is required to measure the outstanding value of its debt on a recurring basis. The following table presents the carrying value and estimated fair value of the Company’s convertible notes that were carried at historical cost as of September 30, 2011:

	Carrying Amount		Fair Value
2.25% Notes	$	400,000	$	360,440
2.50% Notes		400,000		327,920

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Summary of Significant Accounting Policies (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Summary of revenues relating to public and private portal
Revenues	$ 135,138	$ 135,305	$ 408,116	$ 366,042
Public Portal [Member]
Summary of revenues relating to public and private portal
Revenues	115,033	113,078	346,504	299,927
Private Portal [Member]
Summary of revenues relating to public and private portal
Revenues	$ 20,105	$ 22,227	$ 61,612	$ 66,115

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Stock-Based Compensation (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2011 Years Claims	Sep. 30, 2010 Years
Fair value of options granted
Expected dividend yield	0.00%	0.00%
Expected volatility	37.00%	33.00%
Risk-free interest rate	1.11%	2.04%
Expected term (years)	4.6	4.8
Weighted average fair value of options granted during the period	$ 11.77	$ 14.53

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Comprehensive Income (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Comprehensive Income
Unrealized holding gains				$ 13,177
Unrealized losses recognized in earnings				24,248
Other comprehensive income				37,425
Net income	14,234	13,590	55,374	17,484
Comprehensive income				$ 54,909

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

Stock Options

The following table summarizes stock option activity for the Plans:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise Price		Contractual		Intrinsic
	Shares			per Share		Life (In Years)		Value(1)
Outstanding at January 1, 2011		10,227,755		$	30.79
Granted		3,077,150			36.22
Exercised		(1,441,941	)		27.15
Cancelled		(565,119	)		33.59
Outstanding at September 30, 2011		11,297,845		$	32.59		7.6	$	36,601
Vested and exercisable at the end of the period		3,822,675		$	30.51		5.6	$	18,111

(1) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on September 30, 2011, which was $30.15, less the applicable exercise price of the underlying option. This aggregate intrinsic value represents the amount that would have been realized if all the option holders had exercised their options on September 30, 2011.

Fair value of options granted

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model considering the weighted average assumptions noted in the following table. Expected volatility is based on implied volatility from traded options of the Company’s Common Stock combined with historical volatility of the Company’s Common Stock. The expected term represents the period of time that options are expected to be outstanding following their grant date, and was determined using historical exercise data combined with assumptions for future exercise activity. The risk-free rate is based on the U.S. Treasury yield curve for periods equal to the expected term of the options on the grant date.

	Nine Months Ended September 30,
	2011			2010
Expected dividend yield		0.0	%		0.0	%
Expected volatility		0.37			0.33
Risk-free interest rate		1.11	%		2.04	%
Expected term (years)		4.6			4.8
Weighted average fair value of options granted during the period	$	11.77		$	14.53

Restricted Stock Awards

The following table summarizes the activity of the Company’s Restricted Stock:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Balance at January 1, 2011		1,106,751		$	33.13
Granted		564,367			38.82
Vested		(208,618	)		32.78
Forfeited		(54,250	)		32.25
Balance at September 30, 2011		1,408,250		$	35.50

Summary of Stock-Based Compensation Expense

Summary of Stock-Based Compensation Expense

The following table summarizes the components and classification of stock-based compensation expense:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Stock options	$	6,159	$	5,996	$	18,832	$	16,631
Restricted stock		3,563		2,714		9,878		6,694
Other		86		94		259		280
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605
Included in:
Cost of operations	$	1,718	$	1,889	$	5,677	$	5,153
Sales and marketing		2,286		1,867		6,865		5,749
General and administrative		5,804		5,048		16,427		12,703
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

10.   Stock-Based Compensation

Prior to the Merger on October 23, 2009, HLTH had various stock-based compensation plans (collectively, the “HLTH Plans”) under which directors, officers and other eligible employees received awards of options to purchase HLTH Common Stock and restricted shares of HLTH Common Stock. WebMD also had similar stock-based compensation plans (the “WebMD Plans”) that provide for the grant of stock options, restricted stock awards, and other awards based on WebMD Common Stock. In connection with the Merger, all outstanding stock options and restricted stock awards under the HLTH Plans were converted into outstanding stock options and restricted stock awards of WebMD based on the Merger exchange ratio of 0.4444. The following sections of this note present the historical activity of the HLTH Plans (on a converted basis after giving effect to the Merger exchange ratio of 0.4444) combined with the historical activity of the WebMD Plans, which are collectively referred to as the “Plans”.

The 2005 Long-Term Incentive Plan, (as amended, the “2005 Plan”) is the only plan under which future grants can be made. The maximum number of shares of the Company’s Common Stock that may be subject to awards under the 2005 Plan was 18,200,000 as of September 30, 2011, subject to adjustment in accordance with the terms of the 2005 Plan. The Company had an aggregate of 761,543 shares of Common Stock available for future grants under the 2005 Plan at September 30, 2011.

Stock Options

Generally, options under the Plans vest and become exercisable ratably over periods ranging from four to five years based on their individual grant dates, subject to continued employment on the applicable vesting dates, and generally expire within ten years from the date of grant. Options are granted at prices not less than the fair market value of the Company’s Common Stock on the date of grant. The following table summarizes stock option activity for the Plans:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise Price		Contractual		Intrinsic
	Shares			per Share		Life (In Years)		Value(1)
Outstanding at January 1, 2011		10,227,755		$	30.79
Granted		3,077,150			36.22
Exercised		(1,441,941	)		27.15
Cancelled		(565,119	)		33.59
Outstanding at September 30, 2011		11,297,845		$	32.59		7.6	$	36,601
Vested and exercisable at the end of the period		3,822,675		$	30.51		5.6	$	18,111

(1) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on September 30, 2011, which was $30.15, less the applicable exercise price of the underlying option. This aggregate intrinsic value represents the amount that would have been realized if all the option holders had exercised their options on September 30, 2011.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model considering the weighted average assumptions noted in the following table. Expected volatility is based on implied volatility from traded options of the Company’s Common Stock combined with historical volatility of the Company’s Common Stock. The expected term represents the period of time that options are expected to be outstanding following their grant date, and was determined using historical exercise data combined with assumptions for future exercise activity. The risk-free rate is based on the U.S. Treasury yield curve for periods equal to the expected term of the options on the grant date.

	Nine Months Ended September 30,
	2011			2010
Expected dividend yield		0.0	%		0.0	%
Expected volatility		0.37			0.33
Risk-free interest rate		1.11	%		2.04	%
Expected term (years)		4.6			4.8
Weighted average fair value of options granted during the period	$	11.77		$	14.53

Restricted Stock Awards

The Company’s Restricted Stock consists of shares of the Company’s Common Stock which have been awarded to employees with restrictions that cause them to be subject to substantial risk of forfeiture and restrict their sale or other transfer by the employee until they vest. Generally, the Company’s Restricted Stock awards vest ratably over periods ranging from three to five years from their individual award dates subject to continued employment on the applicable vesting dates. The following table summarizes the activity of the Company’s Restricted Stock:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Balance at January 1, 2011		1,106,751		$	33.13
Granted		564,367			38.82
Vested		(208,618	)		32.78
Forfeited		(54,250	)		32.25
Balance at September 30, 2011		1,408,250		$	35.50

Proceeds received from the exercise of options to purchase shares of the Company’s Common Stock were $1,382 and $26,435 during the three and nine months ended September 30, 2011, respectively, and $9,054 and $57,168 during the three and nine months ended September 30, 2010, respectively. Additionally, in connection with the exercise of certain stock options and the vesting of restricted stock, the Company made payments of $98 and $6,730 during the three and nine months ended September 30, 2011, respectively, and $36,831 and $76,559 during the three and nine months ended September 30, 2010, respectively, related to employee statutory withholding taxes that were satisfied by withholding shares of Common Stock of equal value from the respective employees. The proceeds and payments described above are reflected within cash flows from financing activities within the accompanying consolidated statements of cash flows.

The intrinsic value related to stock options that were exercised, combined with the fair value of shares of restricted stock that vested, aggregated $985 and $47,223 for the three and nine months ended September 30, 2011, respectively, and $93,637 and $226,338 for the three and nine months ended September 30, 2010, respectively.

Other

Each year, the Company issues shares of its Common Stock to each WebMD non-employee director with a value equal to their annual board and committee retainers. The Company recorded $86 and $259 of stock-based compensation expense for the three and nine months ended September 30, 2011, respectively, and $94 and $280 for the three and nine months ended September 30, 2010, respectively, in connection with these issuances.

Summary of Stock-Based Compensation Expense

The following table summarizes the components and classification of stock-based compensation expense:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Stock options	$	6,159	$	5,996	$	18,832	$	16,631
Restricted stock		3,563		2,714		9,878		6,694
Other		86		94		259		280
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605
Included in:
Cost of operations	$	1,718	$	1,889	$	5,677	$	5,153
Sales and marketing		2,286		1,867		6,865		5,749
General and administrative		5,804		5,048		16,427		12,703
Total stock-based compensation expense	$	9,808	$	8,804	$	28,969	$	23,605

As of September 30, 2011, approximately $95,300 of unrecognized stock-based compensation expense related to unvested awards (net of estimated forfeitures) is expected to be recognized over a weighted-average period of approximately 2.9 years, related to the Plans.

Tax benefits attributable to stock-based compensation represented 39% of stock-based compensation expense for all periods presented.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1.   Summary of Significant Accounting Policies

Background

WebMD Health Corp. (the “Company” or “WebMD”) is a Delaware corporation that was incorporated on May 3, 2005. The Company completed an initial public offering on September 28, 2005. From the completion of the initial public offering through the completion of the Company’s merger with HLTH Corporation (“HLTH”) on October 23, 2009 (the “Merger”), the Company was more than 80% owned by HLTH. On October 23, 2009, the Merger was completed, with HLTH merging into WebMD and WebMD continuing as the surviving corporation. In the Merger, each share of HLTH Common Stock was converted into 0.4444 shares of WebMD Common Stock. In these Consolidated Financial Statements, the defined term “Company” refers not only to WebMD but also, where the context requires, to HLTH. The specific names of HLTH and WebMD are used only where there is a need to distinguish between the legal entities. In addition, all references in these Consolidated Financial Statements to amounts of shares of HLTH Common Stock and to market prices or purchase prices for HLTH Common Stock have been adjusted to reflect the 0.4444 exchange ratio in the Merger (the “Exchange Ratio”), and expressed as the number of shares of WebMD Common Stock into which the HLTH Common Stock would be converted in the Merger and the equivalent price per share of WebMD Common Stock. Similarly, the exercise price of options and warrants to purchase HLTH Common Stock and the number of shares subject to those options and warrants have been adjusted to reflect the Exchange Ratio.

The Company provides health information services to consumers, physicians and other healthcare professionals, employers and health plans through its public and private online portals, mobile platforms and health-focused publications. The Company’s public portals for consumers enable them to obtain health and wellness information (including information on specific diseases or conditions), check symptoms, locate physicians, store individual healthcare information, receive periodic e-newsletters on topics of individual interest and participate in online communities with peers and experts. The Company’s public portals for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (“CME”) credit and communicate with peers. The Company also provides mobile health information applications for use by consumers and physicians. The Company’s public portals generate revenue primarily through the sale of advertising and sponsorship products, including CME services. The public portals’ sponsors and advertisers include pharmaceutical, biotechnology, medical device and consumer products companies. The Company also generates revenue from the sale of e-detailing promotion and physician recruitment services and from advertising sold in WebMD the Magazine, a consumer magazine distributed to physician office waiting rooms. In addition, the Company generates revenue from the sale of certain information products. The Company’s private portals enable employers and health plans to provide their employees and members with access to personalized health and benefit information and decision-support technology that helps them to make more informed benefit, treatment and provider decisions. In addition, the Company offers clients of its private portals telephonic health coaching services on a per participant basis across an employee or plan population. The Company generates revenue from its private portals through the licensing of these portals and related services to employers and health plans either directly or through distributors.

Interim Financial Statements

The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2011. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations.

The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2010, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Seasonality

The timing of the Company’s revenue is affected by seasonal factors. The Company’s public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of the Company’s public portals. This portion of the Company’s revenue is usually the lowest in the first quarter of each calendar year, and increases during each consecutive quarter throughout the year. The timing of revenue in relation to the Company’s expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing and general and administrative expenses as a percentage of revenue in each calendar quarter.

