WebMD Health (WBMD) 8-K WebMD Announces Third Quarter Financial Results

Exhibit 99.2

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenue	$	135,305		$	111,568		$	366,042		$	300,463
Cost of operations		47,610			41,965			135,972			117,759
Sales and marketing		28,957			26,265			86,789			80,623
General and administrative		22,964			21,967			62,350			65,818
Depreciation and amortization		6,935			7,134			20,268			21,193
Interest income		21			1,840			3,850			6,060
Interest expense		1,797			5,541			10,106			17,858
(Loss) gain on convertible notes		(2,232	)		—			(16,970	)		10,120
Loss on investments		131			—			22,977			—
Other income (expense), net		107			(123	)		(92	)		(944	)
Income from continuing operations before income tax provision (benefit)		24,807			10,413			14,368			12,448
Income tax provision (benefit)		10,193			5,389			(4,140	)		4,922
Consolidated income from continuing operations		14,614			5,024			18,508			7,526
Consolidated (loss) income from discontinued operations, net of tax		(1,024	)		27,462			(1,024	)		14,695
Consolidated net income inclusive of noncontrolling interest		13,590			32,486			17,484			22,221
Income attributable to noncontrolling interest		—			(2,184	)		—			(3,181	)
Net income attributable to Company stockholders	$	13,590		$	30,302		$	17,484		$	19,040
Amounts attributable to Company stockholders:
Income from continuing operations	$	14,614		$	2,872		$	18,508		$	3,381
(Loss) income from discontinued operations		(1,024	)		27,430			(1,024	)		15,659
Net income attributable to Company stockholders	$	13,590		$	30,302		$	17,484		$	19,040
Basic income (loss) per common share:
Income from continuing operations	$	0.25		$	0.06		$	0.33		$	0.07
(Loss) income from discontinued operations		(0.02	)		0.59			(0.01	)		0.34
Net income attributable to Company stockholders	$	0.23		$	0.65		$	0.32		$	0.41
Diluted income (loss) per common share:
Income from continuing operations	$	0.24		$	0.05		$	0.31		$	0.06
(Loss) income from discontinued operations		(0.02	)		0.56			(0.02	)		0.33
Net income attributable to Company stockholders	$	0.22		$	0.61		$	0.29		$	0.39
Weighted-average shares outstanding used in computing income (loss) per common share:
Basic		58,095			46,096			54,602			45,637
Diluted		61,435			48,609			58,660			47,167

WEBMD HEALTH CORP.
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenue
Public portal advertising and sponsorship	$	113,078		$	89,414		$	299,927		$	232,695
Private portal services		22,227			22,154			66,115			67,768
	$	135,305		$	111,568		$	366,042		$	300,463
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)	$	44,578		$	30,564		$	104,536		$	65,846
Interest, taxes, non-cash and other items (b)
Interest income		21			1,840			3,850			6,060
Interest expense		(1,797	)		(5,541	)		(10,106	)		(17,858	)
Income tax (provision) benefit		(10,193	)		(5,389	)		4,140			(4,922	)
Depreciation and amortization		(6,935	)		(7,134	)		(20,268	)		(21,193	)
Non-cash stock-based compensation		(8,804	)		(9,217	)		(23,605	)		(27,783	)
Non-cash advertising		—			—			—			(1,753	)
(Loss) gain on convertible notes		(2,232	)		—			(16,970	)		10,120
Loss on investments		(131	)		—			(22,977	)		—
Other income (expense), net		107			(99	)		(92	)		(991	)
Consolidated income from continuing operations		14,614			5,024			18,508			7,526
Consolidated (loss) income from discontinued operations, net of tax		(1,024	)		27,462			(1,024	)		14,695
Consolidated net income inclusive of noncontrolling interest		13,590			32,486			17,484			22,221
Income attributable to noncontrolling interest		—			(2,184	)		—			(3,181	)
Net income attributable to Company stockholders	$	13,590		$	30,302		$	17,484		$	19,040

(a)	See Annex A-Explanation of Non-GAAP Financial Measures.
(b)	Reconciliation of Adjusted EBITDA to consolidated income from continuing operations.

