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

February 21, 2008
Date of Report (Date of earliest event reported)

WEBMD HEALTH CORP.
(Exact name of registrant as specified in its charter)

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

111 Eighth Avenue
New York, New York 10011 (Address of principal executive offices, including zip code)

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

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

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

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

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

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

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

     All statements contained in this Current Report or in the exhibits furnished with this Current Report, 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; the benefits expected from acquisitions, from new products or services and from other potential sources of additional revenue; the merger transaction (the “Merger Transaction”) between HLTH Corporation and WebMD; the potential sales transactions with respect to ViPS and Porex (the “Potential Sales Transactions”); and expectations regarding the credit ratings and valuation of and market for WebMD’s investments in auction rate securities (ARS). These statements speak only as of the date of this Current Report and are based on our current plans and expectations, and they involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of our products and services; length of sales and implementation cycles for our products and services; our relationships with customers and strategic partners; difficulties in integrating acquired businesses; changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries; and our ability to attract and retain qualified personnel. Further information about these matters can be found in our Securities and Exchange Commission filings. In addition, there can be no assurances regarding: whether HLTH and WebMD will be able to complete the Merger Transaction or as to the timing of such transaction; or whether HLTH will be able to complete the Potential Sales Transactions or as to the timing or terms of such transactions. 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 February 21, 2008, we issued a press release announcing our results for the quarter ended December 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 99.3 to this Current Report contains an Annex to the press release entitled “Explanation of Non-GAAP Financial Measures.” Exhibits 99.1, 99.2 and 99.3 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 2.06. Material Impairments

     To the extent required by Item 2.06 of Form 8-K, the information contained in Item 8.01 of this Current Report is incorporated by reference herein.

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Item 8.01. Other Events

     WebMD currently has a total of approximately $327 million in consolidated cash, cash equivalents and marketable securities, which includes approximately $169 million of investments in certain auction rate securities (ARS). The types of ARS investments that WebMD owns are backed by student loans, 97% of which are guaranteed under the Federal Family Education Loan Program (FFELP), and all had credit ratings of AAA or Aaa when purchased. WebMD does not own any other type of ARS investments.

     The interest rates on these ARS are reset every 28 days by an auction process. Historically, these types of ARS investments have been highly liquid. Last week, auctions for ARS investments backed by student loans failed, including auctions for ARS investments held by WebMD. The result of a failed auction is that these ARS continue to pay interest in accordance with their terms until the next successful auction; however, liquidity will be limited until there is a successful auction or until such time as other markets for these ARS investments develop. WebMD believes that the underlying credit quality of the assets backing its ARS investments have not been impacted by the reduced liquidity of these ARS investments. As a result of these recent events, WebMD is in the process of evaluating the extent of any impairment in its ARS investments resulting from the current lack of liquidity; however, WebMD is not yet able to quantify the amount of any such impairment. WebMD believes that any lack of liquidity relating to its ARS investments will not have an impact on its ability to fund its operations.

Item 9.01. Financial Statements and Exhibits

     (d) Exhibits

     The following exhibits are furnished herewith:

Exhibit
Number	Description
99.1	Press Release, dated February 21, 2008, regarding the Registrant’s results for the quarter ended December 31, 2007
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Annex A to Exhibits 99.1 and 99.2

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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: February 21, 2008	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 February 21, 2008, regarding the Registrant’s results for the quarter ended December 31, 2007
99.2	Financial Tables accompanying Exhibit 99.1
99.3	Annex A to Exhibits 99.1 and 99.2

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 Fourth Quarter Financial Results

Revenue Increases 22%, Adjusted EBITDA Increases 48%

Income from Continuing Operations Increases to $0.75 per Share, Including Tax Benefit of
$0.41 per Share, From $0.10 per Share Last Year

HLTH and WebMD Announce Agreement to Merge

New York, NY (February 21, 2008) – WebMD Health Corp. (NASDAQ: WBMD) today announced financial results for the three months ended December 31, 2007.

“WebMD’s fourth quarter operating results demonstrate the strong progress that we continue to make towards delivering on the Company’s overall strategic plan and I am confident in our growth outlook for the future,” said Wayne Gattinella, President and CEO. “We continue to build our leadership position as the most recognized and trusted brand of health information.”

