8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

November 2, 2006

Date of Report (Date of earliest event reported)

WEBMD HEALTH CORP.

(Exact name of registrant as specified in its charter)

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

111 Eighth Avenue
New York, New York 10011

(Address of principal executive offices, including zip code)

(212) 624-3700

(Registrant’s telephone number, including area code)

(Former name or address, if changed since last report)

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

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

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

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

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

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

Item 2.02. Results of Operations and Financial Condition

     On November 2, 2006, we issued a press release announcing our results for the quarter ended September 30, 2006. A copy of the press release is attached as Exhibit 99.1 to this Current Report. Exhibit 99.2 to this Current Report contains the financial tables that accompanied the press release. Exhibit 99.4 to this Current Report contains an Annex to the press release entitled “Explanation of Non-GAAP Financial Measures.” Exhibits 99.1, 99.2 and 99.4 are being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall any of those exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure

     Exhibit 99.3 to this Current Report includes forward-looking financial information that accompanied Exhibit 99.1 and that is expected to be discussed on the previously announced conference call with investors and analysts to be held by WebMD and Emdeon at 4:45 p.m., Eastern time, today (November 2, 2006). The call can be accessed at www.emdeon.com (in the About Emdeon section) or at www.wbmd.com (in the Investor Relations section) at that time. A replay of the call will be available at the same web addresses. Exhibit 99.3 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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Item 9.01. Financial Statements and Exhibits

     (c) Exhibits

          The following exhibits are furnished herewith:

99.1	Press Release, dated November 2, 2006, regarding the Registrant’s results for the quarter ended September 30, 2006
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Financial Guidance Summary accompanying Exhibit 99.1
99.4	Annex A to Exhibits 99.1 through 99.3

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SIGNATURE

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

	WEBMD HEALTH CORP.
Dated: November 2, 2006	By:	/s/ Lewis H. Leicher
		Lewis H. Leicher
		Senior Vice President

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EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release, dated November 2, 2006, regarding the Registrant’s results for the quarter ended September 30, 2006
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Financial Guidance Summary accompanying Exhibit 99.1
99.4	Annex A to Exhibits 99.1 through 99.3

EX-99.1

EXHIBIT 99.1

Contacts:
Investors:	Media:
Risa Fisher	Jennifer Newman
rfisher@webmd.net	jnewman@webmd.net
212-624-3817	212-624-3912

WebMD Announces Third Quarter Financial Results

Revenue Increases 48%, Adjusted EBITDA Increases 61%

Net Income of $1.0 Million, Which Includes $5.9 Million of SFAS 123R Stock-Based
Compensation Expense, Compares to Net Income of $4.1 million Last Year

New York, NY (November 2, 2006) — WebMD Health Corp. (NASDAQ: WBMD) today announced financial results for the three months ended September 30, 2006.

“This quarter we continued to demonstrate substantial progress in each of our major business markets, as we continue to build the leading online health destination for both consumers and healthcare professionals. With another strong quarter of financial and operating results, WebMD is well positioned to capitalize on the powerful market trends in each of our online businesses,” said Wayne Gattinella, President and Chief Executive Officer of WebMD.

Financial Summary
Revenue for the third quarter was $66.6 million compared to $45.1 million in the prior year period, an increase of 48%. Earnings before interest, taxes, depreciation, amortization, and other non-cash items (“Adjusted EBITDA”) for the third quarter increased 61% to $14.6 million or $0.25 per share compared to $9.1 million or $0.19 per share in the prior year period. The net income of $1.0 million or $0.02 per share for the third quarter includes $5.9 million of stock compensation expense due to the January 1, 2006 adoption of SFAS 123R. Without this, net income would have been $6.9 million or $0.12 per share compared to last year’s net income of $4.1 million or $0.09 per share.

As of September 30, 2006, WebMD had approximately $85 million of cash and investments.

Operating Highlights
Online Services segment revenue was $58.9 million for the third quarter compared to $39.2 million in the prior year period, an increase of 50%. Advertising and sponsorship revenue increased 55% to $43.5 million. Private portal licensing revenue increased 61% to $14.6 million. Online Services segment Adjusted EBITDA increased 63% to $12.7 million compared to $7.8 million in the prior year.

The WebMD Health Network continued to expand with the average number of unique users reaching 32.3 million per month and total traffic of 729 million page views during the third quarter, increases of approximately 30% from a year ago. In the third quarter, 487,000 continuing medical education (CME) programs were completed on the Network, an increase of 55% from the prior year period.

