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UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 0-51547
      WebMD Health Corp.
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-2783228(State of
    incorporation)

(I.R.S. Employer Identification
    No.)111 Eighth Avenue
    New York, New York

10011(Zip code)(Address of principal executive
    office)   (212) 624-3700 (Registrants
    telephone number including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of each class

Name of each exchange on which registeredCommon Stock, par value $0.01 per share

The Nasdaq Stock Market LLC (Global Select Market)   Securities registered pursuant to Section 12(g) of the
    Act:
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting company
    o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
  PageForward-Looking Statements


iiDefinitions of Certain Measures


iiiPART IItem 1.


Business


1Item 1A.


Risk Factors


32Item 1B.


Unresolved Staff Comments


47Item 2.


Properties


47Item 3.


Legal Proceedings


47Item 4.


[Removed and Reserved]


47PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


48Item 6.


Selected Financial Data


51Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


53Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


77Item 8.


Financial Statements and Supplementary Data


78Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


78Item 9A.


Controls and Procedures


78Item 9B.


Other Information


78PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


79Item 11.


Executive Compensation


79Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


79Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


79Item 14.


Principal Accountant Fees and Services


79PART IVItem 15.


Exhibits and Financial Statement Schedule


80Signatures


81Financial Statements


F-1Index to Exhibits


E-1EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1EX-99.2EX-99.3EX-99.4    ® ® ® ® ® ® ® ® ® ® ® sm
 i




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FORWARD-LOOKING
    STATEMENTS  Form 10-K
    
    failure to achieve sufficient levels of usage of our public and
    private portals and mobile platforms;
    the inability to successfully deploy new or updated applications
    or services;
    competition in attracting consumers and healthcare professionals
    to our public portals and mobile platforms;
    competition for advertisers and sponsors for our public portals
    and mobile platforms;
    failure to preserve and enhance the WebMD brand and
    our other brands;
    events or conditions that have a negative effect on promotional
    or educational spending by pharmaceutical and biotechnology
    companies or on the portion of that spending used for
    Internet-based services like ours;
    the inability to attract and retain qualified personnel;
    adverse economic conditions and disruptions in the capital
    markets;
    adverse changes in general business or regulatory conditions
    affecting the healthcare, information technology and Internet
    industries; and
    the Risk Factors described in Item 1A of this Annual Report.    Form 10-K
     ii




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DEFINITIONS
    OF CERTAIN MEASURES  The WebMD Health Network
  
    A unique user or unique visitor during
    any calendar month is an individual electronic device that
    accesses a page in The WebMD Health Networkduring the
    course of such calendar month, as determined by our tracking
    technology. Accordingly, with respect to such calendar month,
    once an individual electronic device accesses a page in The
    WebMD Health Network, that electronic device will generally
    be included in the total number of unique users or visitors for
    that month. Similarly, with respect to any calendar month, an
    electronic device accessing a specific public portal, Website or
    mobile property in The WebMD Health Network (which we
    refer to as a WebMD Destination) may only be counted
    once as a single unique user or visitor regardless of the number
    of times such electronic device accesses that WebMD Destination
    or the number of individuals who may use such electronic device.
    However, if that electronic device accesses more than one WebMD
    Destination within The WebMD Health Networkduring a
    calendar month, it will be counted once for each such WebMD
    Destination. An electronic device that does not access any WebMD
    Destination during a particular calendar month is not included
    in the total number of unique users or visitors for that
    calendar month, even if such electronic device has, in the past,
    accessed one or more WebMD Destinations. In addition, if an
    electronic device blocks our tracking technology, it will be
    counted as a unique user or visitor in a particular month each
    time it visits a WebMD Destination.
    A page view is a page that is viewed on an
    electronic device. The number of page views in
    The WebMD Health Networkis not limited by its number of
    unique users or visitors. Accordingly, each unique user or
    visitor may generate multiple page views.
    With respect to any given time period, aggregate page
    views are the total number of page views
    during such time period on The WebMD Health Network as a
    whole.    The WebMD Health Network, The WebMD
    Health Networks
 iii




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PART I  Item 1.
    Business  INTRODUCTION
  General
    Information
  (212) 624-3700.
    Overview
    of Our Businesses
    
    enable consumers to obtain detailed information on health and
    wellness topics or on a particular disease or condition, to
    locate physicians, to store individual healthcare information,
    to assess their personal health status, to receive periodic
    e-newsletters
    and alerts on topics of individual interest, and to participate
    in online communities with peers and experts;
    enable physicians and other healthcare professionals to access
    clinical reference sources, to stay abreast of the latest
    clinical information, to learn about new treatment options, to
    earn continuing medical education (or CME) and continuing
    education (or CE) credit and to communicate with peers; and
    enable employers and health plans to provide their employees and
    plan members with access to personalized health and benefit
    information and decision-support technology that helps them make
    more informed benefit, provider and treatment choices.  Public Portals.  The WebMD Health Network www.WebMD.com WebMD Health www.Medscape.com Medscape from WebMD The WebMD Health Network The WebMD Health Network
  WebMD Health Medscape from
 1




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WebMD
  The WebMD Health
    Network WebMD the
    Magazine
  Private Portals.
    Available
    Information
  www.wbmd.com Form 10-K, Form 10-Q, Form 8-K,
 2




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PUBLIC
    PORTALS
  Overview
    of The WebMD Health Network
  WebMD Health Medscape from WebMD
  Owned Websites. The
    WebMD Health Network
  Consumer Portal Site

Descriptionwww.webmd.com

WebMD Health, our flagship consumer portal.www.medicinenet.com

A health information site for consumers offering content that is
    written and edited by practicing physicians, including an online
    medical dictionary with thousands of medical terms.www.rxlist.com

An online drug directory with over 2,000 drug monographs, which
    are comprehensive descriptions of pharmaceutical products
    (including chemical name, brand names, molecular structure,
    clinical pharmacology, directions and dosage, side effects, drug
    interactions and precautions).www.emedicinehealth.com

A health information site for consumers offering articles
    written and edited by physicians for consumers, including first
    aid and emergency information that is also accessible at
    firstaid.webmd.com.Professional Portal
    Sitewww.medscape.com

Medscape from WebMD, our flagship Website for physicians
    and other healthcare professionals.www.medscape.org

Medscape Education,the Website through which Medscape,
    LLC distributes online CME and CE to physicians and other
    healthcare professionals.www.theheart.org

One of the leading cardiology Websites, known for its depth and
    breadth of content in this area.   Third Party Sites. The WebMD Health
    Network drugs.com, The WebMD Health Network drugs.com over-the-counter
  Consumer
    Portals
  Introduction.
 3




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Overview of Content and Service
    Offerings. WebMD Health The WebMD Health Network board-certified The WebMD Health Network. The
    WebMD Health Network
  WebMD Health
  Key Features of WebMD Health. WebMD
    Health
  Feature

DescriptionWebMD News Center

Daily health news articles that are written by health
    journalists and reviewed by our professional staff.  Content
    focuses on news you can use and the article topics
    reflect national news stories of interest in the popular media
    that day with original perspective from health and medical
    experts.WebMD Editorial Features

Comprehensive content focusing on major health issues that are
    in the news or otherwise contemporary, with emphasis on health
    trends and national health issues.WebMD Daily

Originally produced multi-media content served on our custom
    video player.  WebMD Daily delivers a three to five minute
    health-related video of real patient stories and expert
    interviews, among other things, and includes narration, graphics
    and links to additional content on a given health topic.
    Sponsors are able to stream promotional messages within the
    video feature itself and within the surrounding viewing area. 4




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Feature

DescriptionWebMD Health Centers

WebMD Health Centers are centralized locations for content and
    services for both WebMD Health editorial offerings and
    sponsor offerings focusing on topics related to health, wellness
    and lifestyle.  Each Health Center features newly organized and
    medically reviewed information and enables the user to easily
    locate the top articles, news, community features and health
    assessments for each topic. We also provide users an
    alphabetical listing of all Health Centers and other collections
    of articles, organized by specific health conditions and
    concerns, known as Health A-Z.WebMD Health Guides

Anchored within each Health Center, WebMD Health Guides are
    designed to guide users through the most current symptom,
    diagnosis, treatment and care information related to a
    particular health topic.  These guides were created by our
    editorial staff of professional health writers in collaboration
    with our proprietary physician network.WebMD Videos
    A-Z

Included in the Health Centers are broadcast-quality health
    videos featuring real stories and expert interviews.Slideshows

Our slideshows are designed to educate users on specific
    conditions and other health topics in an engaging, visually rich
    format.General Medical Information

Our medical library allows consumers to research information
    relating to diseases and common health conditions by providing
    searchable access and easy-to-read content, including: self-care articles drug and supplement references from leading
    publications, including First Data
    Bank® clinical trials and research study information a patients guide to medical tests interactive, illustrated presentations that visually
    explain common health conditions and diseases a medical dictionary doctors views on important health topics.       Decision-Support Services and Other Online
    Tools.
  5




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Feature

DescriptionWebMD HealthCheck

Clinical, algorithm-based self assessments for major conditions
    yielding a personalized risk score based upon the users
    individual characteristics (e.g., gender, age, behavioral risks,
    heredity), along with customized recommendations for further
    education, potential treatment alternatives and a summary report
    to share with the users physician.WebMD Symptom Checker

An interactive graphic interface with advanced clinical
    decision-support rules that allow users to pinpoint potential
    conditions associated with their physical symptoms, gender and
    age. The Symptom Checker was created by an experienced group of
    physicians trained in the development of clinical
    decision-support applications.Healthy Eating and Diet

An educational channel focusing on diet, food, and fitness,
    designed to help users attain their goals in personal health,
    fitness and weight management. The channel includes expert
    interviews, diet assessment, a personal planner (the Food and
    Fitness Planner), a food database for nutritional information,
    as well as calculators, portion help, and a member area for
    discussion boards, blogs and user support.  The Food and Fitness
    Planner also provides users with journaling capability to
    further support their nutritional goals.First Aid & Emergencies

Directs users to educational and treatment information that may
    be useful in the event of certain medical emergencies.  Also
    included in this resource is a First Aid A-Z glossary of terms.Tests & Tools

Provides access to interactive calculators and quizzes to assess
    or demonstrate health topics, including a target heart rate
    calculator, body mass index calculator, pregnancy calculator and
    ovulation calendar.Slideshows

Our slideshows are designed to educate users on specific
    conditions and other health topics in an engaging, visually rich
    format.Drugs & Treatments

Users can search for information about prescription and
    over-the-counter medications by brand or generic name, or by
    condition. We also recently launched Drug Insights, a
    community product that allows consumers to anonymously review
    and share their personal experiences with individual
    prescription products.WebMD Physician Finder

Enables users to find and make an appointment with a physician
    based on the physician or practice name, specialty, zip code and
    distance. 6




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Feature

DescriptionWebMD Health Manager

A free online service featuring a personal health record (a
    secure application that assists consumers in gathering, storing,
    and sharing essential health data in one centralized location),
    secure message center, personal health risk assessments for
    overall health, condition-specific trackers, medication
    summaries, health calendar with reminders and alerts, printable
    health emergency card, family member health record keeping,
    weight loss, fitness and smoking cessation programs, and fully
    personalized e-newsletter.   Membership; The WebMD Community. e-newsletters
  Feature

DescriptionCommunity Centers

Community Centers are designed to allow members to share their
    experiences and exchange information with other members with
    similar health conditions or concerns.  Community Centers may
    include blogs, moderated message boards and posted member
    columns.e-Newsletters

Our selection of e-Newsletters allows consumers to choose to
    receive regular updates on topics targeted to their particular
    health concerns and on general health-related subjects based on
    their interests.Expert Blogs

Expert healthcare professionals and non-healthcare professional
    members alike chronicle their experience in these online
    journals.Ask an Expert

Health and wellness forums within which users can post their
    health questions and receive support and information from health
    experts, moderators and other members.   The WebMD Community The WebMD
    Community The WebMD Community
  WebMD for iPhone and WebMD for
    iPad. WebMD for iPhone WebMD
    for iPad
  
    information about specific health conditions, including
    potential causes, treatments, and related symptoms;
    searchable databases containing information on drugs,
    supplements and vitamins; and 7




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
    local health listings, allowing consumers to find the nearest
    physician, hospital or pharmacy based on current location or to
    search the listings by city, state or zip code.  www.m.webmd.com
  WebMD the Magazine. WebMD the
    Magazine WebMD the Magazine
  Professional
    Portals
  Introduction. The WebMD
    Professional Network Medscape from
    WebMD Medscape Education theheart.org
  Medscape from WebMD. Medscape from
    WebMD The WebMD
    Professional Network,
  
    timely medical news relating to a variety of specialty areas and
    coverage of professional meetings and conferences;
    full-text medical journal articles and reference content,
    including a comprehensive drug reference; and
    video and written commentary from leading medical experts.  Medscape from WebMDs Medscape from
    WebMD Medscape from WebMD Medscape from WebMD
  Medscape from WebMD Medscape from WebMD MedPulse ® e-mail Medscape from WebMD
 8




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Medscape from WebMD
  theheart.org Cardiology Site . theheart.org theheart.org theheart.org theheart.org
  Continuing Medical Education
    (CME). Medscape Education
  Medscape Education , Medscape Education Medscape Education
  
    CME Circle.  Third party CME activities,
    including symposia, monographs and CD-ROMs.
    CME Live.  Original online events featuring
    live streaming video, audio and synchronized visual
    presentations by experts on key topics and conditions.
    CME Cases.  Original CME activities presented
    by healthcare professionals in a patient case format.
    Resource Centers.  Grant-based collections of
    CME-certified content on the diagnosis and treatment of medical
    conditions.  Physician Connect. Physician
    Connect Physician Connect Physician Connect Medscape from
    WebMD Medscape from WebMD
  Medscape Mobile. Medscape Mobile
  
    a drug reference database for researching prescribing and safety
    information on over 8,000 brand-name, generic and over-the
    counter (OTC) drugs, including herbals and supplements;
    a drug interaction checker that identifies interactions for a
    combination of up to 30 drugs, herbals
    and/or
    supplements with detailed information from minor to
    contraindicated interactions;
    clinical reference and treatment guides with information on
    nearly 3,400 diseases and conditions, enhanced with thousands of
    images; 9




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
    step-by-step
    instructions for more than 600 clinical procedures, many with
    video;
    daily professional medical news articles from Medscape Medical
    News across more than 30 specialties;
    continuing Medical Education (CME) covering hundreds of topics
    across more than 30 specialty areas;
    professional directories with search and email capabilities for
    more than 460,000 physicians, 6,000 hospitals and 57,000
    pharmacies.    Medscape Mobile ® ® ® tm tm Medscape
    Mobile
  Advertising
    and Sponsorship
  Overview. The WebMD
    Health Network e-newsletters.
        
    Media Solutions.  These are traditional online
    advertising solutions, such as banners, used to reach
    health-involved consumers and physicians and other healthcare
    professionals. In addition, customers can select targeted media
    packages, including condition-specific or specialty-specific
    e-newsletters,
    keyword searches and educational programs.
    Sponsored Solutions.  These are customized
    collections of articles, topics, and decision-support tools and
    applications, sponsored by clients and distributed within
    WebMD Health.  The WebMD Health Network
  
    our display of more than 7 billion pages of healthcare
    information to users visiting our sites in 2010;
    our ability to help advertisers and sponsors reach specific
    groups of consumers and physicians by specialty, product,
    disease, condition or wellness topic, which typically produces a
    more efficient and productive marketing campaign; and 10




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
    our ability to provide advertisers and other sponsors with
    objective measures of the effectiveness of their online
    marketing, such as activity levels within the sponsored content
    area.  WebMD Professional Services. on-site e-details, on-site E-details on-site e-detailing.
  Sales and
    Marketing
  WebMD the
    Magazine
  Content-Sharing
    and Marketing Relationships
  FDA.
  
    The collaboration includes an online consumer health information
    resource on WebMD.com (www.webmd.com/fda), through which
    consumers can access information on the safety of FDA-regulated
    products, including food, medicine and cosmetics, as well as
    learn how to report problems involving the safety of these
    products directly to the FDA. There are also content and
    multimedia tools on specific topics, such as allergies and
    asthma, childrens health, diabetes, heart health and
    vitamins and supplements.
    FDA information is also located within WebMDs homepage,
    WebMD Health News, WebMD Health Search, RSS feeds, and targeted
    WebMD Newsletters and Special Reports, and also included in
    WebMD the Magazine.
    WebMD also provides FDA public health alerts to all WebMD
    registered users and site visitors that request them. The
    cross-linked joint resource also features the FDAs
    Consumer Updates  timely and
    easy-to-read
    articles that are also posted on the FDAs main consumer
    Web page
    (www.fda.gov/consumer).  over-the-counter
  CDC. http://www.medscape.com/partners/cdc/public/cdc-commentary).
 11




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Yahoo! The WebMD Health Network
  International Relationships.
  