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the Consolidated Financial Statements. Significant estimates and assumptions by management affect: the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards.

Presentation of Segment Information

The Company generates its revenue through its public and private portals. Discrete financial information related to a measure of profit or loss for these two revenue streams is not available as they leverage many common expenses, and the Company does not separately allocate these common expenses in assessing the performance of its business. Accordingly, the Company views its business as one reportable operating segment.

The following table presents the revenues recognized related to the Company’s public portals and private portals during the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Public portal revenues	$	115,033	$	113,078	$	346,504	$	299,927
Private portal revenues		20,105		22,227		61,612		66,115
	$	135,138	$	135,305	$	408,116	$	366,042

Loss Contingencies

The Company accounts for loss contingencies in accordance with FASB ASC No. 450, “Contingencies.” Under ASC No. 450, accruals for loss contingencies are recorded when both (i) the information available indicates that it is probable that a liability has been incurred and (ii) the amount of the loss can be reasonably estimated. The Company records adjustments to these accruals to reflect the status of negotiations, settlements, advice of counsel and other information and events related to an individual matter.

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, adjusted to give effect to participating non-vested restricted stock during the periods it was outstanding. Diluted income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, increased to give effect to potentially dilutive securities and assumes that any dilutive convertible notes were converted, only in the periods in which such effect is dilutive (shares in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Numerator:
Income from continuing operations	$	11,240		$	14,614		$	44,986		$	18,508
Effect of participating non-vested restricted stock		(70	)		(152	)		(320	)		(222	)
Income from continuing operations- Basic and Diluted	$	11,170		$	14,462		$	44,666		$	18,286
Income (loss) from discontinued operations, net of tax	$	2,994		$	(1,024	)	$	10,388		$	(1,024	)
Effect of participating non-vested restricted stock		(19	)		12			(74	)		12
Income (loss) from discontinued operations, net of tax — Basic and Diluted	$	2,975		$	(1,012	)	$	10,314		$	(1,012	)
Denominator:
Weighted-average shares — Basic		57,461			58,095			57,913			54,602
Employee stock options and restricted stock		1,237			3,340			1,969			4,058
Adjusted weighted-average shares after assumed conversions — Diluted		58,698			61,435			59,882			58,660
Basic income (loss) per common share:
Income from continuing operations	$	0.19		$	0.25		$	0.77		$	0.33
Income (loss) from discontinued operations		0.06			(0.02	)		0.18			(0.01	)
Net income	$	0.25		$	0.23		$	0.95		$	0.32
Diluted income (loss) per common share:
Income from continuing operations	$	0.19		$	0.24		$	0.75		$	0.31
Income (loss) from discontinued operations		0.05			(0.02	)		0.17			(0.02	)
Net income	$	0.24		$	0.22		$	0.92		$	0.29

The Company has excluded its convertible notes, as well as certain outstanding stock options and restricted stock, from the calculation of diluted income per common share during the periods in which such securities were anti-dilutive. The following table presents the total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share during the periods presented (shares in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Options and restricted stock		4,747		1,798		2,842		1,812
Convertible notes		11,477		3,017		9,805		8,570
		16,224		4,815		12,647		10,382

Recent Accounting Pronouncements

Accounting Pronouncement Adopted During 2011

Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and distribution arrangements, information services and licenses of healthcare management tools and private portals as well as related health coaching services are recognized ratably over the term of the applicable agreement. Revenue from the sponsorship of CME is recognized over the period the Company substantially completes its contractual deliverables as determined by the applicable agreements.

For contracts that contain multiple deliverables that were entered into prior to January 1, 2011, revenue is allocated to each deliverable based on its relative fair value determined using vendor-specific objective evidence (“VSOE”). In certain instances where fair value did not exist for all the elements, the amount of revenue allocated to the delivered elements equals the total consideration less the fair value of the undelivered elements to the extent VSOE exists for the undelivered elements. In instances where fair value did not exist for the undelivered elements, the entire consideration is recognized over the period that the last element is delivered.

Contracts that contain multiple deliverables that were entered into subsequent to January 1, 2011 are subject to Accounting Standards Update No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also changes the level of evidence of selling price required to separate deliverables by allowing a company to make its best estimate of the standalone selling price of deliverables when more objective evidence of selling price is not available.

The Company adopted ASU 2009-13 on a prospective basis for arrangements entered into or materially modified on or subsequent to January 1, 2011. Beginning January 1, 2011, pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, the Company allocates revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on VSOE if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. The Company is not able to determine TPE of selling price as it is unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that its services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgemental process that considers multiple factors including, but not limited to, recent selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

As a result of the adoption of ASU 2009-13, revenue for the three months ended September 30, 2011 was lower by $300 and revenue during the nine months ended September 30, 2011 was higher by $3,400, than the revenue that would have been recognized under the previous accounting standard. The impact on diluted income per share was $(0.01) and $0.06 during the three and nine months ended September 30, 2011, respectively. This resulted from services that were provided or partially provided during the three and nine months ended September 30, 2011, for certain deliverables of the Company’s multiple deliverable arrangements for which the Company would have previously deferred the related revenue under the previous accounting standards. During the three and nine months ended September 30, 2011, the Company assigned value to these deliverables using its best estimate of selling price, and recognized revenue as they were delivered. The multiple deliverable arrangements that were impacted by ASU 2009-13 related to the Company’s public portal revenues and the services underlying such arrangements are generally delivered over periods of twelve months or less. The Company is not able to reasonably estimate the effect of adopting ASU 2009-13 on future periods as the impact will vary based on many factors including, but not limited to, the quantity and size of new or materially modified multiple-deliverable arrangements entered into, as well as the nature of the various services contained within those arrangements and the time periods over which those services are delivered.

Accounting Pronouncements to be Adopted in the Future

In September 2011, the Financial Accounting Standards Board (the “FASB”) issued an update to the existing guidance for goodwill and other intangible assets. The update simplifies how a company tests goodwill for impairment by allowing both public and nonpublic entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, an entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not anticipate that the adoption of these amendments will have a material impact on its financial condition, results of operations or cash flows.

In June 2011, the FASB issued an amendment to the existing guidance on the presentation of comprehensive income. Under the amended guidance, entities have the option to present the components of net income and other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Entities no longer have the option of presenting the components of other comprehensive income within the statement of changes in stockholders’ equity. For public entities, the amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2011, which for the Company is the first quarter in 2012. The adoption of this amendment will result in a change only to the Company’s current presentation of comprehensive income.

In May 2011, the FASB issued amendments to the existing guidance on fair value measurement. The amendments are intended to create consistency between U.S. generally accepted accounting standards and International Financial Reporting Standards on measuring fair value and disclosing information about fair value measurements. The amendments clarify the application of existing fair value measurement requirements including (i) the application of the highest and best use valuation premise concepts, (ii) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (iii) quantitative information required for fair value measurements categorized within Level 3. In addition, the amendments require additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011. These changes are required to be applied prospectively. The Company is currently evaluating the impact that this amendment may have on its financial condition and results of operations.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.

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Fair Value of Financial Instruments and Non-Recourse Credit Facilities (Details 1) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Reconciles of beginning and ending balances of the Company's Level 3 assets
Fair value as of the end of the period	$ 2,363
Auction Rate Securities [Member]
Reconciles of beginning and ending balances of the Company's Level 3 assets
Fair value as of the beginning of the period		279,701
Redemptions		(290,999)
Gain (loss) included in earnings		(29,508)
Changes in unrealized gains/losses included in other comprehensive income		40,806
Fair value as of the end of the period		0
ARS Option [Member]
Reconciles of beginning and ending balances of the Company's Level 3 assets
Fair value as of the beginning of the period	4,245
Redemptions	(16,561)	(407)
Gain (loss) included in earnings	14,679	1,252
Fair value as of the end of the period	2,363	845
Senior Secured Notes [Member]
Reconciles of beginning and ending balances of the Company's Level 3 assets
Fair value as of the beginning of the period		63,826
Redemptions		(65,475)
Gain (loss) included in earnings		1,362
Interest income accretion included in earnings		287
Fair value as of the end of the period		$ 0

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Stock Repurchase Program, 2010 Tender Offers and Other Repurchases

9 Months Ended

Sep. 30, 2011

Stock Repurchase Program, 2010 Tender Offers and Other Repurchases [Abstract]

Stock Repurchase Program, 2010 Tender Offers and Other Repurchases

7.   Stock Repurchase Program, 2010 Tender Offers and Other Repurchases

In 2008, the Board of Directors established a stock repurchase program (the “2008 Program”), at which time the Company was authorized to use up to $30,000, which was subsequently increased by $15,331 in July 2011, to purchase shares of WebMD Common Stock, from time to time, in the open market, through block trades or in private transactions, depending on market conditions and other factors. During August 2011, the Board of Directors terminated the 2008 Program and established a new stock repurchase program (the “2011 Program” and, collectively with the 2008 Program, the “Programs”) through which the Company was authorized to use up to $75,000 to purchase shares of WebMD Common Stock. During the nine months ended September 30, 2010, the Company repurchased 352,572 shares, at an aggregate cost of $14,914, and no shares were repurchased during the three months ended September 30, 2010. During the three and nine months ended September 30, 2011, the Company repurchased 2,055,784 and 2,064,784 shares, respectively, at an aggregate cost of $67,011 and $67,428, respectively, under the Programs. During October 2011, the Company’s Board of Directors authorized a $75,000 increase to the 2011 Program. Additionally, during the period from October 1, 2011 through November 2, 2011, the Company repurchased 775,464 shares at an aggregate cost of $22,476. As of November 2, 2011, $90,431 remained available for repurchase under the 2011 Program. Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying consolidated balance sheets.

On April 8, 2010, the Company completed a tender offer through which it repurchased 5,172,204 shares of WebMD Common Stock at a price of $46.80 per share for total consideration of $242,795 which includes $736 of costs directly attributable to the purchase. On September 8, 2010, the Company completed a tender offer through which it repurchased 3,000,000 shares of its Common Stock at a price of $52.00 per share for total consideration of $156,421 which includes $421 of costs directly attributable to the purchase.

On January 5, 2011, the Company used $100,000 of the proceeds of the 2.50% Notes to repurchase 1,920,490 shares of the Company’s Common Stock at a price of $52.07 per share. Additionally, on March 8, 2011, the Company used $50,000 of the proceeds of the 2.25% Notes to repurchase 868,507 shares of the Company’s Common Stock at a price of $57.57 per share. See Note 3 for further discussion of the Company’s 2.50% Notes and 2.25% Notes. Neither of these share repurchases were made under the Programs.

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Subsequent Event - Stockholder Rights Plan

9 Months Ended

Sep. 30, 2011

Subsequent Event - Stockholder Rights Plan [Abstract]

Subsequent Event - Stockholder Rights Plan

12.   Subsequent Event — Stockholder Rights Plan

The Company has entered into a Stockholder Rights Agreement, dated as of November 2, 2011 (the “Rights Agreement”), by and between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent. Pursuant to the terms of the Rights Agreement, which has a one-year term, one preferred stock purchase right (a “Right”) will be attached to each outstanding share of the Company’s Common Stock held by holders of record as of the close of business on November 14, 2011 and the Company will issue one Right with each new share of Common Stock issued after that date. The Rights will initially trade with and be inseparable from the Company’s Common Stock and will not be evidenced by separate certificates unless they become exercisable. The Rights will expire at the close of business on November 1, 2012, unless earlier redeemed by the Company or unless the Rights Agreement is amended. Each Right entitles its holder to purchase from the Company one one-thousandth of a share (a “Unit”) of Series A Junior Preferred Stock, par value $0.01 per share (the “Preferred Stock”), at an exercise price of $153.00 per Unit, subject to adjustment in accordance with the terms of the Rights Agreement, once the Rights become exercisable.

