WebMD Health (WBMD) 8-K WebMD Announces Fourth Quarter and Year End 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,
	2014		2013		2014		2013
Revenue	$	162,727	$	146,277	$	580,449	$	515,293
Cost of operations		60,676		57,763		224,094		209,740
Sales and marketing		36,978		33,081		136,160		127,997
General and administrative		24,756		22,715		94,119		93,220
Depreciation and amortization		7,774		6,566		29,811		26,606
Interest income		18		22		69		76
Interest expense		6,171		5,329		24,686		22,826
Loss on convertible notes		—		1,575		—		4,871
Other expense		—		—		—		1,353
Income from continuing operations before income tax provision		26,390		19,270		71,648		28,756
Income tax provision		11,236		8,458		30,707		13,640
Income from continuing operations		15,154		10,812		40,941		15,116
Income from discontinued operations, net of tax		1,122		—		1,122		—
Net income	$	16,276	$	10,812	$	42,063	$	15,116
Basic income per common share:
Income from continuing operations	$	0.42	$	0.27	$	1.08	$	0.32
Income from discontinued operations		0.03		—		0.03		—
Net income	$	0.45	$	0.27	$	1.11	$	0.32
Diluted income per common share:
Income from continuing operations	$	0.36	$	0.25	$	0.97	$	0.31
Income from discontinued operations		0.02		—		0.03		—
Net income	$	0.38	$	0.25	$	1.00	$	0.31
Weighted-average shares outstanding used in computing income per common share:
Basic		36,427		40,457		37,869		46,830
Diluted		53,082		44,872		45,614		48,398

WEBMD HEALTH CORP.

CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, unaudited)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2014			2013			2014			2013
Revenue (a)
Advertising and sponsorship
Biopharma and medical device	$	93,742		$	86,544		$	329,329		$	304,018
OTC, CPG and other		33,294			33,640			124,636			113,009
		127,036			120,184			453,965			417,027
Private portal services		28,570			21,924			103,182			82,111
Information services		7,121			4,169			23,302			16,155
	$	162,727		$	146,277		$	580,449		$	515,293
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (b)	$	48,138		$	40,636		$	158,622		$	122,886
Interest, taxes, non-cash and other items (c)
Interest income		18			22			69			76
Interest expense		(6,171	)		(5,329	)		(24,686	)		(22,826	)
Income tax provision		(11,236	)		(8,458	)		(30,707	)		(13,640	)
Depreciation and amortization		(7,774	)		(6,566	)		(29,811	)		(26,606	)
Non-cash stock-based compensation		(7,821	)		(7,918	)		(32,546	)		(38,550	)
Loss on convertible notes		—			(1,575	)		—			(4,871	)
Other expense		—			—			—			(1,353	)
Income from continuing operations		15,154			10,812			40,941			15,116
Income from discontinued operations, net of tax		1,122			—			1,122			—
Net income	$	16,276		$	10,812		$	42,063		$	15,116

(a) Revenue consists of the following four groups:

• Advertising and Sponsorship – Biopharma and Medical Device consists of advertising and sponsorship revenue from pharmaceutical, biotechnology and medical device clients relating to ethical pharmaceutical products or other regulated devices or products or for sponsoring educational programs;

• Advertising and Sponsorship – OTC, CPG and Other consists of advertising and sponsorship revenue relating to non-Rx or over-the-counter medications and other healthcare products, food and beverages, beauty products and other consumer products, as well as revenue from clients such as retailers, pharmacies, hospitals, health insurance companies and government agencies;

• Private Portal Services consists of revenue from employers and health plans for subscriptions to the Company’s private portals solution and related services, including health coaching and condition management services; and

• Information Services consists of revenue from the sale of stand-alone information and data products.

(b) See Annex A-Explanation of Non-GAAP Financial Measures.

(c) Reconciliation of Adjusted EBITDA to net income.