    During the third quarter of 2007, we announced an alliance with
    the leading provider of online pharmaceutical and medical
    information in Latin America, Spain and Portugal, pursuant to
    which we are delivering Medscape from WebMDs
    clinical information to these markets.
    In October 2009, we launched a new health information Website in
    the United Kingdom with Boots UK, the United Kingdoms
    leading pharmacy-led health and beauty retailer. The co-branded
    Boots WebMD site at www.WebMD.boots.comfeatures daily
    health and wellness news, condition and healthy living centers,
    interactive health tools, WebMDs symptom checker,
    specialized health search, health videos and interactive slide
    shows. Boots supported the launch with a national marketing and
    consumer education effort to its large UK customer base to
    promote the new site, through in-store marketing, in its health
    and beauty magazines, on its heavily trafficked
    e-commerce
    site and to its large base of loyalty program members. In
    addition, Boots UK has engaged its thousands of pharmacists to
    create awareness of the site and its offerings during their
    frequent patient interactions.    PRIVATE
    PORTALS
  Introduction
    
    changing benefit plan designs to increase deductibles,
    co-payments and other
    out-of-pocket
    costs;
    enhancing health management and wellness programs and providing
    incentives for participation in those programs; and
    taking other steps to motivate employees and plan members to use
    healthcare in a cost-effective manner. 12




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The WebMD Health Network The WebMD Health Networks
  The WebMD
    Health and Benefits Manager
  sm
  sm
    
    The WebMD Health Management Suitegives employees and
    plan members access to personalized content and tools that
    empower them to evaluate and manage their healthcare, motivate
    them to make healthier lifestyle choices, and help them improve
    their overall health. The Health Management Suite incorporates
    our WebMD
    HealthQuotientsm

    health risk assessment applications, which enable users to
    assess their overall health risks and to understand their unique
    risk factors with regard to specific conditions. The results of
    the health risk assessment are then used, along with the
    individuals health profile and usage patterns, to give
    each user a personalized experience relevant to his or her
    specific needs and interests. Users can get consistent
    reinforcement from lifestyle improvement programs, health
    management content, and targeted health messaging. For those at
    low risk, educational content and 13




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lifestyle management resources reinforce good decisions and
    behaviors. For high-risk populations, condition management
    programs support productive interventions. We complement our
    Health Management Suite with personalized telephonic health
    coaching and related services. See Telephonic Health
    Coaching and Related Services below.  
    The WebMD Benefits & Financial Suitehelps
    employees and plan members understand the financial implications
    of their benefits options and make more informed
    benefits-related purchase decisions. Using WebMD Coverage
    Advisorsm,

    they can compare costs across available health plan options
    based on personalized information regarding coverage
    alternatives, along with cost-modeling and projection utilities.
    WebMD HSA
    Advisorsm

    provides personalized resources to assist in determining
    appropriate amounts for individuals to contribute to medical
    savings accounts based on their profile. The
    Benefits & Financial Suite is integrated with WebMD
    Health Management Suite applications and content, so users can
    align their benefits choices with their personal health profile
    and individual financial circumstances. Cost-modeling and
    projection tools help users to understand and adopt the right
    health plan for their situation.
    The WebMD Provider & Treatment Suitegives
    employees and plan members access to information and services
    that can help them factor quality and cost into decisions about
    care and treatment options. The Provider & Treatment
    Suite helps users analyze provider quality, identify appropriate
    drug and treatment choices, and understand the costs associated
    with their care. The WebMD Provider Selection
    Advisorsm

    included in this Suite allows users to search for healthcare
    providers (including physicians, hospitals, medical practices,
    dental providers and others) by name, specialty, location or
    healthcare need/situation and provides profiles and comparative
    information on these providers. The quality comparisons provided
    by this Suite are based on evidence-based measures, such as
    volume of patients treated for particular illnesses or
    procedures, mortality rates, unfavorable outcomes for specific
    problems, and average length of hospital stay. Our ability to
    provide comparative information about cost and quality depends
    on our ability to obtain the required data to do so, which we
    currently receive from a number of public and private sources,
    including federal and state governmental sources and the
    Leapfrog Group. We cannot provide assurance that we would be
    able to find alternative sources for this data, if needed, on
    acceptable terms and conditions.
    The WebMD Health Record Suitehelps employees and plan
    members gather, store, manage and share their essential health
    data. The Health Record Suite provides a secure personal health
    record for self-reported and professionally sourced health data,
    and prompts the employee or plan member with secure,
    personalized health alerts describing potential care or
    medication issues. Medical and pharmacy claims data as well as
    lab results can be automatically imported into individuals
    health records. In addition, the WebMD Health Record Suite
    allows individual users to authorize access by healthcare
    providers. Provider access to electronic health records
    encourages better communication and can reduce errors or
    duplications. The WebMD Health Record Suite is integrated with
    other suites in the WebMD Health and Benefits Manager and drives
    personalization in those tools. An individuals health
    record is portable, independent of the specific employer or
    health plan. An individual can access their health record
    through webmd.com or the WebMD private portal of a future
    employer or benefit plan, using a single username/password as a
    secure identifier.    Telephonic
    Health Coaching and Related Services
   14




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one-on-one
  
    Online Coaching.  Our online, self-directed
    health coaching programs focus on exercise, nutrition, smoking
    cessation, weight management, emotional health and stress
    management. These programs let individuals set and track
    wellness goals, learn more about their behaviors and risks and
    follow self-paced personal action plans to improve their health.
    Each program includes comprehensive education modules and
    interactive goal setting and experience tracking.
    Onsite Services.  We offer three types of
    onsite services to our employer clients: onsite wellness
    coordinators help to augment in-house staff; onsite health
    coaches that extend the telephonic coaching model to an onsite,
    in-person model (often delivered within an onsite clinic); and
    turnkey biometric screening and health fair solutions through a
    combination of third party vendors and our own services.    Engagement
    Services
    
    Communications Services.  The Insight Engine
    enables targeted email communication campaigns that inform and
    motivate employees and plan members to change their behaviors
    and improve health status. Messages can be targeted based on
    health profile characteristics, demographics, or site usage, and
    they can be designed to raise awareness of specific resources
    and programs or to motivate lifestyle changes. We also provide
    print newsletters to provide an additional channel to motivate
    utilization of health programs by individuals and their
    dependents.
    Rewards Programs.  We assist employers and
    health plans to motivate their employees and members through
    wellness incentive programs that encourage and reward use of
    health management services and specific health behaviors. Our
    flexible rewards platform enables clients to design and manage
    custom rewards programs based on participation, activity or
    outcomes. Rewards fulfillment may include gift cards, electronic
    funds transfer into HSA accounts, rewards debit cards or check
    rewards.  Relationships
    with Customers
   15




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
    encouragement of healthy lifestyles and behaviors that help
    reduce healthcare costs and improve employee productivity;
    reduced benefits administration, communication, and customer
    service costs;
    reduced hospital, physician and drug costs through more informed
    utilization of the benefit plan;
    increased enrollment in health management programs, including
    disease management or health coaching;
    increased conformance with benefit plan and clinical
    protocols; and
    enhanced health risk stratification that assists employers and
    health plans in selecting health management programs that are
    appropriate to the needs of their specific populations.    
    increased tax savings through increased participation in FSAs
    and HSAs;
    reduced benefit costs through more informed choice of benefit
    plan options and more informed use of the chosen benefit plan;
    improved health outcomes, through more informed choices of
    providers and treatments; and
    improved understanding and management of health conditions
    through access to support tools and educational information.  Sales and
    Marketing
    TECHNOLOGICAL
    INFRASTRUCTURE
     16




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##### Table of Contents



USER
    PRIVACY AND TRUST
    
    URAC.  We have been awarded
    e-Health
    accreditation from URAC, an independent accrediting body that
    has reviewed and approved the WebMD.com site and our private
    portal deployment of WebMD Personal Health Manager for
    compliance with its quality and ethics standards.
    TRUSTe.  WebMD.com and MedicineNet.com are
    licensees of the TRUSTe Privacy Seal and our private portals
    deployment of WebMD Personal Health Manager is a recipient of
    the TRUSTe EU Safe Harbor programs. TRUSTe is an independent,
    non-profit organization whose goal is to build users trust
    and confidence in the Internet. Each year since 2005, TRUSTe and
    the Ponemon Institute have sponsored an independently
    administered user-based ranking of the most trusted companies in
    America, and WebMD has consistently ranked among the most
    trusted in each of those rankings.
    Health on the Net Foundation.  Our WebMD.com,
    eMedicine.com, eMedicineHealth.com, and MedicineNet.com sites
    and WebMD Personal Health Manager comply with the principles of
    the HON Code of Conduct established by the Health on the Net
    Foundation.    Privacy
    Policies
    Policies
    Regarding Advertisements, Sponsorships and Promotions
    Editorial
    Policies
  General.
 17




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Licensed Content.
  COMPETITION
    Public
    Portals
  not-for-profit
  
    general purpose consumer Websites or search engines that offer
    specialized health
    sub-channels,
    including yahoo.com, msn.com, AOL.com, Google and Bing; and
    other high traffic Websites that include healthcare-related and
    non-healthcare-related content and services.      
    publishers and distributors of traditional offline media,
    including television, radio, books, newspapers and magazines
    targeted to consumers, as well as print journals and other
    specialized media targeted to healthcare professionals, many of
    which have established or may establish their own Websites or
    partner with other Websites;
    offline medical conferences, CME programs and symposia;
    vendors of
    e-detailing
    services, such as Physicians Interactive, and our clients
    own in-house detailing efforts; and
    vendors of healthcare information and related services
    distributed through other means, including direct sales, mail
    and fax messaging. 18




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##### Table of Contents



Private
    Portals
    
    wellness and disease management vendors, including Mayo
    Foundation for Medical Education and Research, StayWell
    Productions/MediMedia USA, Inc., Healthways, Health Dialog
    (which is owned by Bupa) and Alere (a division of Inverness
    Medical Innovations);
    suppliers of online and offline electronic personal health
    records and related applications and platforms, including Medem,
    CapMed, Epic Systems, Microsoft, Google and a variety of other
    companies;
    suppliers of other online and offline health management
    applications, including HealthMedia (which is owned by
    Johnson & Johnson), OptumHealth (which is owned by
    United Healthcare), A.D.A.M. Inc., and Consumer Health
    Interactive;
    health information services and health management offerings of
    health plans and their affiliates, including Avivia Health,
    which is owned by Kaiser Permanente, and those of Humana, Aetna
    and United Healthcare; and
    other providers of health and benefits decision-support tools
    and related services.  GOVERNMENT
    REGULATION, INDUSTRY STANDARDS AND RELATED MATTERS
  Introduction
  Healthcare Regulation.
    Other Applicable Regulation.
 19




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Regulation
    of Drug and Medical Device Advertising and Promotion
  over-the-counter
      over-the-counter
  and/or and/or
 20




---



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and/or
  direct-to-consumer
    Regulation
    and Accreditation of Continuing Medical Education
    Medscape Education
     21




---



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
    may discourage pharmaceutical companies from providing grants
    for independent educational activities;
    may slow their internal approval for such grants;
    may reduce the volume of sponsored educational programs that
    Medscape, LLC produces to levels that are lower than in the
    past, thereby reducing revenue; and
    may require Medscape, LLC to make changes to how it offers or
    provides educational programs, including CME.    HIPAA
    Privacy Standards and Security Standards
   22




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Genetic
    Information Nondiscrimination Act (GINA)
       23




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Other
    Restrictions Regarding Confidentiality, Privacy and Security of
    Health Information
      Consumer
    Protection Regulation
  General.
    and/or
   24




---



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Data Protection Regulation. and/or
  CAN-SPAM Act.
 25




---



##### Table of Contents



e-newsletters
  Regulation of Advertisements Sent by
    Fax.
          COPPA. WebMD
    Health not-for-profit
  Regulation of Contests and
    Sweepstakes.
 26




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##### Table of Contents



FACTA.
  Medical
    Professional Regulation
    Federal
    False Claims Act
  qui
    tam qui tam
  Anti-Kickback
    Laws
  e-details.
 27




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##### Table of Contents



Regulation
    of Wellness Incentive Programs
    Bulletin No. 2007-04 2007-04) 2007-04 2007-04, 08-01
   28




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International
    Regulation
  The WebMD Health Network non-U.S. users;
    2010
    Healthcare Reform Legislation
     29




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30




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OTHER
    INFORMATION
  Employees
    Intellectual
    Property
      Seasonality
    Other
  Form 10-K,
 31




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Item 1A.
    Risk
    Factors  This section describes circumstances or events that could
    have a negative effect on our financial results or operations or
    that could change, for the worse, existing trends in some or all
    of our businesses. The occurrence of one or more of the
    circumstances or events described below could have a material
    adverse effect on our financial condition, results of operations
    and cash flows or on the trading prices of our Common Stock and
    Convertible Notes or of securities that we may issue in the
    future. The risks and uncertainties described in this Annual
    Report are not the only ones facing us. Additional risks and
    uncertainties that are not currently known to us or that we
    currently believe are immaterial may also adversely affect our
    business and operations.
    Risks
    Related to Our Operations and the Healthcare Content We
    Provide
  If we
    are unable to provide content and services that attract and
    retain users to The WebMD Health Network on a consistent basis,
    our advertising and sponsorship revenue could be
    reduced
  The WebMD Health Network
  
    our ability to hire and retain qualified authors, journalists
    and independent writers;
    our ability to license quality content from third
    parties; and
    our ability to monitor and respond to increases and decreases in
    user interest in specific topics.  The WebMD Health Network The WebMD Health Network,
  Developing
    and implementing new and updated features and services for our
    public and private portals and our mobile applications may be
    more difficult than expected, may take longer and cost more than
    expected, and may not result in sufficient increases in revenue
    to justify the costs
    and/or
 32




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We
    face significant competition for our healthcare information
    products and services
    
    Our public portals and mobile applications face competition from
    numerous other companies, both in attracting users and in
    generating revenue from advertisers and sponsors. We compete for
    users with online services and Websites that provide
    health-related information, including both commercial sites and
    not-for-profit
    sites. We compete for advertisers and sponsors with:
    health-related Websites; general purpose consumer Websites that
    offer specialized health
    sub-channels;
    other high-traffic Websites that include both healthcare-related
    and non-healthcare-related content and services; search engines
    that provide specialized health search; and advertising networks
    that aggregate traffic from multiple sites. Our public portals
    also face competition from offline publications and information
    services.
    Our private portals compete with: providers of healthcare
    decision-support tools and online health management
    applications, including personal health records; wellness and
    disease management vendors; and health information services and
    health management offerings of healthcare benefits companies and
    their affiliates.    Failure
    to maintain and enhance the WebMD brand could have a
    material adverse effect on our business
    Our
    online businesses have a limited operating history
    Our
    failure to attract and retain qualified executives and employees
    may have a material adverse effect on our business
   33




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The
    timing of our advertising and sponsorship revenue may vary
    significantly from quarter to quarter and is subject to factors
    beyond our control, including regulatory changes affecting
    advertising and promotion of drugs and medical devices and
    general economic conditions
      
    the timing of FDA approval for new products or for new approved
    uses for existing products;
    the timing of FDA approval of generic products that compete with
    existing brand name products;
    the timing of withdrawals of products from the market;
    the timing of rollouts of new or enhanced services on our public
    portals;
    seasonal factors relating to the prevalence of specific health
    conditions and other seasonal factors that may affect the timing
    of promotional campaigns for specific products; and
    the scheduling of conferences for physicians and other
    healthcare professionals.  We may
    be unsuccessful in our efforts to increase advertising and
    sponsorship revenue from consumer products
    companies
    Increasingly,
    individuals are using mobile devices to access the Internet and,
    if we fail to capture a significant share of this portion of the
    market for online health information services, our business
    could be adversely affected
   34




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Lengthy
    sales and implementation cycles for our private online portals
    make it difficult to forecast our revenues from these
    applications and may have an adverse impact on our
    business
      Our
    ability to renew existing agreements with employers and health
    plans will depend, in part, on our ability to continue to
    increase usage of our private portal services by their employees
    and plan members
    We may
    be subject to claims brought against us as a result of content
    we provide
   35




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Expansion
    to markets outside the United States will subject us to
    additional risks
    
    challenges caused by language and cultural differences;
    difficulties in staffing and managing operations from a distance;
    uncertainty regarding liability for services and content;
    burdens of complying with a wide variety of legal, regulatory
    and market requirements;
    variability of economic and political conditions, including the
    extent of the impact of adverse economic conditions in markets
    outside the United States;
    tariffs or other trade barriers;
    fluctuations in currency exchange rates;
    potentially adverse tax consequences, including restrictions on
    repatriation of earnings; and
    difficulties in protecting intellectual property.  Risks
    Related to the Internet and Our Technological
    Infrastructure
  Any
    service interruption or failure in the systems that we use to
    provide online services could harm our business
   36




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
    damage from fire, power loss and other natural disasters;
    communications failures;
    software and hardware errors, failures and crashes;
    security breaches, computer viruses and similar disruptive
    problems; and
    other potential service interruptions.      Implementation
    of additions to or changes in hardware and software platforms
    used to deliver our online services may result in performance
    problems and may not provide the additional functionality that
    was expected
    If the
    systems we use to provide online portals experience security
    breaches or are otherwise perceived to be insecure, our business
    could suffer
  denial-of-service
 37