In general terms, under the Rights Agreement, the Rights become exercisable if any person or group acquires beneficial ownership of 12% or more of the Common Stock or commences a tender or exchange offer which, upon consummation, would result in such person or group being the beneficial owner of 12% or more of the Company’s outstanding common stock. For purposes of the Rights Agreement, beneficial ownership is defined to include ownership of the shares underlying options, warrants, convertible securities, stock appreciation rights, swap agreements or other securities or contract rights or certain derivative positions, whether or not currently exercisable. If any person or group becomes the beneficial owner of 12% or more of the Company’s Common Stock, then each Right not owned by such person (or certain related parties) will entitle its holder to purchase, at the Right’s then-current exercise price, Units of Preferred Stock (or, in certain circumstances, Company Common Stock, cash, property or other securities of the Company) having a market value equal to twice the then-current exercise price of the Right. In addition, if the Company is involved in a merger or other business combination transactions with another person after which its Common Stock does not remain outstanding, or sells 50% or more of its assets or earning power to another person, each Right will entitle its holder to purchase, at the Right’s then-current exercise price, shares of common stock of the ultimate parent of such other person having a market value equal to twice the then-current exercise price of the Right. Each Unit of Preferred Stock, if issued:

•  will be non-redeemable and subordinate to any other shares of preferred stock that may be issued by the Company;

•  will entitle holders to certain dividend and liquidation payments;

•  will have one vote, voting together with the Company Common Stock;

•  will entitle holders to elect two directors if dividends are in arrears for six consecutive fiscal quarters;

•  if shares of Company Common Stock are exchanged via merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of Company Common Stock; and

•  is protected by customary anti-dilution provisions with respect to dividends, liquidation and voting rights, and in the event of mergers and consolidations.

Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the economic value of one Unit of Preferred Stock that may be acquired upon the exercise of each Right should approximate the economic value of one share of Company Common Stock.

The Rights will cause substantial dilution to a person or group that attempts to acquire the Company on terms not approved by the Company’s Board of Directors. However, the Rights should not interfere with any merger or other business combination approved by the Company’s Board of Directors because (i) the Rights may be redeemed by the Board at a nominal price of $0.01 per Right at any time on or prior to the public announcement made by either the Company or the Acquiring Person that such Acquiring Person has acquired beneficial ownership of 12% or more of the Company Common Stock and (ii) the Rights Agreement may be amended prior to the Rights becoming exercisable so that it does not interfere with such merger or other business combination. Thus, the Rights are intended to encourage persons who may seek to acquire control of the Company to initiate such an acquisition through negotiations with the Company’s Board of Directors. However, the effect of the Rights may be to discourage a third party from making a tender offer or otherwise attempting to obtain a substantial equity position in the equity securities of, or seeking to obtain control of, the Company.

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Intangible Assets

9 Months Ended

Sep. 30, 2011

Intangible Assets [Abstract]

Intangible Assets

8.   Intangible Assets

Intangible assets subject to amortization consist of the following:

	September 30, 2011									December 31, 2010
								Weighted									Weighted
	Gross							Average		Gross							Average
	Carrying		Accumulated					Remaining		Carrying		Accumulated					Remaining
	Amount		Amortization			Net		Useful Life(a)		Amount		Amortization			Net		Useful Life(a)
Content	$	15,954	$	(15,954	)	$	—		—	$	15,954	$	(15,954	)	$	—		—
Customer relationships		34,057		(20,329	)		13,728		6.7		34,057		(18,760	)		15,297		7.5
Technology and patents		14,700		(14,700	)		—		—		14,700		(14,700	)		—		—
Trade names-definite lives		6,030		(3,566	)		2,464		4.7		6,030		(3,165	)		2,865		5.4
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	75,205	$	(54,549	)	$	20,656			$	75,205	$	(52,579	)	$	22,626

(a) The calculation of the weighted average remaining useful life is based on the net book value and the remaining amortization period of each respective intangible asset.

Amortization expense was $657 and $1,970 during the three and nine months ended September 30, 2011, respectively, and $778 and $2,632 during the three and nine months ended September 30, 2010, respectively. Aggregate amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2011 (October 1st to December 31st)	$	657
2012	$	2,627
2013	$	2,627
2014	$	2,627
2015	$	2,617
Thereafter	$	5,037

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Convertible Notes (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended				3 Months Ended	9 Months Ended			1 Months Ended				1 Months Ended
	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2010 Convertible Notes [Member]	Sep. 30, 2010 Convertible Notes [Member]	Sep. 30, 2010 1.75% Notes [Member]	Sep. 30, 2011 1.75% Notes [Member]	Dec. 31, 2010 1.75% Notes [Member]	Sep. 30, 2010 3 1/8% Notes [Member]	Sep. 30, 2010 3 1/8% Notes [Member]	Sep. 30, 2011 3 1/8% Notes [Member]	Dec. 31, 2010 3 1/8% Notes [Member]	Jan. 31, 2011 2.50% convertible notes due 2018 [Member] EquityInstruments ConversionRatio	Sep. 30, 2011 2.50% convertible notes due 2018 [Member]	Jan. 11, 2011 2.50% convertible notes due 2018 [Member]	Jan. 05, 2011 2.50% convertible notes due 2018 [Member]	Mar. 31, 2011 2.25% Convertible notes due 2016 [Member] ConversionRatio EquityInstruments	Sep. 30, 2011 2.25% Convertible notes due 2016 [Member]	Mar. 14, 2011 2.25% Convertible notes due 2016 [Member]	Mar. 08, 2011 2.25% Convertible notes due 2016 [Member]	Jan. 11, 2011 2.25% Convertible notes due 2016 [Member]
Convertible Notes (Textual) [Abstract]
Principal amount of debt repurchased						$ 32,446			$ 9,942	$ 42,118
Repurchase of convertible subordinated notes						42,107			13,113	52,368
Notes						1.75%	1.75%	1.75%	3.125%	3.125%	3.125%	3.125%		2.50%	2.50%	2.50%		2.25%	2.25%	2.25%
Debt conversion, original debt amount						232,137
Convertible subordinated notes converted, number of shares				748,812	3,507,527	6,703,129
Pre-tax gain (loss) on repurchase of notes	(2,232)		(16,970)	2,232	16,970
Convertible notes due															400,000				400,000
Proceed From sale of Notes		774,745											387,345				387,400
Cash used to purchase of shares		217,427	420,948										100,000				50,000
Treasury stock purchased, shares													1,920,490				868,507
Average purchase price per share of treasury stock													$ 52.07				$ 57.57
Initial conversion rate of Notes per Thousand Dollar of Principal amount													15.1220				13.5704
Conversion price per share of common stock															$ 66.13				$ 73.69
Convertible shares													6,048,800				5,428,160
Debt converted during period				$ 26,228	$ 122,855
Debt instrument repurchase price description															Equal to 100% of the principal amount of the 2.50% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date				Equal to 100% of the principal amount of the 2.25% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date
Percentage of principal amount equal to repurchase price															100.00%						100.00%

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Comprehensive Income

9 Months Ended

Sep. 30, 2011

Comprehensive Income [Abstract]

Comprehensive Income

6.   Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes certain changes in equity that are excluded from net income, such as changes in unrealized losses on securities. During the three and nine months ended September 30, 2011 and during the three months ended September 30, 2010, comprehensive income was equivalent to net income. The following table presents the components of comprehensive income during the nine months ended September 30, 2010:

Unrealized holding gains	$	13,177
Unrealized losses recognized in earnings		24,248
Other comprehensive income		37,425
Net income		17,484
Comprehensive income	$	54,909

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Net income	$ 55,374	$ 17,484
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
(Income) loss from discontinued operations, net of tax	(10,388)	1,024
Depreciation and amortization	19,929	20,268
Non-cash interest, net	2,702	4,862
Non-cash stock-based compensation	28,969	23,605
Deferred income taxes	5,378	(17,260)
Loss on convertible notes		16,970
(Gain) loss on investments	(14,679)	22,977
Changes in operating assets and liabilities:
Accounts receivable	16,510	(2,206)
Prepaid expenses and other, net	1,238	(3,006)
Accrued expenses and other long-term liabilities	(176)	1,695
Deferred revenue	(6,370)	3,413
Net cash provided by continuing operations	98,487	89,826
Net cash used in discontinued operations	(136)	(17,082)
Net cash provided by operating activities	98,351	72,744
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		361,852
Proceeds received from ARS option	16,561	407
Purchases of property and equipment	(16,061)	(20,329)
Finalization of sale price of discontinued operations		(1,430)
Net cash provided by investing activities	500	340,500
Cash flows from financing activities:
Proceeds from exercise of stock options	26,435	57,168
Cash used for withholding taxes due on stock-based awards	(6,730)	(76,559)
Net proceeds from issuance of 2.50% Notes and 2.25% Notes	774,745
Repurchases of 1.75% Notes and 3 1/8% Notes		(94,475)
Purchases of treasury stock	(217,427)	(420,948)
Excess tax benefit on stock-based awards	24,911	14,003
Net cash provided by (used in) financing activities	601,934	(520,811)
Net increase (decrease) in cash and cash equivalents	700,785	(107,567)
Cash and cash equivalents at beginning of period	400,501	459,766
Cash and cash equivalents at end of period	$ 1,101,286	$ 352,199

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Discontinued Operations

9 Months Ended

Sep. 30, 2011

Discontinued Operations [Abstract]

Discontinued Operations

2.   Discontinued Operations

EPS

On September 14, 2006, the Company completed the sale of Emdeon Practice Services, Inc. (together with its subsidiaries, “EPS”) to Sage Software, Inc. an indirect wholly owned subsidiary of The Sage Group plc (the “EPS Sale”). The Company had certain indemnity obligations to advance amounts for reasonable defense costs for initially ten, and later four, former officers and directors of EPS (the “EPS Indemnification Obligations”) who were indicted in connection with the previously disclosed investigation by the United States Attorney for the District of South Carolina (the “Investigation”), which is more fully described in Note 9. In connection with the EPS Sale, the Company agreed to retain the responsibility for the EPS Indemnification Obligations. During the years ended December 31, 2007, 2008 and 2009, the Company recorded aggregate pre-tax charges of $116,792, which represented the Company’s estimate of its costs related to the EPS Indemnification Obligations. As described in more detail in Note 9, two of the former officers and directors of EPS were found guilty; however, the Court set the verdict aside on May 27, 2010 and entered a judgment of acquittal. The government entered a notice of appeal with respect to the Court’s order. At that time, two other former officers of EPS were awaiting trial in Tampa, Florida, which was scheduled to begin on October 4, 2010; however, on July 9, 2010 the Court in Tampa placed the case against those defendants on hold pending resolution of the appeal of the South Carolina ruling. On June 8, 2011, upon the motion of the government, the United States Court of Appeals for the Fourth Circuit dismissed the government’s appeal of the District Court’s rulings, thereby ending the government’s case against Messrs. Kang and Sessions, the two defendants in South Carolina. On July 8, 2011, upon the motion of the government, the United States District Court for the Middle District of Florida granted a motion to dismiss the government’s case against the remaining two defendants in Florida. As a result of these two decisions, it is the Company’s understanding that the Investigation has concluded. As of December 31, 2010, the remaining accrual with respect to the EPS Indemnification Obligations was $7,527, and was included within liabilities of discontinued operations on the accompanying consolidated balance sheet. During the three months ended June 30, 2011, the Company reversed the remainder of this accrual as it determined it no longer has any remaining liability with respect to the EPS Indemnification Obligations as a result of the June 8, 2011 and July 8, 2011 decisions described above. The reversal of the remaining accrual of $7,206 is included in income from discontinued operations, net of tax, within the accompanying consolidated statements of operations during the nine months ended September 30, 2011.

Also included within liabilities of discontinued operations related to this matter was $5,000 as of December 31, 2010, which represented certain reimbursements received from the Company’s insurance carriers between July 31, 2008 and December 31, 2010. The Company deferred recognizing these insurance reimbursements within the consolidated statement of operations because of the possibility they might have to be repaid to the insurance carriers under the terms of the applicable policies. However, as a result of the June 8, 2011 and July 8, 2011 dismissals described above, the Company believes that the insurance carriers do not have the ability to recover this amount and accordingly, the Company reversed this accrual during the three months ended June 30, 2011. The reversal of $5,000 is included in income from discontinued operations, net of tax, within the accompanying consolidated statements of operations during the nine months ended September 30, 2011.

Porex

In connection with the sale of its Porex business in October 2009, the Company agreed to indemnify Porex for certain tax matters, which were estimated at the time of sale to be approximately $4,800. As a result of the completion of a tax audit for one of the related matters under such indemnification, the Company reduced its indemnification liability by $2,994. This amount is reflected within income from discontinued operations during the three and nine months ended September 30, 2011. The remaining estimate of the Company’s tax indemnification liability related to Porex is $1,810 and is included within liabilities of discontinued operations within the accompanying balance sheet as of September 30, 2011.

