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 6, 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 future financial results and other projections or measures of 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 market for HLTH’s and 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; changes in markets for ARS; 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 May 6, 2008, we issued a press release announcing our results for the quarter ended March 31, 2008. 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 2.06. Material Impairments

     At March 31, 2008, WebMD held student loan related auction rate securities (ARS) with a face amount of $168.4 million. 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. Since mid-February, all auctions involving these securities have failed. 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. It is uncertain when an auction market or other markets will develop. WebMD has determined that the fair value of the ARS as of March 31, 2008 was $141.0 million. Accordingly, WebMD has recorded a charge of $27.4 million to reflect a loss on these securities in its results for the quarter ended March 31, 2008.

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Item 7.01. Regulation FD Disclosure

     Exhibit 99.3 to this Current Report includes forward-looking financial information that accompanied Exhibit 99.1. Exhibit 99.3 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

     (d) Exhibits

          The following exhibits are furnished herewith:

Exhibit
Number	Description
99.1	Press Release, dated May 6, 2008, regarding the Registrant’s results for the quarter ended March 31, 2008 and other matters
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 6, 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 May 6, 2008, regarding the Registrant’s results for the quarter ended March 31, 2008 and other matters
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 First Quarter Financial Results

Traffic Reached Record Levels of 51.9 Million Unique Monthly Users and
1.2 Billion Quarterly Page Views

New York, NY (May 6, 2008) — WebMD Health Corp. (NASDAQ: WBMD) today announced financial results for the three months ended March 31, 2008.

“Our Company reached several important milestones this quarter, as WebMD continued to consolidate its position as the leading source of health information for both consumers and health care professionals,” said Wayne Gattinella, President and CEO. “We believe that the long-term value of our franchise will continue to increase as we expand our distribution footprint and deliver the full spectrum of online health solutions that the marketplace is steadily evolving towards.”

Financial Summary

Revenue for the first quarter was $81.7 million compared to $71.9 million in the prior year period, an increase of 14%. Earnings before interest, taxes, depreciation, amortization, and other non-cash items (“Adjusted EBITDA”) for the first quarter increased 25% to $15.8 million or $0.27 per share compared to $12.6 million or $0.21 per share in the prior year period.

Loss from continuing operations and net loss for the first quarter was $(23.3) million or $(0.40) per share, which includes a $27.4 million impairment charge related to a reduction in fair value of the Company’s auction rate securities investments. Excluding the impairment, income from continuing operations and net income was $4.1 million or $0.07 per share for the first quarter compared to $0.7 million or $0.01 per share in the prior year period.

Operating Highlights

Online Services segment revenue was $78.4 million for the first quarter compared to $68.4 million in the prior year period, an increase of 15%. Advertising and sponsorship revenue increased 18% to $56.1 million. Private portal licensing revenue increased 9% to $21.9 million. Online Services segment Adjusted EBITDA increased 27% to $16.5 million compared to $13.0 million in the prior year period.

Traffic to the WebMD Health Network continued to expand with the average number of unique users reaching a record 51.9 million per month and total traffic of 1.2 billion page views during the first quarter, increases of 25% and 24%, respectively, from a year ago. Excluding the prior year period’s traffic from AOL (which ceased to be part of The WebMD Health Network on April 30, 2007), the average monthly unique users of the WebMD Health Network increased 29% and page view traffic increased 27%. In the first quarter, 1.1 million continuing medical education (CME) programs were completed on the WebMD Professional Network, an increase of 64% 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 122 from 103 a year ago. The installed base of companies licensing the WebMD private portal platform now includes: Newell Rubbermaid, Herman Miller, Inc., SummaCare, Inc. and QualCare, Inc.

Publishing and Other Services segment revenue was $3.3 million for the first quarter compared to $3.5 million in the prior year period, a decrease of 7%. Publishing and Other Services segment Adjusted EBITDA was a loss of ($0.8) million compared to a loss of ($0.4) million in the prior year period. WebMD’s offline professional medical reference and textbook publication business was sold on December 31, 2007 and is reflected as a discontinued operation in the Company’s financial statements for prior periods.