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Our
    online services are dependent on the development and maintenance
    of the Internet infrastructure
  denial-of-service
    Third
    parties may challenge the enforceability of our online
    agreements
    We
    could be subject to breach of warranty or other claims by
    clients of our online portals if the software and systems we use
    to provide them contain errors or experience
    failures
      Risks
    Related to the Healthcare Industry, Healthcare Regulation and
    Internet Regulation
  Developments
    in the healthcare industry could adversely affect our
    business
   38




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##### Table of Contents




    government regulation or private initiatives that affect the
    manner in which healthcare providers interact with patients,
    payers or other healthcare industry participants, including
    changes in pricing or means of delivery of healthcare products
    and services;
    consolidation of healthcare industry participants;
    reductions in governmental funding for healthcare; and
    adverse changes in business or economic conditions affecting
    healthcare payers or providers, pharmaceutical, biotechnology or
    medical device companies or other healthcare industry
    participants.      
    changes in the design of health insurance plans;
    a decrease in the number of new drugs or medical devices coming
    to market; and
    decreases in marketing expenditures by pharmaceutical or medical
    device companies, including as a result of governmental
    regulation or private initiatives that discourage or prohibit
    advertising or sponsorship activities by pharmaceutical or
    medical device companies.      Recently
    enacted federal health care reform legislation could adversely
    affect our healthcare industry customers and clients, causing
    them to reduce expenditures, including expenditures for our
    services
     39




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Government
    regulation of healthcare creates risks and challenges with
    respect to our compliance efforts and our business
    strategies
    
    Regulation of Drug and Medical Device Advertising and
    Promotion.  The WebMD Health Networkprovides
    services involving advertising and promotion of prescription and
    over-the-counter
    drugs and medical devices. If the Food and Drug Administration
    (FDA) or the Federal Trade Commission (FTC) finds that any
    information on The WebMD Health Network, in our mobile
    applications, or in WebMD the Magazineviolates
    applicable regulations, they may take regulatory or judicial
    action against us
    and/or the
    advertiser or sponsor of that information. State attorneys
    general may also take similar action based on their states
    consumer protection statutes. Any increase or change in
    regulation of drug or medical device advertising and promotion
    could make it more difficult for us to contract for sponsorships
    and advertising. We cannot predict what actions the FDA or
    industry participants may take in the future. It is also
    possible that new laws would be enacted that impose restrictions
    on such advertising. In addition, recent private industry
    initiatives have resulted in voluntary restrictions, which
    advertisers and sponsors have agreed to follow. Our advertising
    and sponsorship revenue could be materially reduced by
    additional restrictions on the advertising of prescription drugs
    and medical devices to consumers, whether imposed by law or
    regulation or required under policies adopted by industry
    members.
    Anti-kickback Laws.  There are federal and
    state laws that govern patient referrals, physician financial
    relationships and inducements to healthcare providers and
    patients. The federal healthcare programs anti-kickback law
    prohibits any person or entity from offering, paying, soliciting
    or receiving anything of value, directly or indirectly, for the
    referral of patients covered by Medicare, Medicaid and other
    federal healthcare programs or the leasing, purchasing, ordering
    or arranging for or recommending the lease, purchase or order of
    any item, good, facility or service covered by these programs.
    Many states also have similar anti-kickback laws that are not
    necessarily limited to items or services for which payment is
    made by a federal healthcare program. These laws are applicable
    to manufacturers and 40




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##### Table of Contents



distributors and, therefore, may restrict how we and some of our
    customers market products to healthcare providers, including
    e-details.
    Any determination by a state or federal regulatory agency that
    any of our practices violate any of these laws could subject us
    to civil or criminal penalties and require us to change or
    terminate some portions of our business and could have an
    adverse effect on our business. Even an unsuccessful challenge
    by regulatory authorities to our practices could result in
    adverse publicity and be costly for us to respond to.  
    False Claims Laws.  The Federal False Claims
    Act imposes liability on any person or entity who, among other
    things, knowingly presents, or causes to be presented, a false
    or fraudulent claim for payment by a Federal healthcare program.
    In addition, various states have enacted false claim laws
    analogous to the Federal False Claims Act, and many of these
    state laws apply where a claim is submitted to any third-party
    payor and not merely a federal healthcare program. When an
    entity is determined to have violated the Federal False Claims
    Act, it may be required to pay up to three times the actual
    damages sustained by the government plus civil penalties. In
    recent years an increasing number of Federal False Claims Act
    cases have been brought against drug manufacturers and resulted
    in significant monetary settlements and imposition of federally
    supervised corporate integrity agreements in circumstances that
    include allegations that company-sponsored CME was unlawful
    off-label promotion. Any action against us for violation of
    these laws could cause us to incur significant legal expenses
    and may adversely affect our ability to operate our business.
    Medical Professional Regulation.  The practice
    of most healthcare professions requires licensing under
    applicable state law. In addition, the laws in some states
    prohibit business entities from practicing medicine. If a state
    determines that some portion of our business violates these
    laws, it may seek to have us discontinue those portions or
    subject us to penalties or licensure requirements. Any
    determination that we are a healthcare provider and have acted
    improperly as a healthcare provider may result in liability to
    us.
    GINA.  The Genetic Information
    Nondiscrimination Act (GINA) prohibits discrimination based on
    genetic information in employment and in health insurance
    coverage. The law applies to our private portal customers,
    including both employers and group health plans. WebMDs
    Health Risk Assessment (or HRA), HealthQuotient, is typically
    offered to employees as a voluntary component of their
    employer-sponsored wellness program. Title I of GINA can
    have significant implications for wellness programs offered by
    group health plans in that it prohibits the collection of
    genetic information, which includes an individuals family
    medical history, prior to or in connection with enrollment or
    for underwriting purposes. Underwriting purposes includes
    providing incentives or rewards for completion of an HRA that
    requests genetic information. Title II of GINA prohibits
    employment discrimination based on genetic information as well
    as the request or purchase of genetic information of employees
    or their family members with limited exceptions, including a
    limited exception for voluntary wellness programs. WebMD may
    face challenges as a result of varying interpretations of the
    law by our customers and by the multiple enforcing agencies
    including the U.S. Departments of Health and Human Services
    (HHS), Labor and Treasury and the Equal Employment
    Opportunity Commission. Interpretations of the law have required
    us to modify the HealthQuotient product and we could experience
    increases in operational costs or decreases in demand for our
    products.  Government
    regulation of the Internet could adversely affect our
    business
   41




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Failure
    to comply with laws relating to privacy and security of personal
    information, including personal health information, could result
    in liability to us and concerns about privacy-related issues
    could damage our reputation and our business
     42




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Failure
    to maintain CME accreditation could adversely affect Medscape,
    LLCs ability to provide online CME offerings
        Government
    regulation and industry initiatives could adversely affect the
    volume of sponsored online CME programs implemented through our
    Websites or require changes to how Medscape, LLC offers
    CME
  and/or
    
    may discourage pharmaceutical companies from providing grants
    for independent educational activities;
    may slow their internal approval for such grants; 43




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
    may reduce the volume of sponsored educational programs that
    Medscape, LLC produces to levels that are lower than in the
    past, thereby reducing revenue; and
    may require Medscape, LLC to make changes to how it offers or
    provides educational programs, including CME.    Other
    Risks Applicable to Our Company and to Ownership of Our
    Securities
  Provisions
    in our organizational documents and Delaware law may inhibit a
    takeover, which could adversely affect the value of our Common
    Stock
    If
    certain transactions occur with respect to our capital stock,
    limitations may be imposed on our ability to utilize net
    operating loss carryforwards and tax credits to reduce our
    income taxes
        We may
    not be successful in protecting our intellectual property and
    proprietary rights
   44




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Third
    parties may claim that we are infringing their intellectual
    property, and we could suffer significant litigation or
    licensing expenses or be prevented from providing certain
    services, which may harm our business
    Acquisitions,
    business combinations and other transactions may be difficult to
    complete and, if completed, may have negative consequences for
    our business and our security holders
    
    cash and cash equivalents on hand and marketable securities;
    proceeds from the incurrence of indebtedness; and
    proceeds from the issuance of common stock, preferred stock,
    convertible debt or of other securities.    
    cause substantial dilution of the percentage ownership of our
    stockholders at the time of the issuance;
    cause substantial dilution of our earnings per share;
    subject us to the risks associated with increased leverage,
    including a reduction in our ability to obtain financing or an
    increase in the cost of any financing we obtain;
    subject us to restrictive covenants that could limit our
    flexibility in conducting future business activities; and
    adversely affect the prevailing market price for our outstanding
    securities.    Our
    business will suffer if we fail to successfully integrate
    acquired businesses and technologies or to assess the risks in
    particular transactions
   45




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##### Table of Contents




    our ability to maintain relationships with the customers of the
    acquired business;
    our ability to retain or replace key personnel of the acquired
    business;
    potential conflicts in sponsor or advertising relationships or
    in relationships with strategic partners;
    our ability to coordinate organizations that are geographically
    diverse and may have different business cultures; and
    compliance with regulatory requirements.      We may
    not be able to raise additional funds when needed for our
    business or to exploit opportunities
   46




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Item 3.
    Legal
    Proceedings    Item 4.
    [Removed
    and Reserved] 47




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    High

Low2009First quarter

$
25.20


$
19.37Second quarter


30.70



20.15Third quarter


34.43



28.73Fourth quarter


38.97



31.002010First quarter


46.58



37.64Second quarter


51.19



42.70Third quarter


52.81



45.37Fourth quarter


52.65



48.58     
    quarter-to-quarter
    variations in operating results;
    operating results being different from analysts estimates
    or opinions;
    changes in analysts earnings estimates;
    changes in financial guidance or other forward-looking
    information;
    new products, services or pricing policies introduced by us or
    our competitors;
    acquisitions by us or our competitors;
    developments in existing customer relationships;
    actual or perceived changes in our business strategy;
    developments in new or pending litigation and claims;
    sales of large amounts of our Common Stock;
    changes in general business or regulatory conditions affecting
    the healthcare, information technology or Internet industries;
    changes in general economic conditions; and
    fluctuations in the securities markets in general.   48




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##### Table of Contents



Holders
    Dividends
    Repurchases
    of Equity Securities During the Fourth Quarter of 2010
    Issuer
    Purchases of Equity Securities
  Total


ApproximateNumber of


Dollar Value ofTotal





Shares Purchased as


Shares that May YetNumber of





Part of Publicly


Be Purchased UnderShares


Average Price


Announced Plans or


the Plans orPeriod

Purchased(1)


Paid per Share


Programs


Programs(2)10/01/10  10/31/10


444


$
49.83






$
15,085,94611/01/10  11/30/10


26,008


$
52.33






$
15,085,94612/01/10  12/31/10


33,194


$
50.87






$
15,085,946Total


59,646


$
51.50



     (1)
    Represents shares withheld from WebMD Restricted Common Stock
    that vested during the respective periods in order to satisfy
    withholding tax requirements related to the vesting of the
    awards. The value of these shares was determined based on the
    closing price of WebMD Common Stock on the date of vesting.(2)
    In each period, $15,085,946 relates to the repurchase program
    that WebMD announced in December 2008, at which time WebMD was
    authorized to use up to $30 million to purchase shares of
    its Common Stock from time to time. For additional information,
    see Note 12 to the Consolidated Financial Statements
    included in this Annual Report. 49




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Performance
    Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
 among WebMD Health Corp., the NASDAQ Composite Index
 and the RDG Internet Composite Index
  
  *
    $100 Invested on 12/31/05 in stock or index, including
    reinvestment of dividends.
    Fiscal year ending December 31. 50




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended
    December 31,(1)(2)(3)2010


2009


2008


2007


2006(In thousands, except per share data)Consolidated Statements of Operations Data:Revenue

$
534,519


$
438,536


$
373,462


$
319,232


$
899,585Cost of operations


187,831



165,753



135,138



114,000



542,723Sales and marketing


120,874



112,101



106,080



91,035



116,258General and administrative


85,496



89,620



88,053



102,661



130,056Depreciation and amortization


27,578



28,185



28,410



27,808



44,073Interest income


3,949



9,149



35,300



42,035



32,339Interest expense


11,453



23,515



26,428



25,887



25,472Loss (gain) on convertible notes


23,332



(10,120
)










Loss on investments


9,517







60,108







Severance and other transaction expenses






11,066



6,941



2,527



Gain on sale of EBS Master LLC










538,024







Restructuring










7,416







Gain on 2006 EBS Sale














399



352,297Other (expense) income, net


(72
)


(1,369
)


992



5,933



(4,252
)Income from continuing operations before income tax provision
    (benefit)


72,315



26,196



489,204



3,681



421,387Income tax provision (benefit)


20,043



(45,491
)


26,638



(9,053
)


50,033Equity in earnings of EBS Master LLC










4,007



28,566



763Consolidated income from continuing operations


52,272



71,687



466,573



41,300



372,117Consolidated income (loss) from discontinuedoperations, net of tax


1,800



49,354



94,682



(18,048
)


393,527Consolidated net income inclusive of noncontrolling interest


54,072



121,041



561,255



23,252



765,644Income attributable to noncontrolling interest






(3,705
)


(1,032
)


(10,667
)


(405
)Net income attributable to Company stockholders

$
54,072


$
117,336


$
560,223


$
12,585


$
765,239Amounts attributable to Company stockholders:Income from continuing operations

$
52,272


$
67,018


$
465,725


$
31,845


$
371,844Income from discontinued operations


1,800



50,318



94,498



(19,260
)


393,395Net income attributable to Company stockholders

$
54,072


$
117,336


$
560,223


$
12,585


$
765,239Basic income per common share:Income from continuing operations

$
0.93


$
1.40


$
5.99


$
0.40


$
3.00Income from discontinued operations


0.04



1.05



1.22



(0.24
)


3.17Net income attributable to Company stockholders

$
0.97


$
2.45


$
7.21


$
0.16


$
6.17Diluted income per common share:Income from continuing operations

$
0.85


$
1.21


$
4.92


$
0.36


$
2.69Income from discontinued operations


0.03



0.86



0.96



(0.23
)


2.67Net income attributable to Company stockholders

$
0.88


$
2.07


$
5.88


$
0.13


$
5.36Weighted-average shares outstanding used incomputing per share amounts:Basic


55,328



47,400



77,738



79,694



124,092Diluted


62,228



57,740



97,824



83,886



147,382   51




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##### Table of Contents



As of December
    31,(1)(2)(3)2010

2009

2008

2007

2006(In thousands)Consolidated Balance Sheets Data:Cash, cash equivalents and investments

$
400,501


$
808,144


$
917,897


$
830,120


$
651,464Working capital (excluding assets and liabilities of
    discontinued operations)


420,353



159,539



633,462



860,181



617,101Total assets


942,202



1,288,548



1,501,734



1,651,481



1,469,795Long-term convertible notes, net of discount






227,659



614,018



605,776



598,121Convertible redeemable exchangeable preferred stock


















98,768Noncontrolling interest










134,223



131,353



101,860Stockholders equity


752,895



564,768



496,698



642,809



422,853     (1)
    On October 23, 2009, WebMD Health Corp. completed a merger
    with HLTH Corporation (the Merger), with WebMD
    Health Corp. continuing as the surviving company. The accounting
    treatment for the Merger results in HLTH Corporation being
    treated as the acquiring entity and the pre-acquisition
    consolidated financial statements of HLTH Corporation being
    treated as the historical financial statements of WebMD Health
    Corp. for all historical periods presented. See
    Introduction   Basis of Presentation;
    Accounting Treatment of the Merger within
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations, which is included in Item 7 of
    this Annual Report.(2)
    For the year ended December 31, 2006, the consolidated
    financial position and results of operations reflect the sale of
    a 52% interest in our Emdeon Business Services business (which
    we refer to as EBS), as of November 16, 2006. Accordingly, the
    consolidated balance sheet as of December 31, 2006 excludes
    the assets and liabilities of EBS and includes an investment in
    EBS Master LLC accounted for under the equity method of
    accounting related to our 48% ownership, and the consolidated
    statement of operations for the year ended December 31,
    2006 includes the operations of EBS for the period
    January 1, 2006 through November 16, 2006 and our 48%
    equity in earnings of EBS Master LLC from November 17, 2006
    through December 31, 2006.(3)
    On July 22, 2008, we completed the sale of our ViPS
    business, on September 30, 2009 we completed the sale of
    our Little Blue Book print directory business and on
    October 19, 2009 we completed the sale of our Porex
    business. Accordingly, the selected consolidated financial data
    has been reclassified to reflect the historical results for
    these businesses as discontinued operations for all periods
    presented. 52




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This Item 7 contains forward-looking statements that
    involve risks and uncertainties. Please see
    Forward-Looking Statements for a discussion of the
    uncertainties, risks and assumptions associated with these
    statements. The results of operations for the periods reflected
    herein are not necessarily indicative of results that may be
    expected for future periods, and our actual results may differ
    materially from those discussed in our forward-looking
    statements as a result of various factors, including but not
    limited to those listed under Risk Factors in
    Item 1A of this Annual Report and those included elsewhere
    in this Annual Report. In this MD&A, dollar amounts (other
    than per share amounts) are stated in thousands, unless
    otherwise noted.
  Overview
    
    Introduction.  This section provides: a general
    description of our company and its business; a description of
    our merger with HLTH Corporation (which we refer to as the
    Merger); background information on certain trends, transactions
    and other developments affecting our company; and a discussion
    of how seasonal factors may impact the timing of our revenue.
    Critical Accounting Estimates and
    Policies.  This section discusses those accounting
    policies that are considered important to the evaluation and
    reporting of our financial condition and results of operations,
    and whose application requires us to exercise subjective and
    often complex judgments in making estimates and assumptions. In
    addition, all of our significant accounting policies, including
    our critical accounting policies, are summarized in Note 2
    to the Consolidated Financial Statements included in this Annual
    Report.
    Results of Operations and Supplemental Financial and
    Operating Information.  These sections provide our
    analysis and outlook for the significant line items on our
    statements of operations, as well as other information that we
    deem meaningful to understand our results of operations on a
    consolidated basis.
    Liquidity and Capital Resources.  This section
    provides an analysis of our liquidity and cash flows, as well as
    a discussion of our commitments that existed as of
    December 31, 2010.
    Recent Accounting Pronouncements.  This section
    provides a summary of the most recent authoritative accounting
    standards and guidance that have either been recently adopted by
    our company or may be adopted in the future.  Introduction
  Our Company.
 53




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##### Table of Contents



Basis of Presentation; Accounting Treatment of the
    Merger.
      Our Business.
  e-newsletters e-detailing
 54




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##### Table of Contents



WebMD the Magazine
    Background Information on Certain Trends Influencing the
    Use of Our Services.
  
