8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

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

May 1, 2007

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 or updated 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 May 1, 2007, we issued a press release announcing our preliminary results for the quarter ended March 31, 2007. A copy of the press release is attached as Exhibit 99.1 to this Current Report. Exhibit 99.2 to this Current Report contains the financial tables that accompanied the press release. Exhibit 99.4 to this Current Report contains an Annex to the press release 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 at 4:45 p.m., Eastern time, today (May 1, 2007). The call can be accessed at www.wbmd.com (in the Investor Relations section) at that time. A replay of the call will be available at the same web address. Exhibit 99.3 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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Item 9.01. Financial Statements and Exhibits

(d)	Exhibits
	The following exhibits are furnished herewith:

99.1	Press Release, dated May 1, 2007, regarding the Registrant’s results for the quarter ended March 31, 2007
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Financial Guidance Summary accompanying Exhibit 99.1
99.4	Annex A to Exhibits 99.1 through 99.3

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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: May 1, 2007	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 May 1, 2007, regarding the Registrant’s preliminary results for the quarter ended March 31, 2007
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Financial Guidance Summary accompanying Exhibit 99.1
99.4	Annex A to Exhibits 99.1 through 99.3

EX-99.1

EXHIBIT 99.1

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

WebMD Announces Preliminary First Quarter Financial Results

Revenue Increases 46%, Adjusted EBITDA Increases 93%

Preliminary Net Income Increases $0.08 per Share

Traffic Grows 43% to a Record 41 Million Unique Monthly Users

New York, NY (May 1, 2007) — WebMD Health Corp. (NASDAQ: WBMD) today announced preliminary financial results for the three months ended March 31, 2007.

Wayne Gattinella, President and Chief Executive Officer of WebMD, said: “Our first quarter financial and operating results demonstrate WebMD’s continuing market leadership. WebMD is the most recognized and trusted brand of health information and the leading source of health information for both consumers and health care professionals. During the quarter, we expanded our reach with a record 41.7 million unique monthly users and 963 million total page views.”

Financial Summary

Revenue for the first quarter was $73.0 million compared to $50.1 million last year, an increase of 46%. Earnings before interest, taxes, depreciation, amortization, and other non-cash items (“Adjusted EBITDA”) for the first quarter increased 93% to $12.6 million or $0.21 per share compared to $6.5 million or $0.11 per share last year. Net income, on a preliminary basis, for the first quarter was $706,000 or $0.01 per share compared to a net loss of $(4.2) million or $(0.07) per share last year.

The Company has recently identified errors in non cash income tax expense and related deferred tax liabilities in an aggregate amount estimated to be $4.0 million for prior periods, primarily 2006. The Company has netted the deferred tax liability resulting from amortization of goodwill against deferred tax assets relating to the Company’s NOL’s. Because the deferred tax liabilities have an indefinite life, they should not have been netted against deferred tax assets with a definite life. The Company is in the process of determining whether the correction of this error will be reflected in the results for the March 2007 quarter or will be reflected by amending its financial statements for prior periods. The preliminary results included with this release do not reflect the impact of the correction. The correction will not have any impact on previously reported revenue, Adjusted EBITDA or operating cash flows.

As of March 31, 2007, WebMD had approximately $212 million of cash and investments, which includes the $140 million that WebMD received from its parent company, Emdeon Corporation, on February 6, 2007 in accordance with the tax sharing agreement between the two companies, as a result of the sale of certain businesses by Emdeon in 2006.

Operating Highlights

Online Services segment revenue was $68.4 million for the first quarter compared to $45.1 million last year, an increase of 52%. Advertising and sponsorship revenue increased 45% to $47.4 million. Private portal licensing revenue increased 76% to $20.1 million. Online Services segment Adjusted EBITDA increased 65% to $13.0 million compared to $7.9 million last year.

The WebMD Health Network continued to expand with the average number of unique users reaching 41.7 million per month and total traffic of 963 million page views during the first quarter, increases of 43% and 29%, respectively, from a year ago. In the first quarter, 690,000 continuing medical education (CME) programs were completed on the Network, an increase of 44% from the prior year period.

WebMD continued to expand its base of large employers and health plans utilizing its private Health and Benefits portals during the first quarter, bringing total platform customers to 103 from

80 a year ago. Additionally, the Company entered into new distribution agreements with benefits outsourcing providers Mercer HR Services, LLC and Workscape, Inc. to market the WebMD health platform to their customer base.