The strength of the WebMD brand continues to expand. WebMD the Magazine is now the third most highly read health magazine, behind only Prevention and Men’s Health, according to the 2008 MARS OTC/DTC national media and marketing study released in April.

Investment in Auction Rate Securities

At March 31, 2008, WebMD held auction rate securities (ARS) with a face amount of $168.4 million. 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. Since February, all auctions involving these securities have failed. 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. It is uncertain when other markets will develop. WebMD has determined that the fair value of the ARS as of March 31, 2008 was $141 million. Accordingly, WebMD has recorded an impairment charge of $27.4 million related to a reduction in fair value of the Company’s auction rate securities investments for the quarter ended March 31, 2008.

In addition to its ARS investments, WebMD has approximately $160 million in cash and cash equivalents at March 31, 2008.

Merger with HLTH

As previously announced, HLTH and WebMD entered into a definitive merger agreement on February 20, 2008. The agreement provided that HLTH will be merged into WebMD, with each outstanding share of HLTH common stock to be converted into 0.1979 shares of WebMD common stock and $6.89 in cash, subject to certain adjustments. Completion of the merger is conditioned upon, among other things, approval of the stockholders of both HLTH and WebMD. HLTH and WebMD currently expect to file a preliminary proxy statement/prospectus relating to the merger in the next few weeks and believe that would likely allow them to hold stockholder meetings in September to seek those approvals. However, the ability to schedule these meetings will depend on the timing for closing the sales of HLTH’s ViPS and Porex businesses, at least one of which must be completed prior to closing the merger, as well as the timing for completion of SEC review of the proxy statement/prospectus. HLTH is currently in the process of selling the ViPS and Porex businesses, with potential purchasers nearing completion of their due diligence investigations.

Financial Guidance

As announced on April 23, 2008, WebMD currently expects 2008 revenue of $380 to $395 million, assuming the following distribution:

• Approximately 73% from advertising and sponsorship, with revenue growth of approximately 21% to 26% over 2007;

• Approximately 23% from licensing of our private portal products, with revenue growth of approximately 8% to 10% over 2007; and

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• Approximately 4% from publishing and content syndication revenues.

A schedule providing additional information is attached to this press release.

Analyst and Investor Conference Call

As previously announced, WebMD will hold a conference call with investors and analysts to discuss its first quarter 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.

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

This press release does not constitute an offer of any securities for sale. In connection with the proposed merger, HLTH and WebMD expect to file, with the SEC, a proxy statement/prospectus as part of a registration statement regarding the proposed transaction. Investors and security holders are urged to read the proxy statement/prospectus because it will contain important information about HLTH and WebMD and the proposed transaction. Investors and security holders may obtain a free copy of the definitive proxy statement/prospectus and other documents when filed by HLTH and WebMD with the SEC at www.sec.gov or www.hlth.com or www.wbmd.com. Investors and security holders are urged to read the proxy statement, prospectus and other relevant material when they become available before making any voting or investment decisions with respect to the merger.

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

All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding: expectations regarding the market for WebMD’s investments in auction rate securities (ARS); 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 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 WebMD’s products and services; 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.

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

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)

	Three Months Ended
	March 31,
	2008			2007
Revenue	$	81,682		$	71,944
Costs and expenses:
Cost of operations		31,570			28,618
Sales and marketing		25,830			22,870
General and administrative		13,775			15,505
Impairment of auction rate securities		27,406			—
Depreciation and amortization		6,785			5,991
Interest income		3,453			1,985
Income (loss) from continuing operations before income tax provision		(20,231	)		945
Income tax provision		3,104			210
Income (loss) from continuing operations		(23,335	)		735
Loss from discontinued operations, net of tax		—			(29	)
Net income (loss)	$	(23,335	)	$	706
Basic income (loss) per common share:
Income (loss) from continuing operations	$	(0.40	)	$	0.01
Loss from discontinued operations		—			(0.00	)
Net Income (loss)	$	(0.40	)	$	0.01
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	(0.40	)	$	0.01
Loss from discontinued operations		—			(0.00	)
Net Income (loss)	$	(0.40	)	$	0.01
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		57,636			56,976
Diluted		57,636			59,630

