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 September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenue	$	143,490	$	130,937	$	417,722	$	369,016
Cost of operations		56,398		53,438		163,418		151,977
Sales and marketing		32,950		32,561		99,182		94,916
General and administrative		23,243		22,689		69,363		70,505
Depreciation and amortization		7,667		6,552		22,037		20,040
Interest income		19		16		51		54
Interest expense		6,171		5,833		18,515		17,497
Loss on convertible notes		—		3,296		—		3,296
Other expense		—		—		—		1,353
Income before income tax provision		17,080		6,584		45,258		9,486
Income tax provision		7,275		3,353		19,471		5,182
Net income	$	9,805	$	3,231	$	25,787	$	4,304
Net income per common share:
Basic	$	0.26	$	0.07	$	0.67	$	0.09
Diluted	$	0.23	$	0.06	$	0.61	$	0.09
Weighted-average shares outstanding used in computing income per common share:
Basic		37,960		48,540		38,349		48,954
Diluted		45,757		50,594		46,364		50,315

WEBMD HEALTH CORP.

CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenue
Public portal advertising and sponsorship	$	117,695		$	109,608		$	343,110		$	308,829
Private portal services		25,795			21,329			74,612			60,187
	$	143,490		$	130,937		$	417,722		$	369,016
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)	$	39,301		$	31,720		$	110,484		$	82,250
Interest, taxes, non-cash and other items (b)
Interest income		19			16			51			54
Interest expense		(6,171	)		(5,833	)		(18,515	)		(17,497	)
Income tax provision		(7,275	)		(3,353	)		(19,471	)		(5,182	)
Depreciation and amortization		(7,667	)		(6,552	)		(22,037	)		(20,040	)
Non-cash stock-based compensation		(8,402	)		(9,471	)		(24,725	)		(30,632	)
Loss on convertible notes		—			(3,296	)		—			(3,296	)
Other expense		—			—			—			(1,353	)
Net income	$	9,805		$	3,231		$	25,787		$	4,304

(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)

	September 30, 2014		December 31, 2013
	(unaudited)
Assets
Cash and cash equivalents	$	699,847	$	824,880
Accounts receivable, net		113,448		124,232
Prepaid expenses and other current assets		15,091		13,243
Deferred tax assets		12,350		13,620
Total current assets		840,736		975,975
Property and equipment, net		61,238		64,884
Goodwill		202,980		202,980
Intangible assets, net		15,048		13,834
Deferred tax assets		33,297		38,802
Other assets		25,799		29,153
Total Assets	$	1,179,098	$	1,325,628
Liabilities and Stockholders’ Equity
Accrued expenses	$	65,260	$	73,739
Deferred revenue		84,247		85,148
Liabilities of discontinued operations		1,506		1,506
Total current liabilities		151,013		160,393
2.25% convertible notes due 2016		252,232		252,232
2.50% convertible notes due 2018		400,000		400,000
1.50% convertible notes due 2020		300,000		300,000
Other long-term liabilities		20,792		22,103
Stockholders’ equity		55,061		190,900
Total Liabilities and Stockholders’ Equity	$	1,179,098	$	1,325,628

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net income	$	25,787		$	4,304
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,037			20,040
Non-cash interest, net		3,384			3,245
Non-cash stock-based compensation		24,725			30,632
Deferred income taxes		6,791			4,592
Loss on convertible notes		—			3,296
Changes in operating assets and liabilities:
Accounts receivable		10,784			6,917
Prepaid expenses and other, net		(2,429	)		(100	)
Accrued expenses and other long-term liabilities		(9,319	)		(5,689	)
Deferred revenue		(901	)		(5,326	)
Net cash provided by operating activities		80,859			61,911
Cash flows from investing activities:
Cash paid in business combination		(3,182	)		—
Purchases of property and equipment		(17,964	)		(9,901	)
Proceeds from sale of property and equipment		—			1,381
Net cash used in investing activities		(21,146	)		(8,520	)
Cash flows from financing activities:
Proceeds from exercise of stock options		35,857			19,482
Cash used for withholding taxes due on stock-based awards		(31,294	)		(7,321	)
Repurchase of convertible notes		—			(101,750	)
Repurchase of shares through tender offers		(97,560	)		(170,516	)
Purchases of treasury stock		(103,602	)		(9,023	)
Excess tax benefit on stock-based awards		11,853			—
Net cash used in financing activities		(184,746	)		(269,128	)
Net decrease in cash and cash equivalents		(125,033	)		(215,737	)
Cash and cash equivalents at beginning of period		824,880			991,835
Cash and cash equivalents at end of period	$	699,847		$	776,098

WEBMD HEALTH CORP.

NET INCOME PER COMMON SHARE

(In thousands, except per share data, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Numerator:
Net income — Basic	$	9,805	$	3,231	$	25,787	$	4,304
Interest expense on 1.50% convertible notes, net of tax		864		—		2,592		—
Net income — Diluted	$	10,669	$	3,231	$	28,379	$	4,304
Denominator:
Weighted-average shares — Basic		37,960		48,540		38,349		48,954
Stock options and restricted stock		2,113		2,054		2,333		1,361
1.50% convertible notes		5,684		—		5,682		—
Adjusted weighted-average shares after assumed conversions — Diluted		45,757		50,594		46,364		50,315
Net income per common share:
Basic	$	0.26	$	0.07	$	0.67	$	0.09
Diluted	$	0.23	$	0.06	$	0.61	$	0.09