WebMD continued to expand its base of private Health and Benefits portals to large employers and health plans. During the third quarter, the Company implemented new online health platforms for large corporations, including The Kroger Co., J.C. Penney Corporation, Inc., Electronic Data Systems Corp., Medtronic, Inc., Reed Elsevier Inc. and Rock-Tenn Company. WebMD also licensed its health platform to several health plans and government organizations, including Blue Cross and Blue Shield of Alabama and Connecticare.

Publishing and Other Services segment revenue was $7.7 million for the third quarter compared to $5.9 million in the prior year period, an increase of 31%. Publishing and Other Services segment Adjusted EBITDA was $1.9 million compared to $1.3 million in the prior year period.

Acquisition of Subimo Expands WebMD’s Private Online Health Portal Services
WebMD today announced that it has entered into a definitive agreement to acquire Subimo, LLC (www.subimo.com), a provider of healthcare decision support applications to large employers, health plans and financial institutions. With this acquisition, WebMD combines its market-leading private health and benefits portals with Subimo’s advanced online health applications which will expand WebMD’s suite of products and services and help to accelerate its market leadership.

Financial Guidance
A schedule outlining the Company’s updated financial guidance is attached to this press release.

Analyst and Investor Conference Call
As previously announced, WebMD and Emdeon Corporation will hold a conference call with investors and analysts to discuss their third quarter results at 4:45 pm (eastern) on November 2, 2006. The call can be accessed at www.wbmd.com (in the Investor Relations section) or at www.emdeon.com (in the About Emdeon section). A replay of the audio webcast will be available at the same web address.

About WebMD
WebMD Health Corp. (Nasdaq: WBMD) is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through our public and private online portals and health-focused publications. WebMD is a subsidiary of Emdeon Corporation (Nasdaq: HLTH).

The WebMD Health Network reaches over 30 million visitors a month through its leading owned and operated health sites that include WebMD Health, Medscape, MedicineNet, eMedicine, eMedicine Health, RxList and theheart.org.

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All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding: guidance on our future financial results and other projections or measures of our future performance; and the amount and timing of the benefits expected from acquisitions, from new products or services and from other potential sources of additional revenue. These statements speak only as of the date of this press release and are based on our current plans and expectations, and they involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of our products and services; relationships with customers and strategic partners; difficulties in integrating acquired businesses; and changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet and information technology industries. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.

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

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WebMD^®, WebMD Health^®, Medscape^®, eMedicine^® and Summex^®, are trademarks of WebMD Health Corp. or its subsidiaries.

EX-99.2

EXHIBIT 99.2

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006			2005
Revenue	$	66,645	$	45,094	$	173,308		$	119,834
Costs and expenses:
Cost of operations		26,945		18,020		77,371			51,531
Sales and marketing		20,472		13,534		52,941			36,663
General and administrative		13,476		6,582		37,931			21,787
Depreciation and amortization		5,085		2,733		12,627			7,985
Interest income		1,221		10		4,137			10
Income (loss) before income tax provision		1,888		4,235		(3,425	)		1,878
Income tax provision		896		112		908			264
Net income (loss)	$	992	$	4,123	$	(4,333	)	$	1,614
Net income (loss) per common share:
Basic	$	0.02	$	0.09	$	(0.08	)	$	0.03
Diluted	$	0.02	$	0.09	$	(0.08	)	$	0.03
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		56,059		48,273		56,056			48,158
Diluted		58,122		48,302		56,056			48,167

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
Revenue
Online Services:
Advertising and sponsorship	$	43,534		$	28,054		$	112,513		$	77,497
Licensing		14,569			9,053			38,315			23,097
Content syndication and other		843			2,124			2,815			6,697
Total Online Services		58,946			39,231			153,643			107,291
Publishing and Other Services		7,699			5,863			19,665			12,543
	$	66,645		$	45,094		$	173,308		$	119,834
Earnings before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”)
Online Services	$	12,727		$	7,795		$	29,594		$	15,588
Publishing and Other Services		1,906			1,282			1,165			367
		14,633			9,077			30,759			15,955
Adjusted EBITDA per diluted common share (a)	$	0.25		$	0.19		$	0.55		$	0.33
Interest, taxes, depreciation, amortization and other non-cash items (b)
Interest income		1,221			10			4,137			10
Depreciation and amortization		(5,085	)		(2,733	)		(12,627	)		(7,985	)
Non-cash advertising		(1,660	)		(1,707	)		(4,454	)		(5,121	)
Non-cash stock-based compensation		(7,221	)		(412	)		(21,240	)		(981	)
Income tax provision		(896	)		(112	)		(908	)		(264	)
Net income (loss)	$	992		$	4,123		$	(4,333	)	$	1,614
Net income (loss) per common share:
Basic	$	0.02		$	0.09		$	(0.08	)	$	0.03
Diluted	$	0.02		$	0.09		$	(0.08	)	$	0.03
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		56,059			48,273			56,056			48,158
Diluted		58,122			48,302			56,056			48,167