    Use of the Internet by Consumers and
    Physicians.  The Internet has emerged as a major
    communications medium and has already fundamentally changed many
    sectors of the economy, including the marketing and sales of
    financial services, travel, and entertainment, among others. The
    Internet is also changing the healthcare industry and has
    transformed how consumers and physicians find and utilize
    healthcare information.  
    Healthcare consumers increasingly seek to educate themselves
    online about their healthcare-related issues, motivated in part
    by the larger share of healthcare costs they are being asked to
    bear due to changes in the benefit designs being offered by
    health plans and employers. The Internet has fundamentally
    changed the way consumers obtain health and wellness
    information, enabling them to have immediate access to
    searchable information and dynamic interactive content to check
    symptoms, assess risks, understand diseases, find providers and
    evaluate treatment options.
    The Internet has also become a primary source of information for
    physicians seeking to improve clinical practice and is growing
    relative to traditional information sources, such as
    conferences, meetings and offline journals.  
    Increased Online Marketing and Education Spending for
    Healthcare Products.  Pharmaceutical,
    biotechnology and medical device companies spend large amounts
    each year marketing their products and educating consumers and
    physicians about them; however, only a small portion is
    currently spent on online services. We believe that these
    companies, which comprise the majority of the advertisers and
    sponsors of our public portals, are becoming increasingly aware
    of the effectiveness of the Internet relative to traditional
    media in providing health, clinical and product-related
    information to consumers and physicians, and this increasing
    awareness will result in increasing demand for our services. In
    addition, in an effort to improve operating efficiencies, some
    pharmaceutical companies have been reducing their field sales
    forces in the past several years. We believe that, in their
    effort to achieve greater overall marketing efficiency,
    pharmaceutical companies will continue to increase the use of
    online promotional marketing to physicians and other healthcare
    professionals, including through use of our services. However,
    notwithstanding our general expectation for increased demand,
    our advertising and sponsorship revenue may vary significantly
    from quarter to quarter due to a number of factors, including
    general economic and regulatory conditions and the following:  
    The majority of our advertising and sponsorship contracts are
    for terms of approximately four to twelve months. We have
    relatively few longer term advertising and sponsorship contracts.
    The time between the date of initial contact with a potential
    advertiser or sponsor regarding a specific program and the
    execution of a contract with the advertiser or sponsor for that
    program may be subject to delays over which we have little or no
    control, including as a result of budgetary constraints of the
    advertiser or sponsor or their need for internal approvals.   55




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
    Reaching Health-Conscious Consumers.  More than
    half of the traffic to our consumer portals is in areas of
    health and wellness that are not related solely to diseases and
    conditions. The demand for reaching health-conscious consumers
    is growing significantly. In addition to pharmaceutical,
    biotechnology and medical device companies, our public portals
    advertisers and sponsors include consumer products companies
    whose products relate to health, wellness, diet, fitness,
    lifestyle, safety and illness prevention. During 2010, we
    supported a growing number of consumer product company clients,
    including Johnson & Johnson, Proctor & Gamble and
    Nestle Corp., along with retailers such as
    Wal-Mart and
    Target. We plan to continue to focus on increasing sponsorship
    revenues from consumer products companies, retailers and other
    companies that are interested in communicating health-related or
    safety-related information about their products or services to
    our audience.
    Use of Health and Benefits Applications.  In a
    healthcare market where a greater share of the responsibility
    for healthcare costs and decision-making has been shifting to
    consumers, use of information technology to assist consumers in
    making informed decisions about healthcare has also increased.
    We believe that through our WebMD Health and Benefits Manager
    tools, including our personal health record application, we are
    well positioned to play a role in this environment. However, our
    strategy depends, in part, on increasing usage of our private
    portal services by our employer and health plan clients
    employees and members and being able to demonstrate a sufficient
    return on investment and other benefits for our private portals
    clients from those services. Increasing usage of our private
    portal services requires us to continue to develop new and
    updated applications, features and services. In addition, we
    face competition in the area of healthcare decision-support
    tools and online health management applications and health
    information services. Many of our competitors have greater
    financial, technical, product development, marketing and other
    resources than we do, and may be better known than we are. We
    also expect that, for clients and potential clients that have
    been adversely affected by general economic conditions, we may
    continue to experience some reductions in initial contracts,
    contract expansions and contract renewals for our private portal
    services, as well as reductions in the size of existing
    contracts.  
    Developments in Social Media and Other
    Applications.  In the past several years, video
    and multimedia applications have become an increasingly
    important part of what users expect from Internet sites. In
    addition, consumers are increasingly using the Internet to
    access social media as a means to communicate and exchange
    information, including regarding health and wellness. Similarly,
    physicians and other healthcare professionals are increasingly
    participating in condition or topic specific community groups
    and other interactive applications. Consumers and healthcare
    professionals are also increasingly using mobile devices to
    access the Internet, with physicians increasingly using mobile
    devices in diagnosis and treatment at the point of care. Mobile,
    while not yet a meaningful revenue source for us, is expected to
    be an important area of growth for the future. We are focused on
    delivering a multi-screen platform that extends the user
    experience beyond the desktop portal onto the mobile device. We
    have invested and intend to continue to invest in software and
    systems that allow us to meet the demands of our users and
    sponsors, including customized content management and publishing
    technology to deliver interactive content, multimedia
    programming and personalized health applications that engage our
    users. The following are some of our recent and current
    initiatives to improve the user experience on our Websites,
    expand our services and increase our user base:  
    Physician Connect, our social networking platform for
    physicians, allows them to exchange information online on a
    range of topics, including patient care, drug information,
    healthcare-related legislation and practice management.
    Physicians can also create polls to assess the opinions of their
    colleagues on a range of topics. We also offer third parties the
    opportunity to sponsor Physician Connectdiscussions and
    polls so that they can gain insights into physicians
    perspectives and areas of interest. As of 56




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##### Table of Contents



January 31, 2011, Physician Connecthad attracted
    more than 150,000 physician members. Medscape from WebMDalso offers a variety of sponsored and unsponsored blogs
    where healthcare professionals can share their thoughts and
    opinions with the Medscape from WebMD community.  
    In March 2010, we launched The WebMD Community, a social
    networking initiative that gives consumers the ability to
    connect with health experts and with other WebMD members to
    exchange information, experiences and support. The WebMD
    Communityis being integrated throughout each of the core
    content areas of WebMD.com, giving members the ability to safely
    and easily connect with others on topics that are most relevant
    to them. In addition to expert-led communities, members are
    empowered to create their own communities and to exchange
    information with other users. The WebMD Community also
    enables third party sponsors to create branded experiences and
    to host consumer discussions on specific health and wellness
    topics most important to them.
    Medscape Mobileis a free medical application that
    includes Medscapes specialty-specific news, comprehensive
    drug information and clinical reference tools. Medscape
    Mobilealso includes CME activities organized by specialty
    and designed for use on a mobile device. Medscape Mobilewas launched for
    iPhone®

    and iPod
    touch®

    users in 2009, for
    Blackberry®

    users in April 2010 and for
    iPadtm

    and
    Androidtm

    users in January 2011. As of December 31, 2010, Medscape
    Mobilehad attracted approximately 700,000 registered users.
    WebMD for iPhoneand WebMD for iPad are free
    applications for consumers that provide mobile access to certain
    WebMD content and tools on an
    iPhone®

    or
    iPadtm,

    including Symptom Checker, First Aid, and Pill Identifier
    applications, as well as other health information. As of
    December 31, 2010, these applications had been downloaded a
    total of approximately 3.5 million times. We also provide
    the entire mobile audience with access to our consumer content
    and tools through our new mobile site at www.m.webmd.com.
    We are pursuing opportunities to expand the reach of our brands
    outside the United States. Generally, we expect that we would
    accomplish this through partnerships or joint ventures with
    other companies having expertise in the specific country or
    region. In October 2009, we launched our first major consumer
    portal outside the United States in partnership with Boots, the
    UKs leading pharmacy-led health and beauty retailer. In
    addition, in certain markets outside of the U.S., we expect to
    provide some of our online services directly to healthcare
    professionals and, to a lesser extent, consumers.  
    Healthcare Reform Legislation.  The Patient
    Protection and Affordable Care Act, as amended by the Health
    Care and Education Reconciliation Act of 2010 (which we refer to
    as the Reform Legislation), was signed into law in March 2010.
    The Reform Legislation makes extensive changes to the system of
    healthcare insurance and benefits in the U.S. In general,
    the Reform Legislation seeks to reduce healthcare costs and
    decrease the number of uninsured legal U.S. residents by,
    among other things, requiring individuals to carry, and certain
    employers to offer, health insurance or be subject to penalties.
    The Reform Legislation also imposes new regulations on health
    insurers, including guaranteed coverage requirements,
    prohibitions on certain annual and all lifetime limits on
    amounts paid on behalf of or to plan members, increased
    restrictions on rescinding coverage, establishment of minimum
    medical loss ratio requirements, a requirement to cover certain
    preventive services on a first dollar basis, the establishment
    of state insurance exchanges and essential benefit packages, and
    greater limitations on how health insurers price certain of
    their products. The Reform Legislation also contains provisions
    that will affect the revenues and profits of pharmaceutical and
    medical device companies, including new taxes on certain sales
    of their products. Many of the provisions of the Reform
    Legislation that expand insurance coverage will not become
    effective until 2014, and many provisions require regulations
    and interpretive guidance to be issued before they will be fully
    implemented. Some provisions do not apply to health plans that
    were in place when the Reform Legislation was enacted and have
    not been substantially changed since. In addition, it is
    difficult to foresee how individuals and businesses will respond
    to the choices available to them under the Reform Legislation.
    Furthermore, the Reform Legislation will result in future state
    legislative and regulatory changes, which we are unable to
    predict at this time, in order for states to comply with certain
    provisions of the Reform Legislation and to participate in
    grants and other incentive opportunities. In addition, a number
    of states 57




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##### Table of Contents



have filed lawsuits challenging the constitutionality of certain
    provisions of the Reform Legislation. As of February 10,
    2011, two federal courts have ruled that the requirement for
    individuals to carry insurance is unconstitutional, but other
    courts have upheld this provision.      Background
    Information on Certain Transactions and Other Significant
    Developments
  Convertible Notes. 1 8 1 8 1 8 1 8
   58




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##### Table of Contents



2010 Tender Offers.
  Sale of Porex.
  Auction Rate Securities.
  2009 Tender Offer.
  Divestiture of the Little Blue Book Print Directory
    Business.
  2008 EBSCo Sale.
 59




---



##### Table of Contents



ViPS Sale.
  Directors & Officers Liability Insurance Coverage
    Litigation. and/or
       60




---



##### Table of Contents



agreed-upon
       61




---



##### Table of Contents



Indemnification Obligations to Former Officers and Directors
    of EPS.
  Seasonality
    Critical
    Accounting Estimates and Policies
  Critical
    Accounting Estimates
   62




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##### Table of Contents



Critical
    Accounting Policies
    
    Revenue Recognition.  Revenue from advertising
    is recognized as advertisements are delivered or as publications
    are distributed. Revenue from sponsorship arrangements, content
    syndication and distribution arrangements, information services
    and licenses of healthcare management tools and private portals
    as well as related health coaching services, are recognized
    ratably over the term of the applicable agreement. Revenue from
    the sponsorship of CME is recognized over the period we
    substantially complete our contractual deliverables as
    determined by the applicable agreements. When contractual
    arrangements contain multiple elements, revenue is allocated to
    each element based on its relative fair value determined using
    prices charged when elements are sold separately. In certain
    instances where fair value does not exist for all the elements,
    the amount of revenue allocated to the delivered elements equals
    the total consideration less the fair value of the undelivered
    elements. In instances where fair value does not exist for the
    undelivered elements, revenue is recognized as the last element
    is delivered.
    Long-Lived Assets.  Our long-lived assets
    consist of property and equipment, goodwill and other intangible
    assets. Goodwill and other intangible assets arise from the
    acquisitions we have made. The amount assigned to intangible
    assets is subjective and based on fair value using exit price
    and market participant view, such as discounted cash flow and
    replacement cost models. Our long-lived assets, excluding
    goodwill and indefinite lived intangible assets, are amortized
    over their estimated useful lives, which we determine based on
    the consideration of several factors including the period of
    time the asset is expected to remain in service. We evaluate the
    carrying value and remaining useful lives of long-lived assets,
    excluding goodwill and indefinite lived intangible assets,
    whenever indicators of impairment are present. We evaluate the
    carrying value of goodwill and indefinite lived intangible
    assets annually, or whenever indicators of impairment are
    present. We use a discounted cash flow approach to determine the
    fair value of goodwill and indefinite lived intangible assets.
    Long-lived assets held for sale are reported at the lower of
    cost or fair value less cost to sell. There was no impairment of
    goodwill or indefinite lived intangible assets noted as a result
    of our impairment testing in 2010.
    Fair Value of Investments in Auction Rate Securities
    (ARS).  Through April 20, 2010, we held
    investments in ARS which were backed by student loans, 97%
    guaranteed under the Federal Family Education Loan Program
    (FFELP), and had credit ratings of AAA or Aaa when purchased.
    Historically, the fair value of these ARS holdings approximated
    par value due to the frequent auction periods, generally every 7
    to 28 days, which provided liquidity to these investments.
    However, since February 2008, substantially all auctions
    involving these securities have failed. The result of a failed
    auction is that these ARS holdings will continue to pay interest
    in accordance with their terms at each respective auction date;
    however, liquidity of the securities will be limited until there
    is a successful auction, the issuer redeems the securities, the
    securities mature or until such time as other markets develop.
    Additionally, approximately one-half of the auction rate
    securities we held were, during 2009, either downgraded below
    AAA or placed on watch status by one or more of the
    major credit rating agencies.   63




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##### Table of Contents




    Stock-Based Compensation.  Stock-based
    compensation expense for all share-based payment awards granted
    is determined based on the grant-date fair value. The grant date
    fair value for stock options is estimated using the
    Black-Scholes Option Pricing Model. We recognize these
    compensation costs net of an estimated forfeiture rate on a
    straight-line basis over the requisite service period of the
    award, which is generally the vesting term of the share-based
    payment awards. As of December 31, 2010, there was
    approximately $76.1 million of unrecognized stock-based
    compensation expense (net of estimated forfeitures) related to
    unvested stock options and restricted stock awards held by
    employees, which is expected to be recognized over a
    weighted-average period of approximately 2.8 years, related
    to our stock-based compensation plans.
    Deferred Taxes.  Our deferred tax assets are
    comprised primarily of net operating loss carryforwards and
    federal tax credits. These net operating loss carryforwards and
    federal tax credits may be used to offset taxable income in
    future periods, reducing the amount of taxes we might otherwise
    be required to pay. A significant portion of our net deferred
    tax assets, including the portion related to excess tax benefits
    of stock-based awards, are reserved for by a valuation allowance
    as required by relevant accounting literature. The remaining
    portion of our net deferred tax assets are no longer reserved
    for by a valuation allowance. Management determines the need for
    a valuation allowance by assessing the probability of realizing
    deferred tax assets, taking into consideration factors including
    historical 64




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##### Table of Contents



operating results, expectations of future earnings and taxable
    income. Management will continue to evaluate the need for a
    valuation allowance in the future.  
    Tax Contingencies.  Our tax contingencies are
    recorded to address potential exposures involving tax positions
    we have taken that could be challenged by tax authorities. These
    potential exposures result from applications of various
    statutes, rules, regulations and interpretations. Our estimates
    of tax contingencies reflect assumptions and judgments about
    potential actions by taxing jurisdictions. We believe that these
    assumptions and judgments are reasonable. However, our accruals
    may change in the future due to new developments in each matter
    and the ultimate resolution of these matters may be greater or
    less than the amount that we have accrued. Consistent with our
    historical financial reporting, we have elected to reflect
    interest and penalties related to uncertain tax positions as
    part of the income tax provision (benefit).  Results
    of Operations
    Years Ended December 31,2010