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Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Intangible assets subject to amortization
Content, Gross Carrying Amount	$ 15,954		$ 15,954		$ 15,954
Customer relationships, Gross Carrying Amount	34,057		34,057		34,057
Technology and patents, Gross Carrying Amount	14,700		14,700		14,700
Trade names-definite lives, Gross Carrying Amount	6,030		6,030		6,030
Trade names-indefinite lives, Net	4,464		4,464		4,464
Total	75,205		75,205		75,205
Accumulated Amortization	(54,549)		(54,549)		(52,579)
Net	20,656		20,656		22,626
Aggregate amortization expense for intangible assets
2011 (October 1st to December 31st)					657
2012					2,627
2013					2,627
2014					2,627
2015					2,617
Thereafter					5,037
Intangible Assets (Textual) [Abstract]
Amortization expense	657	778	1,970	2,632
Content [Member]
Intangible assets subject to amortization
Accumulated Amortization	(15,954)		(15,954)		(15,954)
Net	0		0		0
Weighted Average Remaining Useful Life	0.0		0.0		0.0
Customer relationships [Member]
Intangible assets subject to amortization
Accumulated Amortization	(20,329)		(20,329)		(18,760)
Net	13,728		13,728		15,297
Weighted Average Remaining Useful Life	6.7		6.7		7.5
Technology and Patents [Member]
Intangible assets subject to amortization
Accumulated Amortization	(14,700)		(14,700)		(14,700)
Net	0		0		0
Weighted Average Remaining Useful Life	0.0		0.0		0.0
Trade names-definite lives [Member]
Intangible assets subject to amortization
Accumulated Amortization	(3,566)		(3,566)		(3,165)
Net	$ 2,464		$ 2,464		$ 2,865
Weighted Average Remaining Useful Life	4.7		4.7		5.4

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Discontinued Operations (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended			9 Months Ended	36 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2011 Defendants Years	Sep. 30, 2010	Sep. 30, 2011 Years Claims Defendants	Sep. 30, 2010	Dec. 31, 2010	Sep. 30, 2011 Emdeon Practice Services [Member]	Dec. 31, 2009 Emdeon Practice Services [Member]	Dec. 31, 2010 Emdeon Practice Services [Member]	Sep. 30, 2011 Porex [Member]	Sep. 30, 2011 Porex [Member]	Sep. 30, 2010 Porex [Member]
Discontinued Operations (Textual) [Abstract]
Pre-tax charge related to indemnification obligation							$ 116,792
Loss contingency accrual, at carrying value								7,527
Reversal of accrual included within liabilities of discontinued operations						7,206
Certain reimbursements received from the Company's insurance carriers								5,000
Reversal of liabilities of discontinued operations included in income from discontinued operations, net of tax						5,000
Loss contingency, estimate of possible loss											4,800
Income from discontinued operations by its reduction indemnification liability	2,994	(1,024)	10,388	(1,024)					2,994	2,994
Liabilities of discontinued operations related to Company's tax indemnification	$ 1,810		$ 1,810		$ 17,327				$ 1,810	$ 1,810
Additional Discontinued Operations (Textual) [Abstract]
Number of officers and directors found guilty	2		2
Number of defendants in South Carolina	2		2
Number of defendants in Florida	2		2
Indemnification obligations, initial number of former officers and directors	10		10
Indemnification obligations, subsequent number of former officers and directors	4		4
Number of decisions			2
Discontinued operation, description of material contingent liabilities remaining				the Company agreed to indemnify Porex for certain tax matters, which were estimated at the time of sale to be approximately $4,800

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Convertible notes

9 Months Ended

Sep. 30, 2011

Convertible notes [Abstract]

Convertible notes

3.   Convertible Notes

Repurchase and Conversions of 1.75% and 31/8% Notes

During the nine months ended September 30, 2010, the Company repurchased $32,446 principal amount of its 1.75% Notes for $42,107 in cash and the holders of the 1.75% Notes converted $232,137 principal amount into 6,703,129 shares of WebMD common stock. Also during the three and nine months ended September 30, 2010, the Company repurchased $9,942 and $42,118 principal amount of its 31/8% Notes for $13,113 and $52,368 in cash, respectively, and holders of the 31/8% Notes converted $26,228 and $122,855 principal amount into 748,812 and 3,507,527 shares of WebMD common stock, respectively. The Company recognized an aggregate pre-tax loss of $2,232 and $16,970 related to the repurchase of the 1.75% Notes and the repurchase and conversions of the 31/8% Notes, which is reflected within loss on convertible notes in the accompanying consolidated statement of operations during the three and nine months ended September 30, 2010, respectively. The loss includes the expensing of remaining deferred issuance costs outstanding related to the repurchased and converted notes. No 1.75% Notes or 31/8% Notes were outstanding at December 31, 2010.

2.50% Convertible Notes due 2018

On January 11, 2011, the Company issued $400,000 aggregate principal amount of 2.50% Convertible Notes due 2018 (the “2.50% Notes”) in a private offering. Unless previously converted, the 2.50% Notes will mature on January 31, 2018. Net proceeds from the sale of the 2.50% Notes were approximately $387,345, after deducting the related offering expenses, of which approximately $100,000 was used to repurchase 1,920,490 shares of the Company’s Common Stock at a price of $52.07 per share, the last reported sale price of the Company’s Common Stock on January 5, 2011, which repurchase settled on January 11, 2011. Interest on the 2.50% Notes is payable semi-annually on January 31 and July 31 of each year, commencing July 31, 2011. Under the terms of the 2.50% Notes, holders may surrender their 2.50% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 15.1220 shares of Common Stock per thousand dollars principal amount of the 2.50% Notes. This is equivalent to an initial conversion price of approximately $66.13 per share of Common Stock. In the aggregate, the 2.50% Notes are convertible into 6,048,800 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances. Under the terms of the 2.50% Notes, if the Company undergoes certain change of control transactions prior to the maturity date of the 2.50% Notes, holders of the 2.50% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.50% Notes at a repurchase price equal to 100% of the principal amount of the 2.50% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. At the Company’s option, and to the extent permitted by the applicable rules of the Nasdaq Global Select Market (or the applicable rules of such other exchange on which the Company’s Common Stock may be listed), instead of paying the repurchase price in cash, the Company may pay the repurchase price in shares of its Common Stock or a combination of cash and shares of its Common Stock. However, in the case of certain change of control transactions in which the Company is acquired by a public company, the Company may elect to provide for conversion of the 2.50% Notes into acquirer common stock, in which case the repurchase option would not apply.

2.25% Convertible Notes due 2016

On March 14, 2011, the Company issued $400,000 aggregate principal amount of 2.25% Convertible Notes due 2016 (the “2.25% Notes”) in a private offering. Unless previously converted, the 2.25% Notes will mature on March 31, 2016. Net proceeds from the sale of the 2.25% Notes were approximately $387,400, after deducting the related offering expenses, of which approximately $50,000 was used to repurchase 868,507 shares of the Company’s Common Stock at a price of $57.57 per share, the last reported sale price of the Company’s Common Stock on March 8, 2011, which repurchase settled on March 14, 2011. Interest on the 2.25% Notes is payable semi-annually on March 31 and September 30 of each year, commencing September 30, 2011. Under the terms of the 2.25% Notes, holders may surrender their 2.25% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 13.5704 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This is equivalent to an initial conversion price of approximately $73.69 per share of Common Stock. In the aggregate, the 2.25% Notes are convertible into 5,428,160 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances. Under the terms of the 2.25% Notes, if the Company undergoes certain change of control transactions prior to the maturity date of the 2.25% Notes, holders of the 2.25% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.25% Notes at a repurchase price equal to 100% of the principal amount of the 2.25% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. At the Company’s option, and to the extent permitted by the applicable rules of the Nasdaq Global Select Market (or the applicable rules of such other exchange on which the Company’s Common Stock may be listed), instead of paying the repurchase price in cash, the Company may pay the repurchase price in shares of its Common Stock or a combination of cash and shares of its Common Stock. However, in the case of certain change of control transactions in which the Company is acquired by a public company, the Company may elect to provide for conversion of the 2.25% Notes into acquirer common stock, in which case the repurchase option would not apply.

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Stock-Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2011 Years Claims Defendants
Stock Options
Shares Outstanding, Beginning Balance	10,227,755
Weighted Average Exercise Price per Share, Outstanding, Beginning Balance	$ 30.79
Granted, Shares	3,077,150
Weighted Average Exercise Price per Share, Granted	$ 36.22
Exercised, Shares	(1,441,941)
Weighted Average Exercise Price per Share, Exercised	$ 27.15
Cancelled, Shares	(565,119)
Weighted Average Exercise Price per Share, Cancelled	$ 33.59
Shares Outstanding, Ending Balance	11,297,845
Weighted Average Exercise Price per Share, Outstanding, Ending Balance	$ 32.59
Weighted Average Remaining Contractual Life (In Years), Outstanding	7.6
Aggregate Intrinsic Value, Outstanding	$ 36,601
Vested and Exercisable, Shares	3,822,675
Weighted Average Exercise Price per Share, Vested and exercisable at the end of the period	$ 30.51
Weighted Average Remaining Contractual Life (In Years), Vested and exercisable at the end of the period	5.6
Aggregate Intrinsic Value, Vested and Exercisable	$ 18,111

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Summary of Significant Accounting Policies (Details 1) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Numerator:
Income from continuing operations	$ 14,234	$ 13,590	$ 55,374	$ 17,484
Denominator:
Weighted-average shares - Basic	57,461	58,095	57,913	54,602
Employee stock options and restricted stock	1,237	3,340	1,969	4,058
Adjusted weighted-average shares after assumed conversions - Diluted	58,698	61,435	59,882	58,660
Basic income (loss) per common share:
Income from continuing operations	$ 0.19	$ 0.25	$ 0.77	$ 0.33
Income (loss) from discontinued operations	$ 0.06	$ (0.02)	$ 0.18	$ (0.01)
Net income	$ 0.25	$ 0.23	$ 0.95	$ 0.32
Diluted income (loss) per common share:
Income from continuing operations	$ 0.19	$ 0.24	$ 0.75	$ 0.31
Income (loss) from discontinued operations	$ 0.05	$ (0.02)	$ 0.17	$ (0.02)
Net income	$ 0.24	$ 0.22	$ 0.92	$ 0.29
Continuing Operations [Member]
Numerator:
Income from continuing operations	11,240	14,614	44,986	18,508
Effect of participating non-vested restricted stock	(70)	(152)	(320)	(222)
Income from continuing operations- Basic and Diluted	11,170	14,462	44,666	18,286
Discontinued Operations [Member]
Numerator:
Income from continuing operations	2,994	(1,024)	10,388	(1,024)
Effect of participating non-vested restricted stock	(19)	12	(74)	12
Income from discontinued operations, net of tax - Basic and Diluted	$ 2,975	$ (1,012)	$ 10,314	$ (1,012)

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Related Party Transaction (Details Textual) (FESCO [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
FESCO [Member]
Related Party Transaction (Textual) [Abstract]
Revenue, related party	$ 1,026	$ 1,421	$ 3,864	$ 4,317
Accounts receivable, related party	$ 677		$ 677		$ 1,587
Percentage beneficial ownership	7.10%		7.10%