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

	Three Months Ended
	March 31,
	2008			2007
Revenue
Online Services:
Advertising and sponsorship	$	56,065		$	47,421
Licensing		21,923			20,115
Content syndication and other		417			884
Total Online Services		78,405			68,420
Publishing and Other Services		3,277			3,524
	$	81,682		$	71,944
Earnings (loss) before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)
Online Services	$	16,531		$	12,992
Publishing and Other Services		(754	)		(358	)
		15,777			12,634
Adjusted EBITDA per basic common share	$	0.27		$	0.22
Adjusted EBITDA per diluted common share ( c )	$	0.27		$	0.21
Interest, taxes, depreciation, amortization and other non-cash items (b)
Interest income		3,453			1,985
Depreciation and amortization		(6,785	)		(5,991	)
Non-cash advertising		(1,558	)		(2,320	)
Non-cash stock-based compensation		(3,712	)		(5,363	)
Impairment of auction rate securities		(27,406	)		—
Income tax provision		(3,104	)		(210	)
Income (loss) from continuing operations		(23,335	)		735
Loss from discontinued operations, net of tax		—			(29	)
Net income (loss)	$	(23,335	)	$	706
Basic income (loss) per common share:
Income (loss) from continuing operations	$	(0.40	)	$	0.01
Loss from discontinued operations		—			(0.00	)
Net Income (loss)	$	(0.40	)	$	0.01
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	(0.40	)	$	0.01
Loss from discontinued operations		—			(0.00	)
Net Income (loss)	$	(0.40	)	$	0.01
Weighted-average shares outstanding used in computing basic and diluted net income (loss) per common share:
Basic		57,636			56,976
Diluted		57,636			59,630

(a)	See Annex A — Explanation of Non-GAAP Financial Measures
(b)	Reconciliation of Adjusted EBITDA to net income (loss)
(c)	Three months ended March 31, 2008 Adjusted EBITDA per share is calculated based on 59,145 diluted shares.

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

	March 31,		December 31,
	2008		2007
ASSETS
Current assets:
Cash and cash equivalents	$	159,831	$	213,753
Marketable securities		141,044		80,900
Accounts receivable, net		73,861		86,081
Current portion of prepaid advertising		2,275		2,329
Due from HLTH		—		1,153
Other current assets		8,837		10,840
Total current assets		385,848		395,056
Property and equipment, net		46,995		48,589
Prepaid advertising		3,017		4,521
Goodwill		221,429		221,429
Intangible assets, net		33,766		36,314
Other assets		10,889		12,955
	$	701,944	$	718,864
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	16,731	$	26,498
Deferred revenue		88,114		76,401
Due to HLTH		207		—
Total current liabilities		105,052		102,899
Other long-term liabilities		9,033		9,210
Stockholders’ equity		587,859		606,755
	$	701,944	$	718,864

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

	Three Months Ended
	March 31,
	2008			2007
Cash flows from operating activities:
Net income (loss)	$	(23,335	)	$	706
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations, net of tax		—			29
Depreciation and amortization		6,785			5,991
Non-cash advertising		1,558			2,320
Non-cash stock-based compensation		3,712			5,363
Deferred income taxes		2,415			78
Impairment of auction rate securities		27,406			—
Changes in operating assets and liabilities:
Accounts receivable		12,220			2,185
Other assets		(164	)		(66	)
Accrued expenses and other long-term liabilities		(8,949	)		(11,545	)
Due to HLTH		1,329			228
Deferred revenue		11,714			7,678
Net cash provided by continuing operations		34,691			12,967
Net cash provided by discontinued operations		—			54
Net cash provided by operating activities		34,691			13,021
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities		40,350			28,122
Purchases of available-for-sale securities		(127,900	)		(48,632	)
Purchases of property and equipment		(2,637	)		(4,762	)
Cash received from sale of business, net of fees		985			—
Net cash used in investing activities		(89,202	)		(25,272	)
Cash flows from financing activities:
Proceeds from issuance of common stock		589			4,458
Net cash transfers with HLTH		—			145,257
Net cash provided by financing activities		589			149,715
Net (decrease) increase in cash and cash equivalents		(53,922	)		137,464
Cash and cash equivalents at beginning of period		213,753			44,660
Cash and cash equivalents at end of period	$	159,831		$	182,124