WEBMD HEALTH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31,
	2014		2013
Assets
Cash and cash equivalents	$	706,776	$	824,880
Accounts receivable, net		136,806		124,232
Prepaid expenses and other current assets		13,877		13,243
Deferred tax assets		18,147		13,620
Total current assets		875,606		975,975
Property and equipment, net		59,573		64,884
Goodwill		202,980		202,980
Intangible assets, net		14,215		13,834
Deferred tax assets		18,947		38,802
Other assets		26,236		29,153
Total Assets	$	1,197,557	$	1,325,628
Liabilities and Stockholders’ Equity
Accrued expenses	$	72,658	$	73,739
Deferred revenue		89,785		85,148
Liabilities of discontinued operations		—		1,506
Total current liabilities		162,443		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		21,293		22,103
Stockholders’ equity		61,589		190,900
Total Liabilities and Stockholders’ Equity	$	1,197,557	$	1,325,628

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Years Ended December 31,
	2014			2013
Cash flows from operating activities:
Net income	$	42,063		$	15,116
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax		(1,122	)		—
Depreciation and amortization		29,811			26,606
Non-cash interest, net		4,511			4,192
Non-cash stock-based compensation		32,546			38,550
Deferred income taxes		14,717			13,070
Loss on convertible notes		—			4,871
Changes in operating assets and liabilities:
Accounts receivable		(12,574	)		(17,610	)
Prepaid expenses and other, net		(673	)		266
Accrued expenses and other long-term liabilities		(380	)		8,061
Deferred revenue		4,637			(7,028	)
Net cash provided by continuing operations		113,536			86,094
Net cash used in discontinued operations		(384	)		—
Net cash provided by operating activities		113,152			86,094
Cash flows from investing activities:
Cash paid in business combination		(3,182	)		—
Purchases of property and equipment		(23,194	)		(22,341	)
Proceeds from sale of property and equipment		—			1,381
Net cash used in investing activities		(26,376	)		(20,960	)
Cash flows from financing activities:
Proceeds from exercise of stock options		40,602			29,724
Cash used for withholding taxes due on stock-based awards		(33,385	)		(12,526	)
Net proceeds from issuance of convertible notes		—			291,823
Repurchase of convertible notes		—			(150,354	)
Repurchase of shares through tender offers		(97,588	)		(170,516	)
Purchases of treasury stock		(128,748	)		(220,298	)
Excess tax benefit on stock-based awards		14,239			58
Net cash used in financing activities		(204,880	)		(232,089	)
Net decrease in cash and cash equivalents		(118,104	)		(166,955	)
Cash and cash equivalents at beginning of period		824,880			991,835
Cash and cash equivalents at end of period	$	706,776		$	824,880

WEBMD HEALTH CORP.

NET INCOME PER COMMON SHARE

(In thousands, except per share data, unaudited)

	Three Months Ended December 31,				Years Ended December 31,
	2014		2013		2014		2013
Numerator:
Income from continuing operations — Basic	$	15,154	$	10,812	$	40,941	$	15,116
Interest expense on 1.50% convertible notes, net of tax		864		326		3,456		—
Interest expense on 2.50% convertible notes, net of tax		1,797		—		—		—
Interest expense on 2.25% convertible notes, net of tax		1,103		—		—		—
Income from continuing operations — Diluted	$	18,918	$	11,138	$	44,397	$	15,116
Income from discontinued operations, net of tax — Basic and Diluted	$	1,122	$	—	$	1,122	$	—
Denominator:
Weighted-average shares — Basic		36,427		40,457		37,869		46,830
Stock options and restricted stock		1,245		2,192		2,060		1,568
1.50% convertible notes		5,694		2,223		5,685		—
2.50% convertible notes		6,205		—		—		—
2.25% convertible notes		3,511		—		—		—
Adjusted weighted-average shares after assumed conversions — Diluted		53,082		44,872		45,614		48,398
Basic income per common share:
Income from continuing operations	$	0.42	$	0.27	$	1.08	$	0.32
Income from discontinued operations		0.03		—		0.03		—
Net income	$	0.45	$	0.27	$	1.11	$	0.32
Diluted income per common share:
Income from continuing operations	$	0.36	$	0.25	$	0.97	$	0.31
Income from discontinued operations		0.02		—		0.03		—
Net income	$	0.38	$	0.25	$	1.00	$	0.31

WEBMD HEALTH CORP.

2014 REVENUE

(In thousands, unaudited)

	Three Months Ended								Year Ended December 31, 2014
	March 31, 2014		June 30, 2014		September 30, 2014		December 31, 2014
Revenue
Advertising and sponsorship
Biopharma and medical device	$	68,488	$	81,981	$	85,118	$	93,742	$	329,329
OTC, CPG and other		34,469		29,503		27,370		33,294		124,636
		102,957		111,484		112,488		127,036		453,965
Private portal services		24,629		24,188		25,795		28,570		103,182
Information services		6,246		4,728		5,207		7,121		23,302
	$	133,832	$	140,400	$	143,490	$	162,727	$	580,449

• See Consolidated Supplemental Financial Information for descriptions of the above revenue groups.