2009


2008$


%(a)


$


%(a)


$


%(a)Revenue

$
534,519



100.0


$
438,536



100.0


$
373,462



100.0Cost of operations


187,831



35.1



165,753



37.8



135,138



36.2Sales and marketing


120,874



22.6



112,101



25.6



106,080



28.4General and administrative


85,496



16.0



89,620



20.4



88,053



23.6Depreciation and amortization


27,578



5.2



28,185



6.4



28,410



7.6Interest income


3,949



0.7



9,149



2.1



35,300



9.5Interest expense


11,453



2.1



23,515



5.4



26,428



7.1Loss (gain) on convertible notes


23,332



4.4



(10,120
)


(2.3
)






Loss on investments


9,517



1.8











60,108



16.1Severance and other transaction expenses










11,066



2.5



6,941



1.9Gain on sale of EBS Master LLC


















538,024



144.1Restructuring


















7,416



2.0Other (expense) income, net


(72
)






(1,369
)


(0.3
)


992



0.3Income from continuing operations before income tax provision
    (benefit)


72,315



13.5



26,196



6.0



489,204



131.0Income tax provision (benefit)


20,043



3.7



(45,491
)


(10.4
)


26,638



7.1Equity in earnings of EBS Master LLC


















4,007



1.1Consolidated income from continuing operations


52,272



9.8



71,687



16.3



466,573



124.9Consolidated income from discontinued operations


1,800



0.3



49,354



11.3



94,682



25.4Consolidated net income inclusive of noncontrolling interest


54,072



10.1



121,041



27.6



561,255



150.3Income attributable to noncontrolling interest










(3,705
)


(0.8
)


(1,032
)


(0.3
)Net income attributable to Company stockholders

$
54,072



10.1


$
117,336



26.8


$
560,223



150.0     (a)
    
    amounts may not add due to rounding. 65




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##### Table of Contents



e-detailing WebMD the
    Magazine
          
    Non-cash advertising expense.  Expense related
    to the use of our prepaid advertising inventory that we received
    from News Corporation in exchange for equity instruments that we
    issued in connection with an agreement we entered into with News
    Corporation in 1999 and subsequently amended in 2000. The
    inventory was to be used over nine years expiring in 2009. This
    non-cash advertising expense is included in sales and marketing
    expense as we use the asset for promotion of our brand.
    Non-cash stock-based compensation
    expense.  Expense related to the awards of all
    share-based payments to employees and non-employee directors,
    such as grants of employee stock options and restricted stock.
    Non-cash stock-based compensation expense is reflected in the
    same expense captions as the related salary cost of the
    respective employee. 66




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##### Table of Contents



Years Ended December 31,2010


2009


2008Advertising expense included in:Sales and marketing

$



$
1,753


$
5,097Stock-based compensation expense included in:Cost of operations

$
7,211


$
6,723


$
3,818Sales and marketing


8,033



8,069



3,591General and administrative


18,056



24,620



17,223Income from continuing operations


33,300



39,412



24,632Consolidated income from discontinued operations






693



1,600Total stock-based compensation expense

$
33,300


$
40,105


$
26,232   2010
    and 2009
    Revenue.
  Cost of Operations.
    Sales and Marketing.
   67




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##### Table of Contents



General and Administrative.
    Depreciation and Amortization.
  Interest Income.
  Interest Expense. 1 8 1 8
  (Loss) Gain on Convertible Notes. 1 8 1 8 1 8
  Loss on Investments.
  Severance and Other Transaction Expenses.
  Other (Expense) Income, Net.
 68




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Income Tax Provision (Benefit).
  Consolidated Income from Discontinued Operations, Net of
    Tax.
  Income Attributable to Noncontrolling
    Interest.
  2009
    and 2008
    Revenue.
  Cost of Operations.
   69




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##### Table of Contents



Sales and Marketing.
    General and Administrative.
    Depreciation and Amortization.
  Interest Income.
  Interest Expense. 1 8 1 8 1 8
  Gain on Repurchases of Convertible
    Notes. 1 8
 70




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##### Table of Contents



Severance and Other Transaction Expenses.
  Gain on Sale of EBS Master LLC.
  Impairment of Auction Rate
    Securities. other-than-temporary
  Restructuring.
  Other (Expense) Income, Net.
  Income Tax (Benefit) Provision.
  Consolidated Income from Discontinued Operations, Net of
    Tax.
 71




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##### Table of Contents



Income Attributable to Noncontrolling
    Interest.
  Supplemental
    Financial and Operating Information
    Years Ended December 31,2010


2009


2008RevenuePublic portal advertising and sponsorship

$
446,969


$
347,570


$
284,416Private portal services


87,550



90,966



89,046$
534,519


$
438,536


$
373,462Earnings before interest, taxes, non-cash and other items
    (Adjusted EBITDA)

$
173,618


$
112,274


$
74,255Interest, taxes, non-cash and other itemsInterest income


3,949



9,149



35,300Interest expense


(11,453
)


(23,515
)


(26,428
)Income tax (provision) benefit


(20,043
)


45,491



(26,638
)Depreciation and amortization


(27,578
)


(28,185
)


(28,410
)Non-cash stock-based compensation


(33,300
)


(39,412
)


(24,632
)Non-cash advertising






(1,753
)


(5,097
)(Loss) gain on convertible notes


(23,332
)


10,120



Loss on investment


(9,517
)






(60,108
)Severance and other transaction expenses






(11,066
)


(6,941
)Restructuring










(7,416
)Equity in earnings of EBS Master LLC










4,007Gain on sale of EBS Master LLC










538,024Other (expense) income, net


(72
)


(1,416
)


657Consolidated income from continuing operations


52,272



71,687



466,573Consolidated income from discontinued operations, net of tax


1,800



49,354



94,682Consolidated net income inclusive of noncontrolling interest


54,072



121,041



561,255Income attributable to noncontrolling interest






(3,705
)


(1,032
)Net income attributable to Company stockholders

$
54,072


$
117,336


$
560,223   2010
    and 2009
   72




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##### Table of Contents



Public Portal Advertising and
    Sponsorship.
  Private Portal Services.
  Adjusted EBITDA.
  2009
    and 2008
    Public Portal Advertising and
    Sponsorship. WebMD the Magazine
  Private Portal Services.
  Adjusted EBITDA.
  * * *
    *
  Explanatory Note Regarding Adjusted
    EBITDA.  Adjusted EBITDA is a non-GAAP financial
    measure and should be viewed as supplemental to, and not as an
    alternative for, income (loss) from continuing
    operations or net income (loss) calculated in
    accordance with GAAP. Our management uses Adjusted EBITDA as an
    additional measure of performance for purposes of business
    decision-making, including developing budgets, managing
    expenditures, and evaluating potential acquisitions or
    divestitures.
 73




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##### Table of Contents



Period-to-period
    comparisons of Adjusted EBITDA help our management identify
    additional trends in financial results that may not be shown
    solely by
    period-to-period
    comparisons of income (loss) from continuing operations or net
    income (loss). In addition, we use Adjusted EBITDA in the
    incentive compensation programs applicable to many of our
    employees in order to evaluate our performance. We believe that
    the presentation of Adjusted EBITDA is useful to investors in
    their analysis of our results for reasons similar to the reasons
    why our management finds it useful and because it helps
    facilitate investor understanding of decisions made by our
    management in light of the performance metrics used in making
    those decisions. In addition, we believe that providing Adjusted
    EBITDA, together with a reconciliation of Adjusted EBITDA to
    income (loss) from continuing operations or to net income
    (loss), helps investors make comparisons between us and other
    companies that may have different capital structures, different
    effective income tax rates and tax attributes, different
    capitalized asset values
    and/or
    different forms of employee compensation. Please see the
    Explanation of Non-GAAP Financial Information
    filed as Exhibit 99.1 to this Annual Report for additional
    background information regarding our use of Adjusted EBITDA.
    Exhibit 99.1 is incorporated in this MD&A by this
    reference.
  Liquidity
    and Capital Resources
  Cash
    Flows
         74




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##### Table of Contents



1 8
    Contractual
    Obligations and Commitments
    Less Than








More ThanTotal


1 Year


1-3 Years


4-5 Years


5 Years(In thousands)Leases(a)

$
64,225


$
7,990


$
16,102


$
15,747


$
24,386     (a)
    
    The lease amounts are net of
    sublease income        Outlook
    on Future Liquidity
       75




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##### Table of Contents



Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
  Accounting
    Pronouncements Adopted During 2009
    1 8 1 8 1 8 1 8
   76




---



##### Table of Contents



other-than-temporary
      Accounting
    Pronouncements to be Adopted in the Future
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    Rate Sensitivity
   77




---



##### Table of Contents



Exchange
    Rate Sensitivity
    Item 8.
    Financial
    Statements and Supplementary Data  Financial
    Statements
  Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rule 13a-15(b), Rule 13a-15(e),
  Rule 13a-15(d), Rule 13a-15(f),
  Item 9B.
    Other
    Information   78




---



##### Table of Contents



PART III    Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   79




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedule  (a)(1)-(2) Financial Statements and Schedule
  page F-1
  (a)(3) Exhibits
  page E-1,
 80




---



##### Table of Contents



SIGNATURES    WebMD Health
    Corp.
  By:
    /s/  ANTHONY
    VUOLO    Chief Operating Officer and
 Chief Financial Officer
    Signature

Capacity

Date/s/  Wayne T. GattinellaWayne
    T. Gattinella

Director; President and Chief Executive Officer (principal
    executive officer)

March 1, 2011/s/  Anthony
    VuoloAnthony
    Vuolo

Chief Operating Officer and Chief Financial Officer (principal
    financial and accounting officer)

March 1, 2011/s/  Mark
    J. Adler, M.D.Mark
    J. Adler, M.D.

Director

March 1, 2011/s/  Kevin
    M. CameronKevin
    M. Cameron

Director

March 1, 2011/s/  Neil
    F. DimickNeil
    F. Dimick

Director

March 1, 2011/s/  Jerome
    C. KellerJerome
    C. Keller

Director

March 1, 2011/s/  James
    V. ManningJames
    V. Manning

Director

March 1, 2011/s/  Abdool
    Rahim Moossa, M.D.Abdool
    Rahim Moossa, M.D.

Director

March 1, 2011/s/  Herman
    SarkowskyHerman
    Sarkowsky

Director

March 1, 2011 81




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##### Table of Contents



Signature

Capacity

Date/s/  Joseph
    E. SmithJoseph
    E. Smith

Director

March 1, 2011/s/  Stanley
    S. Trotman, Jr.Stanley
    S. Trotman, Jr.

Director

March 1, 2011/s/  Martin
    J. WygodMartin
    J. Wygod

Director

March 1, 2011  82




---



##### 



WEBMD
    HEALTH CORP.



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
    DATA   
 PageHistorical Financial Statements:Report of Management on Internal Control Over
    Financial Reporting


F-2Report of Independent Registered Public
    Accounting Firm on Internal Control Over Financial Reporting


F-3Report of Independent Registered Public
    Accounting Firm


F-4Consolidated Balance Sheets as of
    December 31, 2010 and 2009


F-5Consolidated Statements of Operations for the
    Years Ended December 31, 2010, 2009 and 2008


F-6Consolidated Statements of Equity for the Years
    Ended December 31, 2010, 2009 and 2008


F-7Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2010, 2009 and 2008


F-8Notes to Consolidated Financial Statements


F-9Supplemental Financial Data:The following supplemental financial data of the Registrant and
    its subsidiaries required to be included in Item 15(a)(2)
    on
    Form 10-K
    are listed below:Schedule II  Valuation and
    Qualifying Accounts


S-1     F-1




---



##### Table of Contents



REPORT OF
    MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the company are being made
    only in accordance with authorizations of management and
    directors of the company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    the companys assets that could have a material effect on
    the financial statements.      Internal
    Control  Integrated Framework
  page F-3.
   F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                
    F-3




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          other-than-temporary
    
    F-4




---



##### Table of Contents



WEBMD
    HEALTH CORP.
    CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share
    data) December 31,2010


2009ASSETSCurrent assets:Cash and cash equivalents

$
400,501


$
459,766Accounts receivable, net of allowance for doubtful accounts of
    $1,493 at December 31, 2010 and $1,511 at December 31,
    2009


134,448



118,155Prepaid expenses and other current assets


12,161



11,419Investments






9,932Deferred tax assets


23,467



Total current assets


570,577



599,272Investments






338,446Property and equipment, net


61,516



52,194Goodwill


202,104



202,104Intangible assets, net


22,626



26,020Deferred tax assets


71,125



50,789Other assets


14,254



19,723TOTAL ASSETS

$
942,202


$
1,288,548LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accrued expenses

$
53,181


$
63,721Deferred revenue


97,043



98,4741.75% convertible subordinated notes due 2023






264,583Deferred tax liabilities






12,955Liabilities of discontinued operations


17,327



34,197Total current liabilities


167,551



473,93031/8%
    convertible notes due 2025, net of discount of $22,641 at
    December 31, 2009






227,659Other long-term liabilities


21,756



22,191Commitments and contingenciesStockholders equity:Preferred stock, 50,000,000 shares authorized; no shares
    issued and outstanding






Common stock, $0.01 par value per share,
    650,000,000 shares authorized;62,401,272 shares issued at December 31, 2010 and
    57,243,710 shares issued at December 31, 2009


624



572Additional paid-in capital


9,462,373



9,469,857Treasury stock, at cost; 2,485,391 shares at
    December 31, 2010 and 6,296,944 shares at
    December 31, 2009


(129,589
)


(233,651
)Accumulated deficit


(8,580,513
)


(8,634,585
)Accumulated other comprehensive loss






(37,425
)Stockholders equity


752,895



564,768TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
942,202


$
1,288,548    F-5




---



##### Table of Contents



WEBMD
    HEALTH CORP.
    CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share
    data) Years Ended December 31,2010


2009


2008Revenue

$
534,519


$
438,536


$
373,462Cost of operations


187,831



165,753



135,138Sales and marketing


120,874



112,101



106,080General and administrative


85,496



89,620



88,053Depreciation and amortization


27,578



28,185



28,410Interest income


3,949



9,149



35,300Interest expense


11,453



23,515



26,428Loss (gain) on convertible notes


23,332



(10,120
)


Loss on investments


9,517







60,108Severance and other transaction expenses






11,066



6,941Gain on sale of EBS Master LLC










538,024Restructuring










7,416Other (expense) income, net


(72
)


(1,369
)


992Income from continuing operations before income tax provision
    (benefit)


72,315



26,196



489,204Income tax provision (benefit)


20,043



(45,491
)


26,638Equity in earnings of EBS Master LLC










4,007Consolidated income from continuing operations


52,272



71,687



466,573Consolidated income from discontinued operations, net of tax
    (benefit) provision of ($444), $21,224 and $3,134 in 2010, 2009
    and 2008


1,800



49,354



94,682Consolidated net income inclusive of noncontrolling interest


54,072



121,041



561,255Income attributable to noncontrolling interest






(3,705
)


(1,032
)Net income attributable to Company stockholders

$
54,072


$
117,336


$
560,223Amounts attributable to Company stockholders:Income from continuing operations

$
52,272


$
67,018


$
465,725Income from discontinued operations


1,800



50,318



94,498Net income attributable to Company stockholders

$
54,072


$
117,336


$
560,223Basic income per common share:Income from continuing operations

$
0.93


$
1.40


$
5.99Income from discontinued operations


0.04



1.05



1.22Net income attributable to Company stockholders

$
0.97


$
2.45


$
7.21Diluted income per common share:Income from continuing operations

$
0.85


$
1.21


$
4.92Income from discontinued operations


0.03



0.86



0.96Net income attributable to Company stockholders

$
0.88


$
2.07


$
5.88Weighted-average shares outstanding used in computing per share
    amounts:Basic


55,328



47,400



77,738Diluted


62,228



57,740



97,824    F-6




---



##### Table of Contents



WEBMD
    HEALTH CORP.
    CONSOLIDATED STATEMENTS OF EQUITY(In thousands, except share
    data) Stockholders EquityAccumulatedAdditional











Other


Total


Non-Common Stock


Paid-In


Treasury Stock


Accumulated


Comprehensive


Stockholders


Controlling


TotalShares


Amount


Capital


Shares


Amount


Deficit


(Loss) Income


Equity


Interest


EquityBalances at December 31, 2007


203,447,813


$
2,034


$
12,536,711



122,559,580


$
(2,564,948
)

$
(9,336,841
)

$
5,853


$
642,809


$
131,353


$
774,162Comprehensive income:Net income






















560,223







560,223



1,032



561,255Other comprehensive income:Net change in unrealized losses on securities


























(9,588
)


(9,588
)


(702
)


(10,290
)Foreign currency translation adjustment


























(4,178
)


(4,178
)






(4,178
)Reversal of EBSCos comprehensive loss in connection with
    sale of EBSCo


























7,326



7,326







7,326Other comprehensive income






























(6,440
)


(702
)


(7,142
)Comprehensive income






























553,783



330



554,113Issuance of stock for option exercises, ESPP and other issuances


213,920



2



9,283



(1,144,936
)


9,275











18,560



3,465



22,025Tax benefit realized from issuances of common stock and
    valuation reversal