EX-99.3

Exhibit 99.3

FINANCIAL GUIDANCE SUMMARY

2008 Financial Guidance
(in millions, except per share amounts)

	Year Ended
	December 31, 2008
	Range
Revenue	$	380.0		$	395.0
Earnings before interest, taxes, depreciation, amortization and other non-cash items (“Adjusted EBITDA”) (a)	$	97.5		$	107.5
Adjusted EBITDA per diluted common share	$	1.57		$	1.73
Interest, taxes, depreciation, amortization and other non-cash items (b)
Interest income	$	10.0		$	11.0
Depreciation and amortization	$	(31.0	)	$	(29.0	)
Non-cash advertising	$	(5.0	)	$	(5.0	)
Non-cash stock-based compensation	$	(22.0	)	$	(21.0	)
Impairment of auction rate securities		(27.4	)		(27.4	)
Income tax provision ( c )	$	(20.0	)	$	(26.0	)
Net income	$	2.1		$	10.1
Net income per common share:
Basic	$	0.04		$	0.17
Diluted	$	0.03		$	0.16
Net income, excluding impairment of auction rate securities of ($27.4)(d)	$	29.5		$	37.5
Net income per common share, excluding impairment of auction rate securities
Basic	$	0.50		$	0.64
Diluted	$	0.48		$	0.60
Weighted-average shares outstanding used in computing net income per common share:
Basic		59.0			59.0
Diluted		62.0			62.0

Notes:
(a)	See Annex A — Explanation of Non-GAAP Financial Measures
(b)	Reconciliation of Adjusted EBITDA to net income
(c)	Income tax rate for Q2 to Q4 2008 is estimated to be approximately 41% of pretax income. The income tax provision excludes any benefit relating to any reversal in 2008 of the valuation allowance against deferred tax assets.
(d)	Impairment of auction rate securities recorded in Q1 2008.

Additional Information

- Quarterly distribution of revenue is estimated to be approximately $81.7 in Q1, $88 to $90 in Q2, $100 to $104 in Q3 and $110 to $119 in Q4

- Adjusted EBITDA as a percentage of revenue is estimated to be approximately 19% in Q1, 22% to 23% in Q2, 27% to 28% in Q3 and 32% to
   35% in Q4

- Net Income (Loss) as a percentage of revenue is estimated to be approximately (29.0%) in Q1, 6.0% to 7.0% in Q2, 9.0% to 11.0% in Q3 and 10.0% to 14.0% in Q4

EX-99.4

Exhibit 99.4

ANNEX A

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

     The accompanying WebMD Health Corp. press release and financial tables include both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, 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 (loss) 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 (loss) 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 (loss) 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 (loss) from continuing operations 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 (loss) 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
	March 31,
	2008			2007
Non-cash stock-based compensation included in:
Cost of operations	$	(1,119	)	$	(1,578	)
Sales and marketing	$	(1,138	)	$	(1,258	)
General and administrative	$	(1,455	)	$	(2,527	)

• 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 2009. 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

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	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 $1,558 and $2,320 for the three months ended March 31, 2008 and 2007, 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 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 after consideration of the relevant factors. The related valuation allowances are either reversed through the income statement, additional paid-in capital, or reversed to goodwill, to the extent those tax benefits were acquired through business combinations. 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.
•	Other Items. WebMD engages in other activities and transactions that can impact WebMD’s overall income (loss) from continuing operations. WebMD excludes these other items from Adjusted EBITDA when it believes these activities or transactions are not directly attributable to the performance of WebMD’s business operations and, accordingly, their exclusion would assists management and investors in making period-to-period comparisons of operating performance. Investors should note that these other items may recur in future periods. In the accompanying press release and financial tables, WebMD has excluded loss on the impairment of auction rate securities from Adjusted EBITDA.

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