Financial Summary

Revenue for the fourth quarter was $96.6 million compared to $79.4 million in the prior year period, an increase of 22%. Earnings before interest, taxes, depreciation, amortization, and other non-cash items (“Adjusted EBITDA”) for the fourth quarter increased 48% to $33.1 million or $0.55 per share compared to $22.4 million or $0.38 per share in the prior year period. Income from continuing operations was $45.1 million or $0.75 per share for the fourth quarter compared to $6.0 million or $0.10 per share in the prior year period. Net income for the December 2007 quarter was $48.3 million or $0.81 per share compared to $6.0 million or $0.10 per share in the prior year period. Income from continuing operations and net income for the fourth quarter 2007 include a benefit of $24.7 million, or $0.41 per share, relating to certain reversals of WebMD’s valuation allowance against deferred tax assets, primarily net operating loss (“NOL”) carryforwards.

Revenue for the year ended December 31, 2007 was $332.0 million compared to $248.8 million a year ago, an increase of 33%. Adjusted EBITDA for the year was $84.7 million or $1.42 per share compared to $52.7 million or $0.91 per share a year ago, an increase of 61%. Income from continuing operations for the year was $62.4 million or $1.05 per share compared to $2.2 million or $0.04 per share a year ago. Net income for the year was $65.9 million or $1.10 per share compared to $2.5 million or $0.04 per share in the prior year. Income from continuing operations and net income for the year ended December 31, 2007 include a benefit of $24.7 million, or $0.41 per share, relating to certain reversals of WebMD’s valuation allowance against deferred tax assets, primarily NOL carryforwards.

WebMD’s revenue for the fourth quarter and full year excludes approximately $1 million and $4 million, respectively, related to its offline professional medical reference and textbook publication business which was sold on December 31, 2007 and is now reflected as a discontinued operation in WebMD’s financial statements for current and prior periods.

Operating Highlights

Online Services segment revenue was $92.3 million for the fourth quarter compared to $76.1 million in the prior year period, an increase of 21%. Advertising and sponsorship revenue increased 21% to $70.4 million. Private portal licensing revenue increased 25% to $21.6 million. Online Services segment Adjusted EBITDA increased 39% to $31.6 million compared to $22.7 million in the prior year period.

The WebMD Health Network continued to expand with the average number of unique users reaching 44.8 million per month and total traffic of 968 million page views during the fourth quarter, increases of 26% and 19%, respectively, from a year ago. Excluding the prior year period’s traffic from AOL (which ceased to be part of The WebMD Health Network earlier this year), the average monthly unique users of The WebMD Health Network increased 32% and page view traffic increased 22%. In the fourth quarter, 936,000 continuing medical education (CME) programs were completed on the Network, an increase of 50% 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 fourth quarter, bringing total platform customers to 117 from 99 a year ago. The installed base of companies licensing the WebMD private portal platform now includes: Blue Cross and Blue Shield of Minnesota, Special Agents Mutual Benefit Association, ConnectiCare, Inc., Blue Shield of California and Liebert Corporation.

Publishing and Other Services segment revenue was $4.3 million for the fourth quarter compared to $3.3 million in the prior year period, an increase of 33%. Publishing and Other Services segment Adjusted EBITDA was $1.5 million compared to a loss of ($321,000) in the prior year period. As noted above, effective December 31, 2007, WebMD sold its offline professional medical reference and textbook publication business. This business is now reflected as a discontinued operation in the Company’s financial statements for current and prior periods.

HLTH and WebMD Announce Agreement to Merge

In a separate release today, HLTH and WebMD announced that they have entered into a definitive merger agreement pursuant to which HLTH will merge into WebMD. The merger will eliminate HLTH’s controlling interest in WebMD and reduce the number of outstanding shares by approximately 20% and is expected to leave WebMD with approximately $700 million in cash and investments and the flexibility to pursue future opportunities as they may arise.

Investment in Auction Rate Securities Backed by Federally Guaranteed Student Loans

WebMD currently has a total of approximately $327 million in consolidated cash, cash equivalents and marketable securities, which includes approximately $169 million of investments in certain auction rate securities (ARS). The types of ARS investments that WebMD owns are backed by student loans, 97% of which are guaranteed under the Federal Family Education Loan Program (FFELP), and all had credit ratings of AAA or Aaa when purchased. WebMD does not own any other type of ARS investments.

The interest rates on these ARS are reset every 28 days by an auction process. Historically, these types of ARS investments have been highly liquid. Last week, auctions for ARS investments backed by student loans failed, including auctions for ARS investments held by WebMD. The result of a failed auction is that these ARS continue to pay interest in accordance with their terms until the next successful auction; however, liquidity will be limited until there is a successful auction or until such time as other markets for these ARS investments develop. WebMD believes that the underlying credit quality of the assets backing its ARS investments have not been impacted by the reduced liquidity of these ARS investments. As a result of these recent events, WebMD is in the process of evaluating the extent of any impairment in its ARS investments resulting from the current lack of liquidity; however, WebMD is not yet able to

quantify the amount of any such impairment. WebMD believes that any lack of liquidity relating to its ARS investments will not have an impact on its ability to fund its operations.