2,232



















2,232







2,232Gain on issuance of subsidiary common stock for options
    exercised and restricted stock released and other










3,688



















3,688



(3,688
)


Repurchase of common stock of subsidiary


































(6,728
)


(6,728
)Cash settlement for Subimo transaction


































(2,782
)


(2,782
)Purchase of warrant










(700
)


















(700
)






(700
)Stock-based compensation expense










13,650



















13,650



12,273



25,923Purchase of treasury stock in tender offer














37,196,245



(737,324
)










(737,324
)






(737,324
)Balances at December 31, 2008


203,661,733



2,036



12,564,864



158,610,889



(3,292,997
)


(8,776,618
)


(587
)


496,698



134,223



630,921Comprehensive income:Net income






















117,336







117,336



3,705



121,041Cumulative effect related to the adoption of new authoritative
    guidance relating to
    other-than-temporary
    impairments






















24,697



(24,697
)










Other comprehensive income:Net change in unrealized losses on securities


























(340
)


(340
)


(857
)


(1,197
)Foreign currency translation adjustment


























(8,091
)


(8,091
)






(8,091
)Other comprehensive income






























(8,431
)


(857
)


(9,288
)Comprehensive income






























108,905



2,848



111,753Issuance of stock for option exercises and other issuances


774,130



8



2,790



(1,585,065
)


16,651











19,449



6,179



25,628Tax benefit realized from issuances of common stock










480



















480







480Recognition of Merger


(147,192,153
)


(1,472
)


(3,115,748
)


(157,068,107
)


3,277,915







(3,710
)


156,985



(162,013
)


(5,028
)Repurchases of
    31/8%
    convertible notes, net of tax










(3,544
)


















(3,544
)






(3,544
)Stock-based compensation expense










21,015



















21,015



18,763



39,778Purchase of treasury stock in tender offers














6,339,227



(235,220
)










(235,220
)






(235,220
)Balances at December 31, 2009


57,243,710



572



9,469,857



6,296,944



(233,651
)


(8,634,585
)


(37,425
)


564,768







564,768Comprehensive income:Net income






















54,072







54,072







54,072Other comprehensive income:Net change in unrealized losses on securities


























37,425



37,425







37,425Other comprehensive income






























37,425







37,425Comprehensive income






























91,497







91,497Issuance of stock for option exercises and other issuances


12,859



1



(224,806
)


(4,835,699
)


198,670











(26,135
)






(26,135
)Tax benefit realized from issuances of common stock










22,458



















22,458







22,458Conversions, repurchases and redemption of 1.75% and
    31/8%
    convertible notes, net of tax


5,144,703



51



161,925



(7,500,630
)


319,522











481,498







481,498Stock-based compensation expense










32,939



















32,939







32,939Purchase of treasury stock under repurchase program














352,572



(14,914
)










(14,914
)






(14,914
)Purchase of treasury stock in tender offers














8,172,204



(399,216
)










(399,216
)






(399,216
)Balances at December 31, 2010


62,401,272


$
624


$
9,462,373



2,485,391


$
(129,589
)

$
(8,580,513
)

$



$
752,895


$



$
752,895    F-7




---



##### Table of Contents






WEBMD
    HEALTH CORP.
    CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Years Ended December 31,2010


2009


2008Cash flows from operating activities:Consolidated net income inclusive of noncontrolling interest

$
54,072


$
121,041


$
561,255Adjustments 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
)


(94,682
)Depreciation and amortization


27,578



28,185



28,410Equity in earnings of EBS Master LLC










(4,007
)Non-cash interest, net


5,594



10,205



9,859Non-cash advertising






1,753



5,097Non-cash stock-based compensation


33,300



39,412



24,632Deferred income taxes


(403
)


(42,143
)


7,474Loss (gain) on convertible notes


23,332



(10,120
)


Gain on sale of EBS Master LLC










(538,024
)Loss on investments


9,517







60,108Changes in operating assets and liabilities:Accounts receivable


(16,292
)


(25,073
)


(9,672
)Prepaid expenses and other, net


4,617



6,979



1,893Accrued expenses and other long-term liabilities


213



7,677



6,052Deferred revenue


(1,431
)


18,861



4,095Net cash provided by continuing operations


138,297



107,423



62,490Net cash (used in) provided by discontinued operations


(16,474
)


305



34,624Net cash provided by operating activities


121,823



107,728



97,114Cash flows from investing activities:Proceeds from sales of
    available-for-sale
    securities


361,852



2,300



118,339Proceeds received from ARS Option


10,467







Purchases of
    available-for-sale
    securities










(177,150
)Purchases of property and equipment


(32,254
)


(17,886
)


(24,265
)Purchase of investment in preferred stock










(6,471
)Cash paid in business combinations net of cash acquired










(2,633
)Purchase of noncontrolling interest in subsidiary










(12,818
)Proceeds received (payments made) from sale of discontinued
    operations


(1,430
)


72,318



247,491Proceeds from the sale of EBS Master LLC










574,617Other










1,224Net cash provided by continuing operations


338,635



56,732



718,334Net cash used in discontinued operations






(3,552
)


(4,852
)Net cash provided by investing activities


338,635



53,180



713,482Cash flows from financing activities:Proceeds from exercise of stock options


59,825



42,898



23,505Cash used for withholding taxes due on stock-based awards


(86,533
)


(17,645
)


(1,822
)Repurchases of convertible notes


(94,525
)


(123,857
)


Purchase of treasury stock under repurchase program and tender
    offers


(420,948
)


(228,402
)


(737,324
)Cash paid for merger related costs






(5,021
)


Excess tax benefit on stock-based awards


22,458



480



748Other










(700
)Net cash used in continuing operations


(519,723
)


(331,547
)


(715,593
)Net cash used in discontinued operations










(76
)Net cash used in financing activities


(519,723
)


(331,547
)


(715,669
)Effect of exchange rates on cash






557



(1,958
)Net (decrease) increase in cash and cash equivalents


(59,265
)


(170,082
)


92,969Cash and cash equivalents at beginning of period


459,766



629,848



536,879Cash and cash equivalents at end of period

$
400,501


$
459,766


$
629,848    F-8




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   1.  Background
    and Basis of Presentation
  Background
    e-newsletters e-detailing WebMD the Magazine
   F-9




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Basis of
    Presentation
        2.  Summary
    of Significant Accounting Policies
  Principles
    of Consolidation
    Accounting
    Estimates
   F-10




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Seasonality
    Cash and
    Cash Equivalents
    Fair
    Value
    Marketable
    Securities
  available-for-sale held-to-maturity held-to-maturity; available-for-sale. available-for-sale.
  Held-to-maturity available-for-sale available-for-sale other-than-temporarily other-than-temporarily
 F-11




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Equity
    Investment in EBS Master LLC
    Allowance
    for Doubtful Accounts
    Long-Lived
    Assets
  Property
    and Equipment
    Computer equipment

3 to 5 yearsOffice equipment, furniture and fixtures

4 to 7 yearsSoftware

3 to 5 yearsBuilding and improvements

Up to 40 yearsWebsite development costs

3 yearsLeasehold improvements

Shorter of useful life or lease term     Goodwill
    and Intangible Assets
    Content

3 to 5 yearsCustomer relationships

5 to 12 yearsAcquired technology and patents

3 yearsTrade names

10 years   Recoverability
     F-12




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Internal
    Use Software
    Website
    Development Costs
    Restricted
    Cash
    Deferred
    Charges
  1 8 1 8 1 8 1 8
 F-13




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Leases
    Revenue
    Recognition
    Sales,
    Use and Value Added Tax
    Advertising
    Costs
    Foreign
    Currency
   F-14




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Concentration
    of Credit Risk
      Income
    Taxes
      Accounting
    for Stock-Based Compensation
    Net
    Income Attributable to Company Stockholders Per Common
    Share
   F-15




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2010


2009


2008Numerator:Income from continuing operations

$
52,272


$
67,018


$
465,725Effect of participating non-vested restricted stock


(601
)


(787
)


Income from continuing operations  Basic


51,671



66,231



465,725Interest expense on 1.75% convertible notes, net of tax


1,469



3,714



4,600Interest expense on
    31/8%
    convertible notes, net of tax










11,255Effect of dilutive securities of subsidiary






(343
)


(587
)Income from continuing operations  Diluted

$
53,140


$
69,602


$
480,993Income from discontinued operations, net of tax

$
1,800


$
50,318


$
94,498Effect of participating non-vested restricted stock


(21
)


(591
)


Income from discontinued operations, net of tax  Basic


1,779



49,727



94,498Effect of dilutive securities of subsidiary






53



(27
)Income from discontinued operations, net of tax 
    Diluted

$
1,779


$
49,780


$
94,471Denominator:Weighted-average shares  Basic


55,328



47,400



77,738Employee stock options, restricted stock and warrants


3,706



2,265



1,4141.75% Convertible notes


3,194



8,075



10,10731/8% Convertible
    notes










8,565Adjusted weighted-average shares after assumed
    conversions  Diluted


62,228



57,740



97,824Basic income per common share:Income from continuing operations

$
0.93


$
1.40


$
5.99Income from discontinued operations


0.04



1.05



1.22Net income attributable to Company stockholders

$
0.97


$
2.45


$
7.21Diluted income per common share:Income from continuing operations

$
0.85


$
1.21


$
4.92Income from discontinued operations


0.03



0.86



0.96Net income attributable to Company stockholders

$
0.88


$
2.07


$
5.88    F-16




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2010


2009


2008Options, restricted stock and warrants


1,843



12,929



14,510Convertible notes


3,777



7,147



5,620



20,076



14,510   Discontinued
    Operations
    Reclassifications
    Recent
    Accounting Pronouncements
  Accounting
    Pronouncements Adopted During 2009
    1 8 1 8 1 8 1 8 1 8
   F-17




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        other-than-temporary
      Accounting
    Pronouncements to be Adopted in the Future
   F-18




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Discontinued
    Operations  Porex
        Years Ended December 31,2009


2008Revenue

$
68,208


$
94,407Earnings before taxes


14,137



19,294Gain on disposal before taxes


25,790



   Little
    Blue Book Print Directory Business
    Years Ended December 31,2009


2008Revenue

$
4,066


$
9,235(Losses) earnings before taxes


(8,432
)


1,954Loss on disposal before taxes


(103
)


  F-19




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ViPS
    Year EndedDecember 31,2008Revenue

$
57,497Earnings before taxes


8,121Gain on disposal before taxes


96,969   EPS
     F-20




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      4.
    Emdeon
    Business Services            For the PeriodJanuary 1, 2008ThroughFebruary 8, 2008Revenue

$
94,481Cost of operations


44,633Net income


5,551  F-21




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    Convertible
    Notes  31/8% Convertible
    Notes due 2025
  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  1 8 1 8 1 8 1 8
  Years Ended December 31,2010


2009


2008Contractual coupon interest

$
4,186


$
8,310


$
9,375Amortization of debt discount


4,230



7,846



8,244Amortization of debt issuance costs


587



1,087



1,142Interest expense for
    31/8% Notes

$
9,003


$
17,243


$
18,761Effective interest rate


7.4
%


7.4
%


7.4
%   1 8 1 8 1 8
  1 8 1 8
 F-22




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1 8
  1 8
  1.75% Convertible
    Subordinated Notes due 2023
           F-23




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Long-Lived
    Assets  Property
    and Equipment
    December 31,2010


2009Software

$
37,666


$
28,401Computer equipment


37,055



31,663Website development costs


33,823



30,116Leasehold improvements


30,860



22,353Office equipment, furniture and fixtures


10,642



6,924Land and buildings


1,847



1,847151,893



121,304Less: accumulated depreciation


(90,377
)


(69,110
)Property and equipment, net

$
61,516


$
52,194     Goodwill
    and Intangible Assets
    December 31, 2010


December 31, 2009Weighted











WeightedGross








Average


Gross








AverageCarrying


Accumulated





Remaining


Carrying


Accumulated





RemainingAmount


Amortization


Net


Useful Life(a)


Amount


Amortization


Net


Useful Life(a)Content

$
15,954


$
(15,954
)

$







$
15,954


$
(15,482
)

$
472



1.0Customer relationships


34,057



(18,760
)


15,297



7.5



34,057



(16,374
)


17,683



8.3Technology and patents


14,700



(14,700
)










14,700



(14,700
)






Trade names-definite lives


6,030



(3,165
)


2,865



5.4



6,030



(2,629
)


3,401



6.4Trade names-indefinite lives


4,464







4,464



n/a



4,464







4,464



n/aTotal

$
75,205


$
(52,579
)

$
22,626






$
75,205


$
(49,185
)

$
26,020     (a)
    
    The calculation of the weighted
    average remaining useful life is based on the net book value and
    the remaining amortization period of each respective intangible
    asset.    Year Ending December 31:2011

$
2,6272012


2,6272013


2,6272014


2,6272015


2,617Thereafter


5,037  F-24




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Restructuring    8.  Accrued
    Expenses
    December 31,2010


2009Accrued compensation

$
31,565


$
32,012Accrued outside services


4,028



4,148Accrued marketing and distribution


5,624



4,051Accrued income, sales and other taxes


983



1,745Accrual for tendered shares not yet delivered






6,818Other accrued liabilities


10,981



14,947$
53,181


$
63,721   9.
    Commitments
    and Contingencies  Legal
    Proceedings
  Investigations
    by United States Attorney for the District of South Carolina and
    the SEC
     F-25




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         F-26




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Directors &
    Officers Liability Insurance Coverage Litigation
  and/or
        agreed-upon
 F-27




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Roger
    H. Kaye and Roger H. Kaye, MD PC v. WebMD, LLC, et
    al.
   F-28




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  class-related
  Litigation
    Regarding Distribution of Shares in Healtheon Initial Public
    Offering
    Rule 10b-5
       F-29




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Daniel
    Rodimer, et.al., on behalf of themselves and all others
    similarly situated v. Apple, Inc., et. al.
    Other
    Legal Proceedings
    Leases
      Years Ending December 31,2011

$
7,9902012


8,1852013


7,9172014


7,9892015


7,758Thereafter


24,386Total minimum lease payments

$
64,225   Other
    Contingencies
   F-30




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    10.
    Stock-Based
    Compensation      Stock
    Options
      Weighted AverageWeighted Average


RemainingExercise Price Per


Contractual Life


Aggregate IntrinsicShares


Share


(In Years)


Value(1)Outstanding at January 1, 2008


26,037,817


$
31.39Granted


7,382,934



23.86Exercised


(1,339,415
)


17.20Cancelled


(2,029,466
)


33.28Outstanding at December 31, 2008


30,051,870



30.04Granted


1,000,673



28.98Exercised


(4,614,910
)


23.29Cancelled


(4,008,680
)


39.67Outstanding at December 31, 2009


22,428,953



29.67Granted


2,088,900



46.39Exercised


(12,281,271
)


27.05Cancelled


(2,008,827
)


57.36Outstanding at December 31, 2010


10,227,755


$
30.79



7.4


$
208,243Vested and exercisable at the end of the period


3,436,033


$
28.78



5.4


$
77,248  F-31




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (1)
    
    The aggregate intrinsic value is
    based on the market price of the Companys Common Stock on
    December 31, 2010, which was $51.06, less the applicable
    exercise price of the underlying option. This aggregate
    intrinsic value represents the amount that would have been
    realized if all the option holders had exercised their options
    on December 31, 2010.    Outstanding


ExercisableWeightedWeighted


Average





WeightedAverage


Remaining





AverageExercise Price


Contractual Life





Exercise PriceExercise Prices

Shares


Per Share


(In Years)


Shares


Per Share$7.72-$19.95


989,585


$
17.52



4.3



828,629


$
17.21$20.05-$23.59


855,111



21.70



7.4



335,600



21.52$23.61


3,533,333



23.61



7.9



380,964



23.61$23.74-$29.98


928,408



26.87



6.0



747,112



26.90$30.00-$34.88


627,349



32.00



6.7



248,550



32.06$35.00-$41.91


806,348



39.02



7.0



359,648



39.45$42.03-$46.75


643,810



45.25



7.7



243,909



44.58$46.81


965,250



46.81



9.5







$47.11-$51.96


761,245



49.91



8.4



209,718



49.76$52.00-$92.61


117,316



57.63



6.4



81,903



59.4510,227,755


$
30.79



7.4



3,436,033


$
28.78     Years Ended December 31,2010

2009

2008Expected dividend yield

0.0%

0.0%

0.0%Expected volatility

0.31-0.33

0.38-0.55

0.37-0.57Risk-free interest rate

1.92%

1.45%

1.26%Expected term (years)

4.8

3.4

3.4Weighted average fair value of options granted during the period

$14.53

$11.01

$9.29   Restricted
    Stock Awards
   F-32




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2010


2009


2008Weighted





Weighted





WeightedAverage





Average





AverageGrant Date





Grant Date





Grant DateShares


Fair Value


Shares


Fair Value


Shares


Fair ValueBalance at the beginning of the year


1,106,124


$
27.51



1,244,900


$
23.99



858,910


$
26.07Granted


304,775



46.90



411,875



33.63



826,039



22.66Vested


(284,761
)


26.65



(449,936
)


23.50



(364,521
)


23.90Forfeited


(19,387
)