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

	September 30, 2010		December 31, 2009
Assets
Cash and cash equivalents	$	352,199	$	459,766
Accounts receivable, net		120,361		118,155
Prepaid expenses and other current assets		17,055		11,419
Investments		—		9,932
Deferred tax assets		27,346		—
Total current assets		516,961		599,272
Investments		—		338,446
Property and equipment, net		62,221		52,194
Goodwill		202,104		202,104
Intangible assets, net		23,388		26,020
Deferred tax assets		78,631		50,789
Other assets		17,407		19,723
Total Assets	$	900,712	$	1,288,548
Liabilities and Equity
Accrued expenses	$	63,832	$	63,721
Deferred revenue		101,887		98,474
1.75% convertible notes		—		264,583
Deferred tax liabilities		—		12,955
Liabilities of discontinued operations		20,574		34,197
Total current liabilities		186,293		473,930
3⅛% convertible notes, net of discount of $5,693 at September 30, 2010 and $22,641 at December 31, 2009		79,634		227,659
Other long-term liabilities		24,263		22,191
Stockholders’ equity		610,522		564,768
Total Liabilities and Equity	$	900,712	$	1,288,548

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

	Nine Months Ended
	September 30,
	2010			2009
Cash flows from operating activities:
Consolidated net income inclusive of noncontrolling interest	$	17,484		$	22,221
Adjustments to reconcile consolidated net income inclusive of noncontrolling interest to net cash provided by operating activities:
Consolidated loss (income) from discontinued operations, net of tax		1,024			(14,695	)
Depreciation and amortization		20,268			21,193
Non-cash interest, net		4,862			7,737
Non-cash advertising		—			1,753
Non-cash stock-based compensation		23,605			27,783
Deferred income taxes		(17,260	)		7,563
Loss (gain) on convertible notes		16,970			(10,120	)
Loss on investments		22,977			—
Changes in operating assets and liabilities:
Accounts receivable		(2,206	)		6,010
Prepaid expenses and other, net		(3,006	)		(8,394	)
Accrued expenses and other long-term liabilities		1,695			(7,740	)
Deferred revenue		3,413			4,248
Net cash provided by continuing operations		89,826			57,559
Net cash (used in) provided by discontinued operations		(17,082	)		9,273
Net cash provided by operating activities		72,744			66,832
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		362,259			2,200
Purchases of property and equipment		(20,329	)		(14,248	)
Finalization of sale price of discontinued operations		(1,430	)		2,840
Net cash provided by (used in) continuing operations		340,500			(9,208	)
Net cash used in discontinued operations		—			(3,315	)
Net cash provided by (used in) investing activities		340,500			(12,523	)
Cash flows from financing activities:
Proceeds from exercise of stock options		57,168			30,004
Cash used for withholding taxes due on stock-based awards		(76,559	)		(1,234	)
Repurchases of convertible notes		(94,475	)		(123,857	)
Purchase of treasury stock under repurchase program		(14,914	)		—
Payment for shares tendered in 2009, delivered in 2010		(6,818	)		—
Purchase of treasury stock in tender offers		(399,216	)		—
Excess tax benefit on stock-based awards		14,003			63
Net cash used in financing activities		(520,811	)		(95,024	)
Effect of exchange rates on cash		—			420
Net decrease in cash and cash equivalents		(107,567	)		(40,295	)
Cash and cash equivalents at beginning of period		459,766			629,848
Cash and cash equivalents at end of period	$	352,199		$	589,553

WEBMD HEALTH CORP.
CONSOLIDATED NET INCOME ATTRIBUTABLE TO COMPANY STOCKHOLDERS
(In thousands, except per share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Numerator:
Income from continuing operations	$	14,614		$	2,872		$	18,508		$	3,381
Effect of participating non-vested restricted stock		(152	)		(31	)		(222	)		(37	)
Income from continuing operations — Basic		14,462			2,841			18,286			3,344
Effect of dilutive securities of subsidiary		—			(188	)		—			(285	)
Income from continuing operations — Diluted	$	14,462		$	2,653		$	18,286		$	3,059
(Loss) income from discontinued operations	$	(1,024	)	$	27,430		$	(1,024	)	$	15,659
Effect of participating non-vested restricted stock		12			(293	)		12			(171	)
(Loss) income from discontinued operations —Basic		(1,012	)		27,137			(1,012	)		15,488
Effect of dilutive securities of subsidiary		—			(3	)		—			53
(Loss) income from discontinued operations —Diluted	$	(1,012	)	$	27,134		$	(1,012	)	$	15,541
Denominator:
Weighted-average shares — Basic		58,095			46,096			54,602			45,637
Employee stock options and restricted stock		3,340			2,513			4,058			1,530
Adjusted weighted-average shares after assumed conversionss — Diluted		61,435			48,609			58,660			47,167
Basic income (loss) per common share:
Income from continuing operations	$	0.25		$	0.06		$	0.33		$	0.07
(Loss) income from discontinued operations		(0.02	)		0.59			(0.01	)		0.34
Net income attributable to Company stockholders	$	0.23		$	0.65		$	0.32		$	0.41
Diluted income (loss) per common share:
Income from continuing operations	$	0.24		$	0.05		$	0.31		$	0.06
(Loss) income from discontinued operations		(0.02	)		0.56			(0.02	)		0.33
Net income attributable to Company stockholders	$	0.22		$	0.61		$	0.29		$	0.39