Financial Guidance

WebMD provided updated financial guidance on February 11, 2008. A schedule detailing this guidance is attached to the press release and Form 8-K issued on that date. This guidance did not contemplate the merger announced today.

Analyst and Investor Conference Call

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

About WebMD

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

The WebMD Health Network includes 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: expectations regarding the credit ratings and valuation of and market for HLTH’s and WebMD’s investments in auction rate securities (ARS); HLTH’s and WebMD’s future financial results and other measures of WebMD’s future performance; market opportunities and WebMD’s ability to capitalize on them; the benefits expected from new products or services and from other potential sources of additional revenue; the merger transaction between HLTH and WebMD (the “Merger Transaction”); and the potential sales transactions with respect to ViPS and Porex (the “Potential Sales Transactions”). These statements speak only as of the date of this press release, are based on HLTH’s and WebMD’s current plans and expectations, and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: changes in the markets for ARS; market acceptance of HLTH’s and WebMD’s products and services; HLTH’s and WebMD’s relationships with customers and strategic partners; 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. In addition, there can be no assurances regarding: whether HLTH and WebMD will be able to complete the Merger Transaction or as to the timing of such transaction; or whether HLTH will be able to complete the Potential Sales Transactions or as to the timing or terms of such transactions. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.

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

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

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WebMD^®, WebMD Health^®, Medscape^®, eMedicine^®, MedicineNet^®, RxList^®, Subimo^®, Medsite^®, The Little Blue Book^® 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						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Revenue	$	96,642		$	79,385		$	331,954		$	248,776
Costs and expenses:
Cost of operations		29,645			27,739			117,281			101,675
Sales and marketing		26,387			23,248			93,645			76,189
General and administrative		14,112			14,407			60,986			52,338
Depreciation and amortization		7,216			5,018			27,233			17,639
Interest income		3,856			962			12,378			5,099
Income from continuing operations before income tax (benefit) provision		23,138			9,935			45,187			6,034
Income tax (benefit) provision		(21,926	)		3,886			(17,255	)		3,883
Income from continuing operations		45,064			6,049			62,442			2,151
Income (loss) from discontinued operations, net of tax		3,232			(91	)		3,442			385
Net income	$	48,296		$	5,958		$	65,884		$	2,536
Basic income (loss) per common share:
Income from continuing operations	$	0.78		$	0.11		$	1.09		$	0.04
Income (loss) from discontinued operations		0.06			(0.00	)		0.06			0.01
Net Income	$	0.84		$	0.11		$	1.15		$	0.05
Diluted income (loss) per common share:
Income from continuing operations	$	0.75		$	0.10		$	1.05		$	0.04
Income (loss) from discontinued operations		0.06			(0.00	)		0.05			0.00
Net Income	$	0.81		$	0.10		$	1.10		$	0.04
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		57,534			56,411			57,184			56,145
Diluted		59,748			58,367			59,743			58,075

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

	Three Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Revenue
Online Services:
Advertising and sponsorship	$	70,389		$	58,113		$	229,333		$	170,626
Licensing		21,556			17,306			81,471			55,621
Content syndication and other		351			703			2,378			3,518
Total Online Services		92,296			76,122			313,182			229,765
Publishing and Other Services		4,346			3,263			18,772			19,011
	$	96,642		$	79,385		$	331,954		$	248,776
Earnings (loss) before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)
Online Services	$	31,612		$	22,730		$	80,594		$	52,324
Publishing and Other Services		1,460			(321	)		4,103			362
		33,072			22,409			84,697			52,686
Adjusted EBITDA per basic common share	$	0.57		$	0.40		$	1.48		$	0.94
Adjusted EBITDA per diluted common share	$	0.55		$	0.38		$	1.42		$	0.91
Interest, taxes, depreciation, amortization and other non-cash items (b)
Interest income		3,856			962			12,378			5,099
Depreciation and amortization		(7,216	)		(5,018	)		(27,233	)		(17,639	)
Non-cash advertising		(2,775	)		(2,961	)		(5,264	)		(7,415	)
Non-cash stock-based compensation		(3,799	)		(5,457	)		(19,391	)		(26,697	)
Income tax benefit (provision)		21,926			(3,886	)		17,255			(3,883	)
Income from continuing operations		45,064			6,049			62,442			2,151
Income (loss) from discontinued operations, net of tax		3,232			(91	)		3,442			385
Net income	$	48,296		$	5,958		$	65,884		$	2,536
Basic income (loss) per common share:
Income from continuing operations	$	0.78		$	0.11		$	1.09		$	0.04
Income (loss) from discontinued operations		0.06			(0.00	)		0.06			0.01
Net Income	$	0.84		$	0.11		$	1.15		$	0.05
Diluted income (loss) per common share:
Income from continuing operations	$	0.75		$	0.10		$	1.05		$	0.04
Income (loss) from discontinued operations		0.06			(0.00	)		0.05			0.00
Net Income	$	0.81		$	0.10		$	1.10		$	0.04
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		57,534			56,411			57,184			56,145
Diluted		59,748			58,367			59,743			58,075