25.15



(100,715
)


26.87



(75,528
)


33.52Balance at the end of the year


1,106,751


$
33.13



1,106,124


$
27.51



1,244,900


$
23.99       Employee
    Stock Purchase Plan
    Other
     F-33




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Summary
    of Stock-Based Compensation Expense
    Years Ended December 31,2010


2009


2008Stock options

$
23,324


$
29,153


$
17,587Restricted stock


9,615



10,625



7,184Other


361



327



1,461Total stock-based compensation expense

$
33,300


$
40,105


$
26,232Included in:Cost of operations

$
7,211


$
6,723


$
3,818Sales and marketing


8,033



8,069



3,591General and administrative


18,056



24,620



17,223Consolidated income from continuing operations


33,300



39,412



24,632Consolidated income from discontinued operations






693



1,600Total stock-based compensation expense

$
33,300


$
40,105


$
26,232       11.
    Retirement
    Plans    12.
    Equity  Common
    Stock
    Tender
    Offers
   F-34




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Stock
    Repurchase Program
    Warrants
     F-35




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Income
    Taxes    December 31,2010


2009Deferred tax assets:Federal net operating loss carryforwards

$
133,284


$
162,520State net operating loss carryforwards


43,738



45,588Federal tax credits


55,027



44,943Accrued expenses


24,391



33,344Stock-based compensation


20,473



30,497Intangible assets


8,579



10,457Auction rate securities


18,501



28,470Fixed assets


7,451



5,293Other


4,188



4,921Total deferred tax assets


315,632



366,033Valuation allowance


(202,189
)


(234,735
)Net deferred tax assets


113,443



131,298Deferred tax liabilities:Convertible notes






(76,167
)Goodwill and indefinite-lived intangible asset


(18,851
)


(15,978
)Other






(1,319
)Total deferred tax liabilities


(18,851
)


(93,464
)Net deferred tax assets

$
94,592


$
37,834   December 31,2010


2009Current deferred tax assets (liabilities), net:Current deferred tax assets, net of deferred tax liabilities

$
65,280


$
55,752Valuation allowance


(41,813
)


(68,707
)Current deferred tax assets (liabilities), net


23,467



(12,955
)Non-current deferred tax assets, net:Non-current deferred tax assets, net of deferred tax liabilities


231,501



216,817Valuation allowance


(160,376
)


(166,028
)Non-current deferred tax assets, net


71,125



50,789Net deferred tax assets

$
94,592


$
37,834  F-36




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2010


2009


2008Current:Federal

$
(1,197
)

$
(5,695
)

$
6,602State


2,673



2,282



12,379Foreign


141



65



590Current income tax provision (benefit)


1,617



(3,348
)


19,571Deferred:Federal


(3,569
)


(31,662
)


2,218State


3,166



(10,481
)


701Deferred income tax (benefit) provision


(403
)


(42,143
)


2,919Reversal of valuation allowance applied to goodwill










2,707Reversal of valuation allowance applied to additional paid-in
    capital


18,829







1,441Total income tax provision (benefit)

$
20,043


$
(45,491
)

$
26,638     Years Ended December 31,2010


2009


2008United States federal statutory rate


35.0
%


35.0
%


35.0
%State income taxes (net of federal benefit)


6.7



1.4



1.7Valuation allowance


(12.6
)


(259.5
)


(38.6
)Non-deductible officer compensation


0.8



5.7



0.1Loss on auction rate securities


14.3







Losses benefited (from) to discontinued operations


(17.5
)


59.5



6.5Effect of the Merger on state net operating loss carryforwards






(17.6
)


Other


1.0



1.8



0.7Effective income tax rate


27.7
%


(173.7
)%


5.4
%      F-37




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    with-and-without with-and-without
          Years Ended December 31,2010


2009Balance at the beginning of the year

$
13,319


$
10,576Increases related to prior year tax positions






3,161Increases related to current year tax positions






4,254Decreases related to prior year tax positions


(115
)


(3,781
)Decreases related to current year tax positions






(727
)Expiration of the statute of limitations for the assessment of
    taxes


(335
)


(164
)Balance at the end of the year

$
12,869


$
13,319    F-38




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Fair
    Value of Financial Instruments and Non-Recourse Credit
    Facilities    Level 1:
    Observable inputs such as quoted market prices in active markets
    for identical assets or liabilities.Level 2:
    Observable market-based inputs or unobservable inputs that are
    corroborated by market data.Level 3:
    Unobservable inputs for which there is little or no market data,
    which require the use of the reporting entitys own
    assumptions.    December 31, 2010

December 31, 2009Gross





GrossFair Value

Amortized



Unrealized

Amortized



UnrealizedEstimate Using:

Cost Basis

Fair Value

Gains

Cost Basis

Fair Value

Gains (Losses)Cash and cash equivalents


Level 1


$
400,501


$
400,501


$



$
459,766


$
459,766


$
Equity securities


Level 1















1,470



4,851



3,381ARS Option


Level 3



4,245



4,245















Auction rate
    securities(1)


Level 3















320,507



279,701



(40,806
)(2)Senior secured
    notes(3)


Level 3















63,826



63,826



     (1)
    
    The face (par) value of the auction
    rate securities was $352,700 as of December 31, 2009. There
    were no auction rate securities outstanding as of
    December 31, 2010.(2)
    
    Amounts reflect cumulative effect
    of adoption of new authoritative guidance as discussed below.(3)
    
    The face value of the senior
    secured notes was $67,500 as of December 31, 2009. There
    were no senior secured notes as of December 31, 2010. F-39




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended December 31,2010


2009ARS


Auction Rate


Senior


Auction Rate


SeniorOption


Securities


Secured Notes


Securities


Secured NotesFair value as of the beginning of the period

$



$
279,701


$
63,826


$
286,552


$
Redemptions


(10,467
)


(290,999
)


(65,475
)


(2,300
)


63,598Gain (loss) included in earnings


14,712



(29,508
)


1,362







Interest income accretion included in earnings










287







228Changes in unrealized gains/losses included in other
    comprehensive income






40,806







(4,551
)


Fair value as of the end of the period

$
4,245


$



$



$
279,701


$
63,826   other-than-temporary
  other-than-temporary other-than-temporary other-than-temporarily other-than-temporarily other-than-temporary
 F-40




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          other-than-temporary
 F-41




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          December 31, 2009Carrying Amount


Fair ValueFinancial Assets:1.75% Notes(a)

$
264,583


$
296,00231/8% Notes(a)


227,659



284,716     (a)
    
    Fair value estimate incorporates
    bid price quotes.  Non-Recourse
    Credit Facilities
   F-42




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Other
    (Expense) Income, Net    Years Ended December 31,2010


2009


2008Transition service
    fees(a)

$



$
47


$
335Reduction of tax
    contingencies(b)


711



915



1,749Legal
    expense(c)


(783
)


(2,331
)


(1,092
)Other (expense) income, net

$
(72
)

$
(1,369
)

$
992     (a)
    
    Represents the net fees received
    from ViPS, Sage Software and EBSCo in relation to their
    respective transition services agreements.(b)
    
    Represents the reduction of certain
    sales and use tax contingencies resulting from the expiration of
    various statutes.(c)
    
    Represents the costs and expenses
    incurred by the Company related to the investigation by the
    United States Attorney for the District of South Carolina and
    the SEC and the related Coverage Litigation.  16.
    Related
    Party Transactions  Fidelity
    Human Resources Services Company LLC
    17.
    Supplemental
    Disclosures of Cash Flow Information    Years Ended December 31,2010


2009


2008Supplemental Disclosure of Cash Flow Information:Interest paid

$
6,880


$
13,891


$
15,502Taxes (received) paid,
    net(a)

$
(1,723
)

$
(3,687
)

$
26,714     (a)
    
    As the Company generally files its
    tax returns on a consolidated basis, taxes paid, net of refunds,
    includes all taxes paid by the Company, including those of the
    Companys discontinued operations. F-43




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    Quarterly
    Financial Data  (Unaudited)    2010First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
108,030


$
122,707


$
135,305


$
168,477Cost of operations


42,994



45,368



47,610



51,859Sales and marketing


28,407



29,425



28,957



34,085General and administrative


18,809



20,577



22,964



23,146Depreciation and amortization


7,015



6,318



6,935



7,310Interest income


3,409



420



21



99Interest expense


5,139



3,170



1,797



1,347Loss on convertible notes


(3,727
)


(11,011
)


(2,232
)


(6,362
)(Loss) gain on investments


(28,848
)


6,002



(131
)


13,460Other (expense) income, net


(298
)


99



107



20(Loss) income from continuing operations before incometax (benefit) provision


(23,798
)


13,359



24,807



57,947Income tax (benefit) provision


(20,008
)


5,675



10,193



24,183Consolidated (loss) income from continuing operations


(3,790
)


7,684



14,614



33,764Consolidated (loss) income from discontinued operations, net of
    tax










(1,024
)


2,824Net (loss) income attributable to Company stockholders

$
(3,790
)

$
7,684


$
13,590


$
36,588Amounts attributable to Company stockholders:(Loss) income from continuing operations

$
(3,790
)

$
7,684


$
14,614


$
33,764(Loss) income from discontinued operations










(1,024
)


2,824Net (loss) income attributable to Company stockholders

$
(3,790
)

$
7,684


$
13,590


$
36,588Basic income (loss) per common share:(Loss) income from continuing operations

$
(0.07
)

$
0.14


$
0.25


$
0.58(Loss) income from discontinued operations










(0.02
)


0.05Net (loss) income attributable to Company stockholders

$
(0.07
)

$
0.14


$
0.23


$
0.63Diluted income (loss) per common share:(Loss) income from continuing operations

$
(0.07
)

$
0.13


$
0.24


$
0.55(Loss) income from discontinued operations










(0.02
)


0.04Net (loss) income attributable to Company stockholders

$
(0.07
)

$
0.13


$
0.22


$
0.59Net Income Attributable to Company Stockholders per Common
    Share:Numerator:(Loss) income from continuing operations

$
(3,790
)

$
7,684


$
14,614


$
33,764Effect of participating non-vested restricted stock






(88
)


(152
)


(339
)(Loss) income from continuing operations  Basic


(3,790
)


7,596



14,462



33,425Interest expense on 1.75% convertible notes, net of tax






592







Interest expense on
    31/8%
    convertible notes, net of tax














809(Loss) income from continuing operations  Diluted

$
(3,790
)

$
8,188


$
14,462


$
34,234(Loss) income from discontinued operations, net of
    tax  Diluted

$



$



$
(1,024
)

$
2,824Effect of participating non-vested restricted stock










12



(28
)(Loss) income from discontinued operations, net of
    tax  Basic and Diluted

$



$



$
(1,012
)

$
2,796Denominator:Weighted-average shares  Basic


52,191



53,521



58,095



57,505Employee stock options, restricted stock and warrants






3,848



3,340



2,6511.75% Convertible notes






5,135







31/8% Convertible
    notes














2,174Adjusted weighted-average shares after assumed
    conversions  Diluted


52,191



62,504



61,435



62,330  F-44




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2009First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
90,264


$
98,631


$
111,568


$
138,073Cost of operations


36,565



39,229



41,965



47,994Sales and marketing


27,561



26,797



26,265



31,478General and administrative


21,848



22,003



21,967



23,802Depreciation and amortization


7,103



6,956



7,134



6,992Interest income


2,262



1,958



1,840



3,089Interest expense


6,536



5,781



5,541



5,657Gain on convertible notes


6,647



3,473







Severance and other transaction expenses














11,066Other expense, net


(269
)


(552
)


(123
)


(425
)(Loss) income from continuing operations before income tax
    (benefit) provision


(709
)


2,744



10,413



13,748Income tax (benefit) provision


(1,217
)


750



5,389



(50,413
)Consolidated income from continuing operations


508



1,994



5,024



64,161Consolidated income (loss) from discontinued operations, net of
    tax


517



(13,284
)


27,462



34,659Consolidated net income (loss) inclusive of noncontrolling
    interest


1,025



(11,290
)


32,486



98,820Income attributable to noncontrolling interest


(610
)


(387
)


(2,184
)


(524
)Net income (loss) attributable to Company stockholders

$
415


$
(11,677
)

$
30,302


$
98,296Amounts attributable to Company stockholders:(Loss) income from continuing operations

$
(194
)

$
703


$
2,872


$
63,637Income (loss) from discontinued operations


609



(12,380
)


27,430



34,659Net income (loss) attributable to Company stockholders

$
415


$
(11,677
)

$
30,302


$
98,296Basic income (loss) per common share:(Loss) income from continuing operations

$
(0.00
)

$
0.02


$
0.06


$
1.19Income (loss) from discontinued operations


0.01



(0.28
)


0.59



0.65Net income (loss) attributable to Company stockholders

$
0.01


$
(0.26
)

$
0.65


$
1.84Diluted income (loss) per common share:(Loss) income from continuing operations

$
(0.00
)

$
0.01


$
0.05


$
0.92Income (loss) from discontinued operations


0.01



(0.26
)


0.56



0.47Net income (loss) attributable to Company stockholders

$
0.01


$
(0.25
)

$
0.61


$
1.39Net Income Attributable to Company Stockholders per Common
    Share:Numerator:(Loss) income from continuing operations  Basic

$
(194
)

$
703


$
2,872


$
63,637Effect of participating non-vested restricted stock










(31
)


(886
)(Loss) income from continuing operations  Basic


(194
)


703



2,841



62,751Interest expense on 1.75% convertible notes, net of tax














876Interest expense on
    31/8%
    convertible notes, net of tax














2,472Effect of dilutive securities of subsidiary






(76
)


(188
)


(57
)(Loss) income from continuing operations  Diluted

$
(194
)

$
627


$
2,653


$
66,042Income (loss) from discontinued operations

$
609


$
(12,380
)

$
27,430


$
34,659Effect of participating non-vested restricted stock


(7
)






(293
)


(483
)Income (loss) from discontinued operations, net of
    tax  Basic


602



(12,380
)


27,137



34,176Effect of dilutive securities of subsidiary






53



(3
)


Income (loss) from discontinued operations, net of
    tax  Diluted

$
602


$
(12,327
)

$
27,134


$
34,176Denominator:Weighted-average shares  Basic


45,217



45,599



46,096



52,688Employee stock options, restricted stock and warrants






1,134



2,513



4,4701.75% Convertible notes














7,64031/8% Convertible
    notes














7,147Adjusted weighted-average shares after assumed
    conversions  Diluted


45,217



46,733



48,609



71,945  F-45




---



##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Subsequent
    Events   F-46




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##### Table of Contents



Schedule II.
    Valuation and Qualifying Accounts  Years Ended December 31, 2010, 2009 and 2008Balance at


Charged toBeginning


Costs and











Balance atof Year


Expenses


Acquired


Write-offs


Other


End of Year(In thousands)December 31, 2010Allowance for Doubtful Accounts

$
1,511


$
545


$



$
(563
)

$




1,493Valuation Allowance for Deferred Tax Assets


234,735


$
(9,100
)

$



$



$
(23,446
)(a)


202,189December 31, 2009Allowance for Doubtful Accounts


1,301



1,486







(1,276
)






1,511Valuation Allowance for Deferred Tax Assets


317,235



(67,781
)


131







(14,850
)(b)


234,735December 31, 2008Allowance for Doubtful Accounts


1,165



668







(532
)






1,301Valuation Allowance for Deferred Tax Assets


486,197



(194,057
)


24,775







320



317,235     (a)
    
    Primarily represents the valuation
    allowance released as a result of the utilization of net
    operating loss carryforwards generated by excess tax benefits of
    stock-based awards.(b)
    
    Primarily represents the valuation
    allowance released as a result of the effect of the Merger on
    state net operating loss carryforwards. S-1




---



##### Table of Contents



INDEX TO
    EXHIBITS  Exhibit No.