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	12 Months Ended													9 Months Ended
	Jul. 18, 2011 Cases	Dec. 31, 2008 Defendants	Nov. 05, 2011 Action	Oct. 03, 2011 Plaintiffs	Sep. 30, 2011	Sep. 19, 2011 Defendants	Aug. 02, 2011 Cases	Aug. 31, 2009 Exclusions Opinions	Jul. 15, 2009	Nov. 17, 2008 InsuranceCarriers	Jul. 23, 2007 InsurancePolicySets InsuranceCarriers InsurancePolicyGroups	Dec. 15, 2005 Defendants	Jan. 10, 2005 CriminalCounts Defendants	Mar. 31, 2011 EPS policies and Synetic policies [Member]	Sep. 30, 2011 Synetic Policies [Member]	Sep. 30, 2011 EPS Policies [Member]	Dec. 22, 2009 EPS Policies [Member]
Commitments and Contingencies Additional (Textual) [Abstract]
Number of new cases to be filed	6
Number of cases that are substantially similar							2
Number of cases for which motions were filed by various plaintiffs seeking to consolidated				2
Number of actions that have been consolidated			2
Maximum number of days within which consolidated complaint shall be filed			30 days
Defense cost liability for policies under coverage litigation					$ 96,400
Amount of coverage liability related to indemnification obligations not to be paid by ninth level carriers									10,000
Number of employees agreed to plead guilty													3
Number of employees count of mail fraud													1
Employees agreed plead guilty													1
United States attorney announced indictments of former officers and employees												10
Number of defendants passed away		1
Number of defendants dismissed from case		4
Number of defendants severed case		2
Number of remaining defendants						2
Number of insurance companies against which litigation is commenced											10
Number of separate groups of insurance policies											2
Number of sets of policies available to Company											3
Number of new insurance companies defendants in coverage action										4
Number of carriers not moved for summary judgment										1
Number of opinions issued								2
Number of exclusions asserted by carriers for which Court granted summary judgment								1
Policies Issued, Value															100,000	20,000
Amount of policies paid by primary carrier															3,600
Defense cost liability for policies under coverage litigation claimed by third level carriers															23,000
Amount to be paid by insurance companies under reservation of rights or settlement														84,200
Amount to be paid by insurance companies under settlement														62,800
Amount given as advance to company sought to be recovered by second level issuer																	$ 5,000

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Summary of Significant Accounting Policies (Details Textual) (USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended	3 Months Ended	9 Months Ended
	Oct. 31, 2009	Sep. 30, 2011	Sep. 30, 2011	Oct. 23, 2009
Summary of Significant Accounting Policies (Textual) [Abstract]
Sale of stock, percentage of ownership before transaction	80.00%
Change in revenue due to adoption of policy		$ (300)	$ 3,400
Impact on diluted income per share		$ (0.01)	$ 0.06
Exchange ratio				0.4444

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Other Income (Expense), Net

9 Months Ended

Sep. 30, 2011

Other Income (Expense), Net [Abstract]

Other Income (Expense), Net

11.   Other Income (Expense), Net

Other income (expense), net consists of the following items:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011			2010
Reduction of tax contingencies(a)	$	—	$	177		$	—		$	533
Legal expense(b)		—		(70	)		(53	)		(625	)
Other income (expense), net	$	—	$	107		$	(53	)	$	(92	)

(a)	Represents the reduction of certain sales and use tax contingencies resulting from the expiration of various statutes of limitations.
(b)	Represents the costs and expenses incurred by the Company related to the investigation by the United States Attorney for the District of South Carolina and the SEC and the related Coverage Litigation.

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Related Party Transaction

9 Months Ended

Sep. 30, 2011

Related Party Transaction [Abstract]

Related Party Transaction

4.   Related Party Transaction

Fidelity Employer Services Company LLC

Fidelity Employer Services Company LLC (“FESCO”) is a distributor of the Company’s private portals, integrating the private portals product into the human resources administration and benefit administration services that FESCO provides to its employer clients. The Company recorded revenue of $1,026 and $3,864 during the three and nine months ended September 30, 2011, respectively, and $1,421 and $4,317 during the three and nine months ended September 30, 2010, respectively. Included in accounts receivable as of September 30, 2011 and December 31, 2010 was $677 and $1,587, respectively, related to the FESCO agreement. FESCO is an affiliate of FMR LLC, which reported beneficial ownership, as of July 31, 2011, of shares that would represent approximately 7.1% of the Company’s Common Stock as of September 30, 2011. Affiliates of FMR LLC also provide administrative and recordkeeping services to the Company in connection with the Company’s 401(k) plan, stock-based compensation plans and the health savings accounts of Company employees.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of revenues relating to public and private portal of the company

The following table presents the revenues recognized related to the Company’s public portals and private portals during the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Public portal revenues	$	115,033	$	113,078	$	346,504	$	299,927
Private portal revenues		20,105		22,227		61,612		66,115
	$	135,138	$	135,305	$	408,116	$	366,042

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, adjusted to give effect to participating non-vested restricted stock during the periods it was outstanding. Diluted income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, increased to give effect to potentially dilutive securities and assumes that any dilutive convertible notes were converted, only in the periods in which such effect is dilutive (shares in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Numerator:
Income from continuing operations	$	11,240		$	14,614		$	44,986		$	18,508
Effect of participating non-vested restricted stock		(70	)		(152	)		(320	)		(222	)
Income from continuing operations- Basic and Diluted	$	11,170		$	14,462		$	44,666		$	18,286
Income (loss) from discontinued operations, net of tax	$	2,994		$	(1,024	)	$	10,388		$	(1,024	)
Effect of participating non-vested restricted stock		(19	)		12			(74	)		12
Income (loss) from discontinued operations, net of tax — Basic and Diluted	$	2,975		$	(1,012	)	$	10,314		$	(1,012	)
Denominator:
Weighted-average shares — Basic		57,461			58,095			57,913			54,602
Employee stock options and restricted stock		1,237			3,340			1,969			4,058
Adjusted weighted-average shares after assumed conversions — Diluted		58,698			61,435			59,882			58,660
Basic income (loss) per common share:
Income from continuing operations	$	0.19		$	0.25		$	0.77		$	0.33
Income (loss) from discontinued operations		0.06			(0.02	)		0.18			(0.01	)
Net income	$	0.25		$	0.23		$	0.95		$	0.32
Diluted income (loss) per common share:
Income from continuing operations	$	0.19		$	0.24		$	0.75		$	0.31
Income (loss) from discontinued operations		0.05			(0.02	)		0.17			(0.02	)
Net income	$	0.24		$	0.22		$	0.92		$	0.29

Total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share

The following table presents the total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share during the periods presented (shares in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Options and restricted stock		4,747		1,798		2,842		1,812
Convertible notes		11,477		3,017		9,805		8,570
		16,224		4,815		12,647		10,382

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Stock Repurchase Program, 2010 Tender Offers and Other Repurchases (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	9 Months Ended		1 Months Ended				1 Months Ended				1 Months Ended	9 Months Ended	1 Months Ended			2 Months Ended	3 Months Ended		9 Months Ended
	Apr. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Jan. 31, 2011 2.50% convertible notes due 2018 [Member]	Sep. 30, 2011 2.50% convertible notes due 2018 [Member]	Jan. 11, 2011 2.50% convertible notes due 2018 [Member]	Jan. 05, 2011 2.50% convertible notes due 2018 [Member]	Mar. 31, 2011 2.25% Convertible notes due 2016 [Member]	Sep. 30, 2011 2.25% Convertible notes due 2016 [Member]	Mar. 14, 2011 2.25% Convertible notes due 2016 [Member]	Mar. 08, 2011 2.25% Convertible notes due 2016 [Member]	Apr. 30, 2010 Tender Offer [Member]	Sep. 30, 2010 Tender Offer [Member]	Aug. 31, 2011 Stock Repurchase Program [Member]	Jul. 31, 2011 Stock Repurchase Program [Member]	Dec. 31, 2008 Stock Repurchase Program [Member]	Nov. 30, 2011 Stock Repurchase Program [Member]	Sep. 30, 2011 Stock Repurchase Program [Member]	Sep. 30, 2010 Stock Repurchase Program [Member]	Sep. 30, 2011 Stock Repurchase Program [Member]	Sep. 30, 2010 Stock Repurchase Program [Member]
Stock Repurchase Program and Tender Offer (Textual) [Abstract]
Stock repurchase Common Stock value, authorized																$ 30,000
Stock repurchase program authorized additional amount														75,000	15,331
Stock repurchased program value reflected as treasury stock recorded using the cost method												242,795	156,421				22,476	67,011	0	67,428	14,914
Treasury stock purchased, shares				1,920,490				868,507				5,172,204	3,000,000				775,464	2,055,784	0	2,064,784	352,572
Stock repurchase program, remaining authorized repurchase amount																				90,431
Average purchase price per share of treasury stock				$ 52.07				$ 57.57				$ 46.80	$ 52.00
Costs directly attributable to repurchased of Common Stock	736		421
Cash used to purchase of shares		$ 217,427	$ 420,948	$ 100,000				$ 50,000
Notes					2.50%	2.50%	2.50%		2.25%	2.25%	2.25%

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Summary of Significant Accounting Policies (Details 2) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Weighted-average number of potentially dilutive common shares that were excluded from the computation of diluted income (loss) per common share
Total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share	16,224	4,815	12,647	10,382
Options and restricted stock [Member]
Weighted-average number of potentially dilutive common shares that were excluded from the computation of diluted income (loss) per common share
Total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share	4,747	1,798	2,842	1,812
Convertible notes [Member]
Weighted-average number of potentially dilutive common shares that were excluded from the computation of diluted income (loss) per common share
Total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share	11,477	3,017	9,805	8,570

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Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Consolidated Statements of Operations [Abstract]
Income from discontinued operations, net of a tax	$ 1,476	$ 4,812	$ 1,476

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Fair Value of Financial Instruments and Non-Recourse Credit Facilities (Tables)

9 Months Ended

Sep. 30, 2011

Fair Value of Financial Instruments and Non-Recourse Credit Facilities [Abstract]

Company's Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis

The following table sets forth the Company’s Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis as of September 30, 2011 and December 31, 2010:

			September 30, 2011						December 31, 2010
	Fair Value		Amortized				Gross		Amortized				Gross
	Estimate		Cost		Fair		Unrealized		Cost		Fair		Unrealized
	Using:		Basis		Value		Gains		Basis		Value		Gains
Cash and cash equivalents		Level 1	$	1,101,286	$	1,101,286	$	—	$	400,501	$	400,501	$	—
ARS Option		Level 3		2,363		2,363		—		4,245		4,245		—

Reconciles of beginning and ending balances of the Company's Level 3 assets

The following table reconciles the beginning and ending balances of the Company’s Level 3 assets:

	Nine Months Ended September 30,
	2011			2010
	ARS			ARS			Auction Rate			Senior
	Option			Option			Securities			Secured Notes
Fair value as of the beginning of the period	$	4,245		$	—		$	279,701		$	63,826
Redemptions		(16,561	)		(407	)		(290,999	)		(65,475	)
Gain (loss) included in earnings		14,679			1,252			(29,508	)		1,362
Interest income accretion included in earnings		—			—			—			287
Changes in unrealized gains/losses included in other comprehensive income		—			—			40,806			—
Fair value as of the end of the period	$	2,363		$	845		$	—		$	—

Carrying value and estimated fair value of the Company's convertible notes that are carried at historical cost

The following table presents the carrying value and estimated fair value of the Company’s convertible notes that were carried at historical cost as of September 30, 2011:

	Carrying Amount		Fair Value
2.25% Notes	$	400,000	$	360,440
2.50% Notes		400,000		327,920

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Stock-Based Compensation (Details 2) (Restricted Stock [Member], USD $)	9 Months Ended
	Sep. 30, 2011
Restricted Stock [Member]
Restricted Stock Awards
Restricted Stock Awards, Shares, Beginning Balance	1,106,751
Weighted Average Grant Date Fair Value, Beginning Balance	$ 33.13
Restricted Stock Awards, Shares, Granted	564,367
Weighted Average Grant Date Fair Value, Granted	$ 38.82
Restricted Stock Awards, Shares, Vested	(208,618)
Weighted Average Grant Date Fair Value, Vested	$ 32.78
Restricted Stock Awards, Shares, Forfeited	(54,250)
Weighted Average Grant Date Fair Value, Forfeited	$ 32.25
Restricted Stock Awards, Shares, Ending Balance	1,408,250
Weighted Average Grant Date Fair Value, Ending Balance	$ 35.50

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2011

Intangible Assets [Abstract]

Intangible assets subject to amortization

Intangible assets subject to amortization consist of the following:

	September 30, 2011									December 31, 2010
								Weighted									Weighted
	Gross							Average		Gross							Average
	Carrying		Accumulated					Remaining		Carrying		Accumulated					Remaining
	Amount		Amortization			Net		Useful Life(a)		Amount		Amortization			Net		Useful Life(a)
Content	$	15,954	$	(15,954	)	$	—		—	$	15,954	$	(15,954	)	$	—		—
Customer relationships		34,057		(20,329	)		13,728		6.7		34,057		(18,760	)		15,297		7.5
Technology and patents		14,700		(14,700	)		—		—		14,700		(14,700	)		—		—
Trade names-definite lives		6,030		(3,566	)		2,464		4.7		6,030		(3,165	)		2,865		5.4
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	75,205	$	(54,549	)	$	20,656			$	75,205	$	(52,579	)	$	22,626

(a) The calculation of the weighted average remaining useful life is based on the net book value and the remaining amortization period of each respective intangible asset.