Publishing and Other Services segment revenue was $4.5 million for the first quarter compared to $5.0 million last year. Publishing and Other Services segment Adjusted EBITDA loss was ($385,000) compared to a loss of ($1.3) million in the prior year period.

WebMD Successfully Launched its Next-Generation Consumer Health Portal

During the first quarter, WebMD launched its next generation consumer health information portal. The new WebMD health portal introduces the next level of personalization, information, community and care that empowers people to make more informed health decisions. In addition, the new initiative creates opportunities for expanded sponsored promotion, and is expected to increase overall WebMD traffic through improved external search engine optimization.

The new portal also provides free access to the WebMD Personal Health Record, which allows consumers to securely store and maintain their personal health history online. The Personal Health Record is part of the WebMD Health Manager, a free service that includes interactive health assessment and health planning tools that enable people to take a more active role in managing their families’ health.

In addition, the new WebMD site makes it easier to find the most relevant and timely health information across more than 60 new health, wellness and lifestyle centers. Each center features original WebMD content and medically reviewed articles, news, community and health assessments for each topic.

WebMD Announces New Editorial Partnerships

To support the launch of 8 new wellness and lifestyle centers, WebMD has entered into new editorial partnerships with leading publishers of consumer health, wellness and lifestyle publications including Hearst Inc., Martha Stewart Living Omnimedia Inc., Rodale Inc. and Southern Progress.

“We have been seeing growing demand in wellness and lifestyle categories such as diet, nutrition, skin and beauty and parenting. These areas represent important opportunities to extend the WebMD brand of health information to our users and to a growing base of new consumer health advertisers”, said Mr. Gattinella.

New Products Launched for Employers and Health Plans

During the quarter WebMD introduced to the employer and payer markets several new products that are integrated with its private portal platform. These new products include WebMD Health Coach, an integrated suite of online and telephonic lifestyle coaching programs that leverage the capabilities of WebMD’s recent acquisition of Summex; WebMD Health Alerts, a clinical messaging capability driven by an individual’s personal health record that provides alerts regarding potential gaps in care and generates personalized messages based upon evidence-based medical guidelines; and a new Provider and Treatment Decision Support suite that provides consumers with greater transparency when selecting a doctor or hospital by using objective cost, quality and treatment information.

Mr. Gattinella said, “These newest products are an exciting addition to our private portal platform offering and represent an important opportunity for both current and prospective customers. We are encouraged by the initial reception in the marketplace. However, due to the added complexity of these new products we are experiencing some lengthening of our normal sales and implementation cycles.”

Financial Guidance for 2007

WebMD reiterated its previously announced financial guidance for the remainder of 2007. Including preliminary results for the first quarter announced today, the company expects full year 2007 results of:

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• Revenue of $340 million to $354 million, an increase of 34% to 39% over 2006

• Adjusted EBITDA of $79 million to $85 million, or $1.32 to $1.42 per share, an increase of 49% to 61% over 2006, and

• Preliminary Net income of $26 million to $32 million, or $0.43 to $0.53 per share, an increase of approximately 460% to 600% over 2006

WebMD expects that higher advertising and sponsorship revenues will offset the lower licensing revenue growth resulting from the lengthening of its private portal sales and implementation cycles.

A schedule outlining WebMD’s financial guidance is attached to this press release. As noted above, this schedule does not reflect the potential impact of the correction to the income tax provision.

Analyst and Investor Conference Call

As previously announced, WebMD will hold a conference call with investors and analysts to discuss their first quarter results at 4:45 pm (Eastern time) on May 1, 2007. The call can be accessed at www.wbmd.com (in the Investor Relations section). A replay of the audio webcast will be available at the same web address.

About WebMD

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

The WebMD Health Network reaches more than 40 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.

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

All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding: guidance on our future financial results and other projections or measures of our future performance; our expectations concerning market opportunities and our ability to capitalize on them; and the amount and timing of the benefits expected from acquisitions, from new products or services and from other potential sources of additional revenue. These statements speak only as of the date of this press release and are based on our current plans and expectations, and they involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of our products and services; 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.