Description2
.1*

Stock Purchase Agreement, dated as of August 8, 2006,
    between HLTH Corporation (HLTH) and Sage Software,
    Inc. (incorporated by reference to Exhibit 2.1 to
    HLTHs Current Report on
    Form 8-K
    filed on August 11, 2006)2
.2*

Amended and Restated Agreement and Plan of Merger, dated as of
    November 15, 2006, among Emdeon Corporation, EBS Holdco,
    Inc., EBS Master LLC, Emdeon Business Services LLC, Medifax-EDI
    Holding Company, EBS Acquisition LLC, GA EBS Merger LLC and EBS
    Merger Co. (incorporated by reference to Exhibit 2.1 to
    HLTHs Current Report on
    Form 8-K
    filed on November 21, 2006)2
.3*

Securities Purchase Agreement, dated as of February 8,
    2008, among HLTH, EBS Master LLC, the voting members of EBS
    Master LLC and the purchasers listed therein (incorporated by
    reference to Exhibit 2.1 to HLTHs Current Report on
    Form 8-K
    filed on February 13, 2008)2
.4*

Agreement and Plan of Merger, dated as of June 17, 2009,
    between HLTH Corporation and WebMD Health Corp. (incorporated by
    reference to Exhibit 2.1 to the Current Report on
    Form 8-K
    filed by the Registrant on June 18, 2009, as amended on
    June 22, 2009)2
.5*

Stock Purchase Agreement, dated as of September 17, 2009,
    among SNTC Holding, Inc., Aurora Equity Partners III L.P.
    and Aurora Overseas Equity Partners III, L.P. (incorporated by
    reference to Exhibit 2.1 to the Current Report on
    Form 8-K
    filed by HLTH on September 22, 2009)2
.6*

Unit Purchase Agreement, dated as of November 2, 2006, by
    and among the Registrant, Subimo, LLC and the Sellers referred
    to therein (incorporated by reference to Exhibit 2.1 to the
    Current Report on
    Form 8-K
    filed by the Registrant on November 8, 2006) (the
    Subimo Purchase Agreement)2
.7

Amendment, dated December 3, 2008, to the Subimo Purchase
    Agreement (incorporated by reference to Exhibit 2.7 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2008 (the 2008
    Form 10-K))2
.8*

Stock Purchase Agreement, dated as of June 3, 2008, between
    SNTC Holding, Inc. and General Dynamics Information Technology,
    Inc. (incorporated by reference to Exhibit 2.1 to Amendment
    No. 1, filed on June 10, 2008, to the Current Report
    on
    Form 8-K
    filed by HLTH on June 4, 2008)2
.9*

Termination and Mutual Release Agreement, dated as of
    November 18, 2008, among the Registrant, Marketing
    Technology Solutions Inc., Jay Goldberg and Russell Planitzer
    (incorporated by reference to Exhibit 2.8 to the 2008
    Form 10-K)2
.10*

Purchase and Release Agreement, dated as of April 20, 2010,
    between WebMD Health Corp. and Citigroup Global Markets Inc.
    (incorporated by reference to Exhibit 2.1 to the
    Registrants Current Report on
    Form 8-K
    filed on April 26, 2010)3
.1

Restated Certificate of Incorporation of the Registrant
    (incorporated by reference to Exhibit 3.1 to the
    Registrants Registration Statement on
    Form S-8
    filed on October 23, 2009 (Reg.
    No. 333-162651))3
.2

Amended and Restated By-laws of the Registrant (incorporated by
    reference to Exhibit 3.2 to the Registrants
    Registration Statement on
    Form S-8
    filed on October 23, 2009 (Reg.
    No. 333-162651))4
.1

Specimen Common Stock Certificate (incorporated by reference to
    Exhibit 4.1 in Amendment No. 1, filed on
    August 11, 2009, to the Registrants Registration
    Statement on
    Form S-4
    (Reg.
    No. 333-160530))4
.2

Indenture, dated as of January 11, 2011, between the
    Registrant and The Bank of New York Mellon Trust Company,
    N.A. (incorporated by reference to Exhibit 4.1 to Amendment
    No. 1, filed on January 14, 2011, to the
    Registrants Current Report on
    Form 8-K
    filed on January 11, 20114
.3

Form of 2.50% Convertible Note Due 2018 (included in
    Exhibit 4.2)10
.1

Form of Indemnification Agreement between HLTH and each of its
    directors and executive officers (incorporated by reference to
    Exhibit 10.1 to HLTHs Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002) E-1




---



##### Table of Contents



Exhibit No.

Description10
.2

Form of Indemnification Agreement between the Registrant and its
    directors and executive officers (incorporated by reference to
    Exhibit 10.9 to the Registrants Registration
    Statement on
    Form S-1
    (No. 333-124832)
    (which we refer to as the IPO Registration
    Statement))10
.3**

WebMD Health Corp. Long-Term Incentive Plan for Employees of
    Subimo, LLC (incorporated by reference to Exhibit 10.2 to
    HLTHs Annual Report on
    Form 10-K
    for the year ended December 31, 2006)10
.4

Healtheon/WebMD Media Services Agreement dated January 26,
    2000 among HLTH, Eastrise Profits Limited and Fox Entertainment
    Group, Inc. (incorporated by reference to Exhibit 10.5 to
    HLTHs Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000), as amended by
    Amendment dated February 15, 2001 (incorporated by
    reference to Exhibit 10.2 to HLTHs Quarterly Report
    on
    Form 10-Q
    for the quarter ended March 31, 2001)10
.5**

Amended and Restated Employment Agreement, dated as of
    August 3, 2005 between HLTH and Martin J. Wygod
    (incorporated by reference to Exhibit 10.1 to HLTHs
    Current Report on
    Form 8-K
    filed on August 5, 2005)10
.6**

Letter Agreement, dated as of February 1, 2006 between HLTH
    and Martin J. Wygod (incorporated by reference to
    Exhibit 10.3 to HLTHs Current Report on
    Form 8-K
    filed on February 2, 2006)10
.7**

Employment Agreement, dated September 23, 2004, between
    HLTH and Kevin Cameron (incorporated by reference to
    Exhibit 10.1 to HLTHs Current Report on
    Form 8-K
    filed September 28, 2004)10
.8**

Letter Agreement, dated as of February 1, 2006 between HLTH
    and Kevin M. Cameron (incorporated by reference to
    Exhibit 10.2 to HLTHs Current Report on
    Form 8-K
    filed on February 2, 2006)10
.9**

Letter Agreement, dated as of April 27, 2005, between HLTH.
    and Wayne T. Gattinella (incorporated by reference to
    Exhibit 99.1 to HLTHs Current Report on
    Form 8-K
    filed on May 3, 2005)10
.10**

Employment Agreement, dated as of April 28, 2005, between
    WebMD, Inc. and Wayne T. Gattinella (incorporated by reference
    to Exhibit 99.1 to HLTHs Current Report on
    Form 8-K
    filed on May 3, 2005)10
.11**

Form of Amendment to HLTHs Equity Compensation Plans and
    Stock Option Agreements (incorporated by reference to
    Exhibit 10.1 to the Quarterly Report on
    Form 10-Q
    filed by HLTH on November 9, 2006)10
.12**

2001 Employee Non-Qualified Stock Option Plan of HLTH, as
    amended (incorporated by reference to Exhibit 10.46 to
    HLTHs
    Form 10-K
    for the year ended December 31, 2001, as amended by
    Amendment No. 1 on
    Form 10-K/A)10
.13**

2002 Restricted Stock Plan of HLTH and Form of Award Agreement
    (incorporated by reference to Exhibit 10.21 to HLTHs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2002)10
.14**

Amended and Restated 1996 Stock Plan of HLTH (incorporated by
    reference to Exhibit 10.8 to HLTHs Quarterly Report
    on
    Form 10-Q
    for the quarter ended March 31, 2006)10
.15**

Amended and Restated 2000 Long-Term Incentive Plan of HLTH
    (incorporated by reference to Annex E to HLTHs Proxy
    Statement for its 2006 Annual Meeting filed on August 14,
    2006)10
.16**

1991 Director Stock Option Plan of Synetic, Inc.
    (incorporated by reference to Exhibit 4.2 to Synetic,
    Inc.s Registration Statement on
    Form S-8
    (No. 333-46640)
    filed March 24, 1992)10
.17**

Amended and Restated 1991 Special Non-Qualified Stock Option
    Plan of Synetic, Inc. (incorporated by reference to
    Exhibit 4.3 to Synetic, Inc.s Registration Statement
    on
    Form S-8
    (No. 333-36041)
    filed September 19, 1997)10
.18**

1996 Class C Stock Option Plan of Synetic, Inc.
    (incorporated by reference to Exhibit 4.1 to Synetic,
    Inc.s Registration Statement on
    Form S-8
    (No. 333-36041)
    filed September 19, 1997)10
.19**

CareInsite, Inc. 1999 Director Stock Option Plan
    (incorporated by reference to Annex H to the Proxy
    Statement/Prospectus, filed on August 7, 2000, and included
    in HLTHs Registration Statement on
    Form S-4
    (No. 333-39592)) E-2




---



##### Table of Contents



Exhibit No.

Description10
.20**

WebMD Health Corp. Amended and Restated 2005 Long-Term Incentive
    Plan (the 2005 LTIP) (incorporated by reference to
    Exhibit 4.1 to the Registrants Current Report on
    Form 8-K
    filed on October 27, 2010)10
.21**

Amended and Restated Employment Agreement, dated as of
    July 14, 2005, between WebMD Health Corp. and Anthony Vuolo
    (incorporated by reference to Exhibit 99.2 to HLTHs
    Current Report on
    Form 8-K,
    as amended, filed with the Securities and Exchange Commission on
    July 19, 2005)10
.22**

Form of Restricted Stock Agreement with Employees (incorporated
    by reference to Exhibit 4.2 to the Registrants
    Registration Statement on
    Form S-8
    filed on October 23, 2009 (Reg.
    No. 333-162653))10
.23**

Form of Restricted Stock Agreement with Non-Employee Directors
    (incorporated by reference to Exhibit 10.49 to the IPO
    Registration Statement)10
.24**

Form of Non-Qualified Stock Option Agreement with Employees
    (incorporated by reference to Exhibit 4.3 to the
    Registrants Registration Statement on
    Form S-8
    filed on October 23, 2009 (Reg.
    No. 333-162653))10
.25**

Form of Non-Qualified Stock Option Agreement with Non-Employee
    Directors (incorporated by reference to Exhibit 10.51 to
    the IPO Registration Statement)10
.26**

Employment Agreement between WebMD Health Holdings, Inc. and
    Douglas W. Wamsley (incorporated by reference to
    Exhibit 10.15 to the IPO Registration Statement)10
.27**

Employment Agreement between WebMD Health Holdings, Inc. and
    Nan-Kirsten Forte (incorporated by reference to
    Exhibit 10.16 to the IPO Registration Statement)10
.28**

Employment Agreement between WebMD Health Holdings, Inc. and
    Steven Zatz, M.D. (incorporated by reference to
    Exhibit 10.17 to the IPO Registration Statement)10
.29**

Employment Agreement between WebMD Health Holdings, Inc. and
    Craig Froude (incorporated by reference to Exhibit 10.18 to
    the IPO Registration Statement)10
.30

Agreement of Lease, dated as of June 30, 2004,
    between III Chelsea Commerce LP and WebMD, Inc.
    (incorporated by reference to Exhibit 10.45 to the IPO
    Registration Statement)10
.31

First Amendment to the Lease Agreement, dated as of
    December 21, 2004, between III Chelsea Commerce LP and
    WebMD, Inc. (incorporated by reference to Exhibit 10.46 to
    the IPO Registration Statement)10
.32

Services Agreement, dated as of February 12, 2004, between
    WebMD, Inc. and Fidelity Human Resources Services Company LLC
    (f/k/a Fidelity Employer Services Company LLC) (incorporated by
    reference to Exhibit 10.47 to the IPO Registration
    Statement)10
.33**

Form of Restricted Stock Agreement between HLTH and Employees
    for Grants Under HLTHs 2000 Long-Term Incentive Plan
    (incorporated by reference to Exhibit 10.57 to HLTHs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2005)10
.34**

Form of Non-Qualified Stock Option Agreement between HLTH and
    Employees for Grants Under HLTHs 2000 Long-Term Incentive
    Plan (incorporated by reference to Exhibit 10.58 to
    HLTHs Annual Report on
    Form 10-K
    for the year ended December 31, 2005)10
.35**

Form of Non-Qualified Stock Option Agreement between HLTH and
    Employees for Grants Under HLTHs 1996 Stock Plan
    (incorporated by reference to Exhibit 10.59 to HLTHs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2005)10
.36**

Amendment No. 2, dated as of December 1, 2008, between
    HLTH and Martin J. Wygod (incorporated by reference to
    Exhibit 10.1 to HLTHs Current Report on
    Form 8-K
    filed on December 5, 2008)10
.37**

Letter Agreement, dated December 29, 2008, between HLTH and
    Martin J. Wygod (incorporated by reference to Exhibit 10.52
    to HLTHs Annual Report on
    Form 10-K
    for the year ended December 31, 2008)10
.38**

Amendment to Employment Agreement, dated as of December 16,
    2008, between HLTH and Kevin M. Cameron (incorporated by
    reference to Exhibit 10.53 to HLTHs Annual Report on
    Form 10-K
    for the year ended December 31, 2008) E-3




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##### Table of Contents



Exhibit No.

Description10
.39**

Letter Amendment, dated as of December 10, 2008, between
    the Registrant and Wayne T. Gattinella (incorporated by
    reference to Exhibit 10.53 to the 2008
    Form 10-K)10
.40**

Letter Amendment, dated as of July 9, 2009, among HLTH
    Corporation, WebMD Health Corp. and Martin J. Wygod
    (incorporated by reference to Exhibit 10.1 to the Current
    Report on
    Form 8-K
    filed by the Registrant on July 14, 2009)10
.41**

WebMD, LLC Supplemental Bonus Program Trust Agreement
    (incorporated by reference to Exhibit 10.48 to Amendment
    No. 1, filed on April 29, 2008, to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2007)10
.42**

Amendment No. 1 to WebMD Supplemental Bonus Program
    Trust Agreement (incorporated by reference to
    Exhibit 10.58 to Amendment No. 1, filed on
    April 30, 2009, to the 2008
    Form 10-K)10
.43**

Letter Agreement, dated as of October 1, 2007, between the
    Registrant and William Pence (incorporated by reference to
    Exhibit 10.59 to Amendment No. 1, filed on
    April 30, 2009, to the 2008
    Form 10-K)10
.44**

Letter Amendment, dated as of December 10, 2008, between
    the Registrant and William Pence (incorporated by reference to
    Exhibit 10.60 to Amendment No. 1, filed on
    April 30, 2009, to the 2008
    Form 10-K)10
.45**

Amendment, dated as of December 10, 2008 to Amended and
    Restated Employment Agreement between the Registrant and Anthony
    Vuolo (incorporated by reference to Exhibit 10.55 to the
    2008
    Form 10-K)10
.46**

Letter Amendment, dated as of December 14, 2008, between
    the Registrant and Nan Forte (incorporated by reference to
    Exhibit 10.56 to the 2008 Form 10-K)10
.47**

Letter Agreement, dated as of February 19, 2009, between
    HLTH and Anthony Vuolo (incorporated by reference to
    Exhibit 10.57 to the 2008
    Form 10-K)10
.48

Note Purchase Agreement, dated October 19, 2009, among SNTC
    Holding, Inc., Porex Holding Corporation, Porex Corporation and
    Porex Surgical, Inc. (incorporated by reference to
    Exhibit 10.1 to HLTHs Current Report on
    Form 8-K
    filed October 20, 2009)10
.49**

Restricted Stock Agreement, dated November 3, 2009, between
    the Registrant and Anthony Vuolo (incorporated by reference to
    Exhibit 10.71 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2009 (the 2009
    Form 10-K))10
.50**

Letter Amendment, dated as of November 3, 2009, between the
    Registrant and Kevin M. Cameron (incorporated by reference to
    Exhibit 10.72 to the Registrants 2009
    Form 10-K)10
.51**

Letter Amendment, dated as of December 14, 2008, between
    the Registrant and Steven Zatz, M.D. (incorporated by
    reference to Exhibit 10.74 to Amendment No. 1, filed
    April 30, 2010, to the 2009 Form 10-K)10
.52

Letter Agreement, dated March 26, 2010, among SNTC Holding,
    Inc. and Porex Holding Corporation, Porex Corporation and Porex
    Surgical Inc. (incorporated by reference to Exhibit 10.1 to
    the Registrants Quarterly Report on
    Form 10-Q
    filed on May 10, 2010)10
.53**

Letter Agreement, dated as of June 28, 2010, between the
    Registrant and Wayne Gattinella (incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    filed on August 9, 2010)10
.54**

Letter Agreement, dated as of June 28, 2010, between the
    Registrant and Kevin Cameron (incorporated by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q
    filed on August 9, 2010)10
.55**

Letter Agreement, dated as of June 28, 2010, between the
    Registrant and Anthony Vuolo (incorporated by reference to
    Exhibit 10.3 to the Registrants Quarterly Report on
    Form 10-Q
    filed on August 9, 2010)14
.1

Code of Business Conduct (incorporated by reference to
    Exhibit 14.1 to the Registrants Current Report on
    Form 8-K
    filed on September 17, 2010)21


Subsidiaries of the Registrant23
.1

Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm E-4




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##### Table of Contents



Exhibit No.

Description31
.1

Rule 13a-14(a)/15d-14(a)
    Certification of Chief Executive Officer of the Registrant31
.2

Rule 13a-14(a)/15d-14(a)
    Certification of Chief Financial Officer of the Registrant32
.1

Section 1350 Certification of Chief Executive Officer of
    the Registrant32
.2

Section 1350 Certification of Chief Financial Officer of
    the Registrant99
.1

Explanation of Non-GAAP Measures99
.2

Audit Committee Charter99
.3

Compensation Committee Charter99
.4

Nominating & Governance Committee Charter     *
    
    With respect to the agreements filed as Exhibits 2.1
    through 2.6 and Exhibits 2.8 through 2.10, certain of the
    exhibits and the schedules to those agreements have been omitted
    pursuant to Item 601(b)(2) of
    Regulation S-K.
    The Registrant will furnish copies of any of the exhibits and
    schedules to the Securities and Exchange Commission upon request.**
    
    Agreement relates to executive compensation.
    
    Portions of this exhibit were redacted pursuant to confidential
    treatment request filed with the Secretary of the Securities and
    Exchange Commission pursuant to Rule 406 under the
    Securities Act of 1933, as amended. E-5