Aggregate amortization expense for intangible assets

Aggregate amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2011 (October 1st to December 31st)	$	657
2012	$	2,627
2013	$	2,627
2014	$	2,627
2015	$	2,617
Thereafter	$	5,037

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Consolidated Statements of Cash Flows (Unaudited) (Parenthetical)	Sep. 30, 2011 2.50% convertible notes due 2018 [Member]	Jan. 11, 2011 2.50% convertible notes due 2018 [Member]	Jan. 05, 2011 2.50% convertible notes due 2018 [Member]	Sep. 30, 2011 2.25% Convertible notes due 2016 [Member]	Mar. 14, 2011 2.25% Convertible notes due 2016 [Member]	Mar. 08, 2011 2.25% Convertible notes due 2016 [Member]	Sep. 30, 2011 1.75% Notes [Member]	Dec. 31, 2010 1.75% Notes [Member]	Sep. 30, 2010 1.75% Notes [Member]	Sep. 30, 2011 3 1/8% Notes [Member]	Dec. 31, 2010 3 1/8% Notes [Member]	Sep. 30, 2010 3 1/8% Notes [Member]
Cash flows from financing activities:
Notes	2.50%	2.50%	2.50%	2.25%	2.25%	2.25%	1.75%	1.75%	1.75%	3.125%	3.125%	3.125%

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

9.   Commitments and Contingencies

Legal Proceedings

Canson v. WebMD Health Corp., Malland v. WebMD Health Corp., Solomon v. Wygod, Gordon v. Wygod, Wargula v. Wygod, Garber v. Wygod

Six shareholder lawsuits, each of which is described below, have been filed in federal and state court in New York. The lawsuits relate to certain forward-looking information made publicly available by the Company.

On August 2, 2011 and August 26, 2011, federal securities class action complaints entitled Canson v. WebMD Health Corp., et al. and Malland v. WebMD Health Corp., et al., respectively, were filed in the United States District Court for the Southern District of New York on behalf of purchasers of the Company’s common stock between February 23, 2011 and July 15, 2011. The complaints in the two cases (the “Federal Securities Action”) are substantially similar and allege that the Company and certain of its officers made false and misleading statements in violation of the Securities Exchange Act of 1934 and seek unspecified damages and costs. On November 7, 2011, the two cases were consolidated under the caption In re WebMD Health Corp. Securities Litigation and lead plaintiff and lead counsel were appointed. A pretrial conference has been scheduled for November 29, 2011.

On August 31, 2011, a shareholder derivative action entitled Solomon, et anno. v. Wygod, et al. was filed in the Supreme Court of the State of New York, New York County (the “State Court Derivative Action”). The State Court Derivative Action purports to assert claims on behalf of the Company, alleging breach of fiduciary duties, abuse of control, gross mismanagement, corporate waste and unjust enrichment by certain of the Company’s officers and directors. The State Court Derivative Action seeks unspecified damages, corporate governance changes, restitution, disgorgement and costs. The parties have agreed to stay the State Court Derivative Action until such time as the Federal Securities Action is dismissed with prejudice or any of the named defendants in the Federal Securities Action files an answer in that action.

On September 19, 2011 and September 28, 2011, shareholder derivative actions entitled Gordon v. Wygod, et al. and Wargula v. Wygod, et al., respectively, were filed in the United States District Court for the Southern District of New York (the “Federal Derivative Action”). The complaints in the Federal Derivative Action purport to assert claims on behalf of the Company, alleging violations of the Securities Exchange Act of 1934, breach of fiduciary duties, corporate waste and unjust enrichment by certain of the Company’s officers and directors, and seek unspecified damages, corporate governance changes, restitution, disgorgement and costs. The two actions have been consolidated. Pursuant to a stipulated order, a consolidated complaint shall be filed not later than thirty (30) days after entry of an order on a motion to dismiss in the Federal Securities Action and the defendants need not respond to any prior filed complaints in the consolidated actions.

On October 25, 2011, a shareholder derivative action entitled Garber v. Wygod, et al. was filed in United States District Court for the Southern District of New York (the “Related Federal Derivative Action”). The complaint purports to assert claims on behalf of the Company, alleging breach of fiduciary duties, gross mismanagement, abuse of control and corporate waste by certain of the Company’s officers and directors, and seeks contribution and indemnification from each of those officers and directors, as well as unspecified damages and costs.

The Company believes that the Federal Securities Action, the State Court Derivative Action, the Federal Derivative Action and the Related Federal Derivative Action are without merit and intends to vigorously defend against them. The Company is unable to predict the outcomes of these actions or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein.

Investigations by United States Attorney for the District of South Carolina and the SEC

As previously disclosed, the United States Attorney for the District of South Carolina conducted an investigation of HLTH, which HLTH first learned about on September 3, 2003. The investigation related principally to issues of financial accounting improprieties relating to Medical Manager Corporation, a predecessor of HLTH (by its merger into HLTH in September 2000), and, more specifically, HLTH’s former Medical Manager Health Systems, Inc. subsidiary. Medical Manager Health Systems was a predecessor to Emdeon Practice Services, Inc. (“EPS”), a subsidiary that HLTH sold to Sage Software in September 2006 (the “EPS Sale”). HLTH and the Company have fully cooperated with the U.S. Attorney’s Office. As previously reported, the Board of Directors of HLTH formed a special committee consisting solely of independent directors to oversee this matter with the sole authority to direct HLTH’s response to the allegations that have been raised and that special committee was continued as a committee of the Board of Directors of the Company from the Merger until May 2011. As previously disclosed, the Company understands that the SEC also conducted a formal investigation into this matter. In connection with the EPS Sale, HLTH retained responsibility for liabilities relating to this matter and the Company assumed that obligation in the Merger.

The United States Attorney for the District of South Carolina announced on January 10, 2005 that three former employees of Medical Manager Health Systems each had agreed to plead guilty to one count of mail fraud and that one such employee had agreed to plead guilty to one count of tax evasion for acts committed while they were employed by Medical Manager Health Systems. According to the Informations, Plea Agreements and Factual Summaries filed by the United States Attorney in, and available from, the District Court of the United States for the District of South Carolina — Beaufort Division, on January 7, 2005, the three former employees and other then unnamed co-schemers were engaged in schemes between 1997 and 2002 that included causing companies acquired by Medical Manager Health Systems to pay the former vice president in charge of acquisitions and co-schemers kickbacks which were funded through increases in the purchase price paid by Medical Manager Health Systems to the acquired companies and that included fraudulent accounting practices to artificially inflate the quarterly revenues and earnings of Medical Manager Health Systems when it was an independent public company called Medical Manager Corporation from 1997 through 1999, when and after it was acquired by Synetic, Inc. in July 1999, and when and after it became a subsidiary of HLTH in September 2000. A fourth former officer of Medical Manager Health Systems pled guilty to similar activities later in 2005.

On December 15, 2005, the United States Attorney announced indictments of ten former officers and employees of Medical Manager Health Systems including Michael A. Singer, a former Chief Executive Officer of Medical Manager Health Systems and a former director of HLTH, who was last employed by HLTH as its Executive Vice President, Physician Software Strategies until February 2005, John H. Kang, a former President of Medical Manager Health Systems, who was employed until May 2001, and John P. Sessions, a former President and Chief Operating Officer of Medical Manager Health Systems, who was employed until September 2003. The indictment initially charged the defendants with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h) but the second count was dismissed in 2009. The allegations set forth in the indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements. One of the defendants passed away in 2008 and was dismissed from the indictment. Four of the defendants were dismissed from the case and two defendants were severed from the case and their cases were transferred to Tampa, Florida. In addition, Mr. Singer has entered into a Deferred Prosecution Agreement with the United States pursuant to which all charges were dismissed against Mr. Singer on July 26, 2010. The trial of John Kang and John Sessions, former officers of Medical Manager Health Systems, began on January 19, 2010 and on March 1, 2010 both men were found guilty by the jury; however, the Court set the verdict aside on May 27, 2010 and entered a judgment of acquittal. The government entered a notice of appeal with respect to the Court’s order. On January 19, 2011, the Court granted the motion of Messrs. Kang and Sessions for a new trial in the event that the government’s appeal of the Court’s ruling to set aside the verdict is successful. The trial of the remaining two defendants was scheduled to begin on October 4, 2010; however, on July 9, 2010, the Court in Tampa placed the case against those defendants on hold pending resolution of the appeal of the South Carolina ruling. On June 8, 2011, upon the motion of the government, the United States Court of Appeals for the Fourth Circuit dismissed the government’s appeal of the District Court’s rulings, thereby ending the government’s case against Messrs. Kang and Sessions. On July 8, 2011, upon the motion of the government, the United States District Court for the Middle District of Florida granted a motion to dismiss the government’s case against the remaining two defendants in Florida. As a result of these two dismissals, it is the Company’s understanding that the government’s investigation into this matter has concluded.

The Company has not uncovered information that it believes would require a restatement for any of the years covered by HLTH’s financial statements. In addition, the Company believes that the amounts of the kickback payments referred to in the court documents have already been reflected in the financial statements of HLTH to the extent required.

HLTH had (and the Company has assumed in the Merger) certain indemnity obligations to advance amounts for reasonable defense costs for the former officers and directors of EPS. See Note 2 for a more detailed discussion regarding these indemnification obligations.

Directors & Officers Liability Insurance Coverage Litigation

On July 23, 2007, HLTH commenced litigation (the “Coverage Litigation”) in the Court of Chancery of the State of Delaware in and for New Castle County against ten insurance companies in which HLTH was seeking to compel the defendant companies (collectively, the “Defendants”) to honor their obligations under certain directors and officers liability insurance policies (the “Policies”). WebMD succeeded to HLTH as plaintiff in this action as a result of the Merger. HLTH was seeking an order requiring the Defendants to advance and/or reimburse expenses that HLTH had incurred and expected to continue to incur for the EPS Indemnification Obligations, which are described in Note 2.

Pursuant to a stipulation among the parties, the Coverage Litigation was transferred on September 13, 2007 to the Superior Court of the State of Delaware in and for New Castle County. The Policies were issued to HLTH and to EPS, which is a co-plaintiff with the Company in the Coverage Litigation (collectively, the “Plaintiffs”). When EPS was sold in September 2006 to Sage Software, HLTH retained responsibility for the EPS Indemnification Obligations and the Company assumed the EPS Indemnification Obligations as a result of the Merger. HLTH retained (and the Company succeeded to as a result of the Merger) the right to assert claims and recover proceeds under the Policies.

Prior to the filing of the Second Amended Complaint which is discussed below, the Policies at issue in the Coverage Litigation consisted of two separate groups of insurance policies. Each group of policies consists of several layers of coverage, with different insurers having agreed to provide specified amounts of coverage at various levels. The first group of policies was issued to EPS in the amount of $20,000 (the “EPS Policies”) and the second group of policies was issued to Synetic, Inc. (the former parent of EPS, which merged into HLTH) in the amount of $100,000, of which approximately $3,600 was paid by the primary carrier with respect to another unrelated matter (the “Synetic Policies”).

The carrier with the third level of coverage in the Synetic Policies filed a motion for summary judgment in the Coverage Litigation, which most of the carriers who have issued the Synetic Policies joined, which sought summary judgment that any liability to pay defense costs should be allocated among the three sets of policies available to the Company (including the policies with respect to which the Coverage Litigation relates and a third set of policies the issuers of which had not yet been named by the Company) such that the Synetic Policies would only be liable to pay about $23,000 of the $96,400 total coverage available under such policies. HLTH filed its opposition to the motion together with its motion for summary judgment against such carrier and several other carriers who have issued the Synetic Policies seeking to require such carriers to advance payment of the defense costs that the Company is obligated to pay while the Coverage Litigation is pending. On July 31, 2008, the Superior Court for the State of Delaware denied the motion filed by the carriers seeking allocation and granted HLTH’s motion for partial summary judgment to enforce the duty of such carriers to advance and reimburse these costs. Pursuant to the Court’s order, the issuers of the Synetic Policies began reimbursing the Company for its costs as described below.