(a)	Three and nine months ended September 30, 2006 Adjusted EBITDA per diluted common share is calculated based on 58,122 and 57,977 diluted shares, respectively. Three and nine months ended September 30, 2005 Adjusted EBITDA per diluted common share is calculated based on 48,302 and 48,167 diluted shares, respectively.
(b)	Reconciliation of Adjusted EBITDA to net income (loss) (see Annex A — Explanation of Non-GAAP Financial Measures).

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

	September 30,		December 31,
	2006		2005
ASSETS
Current assets:
Cash and cash equivalents	$	45,164	$	75,704
Short-term investments		39,922		78,073
Accounts receivable, net		71,009		57,245
Current portion of prepaid advertising		4,725		7,424
Other current assets		8,578		3,977
Total current assets		169,398		222,423
Property and equipment, net		37,449		21,014
Prepaid advertising		10,350		12,104
Goodwill		174,311		100,669
Intangible assets, net		38,900		20,503
Other assets		257		176
	$	430,665	$	376,889
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	24,912	$	30,400
Deferred revenue		69,380		36,495
Due to Emdeon		11,866		3,672
Total current liabilities		106,158		70,567
Other long-term liabilities		7,907		7,010
Stockholders’ equity		316,600		299,312
	$	430,665	$	376,889

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

	Nine Months Ended
	September 30,
	2006			2005
Cash flows from operating activities:
Net income (loss)	$	(4,333	)	$	1,614
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		12,627			7,985
Non-cash advertising		4,454			5,121
Non-cash stock-based compensation		21,240			981
Changes in operating assets and liabilities:
Accounts receivable		(7,661	)		(1,490	)
Other assets		(5,111	)		1,185
Accrued expenses and other long-term liabilities		(544	)		2,798
Due to Emdeon		8,213			—
Deferred revenue		14,517			778
Net cash provided by operating activities		43,402			18,972
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		261,000			—
Purchases of available-for-sale securities		(222,000	)		—
Purchases of property and equipment		(17,500	)		(15,587	)
Cash paid in business combinations, net of cash acquired		(96,091	)		(30,819	)
Net cash used in investing activities		(74,591	)		(46,406	)
Cash flows from financing activities:
Proceeds from issuance of common stock		649			—
Net cash transfers from Emdeon		—			65,090
Net cash provided by financing activities		649			65,090
Net increase (decrease) in cash and cash equivalents		(30,540	)		37,656
Cash and cash equivalents at beginning of period		75,704			3,456
Cash and cash equivalents at end of period	$	45,164		$	41,112

EX-99.3

EXHIBIT 99.3

FINANCIAL GUIDANCE SUMMARY

2006 Financial Guidance
(in millions, except per share amounts)

				Three Months Ended						Year Ended
	Nine Months Ended			December 31,2006						December 31, 2006
	September 30, 2006			Range						Range
Revenue	$	173.3		$	73.5		$	76.5		$	246.8		$	249.8
Earnings before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)		30.8			19.3			20.5			50.1			51.3
Adjusted EBITDA per diluted common share	$	0.28		$	0.33		$	0.35		$	0.86		$	0.88
Interest income		4.1			0.9			1.0			5.0			5.1
Depreciation and amortization		(12.6	)		(6.7	)		(6.4	)		(19.3	)		(19.0	)
Non-cash advertising		(4.5	)		(2.7	)		(2.5	)		(7.2	)		(7.0	)
Non-cash stock-based compensation		(21.2	)		(5.4	)		(5.1	)		(26.6	)		(26.3	) (b)
Income tax provision		(0.9	)		(1.1	)		(0.9	)		(2.0	)		(1.8	)
Net income (loss)	$	(4.3	)	$	4.3		$	6.6		$	(0.0	)	$	2.3
Net income (loss) per common share:
Basic	$	(0.08	)	$	0.08		$	0.12		$	(0.00	)	$	0.04
Diluted	$	(0.08	)	$	0.07		$	0.11		$	(0.00	)	$	0.04
Weighted-average shares outstanding used in computing net income (loss) per common share:
Basic		56.1			56.2			56.2			56.1			56.1
Diluted		56.1			59.0			59.0			58.2			58.2

(a)	See Annex A — Explanation of Non-GAAP Financial Measures.
(b)	Includes approximately $22.0 or $0.38 per diluted share relating to the adoption of FAS 123R on January 1, 2006.

