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,
	2015		2014		2015		2014
Revenue	$	152,607	$	143,490	$	444,270	$	417,722
Cost of operations		59,552		56,398		177,836		163,418
Sales and marketing		32,850		32,950		97,896		99,182
General and administrative		22,942		23,243		67,397		69,363
Depreciation and amortization		7,266		7,667		23,103		22,037
Interest income		10		19		36		51
Interest expense		5,681		6,171		18,024		18,515
Loss on convertible notes		2,058		—		2,058		—
Gain on investments		—		—		139		—
Other expense		—		—		4,100		—
Income before income tax provision		22,268		17,080		54,031		45,258
Income tax provision		9,080		7,275		17,468		19,471
Net income	$	13,188	$	9,805	$	36,563	$	25,787
Net income per common share:
Basic	$	0.36	$	0.26	$	1.00	$	0.67
Diluted	$	0.32	$	0.23	$	0.89	$	0.61
Weighted-average shares outstanding used in computing income per common share:
Basic		36,721		37,960		36,606		38,349
Diluted		49,958		45,757		49,912		46,364

WEBMD HEALTH CORP.

CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue
Advertising and sponsorship
Biopharma and medical device	$	89,870		$	85,118		$	251,692		$	235,587
OTC, CPG and other		28,850			27,370			89,047			91,342
		118,720			112,488			340,739			326,929
Private portal services		27,460			25,795			83,223			74,612
Information services		6,427			5,207			20,308			16,181
	$	152,607		$	143,490		$	444,270		$	417,722
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (a)	$	46,405		$	39,301		$	125,872		$	110,484
Interest, taxes, non-cash and other items (b)
Interest income		10			19			36			51
Interest expense		(5,681	)		(6,171	)		(18,024	)		(18,515	)
Income tax provision		(9,080	)		(7,275	)		(17,468	)		(19,471	)
Depreciation and amortization		(7,266	)		(7,667	)		(23,103	)		(22,037	)
Non-cash stock-based compensation		(9,142	)		(8,402	)		(24,731	)		(24,725	)
Loss on convertible notes		(2,058	)		—			(2,058	)		—
Gain on investments		—			—			139			—
Other expense		—			—			(4,100	)		—
Net income	$	13,188		$	9,805		$	36,563		$	25,787

(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, 2015		December 31, 2014
	(unaudited)
Assets
Cash and cash equivalents	$	612,332	$	706,776
Accounts receivable, net		147,007		136,806
Prepaid expenses and other current assets		19,199		13,877
Deferred tax assets		12,627		18,147
Total current assets		791,165		875,606
Property and equipment, net		64,930		59,573
Goodwill		202,980		202,980
Intangible assets, net		11,716		14,215
Deferred tax assets		2,546		18,947
Other assets		21,585		26,236
Total Assets	$	1,094,922	$	1,197,557
Liabilities and Stockholders’ Equity
Accrued expenses	$	68,317	$	72,658
Deferred revenue		105,065		89,785
2.25% convertible notes due 2016		102,682		—
Total current liabilities		276,064		162,443
2.25% convertible notes due 2016		—		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		21,965		21,293
Stockholders’ equity		96,893		61,589
Total Liabilities and Stockholders’ Equity	$	1,094,922	$	1,197,557

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	36,563		$	25,787
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,103			22,037
Non-cash interest, net		3,276			3,384
Non-cash stock-based compensation		24,731			24,725
Deferred income taxes		(7,246	)		6,791
Loss on convertible notes		2,058			—
Gain on investments		(139	)		—
Changes in operating assets and liabilities:
Accounts receivable		(10,201	)		10,784
Prepaid expenses and other, net		(5,692	)		(2,429	)
Accrued expenses and other long-term liabilities		(4,555	)		(9,319	)
Deferred revenue		15,280			(901	)
Net cash provided by operating activities		77,178			80,859
Cash flows from investing activities:
Cash paid in business combination		—			(3,182	)
Proceeds from sale of investments		139			—
Purchases of property and equipment		(25,638	)		(17,964	)
Net cash used in investing activities		(25,499	)		(21,146	)
Cash flows from financing activities:
Proceeds from exercise of stock options		15,185			35,857
Cash used for withholding taxes due on stock-based awards		(3,836	)		(31,294	)
Repurchase of convertible notes		(151,038	)		—
Repurchase of shares through tender offers		—			(97,560	)
Purchases of treasury stock		(28,406	)		(103,602	)
Excess tax benefit on stock-based awards		21,972			11,853
Net cash used in financing activities		(146,123	)		(184,746	)
Net decrease in cash and cash equivalents		(94,444	)		(125,033	)
Cash and cash equivalents at beginning of period		706,776			824,880
Cash and cash equivalents at end of period	$	612,332		$	699,847

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,
	2015		2014		2015		2014
Numerator:
Net income — Basic	$	13,188	$	9,805	$	36,563	$	25,787
Interest expense on 1.50% convertible notes, net of tax		864		864		2,592		2,592
Interest expense on 2.50% convertible notes, net of tax		1,797		—		5,392		—
Net income — Diluted	$	15,849	$	10,669	$	44,547	$	28,379
Denominator:
Weighted-average shares — Basic		36,721		37,960		36,606		38,349
Stock options and restricted stock		1,338		2,113		1,407		2,333
1.50% convertible notes		5,694		5,684		5,694		5,682
2.50% convertible notes		6,205		—		6,205		—
Adjusted weighted-average shares after assumed conversions — Diluted		49,958		45,757		49,912		46,364
Net income per common share:
Basic	$	0.36	$	0.26	$	1.00	$	0.67
Diluted	$	0.32	$	0.23	$	0.89	$	0.61