WebMD Health (WBMD) 8-K WebMD Reports Strong Third Quarter Revenue and Earnings Growth

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,
	2016		2015		2016		2015
Revenue	$	171,438	$	152,607	$	497,574	$	444,270
Cost of operations		65,458		59,552		193,759		177,836
Sales and marketing		35,264		32,850		104,634		97,896
General and administrative		20,005		22,942		67,744		67,397
Depreciation and amortization		7,912		7,266		23,071		23,103
Interest income		1,034		10		1,607		36
Interest expense		7,065		5,681		17,430		18,024
Loss on convertible notes		—		2,058		—		2,058
Gain on investments		—		—		—		139
Other expense		1,712		—		1,712		4,100
Income before income tax provision		35,056		22,268		90,831		54,031
Income tax provision		13,438		9,080		35,715		17,468
Net income	$	21,618	$	13,188	$	55,116	$	36,563
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89
Weighted-average shares outstanding used in
computing income per common share:
Basic		38,103		36,721		37,804		36,606
Diluted		55,845		49,958		53,836		49,912
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WEBMD HEALTH CORP.

CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenue
Advertising and sponsorship
Biopharma and medical device	$	107,048		$	89,870		$	296,353		$	251,692
OTC, CPG and other		29,026			28,850			93,907			89,047
		136,074			118,720			390,260			340,739
Health services		28,247			27,460			85,134			83,223
Information services		7,117			6,427			22,180			20,308
	$	171,438		$	152,607		$	497,574		$	444,270
Net income	$	21,618		$	13,188		$	55,116		$	36,563
Interest, taxes, non-cash and other items (a)
Interest income		(1,034	)		(10	)		(1,607	)		(36	)
Interest expense		7,065			5,681			17,430			18,024
Income tax provision		13,438			9,080			35,715			17,468
Depreciation and amortization		7,912			7,266			23,071			23,103
Non-cash stock-based compensation		4,638			9,142			21,038			24,731
Loss on convertible notes		—			2,058			—			2,058
Gain on investments		—			—			—			(139	)
Other expense		1,712			—			1,712			4,100
Earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) (b)	$	55,349		$	46,405		$	152,475		$	125,872

(a) Reconciliation of net income to Adjusted EBITDA.

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

WEBMD HEALTH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30,		December 31,
	2016		2015
	(unaudited)
Assets
Cash and cash equivalents	$	88,600	$	641,165
Accounts receivable, net		153,255		174,313
Investments		949,488		—
Prepaid expenses and other current assets		17,972		18,998
Total current assets		1,209,315		834,476
Property and equipment, net		84,929		81,027
Goodwill		202,980		202,980
Intangible assets, net		8,554		10,894
Deferred tax assets, net		8,984		15,694
Other assets		8,497		10,852
Total Assets	$	1,523,259	$	1,155,923
Liabilities and Stockholders’ Equity
Accrued expenses	$	65,892	$	80,664
Deferred revenue		102,251		102,715
2.25% convertible notes due 2016, net		—		102,523
Total current liabilities		168,143		285,902
2.50% convertible notes due 2018, net		397,620		396,281
1.50% convertible notes due 2020, net		295,140		294,266
2.625% convertible notes due 2023, net		350,849		—
Other long-term liabilities		28,965		23,246
Stockholders’ equity		282,542		156,228
Total Liabilities and Stockholders’ Equity	$	1,523,259	$	1,155,923

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine Months Ended
	September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	55,116		$	36,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,071			23,103
Non-cash interest, net		2,827			3,276
Non-cash stock-based compensation		21,038			24,731
Deferred income taxes		6,632			(7,246	)
Loss on convertible notes		—			2,058
Gain on investments		—			(139	)
Changes in operating assets and liabilities:
Accounts receivable		21,058			(10,201	)
Prepaid expenses and other, net		2,747			(5,692	)
Accrued expenses and other long-term liabilities		(9,748	)		(4,555	)
Deferred revenue		(464	)		15,280
Net cash provided by operating activities		122,277			77,178
Cash flows from investing activities:
Purchases of property and equipment		(24,449	)		(25,638	)
Purchase of investments		(948,078	)		—
Partial redemption of cost-method investment		1,193			—
Proceeds from sale of investments		—			139
Net cash used in investing activities		(971,334	)		(25,499	)
Cash flows from financing activities:
Proceeds from exercise of stock options		52,702			15,185
Cash used for withholding taxes due on stock-based awards		(7,705	)		(3,836	)
Net proceeds from issuance of convertible notes		350,394			—
Maturity of convertible notes		(102,682	)		(151,038	)
Purchases of treasury stock		(22,447	)		(28,406	)
Excess tax benefit on stock-based awards		26,230			21,972
Net cash provided by (used in) financing activities		296,492			(146,123	)
Net decrease in cash and cash equivalents		(552,565	)		(94,444	)
Cash and cash equivalents at beginning of period		641,165			706,776
Cash and cash equivalents at end of period	$	88,600		$	612,332

WEBMD HEALTH CORP.

NET INCOME PER COMMON SHARE

(In thousands, except per share data, unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Numerator:
Net income – Basic	$	21,618	$	13,188	$	55,116	$	36,563
Interest expense on 1.50% convertible notes, net of tax		878		864		2,635		2,592
Interest expense on 2.50% convertible notes, net of tax		1,827		1,797		5,480		5,392
Interest expense on 2.25% convertible notes, net of tax		—		—		457		—
Interest expense on 2.625% convertible notes, net of tax		1,675		—		2,235		—
Net income – Diluted	$	25,998	$	15,849	$	65,923	$	44,547
Denominator:
Weighted-average shares – Basic		38,103		36,721		37,804		36,606
Stock options and restricted stock		1,709		1,338		1,824		1,407
1.50% convertible notes		5,694		5,694		5,694		5,694
2.50% convertible notes		6,205		6,205		6,205		6,205
2.25% convertible notes		—		—		471		—
2.625% convertible notes		4,134		—		1,838		—
Adjusted weighted-average shares after assumed conversions – Diluted		55,845		49,958		53,836		49,912
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89