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

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

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

WebMD^®, WebMD Health^®, Medscape^®, eMedicine^®, MedicineNet^®, RxList^®, Subimo^®, Medsite^®, The Little Blue Book^® and Summex^®, are trademarks of WebMD Health Corp. or its subsidiaries.

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EX-99.2

Exhibit 99.2

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

	Preliminary
	Three Months Ended
	March 31,
	2007		2006
Revenue	$	72,962	$	50,051
Costs and expenses:
Cost of operations		29,663		24,710
Sales and marketing		22,870		15,537
General and administrative		15,505		11,890
Depreciation and amortization		5,993		3,529
Interest income		1,985		1,448
Income (loss) before income tax provision		916		(4,167	)
Income tax provision		210		—
Net income (loss)	$	706	$	(4,167	)
Net income (loss) per common share:
Basic	$	0.01	$	(0.07	)
Diluted	$	0.01	$	(0.07	)
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		56,976		56,054
Diluted		59,630		56,054

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

	Preliminary
	Three Months Ended
	March 31,
	2007			2006
Revenue
Online Services:
Advertising and sponsorship	$	47,421		$	32,760
Licensing		20,115			11,442
Content syndication and other		884			876
Total Online Services		68,420			45,078
Publishing and Other Services		4,542			4,973
	$	72,962		$	50,051
Earnings (loss) before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)
Online Services	$	12,992		$	7,861
Publishing and Other Services		(385	)		(1,334	)
		12,607			6,527
Adjusted EBITDA per basic common share	$	0.22		$	0.12
Adjusted EBITDA per diluted common share (c)	$	0.21		$	0.11
Interest, taxes, depreciation, amortization and other non-cash items (b)
Interest income		1,985			1,448
Depreciation and amortization		(5,993	)		(3,529	)
Non-cash advertising		(2,320	)		(1,605	)
Non-cash stock-based compensation		(5,363	)		(7,008	)
Income tax provision		(210	)		—
Net income (loss)	$	706		$	(4,167	)
Net income (loss) per common share:
Basic	$	0.01		$	(0.07	)
Diluted	$	0.01		$	(0.07	)
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		56,976			56,054
Diluted		59,630			56,054

(a)	See Annex A — Explanation of Non-GAAP Financial Measures
(b)	Reconciliation of Adjusted EBITDA to net income
(c)	Three months ended March 31, 2006 Adjusted EBITDA per share is calculated based on 57,717 diluted shares

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

	Preliminary
	March 31,		December 31,
	2007		2006
ASSETS
Current assets:
Cash and cash equivalents	$	182,124	$	44,660
Short-term investments		30,000		9,490
Accounts receivable, net		87,467		89,652
Current portion of prepaid advertising		1,575		2,656
Due from Emdeon		—		143,153
Other current assets		5,296		5,360
Total current assets		306,462		294,971
Property and equipment, net		46,690		44,709
Prepaid advertising		8,220		9,459
Goodwill		225,253		225,028
Intangible assets, net		42,054		45,268
Other assets		499		530
	$	629,178	$	619,965
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	20,162	$	32,846
Deferred revenue		85,447		77,731
Due to Emdeon		2,358		—
Total current liabilities		107,967		110,577
Other long-term liabilities		9,547		7,912
Stockholders’ equity		511,664		501,476
	$	629,178	$	619,965

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

	Preliminary
	Three Months Ended
	March 31,
	2007			2006
Cash flows from operating activities:
Net income (loss)	$	706		$	(4,167	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		5,993			3,529
Non-cash advertising		2,320			1,605
Non-cash stock-based compensation		5,363			7,008
Changes in operating assets and liabilities:
Accounts receivable		2,185			4,048
Other assets		(23	)		(1,722	)
Accrued expenses and other long-term liabilities		(11,467	)		(5,287	)
Due (from) to Emdeon		228			(2,521	)
Deferred revenue		7,716			9,784
Net cash provided by operating activities		13,021			12,277
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		28,122			23,650
Purchases of available-for-sale securities		(48,632	)		(39,650	)
Purchases of property and equipment		(4,762	)		(6,757	)
Cash paid in business combinations, net of cash acquired		—			(26,877	)
Net cash used in investing activities		(25,272	)		(49,634	)
Cash flows from financing activities:
Proceeds from issuance of common stock		4,458			—
Net cash transfers with Emdeon		145,257			—
Net cash provided by financing activities		149,715			—
Net increase (decrease) in cash and cash equivalents		137,464			(37,357	)
Cash and cash equivalents at beginning of period		44,660			75,704
Cash and cash equivalents at end of period	$	182,124		$	38,347