On September 9, 2008 and February 4, 2009, respectively, the eighth and ninth level carriers of the Synetic Policies notified HLTH that they believed that they were not bound by the Court’s July 31, 2008 order regarding the duty of the Synetic carriers to advance and reimburse defense costs. This resulted in HLTH making a motion to the Court on February 23, 2009 to require such eighth and ninth level carriers to advance and reimburse defense costs. HLTH later settled with the eighth level carrier. Under the terms of the settlement such carrier has paid, in full and final settlement, an agreed-upon percentage of the policy amount against each payment of defense costs made by the Company as such policy was implicated. On April 15, 2009, the ninth level carrier made a cross-motion for summary judgment claiming that, in light of a policy endorsement applicable only to the ninth level carrier, because of the time period during which the conspiracy charged in the Second Superseding Indictment is alleged to have taken place, the Synetic Policy issued by such carrier does not cover the EPS Indemnification Obligations. HLTH believed that such carrier’s motion was without merit and responded to the motion. On July 15, 2009, the Court granted summary judgment in favor of the ninth level carrier. Accordingly, the ninth level carrier was not liable to pay any portion of the $10,000 total coverage of its policy with respect to the EPS Indemnification Obligations. Approximately $84,200 has been paid by insurance companies representing the EPS Policies and the Synetic Policies through a combination of payment under the terms of the Policies, payment under reservation of rights or through settlement. Of this amount, $62,800 represents the portion received through settlement.

On November 17, 2008, HLTH filed a Second Amended Complaint which added four new insurance companies as defendants in the Coverage Action. These carriers are the issuers of a third set of policies (the “Emdeon Policies”) that provide coverage with respect to the EPS Indemnification Obligations. All but one of the carriers who issued the Emdeon Policies moved for summary judgment asserting that exclusions in the Emdeon Policies preclude coverage for the EPS Indemnification Obligations and HLTH filed motions seeking to compel such carriers to advance the costs incurred by HLTH with respect to the EPS Indemnification Obligations. On August 31, 2009, the Court issued two opinions. In the first opinion, the Court granted summary judgment in favor of HLTH with respect to one of the exclusions asserted by the carriers who issued the Emdeon Policies. In the second opinion, the Court granted summary judgment in favor of the carriers with respect to the other exclusion asserted by such carriers. The Company and the carriers who issued the Emdeon Policies (with the exception of the second level carrier with whom the Company has settled) each appealed the trial Court’s August 31, 2009 rulings to the Supreme Court of Delaware and, on April 22, 2010, the Supreme Court decided both appeals in favor of the carriers who issued the Emdeon Policies. The implication of this decision was that the Company had effectively exhausted its insurance coverage with respect to the EPS Indemnification Obligations.

The insurance carriers had also asserted that the Company’s insurance policies provided that, under certain circumstances, amounts advanced by the insurance companies in connection with the EPS Indemnification Obligations would have to have been repaid to the insurance carriers by the Company, although the amounts that the Company received in settlement from certain carriers were not subject to being repaid. As discussed more fully in Note 2 above, as a result of the manner in which the Investigation ended, the Company believes that the insurance carriers do not have the ability to recover any amounts they have previously advanced.

In addition to the Coverage Litigation, on December 22, 2009, TIG Specialty Insurance Company (“TIG”), the second level issuer of the EPS Policies, commenced an action against the Company to recover the $5,000 that TIG advanced to the Company in 2006. The Company and TIG settled the matter in 2010.

Other Legal Proceedings

In the normal course of business, the Company and its subsidiaries are involved in various claims and legal proceedings. While the ultimate resolution of certain of these matters, including certain of those discussed in Note 9 to the Consolidated Financial Statements included in the Company’s 2010 Annual Report on Form 10-K, has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

XML

Fair Value of Financial Instruments and Non-Recourse Credit Facilities (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010	Dec. 31, 2009
Company's Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis
Cash and cash equivalents, Amortized Cost Basis	$ 1,101,286	$ 400,501	$ 352,199	$ 459,766
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Company's Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis
Cash and cash equivalents, Amortized Cost Basis	1,101,286	400,501
Cash and cash equivalents, Fair Value	1,101,286	400,501
Cash and cash equivalents, Gross Unrealized Gains	0	0
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Company's Level 1 and Level 3 financial assets that were measured and recorded at fair value on a recurring basis
ARS Option, Amortized Cost Basis	2,363	4,245
ARS Option, Fair Value	2,363	4,245
ARS Option, Gross Unrealized Gains	$ 0	$ 0

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2011

Summary of Significant Accounting Policies [Abstract]

Background

Background

WebMD Health Corp. (the “Company” or “WebMD”) is a Delaware corporation that was incorporated on May 3, 2005. The Company completed an initial public offering on September 28, 2005. From the completion of the initial public offering through the completion of the Company’s merger with HLTH Corporation (“HLTH”) on October 23, 2009 (the “Merger”), the Company was more than 80% owned by HLTH. On October 23, 2009, the Merger was completed, with HLTH merging into WebMD and WebMD continuing as the surviving corporation. In the Merger, each share of HLTH Common Stock was converted into 0.4444 shares of WebMD Common Stock. In these Consolidated Financial Statements, the defined term “Company” refers not only to WebMD but also, where the context requires, to HLTH. The specific names of HLTH and WebMD are used only where there is a need to distinguish between the legal entities. In addition, all references in these Consolidated Financial Statements to amounts of shares of HLTH Common Stock and to market prices or purchase prices for HLTH Common Stock have been adjusted to reflect the 0.4444 exchange ratio in the Merger (the “Exchange Ratio”), and expressed as the number of shares of WebMD Common Stock into which the HLTH Common Stock would be converted in the Merger and the equivalent price per share of WebMD Common Stock. Similarly, the exercise price of options and warrants to purchase HLTH Common Stock and the number of shares subject to those options and warrants have been adjusted to reflect the Exchange Ratio.

The Company provides health information services to consumers, physicians and other healthcare professionals, employers and health plans through its public and private online portals, mobile platforms and health-focused publications. The Company’s public portals for consumers enable them to obtain health and wellness information (including information on specific diseases or conditions), check symptoms, locate physicians, store individual healthcare information, receive periodic e-newsletters on topics of individual interest and participate in online communities with peers and experts. The Company’s public portals for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (“CME”) credit and communicate with peers. The Company also provides mobile health information applications for use by consumers and physicians. The Company’s public portals generate revenue primarily through the sale of advertising and sponsorship products, including CME services. The public portals’ sponsors and advertisers include pharmaceutical, biotechnology, medical device and consumer products companies. The Company also generates revenue from the sale of e-detailing promotion and physician recruitment services and from advertising sold in WebMD the Magazine, a consumer magazine distributed to physician office waiting rooms. In addition, the Company generates revenue from the sale of certain information products. The Company’s private portals enable employers and health plans to provide their employees and members with access to personalized health and benefit information and decision-support technology that helps them to make more informed benefit, treatment and provider decisions. In addition, the Company offers clients of its private portals telephonic health coaching services on a per participant basis across an employee or plan population. The Company generates revenue from its private portals through the licensing of these portals and related services to employers and health plans either directly or through distributors.

Interim Financial Statements

Interim Financial Statements

The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2011. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations.

The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2010, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Seasonality

Seasonality

The timing of the Company’s revenue is affected by seasonal factors. The Company’s public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of the Company’s public portals. This portion of the Company’s revenue is usually the lowest in the first quarter of each calendar year, and increases during each consecutive quarter throughout the year. The timing of revenue in relation to the Company’s expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing and general and administrative expenses as a percentage of revenue in each calendar quarter.

Accounting Estimates

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the Consolidated Financial Statements. Significant estimates and assumptions by management affect: the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards.

Presentation of Segment Information

Presentation of Segment Information

The Company generates its revenue through its public and private portals. Discrete financial information related to a measure of profit or loss for these two revenue streams is not available as they leverage many common expenses, and the Company does not separately allocate these common expenses in assessing the performance of its business. Accordingly, the Company views its business as one reportable operating segment.

Loss Contingencies

Loss Contingencies

The Company accounts for loss contingencies in accordance with FASB ASC No. 450, “Contingencies.” Under ASC No. 450, accruals for loss contingencies are recorded when both (i) the information available indicates that it is probable that a liability has been incurred and (ii) the amount of the loss can be reasonably estimated. The Company records adjustments to these accruals to reflect the status of negotiations, settlements, advice of counsel and other information and events related to an individual matter.

Net Income Per Common Share

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, adjusted to give effect to participating non-vested restricted stock during the periods it was outstanding. Diluted income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the period, increased to give effect to potentially dilutive securities and assumes that any dilutive convertible notes were converted, only in the periods in which such effect is dilutive (shares in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Numerator:
Income from continuing operations	$	11,240		$	14,614		$	44,986		$	18,508
Effect of participating non-vested restricted stock		(70	)		(152	)		(320	)		(222	)
Income from continuing operations- Basic and Diluted	$	11,170		$	14,462		$	44,666		$	18,286
Income (loss) from discontinued operations, net of tax	$	2,994		$	(1,024	)	$	10,388		$	(1,024	)
Effect of participating non-vested restricted stock		(19	)		12			(74	)		12
Income (loss) from discontinued operations, net of tax — Basic and Diluted	$	2,975		$	(1,012	)	$	10,314		$	(1,012	)
Denominator:
Weighted-average shares — Basic		57,461			58,095			57,913			54,602
Employee stock options and restricted stock		1,237			3,340			1,969			4,058
Adjusted weighted-average shares after assumed conversions — Diluted		58,698			61,435			59,882			58,660
Basic income (loss) per common share:
Income from continuing operations	$	0.19		$	0.25		$	0.77		$	0.33
Income (loss) from discontinued operations		0.06			(0.02	)		0.18			(0.01	)
Net income	$	0.25		$	0.23		$	0.95		$	0.32
Diluted income (loss) per common share:
Income from continuing operations	$	0.19		$	0.24		$	0.75		$	0.31
Income (loss) from discontinued operations		0.05			(0.02	)		0.17			(0.02	)
Net income	$	0.24		$	0.22		$	0.92		$	0.29

The Company has excluded its convertible notes, as well as certain outstanding stock options and restricted stock, from the calculation of diluted income per common share during the periods in which such securities were anti-dilutive. The following table presents the total weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share during the periods presented (shares in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Options and restricted stock		4,747		1,798		2,842		1,812
Convertible notes		11,477		3,017		9,805		8,570
		16,224		4,815		12,647		10,382

Recent Accounting Pronouncements

Accounting Pronouncement Adopted During 2011

Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and distribution arrangements, information services and licenses of healthcare management tools and private portals as well as related health coaching services are recognized ratably over the term of the applicable agreement. Revenue from the sponsorship of CME is recognized over the period the Company substantially completes its contractual deliverables as determined by the applicable agreements.

For contracts that contain multiple deliverables that were entered into prior to January 1, 2011, revenue is allocated to each deliverable based on its relative fair value determined using vendor-specific objective evidence (“VSOE”). In certain instances where fair value did not exist for all the elements, the amount of revenue allocated to the delivered elements equals the total consideration less the fair value of the undelivered elements to the extent VSOE exists for the undelivered elements. In instances where fair value did not exist for the undelivered elements, the entire consideration is recognized over the period that the last element is delivered.

Contracts that contain multiple deliverables that were entered into subsequent to January 1, 2011 are subject to Accounting Standards Update No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also changes the level of evidence of selling price required to separate deliverables by allowing a company to make its best estimate of the standalone selling price of deliverables when more objective evidence of selling price is not available.

The Company adopted ASU 2009-13 on a prospective basis for arrangements entered into or materially modified on or subsequent to January 1, 2011. Beginning January 1, 2011, pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, the Company allocates revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on VSOE if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. The Company is not able to determine TPE of selling price as it is unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that its services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgemental process that considers multiple factors including, but not limited to, recent selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

As a result of the adoption of ASU 2009-13, revenue for the three months ended September 30, 2011 was lower by $300 and revenue during the nine months ended September 30, 2011 was higher by $3,400, than the revenue that would have been recognized under the previous accounting standard. The impact on diluted income per share was $(0.01) and $0.06 during the three and nine months ended September 30, 2011, respectively. This resulted from services that were provided or partially provided during the three and nine months ended September 30, 2011, for certain deliverables of the Company’s multiple deliverable arrangements for which the Company would have previously deferred the related revenue under the previous accounting standards. During the three and nine months ended September 30, 2011, the Company assigned value to these deliverables using its best estimate of selling price, and recognized revenue as they were delivered. The multiple deliverable arrangements that were impacted by ASU 2009-13 related to the Company’s public portal revenues and the services underlying such arrangements are generally delivered over periods of twelve months or less. The Company is not able to reasonably estimate the effect of adopting ASU 2009-13 on future periods as the impact will vary based on many factors including, but not limited to, the quantity and size of new or materially modified multiple-deliverable arrangements entered into, as well as the nature of the various services contained within those arrangements and the time periods over which those services are delivered.

