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

Exhibit 99.2

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

	Three Months Ended						Years Ended
	December 31,						December 31,
	2010			2009			2010			2009
Revenue	$	168,477		$	138,073		$	534,519		$	438,536
Cost of operations		51,859			47,994			187,831			165,753
Sales and marketing		34,085			31,478			120,874			112,101
General and administrative		23,146			23,802			85,496			89,620
Depreciation and amortization		7,310			6,992			27,578			28,185
Interest income		99			3,089			3,949			9,149
Interest expense		1,347			5,657			11,453			23,515
(Loss) gain on convertible notes		(6,362	)		—			(23,332	)		10,120
Gain (loss) on investments		13,460			—			(9,517	)		—
Severance and other transaction expenses		—			11,066			—			11,066
Other income (expense), net		20			(425	)		(72	)		(1,369	)
Income from continuing operations before income tax provision (benefit)		57,947			13,748			72,315			26,196
Income tax provision (benefit)		24,183			(50,413	)		20,043			(45,491	)
Consolidated income from continuing operations		33,764			64,161			52,272			71,687
Consolidated income from discontinued operations, net of tax		2,824			34,659			1,800			49,354
Consolidated net income inclusive of noncontrolling interest		36,588			98,820			54,072			121,041
Income attributable to noncontrolling interest		—			(524	)		—			(3,705	)
Net income attributable to Company stockholders	$	36,588		$	98,296		$	54,072		$	117,336
Amounts attributable to Company stockholders:
Income from continuing operations	$	33,764		$	63,637		$	52,272		$	67,018
Income from discontinued operations		2,824			34,659			1,800			50,318
Net income attributable to Company stockholders	$	36,588		$	98,296		$	54,072		$	117,336
Basic income per common share:
Income from continuing operations	$	0.58		$	1.19		$	0.93		$	1.40
Income from discontinued operations		0.05			0.65			0.04			1.05
Net income attributable to Company stockholders	$	0.63		$	1.84		$	0.97		$	2.45
Diluted income per common share:
Income from continuing operations	$	0.55		$	0.92		$	0.85		$	1.21
Income from discontinued operations		0.04			0.47			0.03			0.86
Net income attributable to Company stockholders	$	0.59		$	1.39		$	0.88		$	2.07
Weighted-average shares outstanding used in computing income per common share:
Basic		57,505			52,688			55,328			47,400
Diluted		62,330			71,945			62,228			57,740

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

	Three Months Ended						Years Ended
	December 31,						December 31,
	2010			2009			2010			2009
Revenue
Public portal advertising and sponsorship	$	147,042		$	114,875		$	446,969		$	347,570
Private portal services		21,435			23,198			87,550			90,966
	$	168,477		$	138,073		$	534,519		$	438,536
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)	$	69,082		$	46,428		$	173,618		$	112,274
Interest, taxes, non-cash and other items (b)
Interest income		99			3,089			3,949			9,149
Interest expense		(1,347	)		(5,657	)		(11,453	)		(23,515	)
Income tax (provision) benefit		(24,183	)		50,413			(20,043	)		45,491
Depreciation and amortization		(7,310	)		(6,992	)		(27,578	)		(28,185	)
Non-cash stock-based compensation		(9,695	)		(11,629	)		(33,300	)		(39,412	)
Non-cash advertising		—			—			—			(1,753	)
(Loss) gain on convertible notes		(6,362	)		—			(23,332	)		10,120
Gain (loss) on investments		13,460			—			(9,517	)		—
Severance and other transaction expenses		—			(11,066	)		—			(11,066	)
Other income (expense), net		20			(425	)		(72	)		(1,416	)
Consolidated income from continuing operations		33,764			64,161			52,272			71,687
Consolidated income from discontinued operations, net of tax		2,824			34,659			1,800			49,354
Consolidated net income inclusive of noncontrolling interest		36,588			98,820			54,072			121,041
Income attributable to noncontrolling interest		—			(524	)		—			(3,705	)
Net income attributable to Company stockholders	$	36,588		$	98,296		$	54,072		$	117,336

(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)

	December 31, 2010		December 31, 2009
Assets
Cash and cash equivalents	$	400,501	$	459,766
Accounts receivable, net		134,448		118,155
Prepaid expenses and other current assets		12,161		11,419
Investments		—		9,932
Deferred tax assets		23,467		—
Total current assets		570,577		599,272
Investments		—		338,446
Property and equipment, net		61,516		52,194
Goodwill		202,104		202,104
Intangible assets, net		22,626		26,020
Deferred tax assets		71,125		50,789
Other assets		14,254		19,723
Total Assets	$	942,202	$	1,288,548
Liabilities and Equity
Accrued expenses	$	53,181	$	63,721
Deferred revenue		97,043		98,474
1.75% convertible notes		—		264,583
Deferred tax liabilities		—		12,955
Liabilities of discontinued operations		17,327		34,197
Total current liabilities		167,551		473,930
31/8% convertible notes, net of discount of $22,641 at December 31, 2009		—		227,659
Other long-term liabilities		21,756		22,191
Stockholders’ equity		752,895		564,768
Total Liabilities and Equity	$	942,202	$	1,288,548