EX-99.3

Exhibit 99.3

WEBMD HEALTH CORP.
2007 FINANCIAL GUIDANCE SUMMARY
(in millions, except per share amounts)

	Preliminary
	Quarter Ended			Quarter Ended						Quarter Ended						Quarter Ended						Year Ended
	March 31, 2007			June 30, 2007						September 30, 2007						December 31, 2007						December 31, 2007
	Actual			Range						Range						Range						Range(c)
Revenue	$	73.0		$	76.0		$	78.0		$	89.0		$	94.0		$	102.0		$	109.0		$	340.0		$	354.0
Earnings before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)		12.6			14.1			14.8			20.9			23.0			31.6			34.9			79.2			85.3
Adjusted EBITDA per diluted common share	$	0.21		$	0.24		$	0.25		$	0.35		$	0.38		$	0.53		$	0.58		$	1.32		$	1.42
Interest, taxes, depreciation, amortization and other non-cash items (b)
Interest income		2.0			2.3			2.5			2.7			2.9			2.9			3.2			9.9			10.6
Depreciation and amortization		(6.0	)		(7.4	)		(7.2	)		(7.5	)		(7.9	)		(8.1	)		(8.4	)		(29.0	)		(29.5	)
Non-cash advertising		(2.3	)		—			—			—			—			(3.2	)		(3.0	)		(5.5	)		(5.3	)
Non-cash stock-based compensation		(5.4	)		(6.0	)		(5.8	)		(7.0	)		(6.7	)		(5.3	)		(5.0	)		(23.7	)		(22.9	)
Income tax provision		(0.2	)		(0.5	)		(0.6	)		(1.4	)		(2.0	)		(3.3	)		(3.7	)		(5.4	)		(6.5	)
Net income	$	0.7		$	2.5		$	3.7		$	7.7		$	9.3		$	14.6		$	18.0		$	25.5		$	31.7
Net income per common share:
Basic	$	0.01		$	0.04		$	0.06		$	0.14		$	0.16		$	0.26		$	0.32		$	0.45		$	0.56
Diluted	$	0.01		$	0.04		$	0.06		$	0.13		$	0.16		$	0.24		$	0.30		$	0.43		$	0.53
Weighted-average shares outstanding used in computing net income per common share:
Basic		57.0			57.0			57.0			57.0			57.0			57.0			57.0			57.0			57.0
Diluted		59.6			60.0			60.0			60.0			60.0			60.0			60.0			60.0			60.0

(a)	See Annex A — Explanation of Non-GAAP Financial Measures
(b)	Reconciliation of Adjusted EBITDA to net income
(c)	2007 Revenue Distribution

	Range
Advertising and Sponsorship	$	237.0	$	245.0
Licensing		80.0		85.0
Content syndication and other	$	2.0	$	2.0
Online	$	319.0	$	332.0
Publishing	$	21.0	$	22.0
Total Revenue	$	340.0	$	354.0

EX-99.4

Exhibit 99.4

ANNEX A

Explanation of Non-GAAP Financial Measures

(All dollar amounts in thousands)

     The accompanying WebMD Health Corp. press release 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. Stock-based compensation expense is a non-cash expense arising from the grant of stock awards to employees. 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 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 the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, 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 that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future. Stock-based compensation expenses included in the Statement of Operations are summarized as follows:

	Three Months Ended
	March 31,
	2007			2006
Non-cash stock-based compensation included in:
Cost of operations	$	(1,578	)	$	(2,317	)
Sales and marketing	$	(1,258	)	$	(1,488	)
General and administrative	$	(2,527	)	$	(3,203	)

• 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-

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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. Non-cash advertising expenses included in the Consolidated Statement of Operations in Sales and marketing expense were $2,320 and $1,605 for the three months ended March 31, 2007 and 2006, respectively.

• 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 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.

• Income Tax Provision. WebMD had a net operating loss (NOL) carryforward of approximately $240,000 as of the year ended December 31, 2006. 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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