Accounting Pronouncements to be Adopted in the Future

In September 2011, the Financial Accounting Standards Board (the “FASB”) issued an update to the existing guidance for goodwill and other intangible assets. The update simplifies how a company tests goodwill for impairment by allowing both public and nonpublic entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, an entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not anticipate that the adoption of these amendments will have a material impact on its financial condition, results of operations or cash flows.

In June 2011, the FASB issued an amendment to the existing guidance on the presentation of comprehensive income. Under the amended guidance, entities have the option to present the components of net income and other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Entities no longer have the option of presenting the components of other comprehensive income within the statement of changes in stockholders’ equity. For public entities, the amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2011, which for the Company is the first quarter in 2012. The adoption of this amendment will result in a change only to the Company’s current presentation of comprehensive income.

In May 2011, the FASB issued amendments to the existing guidance on fair value measurement. The amendments are intended to create consistency between U.S. generally accepted accounting standards and International Financial Reporting Standards on measuring fair value and disclosing information about fair value measurements. The amendments clarify the application of existing fair value measurement requirements including (i) the application of the highest and best use valuation premise concepts, (ii) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (iii) quantitative information required for fair value measurements categorized within Level 3. In addition, the amendments require additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011. These changes are required to be applied prospectively. The Company is currently evaluating the impact that this amendment may have on its financial condition and results of operations.

Revenue Recognition

Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and distribution arrangements, information services and licenses of healthcare management tools and private portals as well as related health coaching services are recognized ratably over the term of the applicable agreement. Revenue from the sponsorship of CME is recognized over the period the Company substantially completes its contractual deliverables as determined by the applicable agreements.

For contracts that contain multiple deliverables that were entered into prior to January 1, 2011, revenue is allocated to each deliverable based on its relative fair value determined using vendor-specific objective evidence (“VSOE”). In certain instances where fair value did not exist for all the elements, the amount of revenue allocated to the delivered elements equals the total consideration less the fair value of the undelivered elements to the extent VSOE exists for the undelivered elements. In instances where fair value did not exist for the undelivered elements, the entire consideration is recognized over the period that the last element is delivered.

Contracts that contain multiple deliverables that were entered into subsequent to January 1, 2011 are subject to Accounting Standards Update No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also changes the level of evidence of selling price required to separate deliverables by allowing a company to make its best estimate of the standalone selling price of deliverables when more objective evidence of selling price is not available.

The Company adopted ASU 2009-13 on a prospective basis for arrangements entered into or materially modified on or subsequent to January 1, 2011. Beginning January 1, 2011, pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, the Company allocates revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on VSOE if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. The Company is not able to determine TPE of selling price as it is unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that its services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgemental process that considers multiple factors including, but not limited to, recent selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

As a result of the adoption of ASU 2009-13, revenue for the three months ended September 30, 2011 was lower by $300 and revenue during the nine months ended September 30, 2011 was higher by $3,400, than the revenue that would have been recognized under the previous accounting standard. The impact on diluted income per share was $(0.01) and $0.06 during the three and nine months ended September 30, 2011, respectively. This resulted from services that were provided or partially provided during the three and nine months ended September 30, 2011, for certain deliverables of the Company’s multiple deliverable arrangements for which the Company would have previously deferred the related revenue under the previous accounting standards. During the three and nine months ended September 30, 2011, the Company assigned value to these deliverables using its best estimate of selling price, and recognized revenue as they were delivered. The multiple deliverable arrangements that were impacted by ASU 2009-13 related to the Company’s public portal revenues and the services underlying such arrangements are generally delivered over periods of twelve months or less. The Company is not able to reasonably estimate the effect of adopting ASU 2009-13 on future periods as the impact will vary based on many factors including, but not limited to, the quantity and size of new or materially modified multiple-deliverable arrangements entered into, as well as the nature of the various services contained within those arrangements and the time periods over which those services are delivered.

Reclassifications

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.

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Consolidated Balance Sheets (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 1,101,286	$ 400,501
Accounts receivable, net of allowance for doubtful accounts of $1,161 at September 30, 2011 and $1,493 at December 31, 2010	117,938	134,448
Prepaid expenses and other current assets	13,172	12,161
Deferred tax assets	21,204	23,467
Total current assets	1,253,600	570,577
Property and equipment, net	58,064	61,516
Goodwill	202,104	202,104
Intangible assets, net	20,656	22,626
Deferred tax assets	62,613	71,125
Other assets	32,318	14,254
TOTAL ASSETS	1,629,355	942,202
Current liabilities:
Accrued expenses	51,141	53,181
Deferred revenue	90,673	97,043
Liabilities of discontinued operations	1,810	17,327
Total current liabilities	143,624	167,551
Other long-term liabilities	22,403	21,756
Commitments and contingencies
Stockholders' equity:
Preferred stock, 50,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.01 par value per share, 650,000,000 shares authorized; 62,405,119 shares issued at September 30, 2011 and 62,401,272 shares issued at December 31, 2010	624	624
Additional paid-in capital	9,468,086	9,462,373
Treasury stock, at cost; 6,058,509 shares at September 30, 2011 and 2,485,391 shares at December 31, 2010	(280,243)	(129,589)
Accumulated deficit	(8,525,139)	(8,580,513)
Stockholders' equity	663,328	752,895
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,629,355	942,202
2.25% Convertible notes due 2016 [Member]
Current liabilities:
Convertible notes due	400,000	0
2.50% convertible notes due 2018 [Member]
Current liabilities:
Convertible notes due	$ 400,000	$ 0

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Fair Value of Financial Instruments and Non-Recourse Credit Facilities (Details 2) (USD $) In Thousands	Sep. 30, 2011
2.25% Notes [Member]
Financial Assets:
Carrying Amount	$ 400,000
Fair Value	360,440
2.50% Notes [Member]
Financial Assets:
Carrying Amount	400,000
Fair Value	$ 327,920

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Stock-Based Compensation (Details 3) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	$ 9,808	$ 8,804	$ 28,969	$ 23,605
Stock Options [Member]
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	6,159	5,996	18,832	16,631
Restricted Stock [Member]
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	3,563	2,714	9,878	6,694
Other [Member]
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	86	94	259	280
Cost of Operations [Member]
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	1,718	1,889	5,677	5,153
Sales and marketing [Member]
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	2,286	1,867	6,865	5,749
General and Administrative Expense [Member]
Summary of Stock-Based Compensation Expense
Stock-based compensation expense	$ 5,804	$ 5,048	$ 16,427	$ 12,703

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Stock-Based Compensation (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Years Claims Defendants	Sep. 30, 2010
Additional Stock based Compensation (Textual) [Abstract]
Stock based compensation expense	$ 9,808	$ 8,804	$ 28,969	$ 23,605
Stock-based Compensation (Textual) [Abstract]
Merger exchange ratio			0.4444
Maximum number of shares of the Company's common stock	18,200,000		18,200,000
Common stock available for future grants	761,543		761,543
Market price of Company's common stock	$ 30.15		$ 30.15
Proceeds from exercise of stock options	1,382	9,054	26,435	57,168
Employee withholding tax paid	98	36,831	6,730	76,559
Combined value of Stock option exercised and restricted stocks vested	985	93,637	47,223	226,338
Unrecognized stock-based compensation expense related to unvested awards	95,300		95,300
Period for recognition of unrecognized Stock based compensation expense			2.9
Percentage of tax benefit attributable to stock-based compensation			39.00%
Non-employee director [Member]
Additional Stock based Compensation (Textual) [Abstract]
Stock based compensation expense	86	94	259	280
Maximum [Member] | Restricted Stock [Member]
Additional Stock based Compensation (Textual) [Abstract]
Share based compensation arrangement by share based payment awards award vesting period			5 years
Maximum [Member] | Stock Options [Member]
Additional Stock based Compensation (Textual) [Abstract]
Share based compensation arrangement by share based payment awards award vesting period			5 years
Minimum [Member] | Restricted Stock [Member]
Additional Stock based Compensation (Textual) [Abstract]
Share based compensation arrangement by share based payment awards award vesting period			3 years
Minimum [Member] | Stock Options [Member]
Additional Stock based Compensation (Textual) [Abstract]
Share based compensation arrangement by share based payment awards award vesting period			4 years
Stock Options [Member]
Additional Stock based Compensation (Textual) [Abstract]
Stock based compensation expense	6,159	5,996	18,832	16,631
Vesting dates expire within date of grant			10 years
Restricted Stock [Member]
Additional Stock based Compensation (Textual) [Abstract]
Stock based compensation expense	$ 3,563	$ 2,714	$ 9,878	$ 6,694

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Fair Value of Financial Instruments and Non-Recourse Credit Facilities (Details Textual) (USD $) In Thousands, unless otherwise specified	1 Months Ended		3 Months Ended		9 Months Ended							1 Months Ended		3 Months Ended	9 Months Ended				1 Months Ended	9 Months Ended					1 Months Ended					1 Months Ended
	Apr. 30, 2010	Apr. 30, 2009 AccountingTreatmentCategories	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Oct. 19, 2009 Level 3 [Member]	Dec. 31, 2009 Financial Assets, Senior Secured Notes of the First Series [Member]	Dec. 31, 2009 Financial Assets, Senior Secured Notes of the Second Series [Member]	Dec. 31, 2009 Financial Assets, Senior Secured Notes of the Third Series [Member]	Dec. 31, 2009 Financial Assets, Senior Secured Notes of the Fourth Series [Member]	Apr. 30, 2010 Auction Rate Securities [Member]	Apr. 30, 2009 Auction Rate Securities [Member]	Mar. 31, 2008 Auction Rate Securities [Member]	Sep. 30, 2011 Auction Rate Securities [Member]	Dec. 31, 2010 Auction Rate Securities [Member]	Sep. 30, 2010 Auction Rate Securities [Member]	Dec. 31, 2009 Auction Rate Securities [Member]	Apr. 30, 2010 ARS Option [Member]	Sep. 30, 2011 ARS Option [Member]	Dec. 31, 2010 ARS Option [Member]	Sep. 30, 2010 ARS Option [Member]	Mar. 31, 2008 ARS Option [Member] Maximum [Member]	Mar. 31, 2008 ARS Option [Member] Minimum [Member]	Apr. 30, 2010 Senior Secured Notes [Member]	Sep. 30, 2010 Senior Secured Notes [Member]	Dec. 31, 2009 Senior Secured Notes [Member]	Oct. 19, 2009 Senior Secured Notes [Member]	Sep. 30, 2011 Privately Held Company [Member]	Apr. 30, 2010 Maximum [Member]	Apr. 30, 2010 Minimum [Member]
Fair Value of Financial Instruments and Non Recourse Credit Facilities (Textual) [Abstract]
Student loan percentage guaranteed under FFELP					97.00%
Investment securities, face (par or principal) amount							$ 67,500	$ 10,000	$ 10,000	$ 10,000	$ 37,500			$ 362,950
ARS Option, Fair Value														302,842													63,826
Company frequent auction period																														28 days	7 days
(Loss) gain on investments			(1,150)	(131)	14,679	(22,977)						29,508		60,108						14,679	14,712				1,362
Cumulative effect of initial adoption of SFAS 159, before net effect of noncontrolling interest													26,848
Cumulative effect of initial adoption of SFAS 159													24,697
Proceeds from investments												286,399			16,561	10,467									65,475
Value of the ARS Option reflected in prepaid expenses and other current assets			2,363		2,363												0	279,701		2,363	4,245	845				0	63,826
Approximate deferred income tax benefit primarily related to the reversal of income tax valuation allowance attributable to its ARS					5,378	(17,260)									22,000
Accrued interest rate on senior secured notes																												8.75%
Carrying Amount																													$ 6,471
Credit rating below AAA of Auction rate Securities held by the company	one-half
Number of categories of losses on securities		2
Weighted average lives for loan portfolios																							14 years	4 years
Repurchase option period for option to repurchase any of all of the ARS sold																			2 years