FINANCIAL GUIDANCE SUMMARY

2007 Financial Guidance
(in millions, except per share amounts)

	Year Ended
	December 31, 2007
	Range
Revenue	$	330.0		$	340.0
Earnings before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)		72.0			78.0
Adjusted EBITDA per diluted common share	$	1.20		$	1.30
Interest income		7.6			8.7
Depreciation and amortization		(33.6	)		(32.4	)
Non-cash advertising		(5.1	)		(5.1	)
Non-cash stock-based compensation		(22.4	)		(21.6	)
Income tax provision		(5.5	)		(4.6	)
Net income	$	13.0		$	23.0
Net income per common share:
Basic	$	0.23		$	0.40
Diluted	$	0.22		$	0.38
Weighted-average shares outstanding used in computing net income per common share:
Basic		57.1			57.1
Diluted		60.0			60.0

(a) See Annex A — Explanation of Non-GAAP Financial Measures

EX-99.4

EXHIBIT 99.4

ANNEX A

Explanation of Non-GAAP Financial Measures

     The accompanying WebMD Health Corp. press release 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, “net income” calculated in accordance with GAAP. The tables and the financial guidance summary attached to the accompanying press release include reconciliations of non-GAAP financial measures to GAAP financial measures.

     Adjusted EBITDA is used by WebMD’s management as an additional measure of WebMD’s overall performance and its reporting segments’ performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help WebMD’s management identify additional trends in WebMD’s and its reporting segments’ financial results that may not be shown solely by period-to-period comparisons of net income. In addition, WebMD uses Adjusted EBITDA in the incentive compensation programs applicable to many of its employees in order to evaluate WebMD’s performance. WebMD 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 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 net income included in the tables and the financial guidance summary attached to the accompanying press release.

     WebMD believes that the presentation of Adjusted EBITDA is useful to investors in their analysis of WebMD’s results for reasons similar to the reasons why WebMD’s management finds it useful and because it helps facilitate investor understanding of decisions made by WebMD’s management in light of the performance metrics used in making those decisions. In addition, as more fully described below, WebMD believes that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to net income, helps investors make comparisons between WebMD 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 WebMD with other public companies and is not intended as a substitute for comparisons based on “net income” calculated in accordance with GAAP. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and net income provided by each company under applicable SEC rules.

     The following is an explanation of the items excluded by WebMD from Adjusted EBITDA but included in net income/(loss):

• 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. WebMD excludes depreciation and amortization expense from Adjusted EBITDA because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of WebMD’s business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, WebMD believes this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that 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 expenses will recur in future periods.

• Stock-Based Compensation Expense. Prior to January 1, 2006, WebMD accounted for stock-based compensation based upon Accounting Principles Board Opinion No.25 “Accounting for Stock Issued to Employees” (“APB 25”). In accordance with APB 25, stock-based compensation was determined using the intrinsic value method. As of January 1, 2006, WebMD adopted Statement of Financial Accounting Standards No.123R, “Share-Based Payment” (“SFAS 123R”) and accounts for stock-based compensation under the fair value method. WebMD utilized the modified prospective transition method under SFAS 123R and, accordingly, prior period results have not been restated. WebMD believes that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in its operating performance that are not impacted by the adoption of SFAS 123R. Additionally, because of alternative available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting SFAS 123R, WebMD believes that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between WebMD’s operating performance and the operating performance of other companies. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

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

• Interest Income. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which WebMD invests. Interest income varies over time due to varying levels of securities available for investment. Transactions that WebMD has entered

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into in recent periods that have impacted securities available for investment include the initial public offering of equity in WebMD and acquisitions of other companies for varying amounts of cash since our initial public offering. Additional financing transactions as well as potential acquisitions that WebMD may enter into in the future could impact the levels and timing of securities available for investment. WebMD excludes interest income from Adjusted EBITDA (i) because these items are not directly attributable to the performance of WebMD’s business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income will recur in future periods.

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Income Tax Provision. WebMD had a net operating loss (NOL) carryforward of approximately $643 million as of the year ended December 31, 2005. Due to a limited history of generating taxable income, WebMD maintains a full valuation allowance on these NOL carryforwards. As WebMD uses these NOL carryforwards, the related valuation allowances are reversed through the income statement. The timing of such reversals is not consistent and as a result, WebMD’s income tax expense can fluctuate significantly from period to period in a manner not directly related to WebMD’s operating performance. WebMD excludes the income tax provision from Adjusted EBITDA (i) because it believes that the income tax provision is not directly attributable to the underlying performance of WebMD’s business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes. Investors should note that income tax provision will recur in future periods.

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