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

	Years Ended
	December 31,
	2010			2009
Cash flows from operating activities:
Consolidated net income inclusive of noncontrolling interest	$	54,072		$	121,041
Adjustments to reconcile consolidated net income inclusive of noncontrolling interest to net cash provided by operating activities:
Consolidated income from discontinued operations, net of tax		(1,800	)		(49,354	)
Depreciation and amortization		27,578			28,185
Non-cash interest, net		5,594			10,205
Non-cash advertising		—			1,753
Non-cash stock-based compensation		33,300			39,412
Deferred income taxes		(403	)		(42,143	)
Loss (gain) on convertible notes		23,332			(10,120	)
Loss on investments		9,517			—
Changes in operating assets and liabilities:
Accounts receivable		(16,292	)		(25,073	)
Prepaid expenses and other, net		4,617			6,979
Accrued expenses and other long-term liabilities		213			7,677
Deferred revenue		(1,431	)		18,861
Net cash provided by continuing operations		138,297			107,423
Net cash (used in) provided by discontinued operations		(16,474	)		305
Net cash provided by operating activities		121,823			107,728
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		361,852			2,300
Proceeds received from ARS Option		10,467			—
Purchases of property and equipment		(32,254	)		(17,886	)
Proceeds received (payments made) from the sale of discontinued operations		(1,430	)		72,318
Net cash provided by continuing operations		338,635			56,732
Net cash used in discontinued operations		—			(3,552	)
Net cash provided by investing activities		338,635			53,180
Cash flows from financing activities:
Proceeds from exercise of stock options		59,825			42,898
Cash used for withholding taxes due on stock-based awards		(86,533	)		(17,645	)
Repurchases of convertible notes		(94,525	)		(123,857	)
Purchase of treasury stock under repurchase program and tender offers		(420,948	)		(228,402	)
Cash paid for merger related costs		—			(5,021	)
Excess tax benefit on stock-based awards		22,458			480
Net cash used in financing activities		(519,723	)		(331,547	)
Effect of exchange rates on cash		—			557
Net decrease in cash and cash equivalents		(59,265	)		(170,082	)
Cash and cash equivalents at beginning of period		459,766			629,848
Cash and cash equivalents at end of period	$	400,501		$	459,766

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

	Three Months Ended						Years Ended
	December 31,						December 31,
	2010			2009			2010			2009
Numerator:
Income from continuing operations	$	33,764		$	63,637		$	52,272		$	67,018
Effect of participating non-vested restricted stock		(339	)		(886	)		(601	)		(787	)
Income from continuing operations — Basic		33,425			62,751			51,671			66,231
Interest expense on 1.75% Convertible Notes, net of tax		—			876			1,469			3,714
Interest expense on 3 1/8% Convertible Notes, net of tax		809			2,472			—			—
Effect of dilutive securities of subsidiary		—			(57	)		—			(343	)
Income from continuing operations — Diluted	$	34,234		$	66,042		$	53,140		$	69,602
Income from discontinued operations net of tax	$	2,824		$	34,659		$	1,800		$	50,318
Effect of participating non-vested restricted stock		(28	)		(483	)		(21	)		(591	)
Income from discontinued operations —Basic		2,796			34,176			1,779			49,727
Effect of dilutive securities of subsidiary		—			—			—			53
Income from discontinued operations —Diluted	$	2,796		$	34,176		$	1,779		$	49,780
Denominator:
Weighted-average shares — Basic		57,505			52,688			55,328			47,400
Employee stock options and restricted stock		2,651			4,470			3,706			2,265
1.75% Convertible Notes		—			7,640			3,194			8,075
3 1/8% Convertible Notes		2,174			7,147			—			—
Adjusted weighted-average shares after assumed conversions — Diluted		62,330			71,945			62,228			57,740
Basic income per common share:
Income from continuing operations	$	0.58		$	1.19		$	0.93		$	1.40
Income from discontinued operations		0.05			0.65			0.04			1.05
Net income attributable to Company stockholders	$	0.63		$	1.84		$	0.97		$	2.45
Diluted income per common share:
Income from continuing operations	$	0.55		$	0.92		$	0.85		$	1.21
Income from discontinued operations		0.04			0.47			0.03			0.86
Net income attributable to Company stockholders	$	0.59		$	1.39		$	0.88		$	2.07