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

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

	December 31,		December 31,
	2007		2006
ASSETS
Current assets:
Cash and cash equivalents	$	213,753	$	44,660
Short-term investments		80,900		9,490
Accounts receivable, net		86,081		89,652
Current portion of prepaid advertising		2,329		2,656
Due from HLTH		1,153		143,153
Other current assets		10,840		5,312
Assets of discontinued operations		—		48
Total current assets		395,056		294,971
Property and equipment, net		48,589		44,709
Prepaid advertising		4,521		9,459
Goodwill		221,429		225,028
Intangible assets, net		36,314		45,268
Other assets		12,955		530
	$	718,864	$	619,965
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	26,498	$	32,846
Deferred revenue		76,401		76,086
Liabilities of discontinued operations		—		1,645
Total current liabilities		102,899		110,577
Deferred tax liability		—		5,367
Other long-term liabilities		9,210		7,912
Stockholders’ equity		606,755		496,109
	$	718,864	$	619,965

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

	Year Ended
	December 31,
	2007			2006
Cash flows from operating activities:
Net income	$	65,884		$	2,536
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax		(3,442	)		(385	)
Depreciation and amortization		27,233			17,639
Non-cash advertising		5,264			7,415
Non-cash stock-based compensation		19,391			26,697
Deferred income taxes		(20,953	)		2,104
Changes in operating assets and liabilities:
Accounts receivable		3,570			(25,430	)
Other assets		1,102			(971	)
Accrued expenses and other long-term liabilities		(7,185	)		6,698
Due to HLTH		(3,278	)		(1,568	)
Deferred revenue		314			17,761
Net cash provided by continuing operations		87,900			52,496
Net cash (used in) provided by discontinued operations		(390	)		305
Net cash provided by operating activities		87,510			52,801
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		212,923			304,184
Purchases of available-for-sale securities		(284,333	)		(229,410	)
Purchases of property and equipment		(18,058	)		(28,452	)
Cash paid in business combinations, net of cash acquired		—			(130,167	)
Net cash used in investing activities		(89,468	)		(83,845	)
Cash flows from financing activities:
Proceeds from issuance of common stock		14,355			5,257
Tax benefit on stock-based awards		1,577			—
Net cash transfers with HLTH		155,119			(5,257	)
Net cash provided by financing activities		171,051			—
Net increase (decrease) in cash and cash equivalents		169,093			(31,044	)
Cash and cash equivalents at beginning of period		44,660			75,704
Cash and cash equivalents at end of period	$	213,753		$	44,660

EX-99.3

Exhibit 99.3

ANNEX A

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

     The accompanying WebMD Health Corp. press release and financial tables include both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, depreciation, amortization and other non-cash items (which we refer to as “Adjusted EBITDA”) and related per share amounts. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, “income from continuing operations” calculated in accordance with GAAP. The tables 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 income from continuing operations. 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 income from continuing operations, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to net income that accompany our press releases containing non-GAAP financial measures, including the reconciliations contained in the tables 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 income from continuing operations, 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 “income from continuing operations” or “net income” calculated in accordance with GAAP. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

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

• Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. 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-based 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						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Non-cash stock-based compensation included in:
Cost of operations	$	(904	)	$	(1,633	)	$	(5,063	)	$	(8,744	)
Sales and marketing	$	(1,167	)	$	(1,260	)	$	(5,056	)	$	(5,870	)
General and administrative	$	(1,728	)	$	(2,564	)	$	(9,272	)	$	(12,083	)

• 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, HLTH 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

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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. Non-cash advertising expenses included in the Consolidated Statement of Operations in Sales and Marketing expense were $2,775 and $2,961 for the three months ended December 31, 2007 and 2006, respectively, and $5,264 and $7,415 for the years ended December 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 it is not directly attributable to the 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 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 $270,000 as of the year ended December 31, 2007.  WebMD has maintained a full valuation allowance on these NOL carryforwards until the fourth quarter of 2007 at which time a portion of the valuation allowance was reversed due to an increased history of generating income. As WebMD reduces these NOL carryforwards, the related valuation allowances are reversed through the income statement.  The timing of such reversals has not been 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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