##### Table of Contents



UNITED
    STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
    Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30,
    2009oro

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(State of
    incorporation)

20-2783228(I.R.S. Employer
    Identification No.)111 Eighth Avenue
    New York, New York(Address of principal
    executive office)

10011(Zip
    code)   (212) 624-3700 (Registrants
    telephone number, including area code)
        þ o
  Regulation S-T
  o o
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting
    company)   Rule 12b-2
  o þ




---



##### 



WEBMD
    HEALTH CORP.
    QUARTERLY REPORT ON
    FORM 10-Q
    For the period ended September 30, 2009
    TABLE OF CONTENTS
   
 PageNumberForward-Looking Statements


3PART I

Financial InformationItem 1.

Financial Statements:Consolidated Balance Sheets as of
    September 30, 2009 (unaudited) and December 31,
    2008


4Consolidated Statements of Operations for the
    three and nine months ended September 30, 2009 and 2008
    (unaudited)


5Consolidated Statements of Cash Flows for the
    nine months ended September 30, 2009 and 2008
    (unaudited)


6Notes to Consolidated Financial Statements


7Item 2.

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


26Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


61Item 4.

Controls and Procedures


61PART II

Other InformationItem 1.

Legal Proceedings


62Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


62Item 6.

Exhibits


62Signatures


63Exhibit Index


E-1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1    ® ® ® ® ® ® ® ® ® ® ®
 2




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS  Form 10-Q
    
    failure to achieve sufficient levels of usage of www.webmd.com
    and our other public portals;
    failure to achieve sufficient levels of usage and market
    acceptance of new and updated products and services;
    difficulties in forming and maintaining relationships with
    customers and strategic partners;
    the inability to successfully deploy new or updated applications
    or services;
    the anticipated benefits from acquisitions not being fully
    realized or not being realized within the expected time frames;
    the inability to attract and retain qualified personnel;
    adverse economic conditions and disruptions in the capital
    markets;
    general business or regulatory conditions affecting the
    healthcare, information technology, and Internet industries
    being less favorable than expected; and
    the other risks and uncertainties described in this Quarterly
    Report on
    Form 10-Q
    under the heading Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Factors That May Affect Our Future
    Financial Condition or Results of Operations.     3




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##### Table of Contents



PART I
    FINANCIAL INFORMATION  ITEM 1.
    Financial
    Statements  WEBMD
    HEALTH CORP.
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands, except share and per share data)
  September 30,


December 31,2009


2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
275,250


$
191,659Accounts receivable, net of allowance for doubtful accounts of
    $1,542 at September 30, 2009 and $1,301 at
    December 31, 2008


87,072



93,082Prepaid advertising






1,753Other current assets


9,286



11,358Assets of discontinued operations






12,575Total current assets


371,608



310,427Investments


126,564



133,563Property and equipment, net


52,286



54,165Goodwill


208,967



208,967Intangible assets, net


21,416



26,237Other assets


13,259



22,573$
794,100


$
755,932LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accrued expenses

$
31,760


$
31,241Deferred revenue


83,861



79,613Due to HLTH


1,378



427Liabilities of discontinued operations






2,599Total current liabilities


116,999



113,880Other long-term liabilities


7,539



8,334Commitments and contingenciesStockholders equity:Preferred stock, 50,000,000 shares authorized; no shares
    issued and outstanding






Class A Common Stock, $0.01 par value per share,
    500,000,000 shares authorized; 10,113,149 shares
    issued at September 30, 2009 and 10,044,372 shares
    issued at December 31, 2008


101



100Class B Common Stock, $0.01 par value per share,
    150,000,000 shares authorized; 48,100,000 shares
    issued and outstanding at September 30, 2009 and
    December 31, 2008


481



481Additional paid-in capital


565,178



548,069Class A Treasury Stock, at cost; 312,820 shares at
    September 30, 2009 and 624,871 shares at
    December 31, 2008


(6,256
)


(12,497
)Accumulated other comprehensive loss


(22,323
)


(4,277
)Retained earnings


132,381



101,842Total stockholders equity


669,562



633,718$
794,100


$
755,932    4




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##### Table of Contents



WEBMD
    HEALTH CORP.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (In
    thousands, except per share data, unaudited)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Revenue

$
111,568


$
96,797


$
300,463


$
263,451Cost of operations


41,965



34,225



117,759



97,120Sales and marketing


26,265



26,021



80,623



76,068General and administrative


15,961



14,774



45,826



42,465Depreciation and amortization


6,988



7,056



20,729



20,815Interest income


834



2,616



2,733



8,419Impairment of auction rate securities














27,406Income from continuing operations before income tax provision


21,223



17,337



38,259



7,996Income tax provision


8,622



7,375



15,469



15,308Income (loss) from continuing operations


12,601



9,962



22,790



(7,312
)Income (loss) from discontinued operations, net of tax


190



804



(5,100
)


1,095Net income (loss)

$
12,791


$
10,766


$
17,690


$
(6,217
)Basic income (loss) per common share:Income (loss) from continuing operations

$
0.22


$
0.17


$
0.39


$
(0.13
)Income (loss) from discontinued operations


0.00



0.02



(0.09
)


0.02Net income (loss)

$
0.22


$
0.19


$
0.30


$
(0.11
)Diluted income (loss) per common share:Income (loss) from continuing operations

$
0.21


$
0.17


$
0.39


$
(0.13
)Income (loss) from discontinued operations


0.00



0.01



(0.09
)


0.02Net income (loss)

$
0.21


$
0.18


$
0.30


$
(0.11
)Weighted-average shares outstanding used in computing
    per share amounts:Basic


57,777



57,770



57,676



57,699Diluted


58,844



59,111



58,445



57,699    5




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##### Table of Contents



WEBMD
    HEALTH CORP.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands, unaudited)
  Nine Months EndedSeptember 30,2009


2008Cash flows from operating activities:Net income (loss)

$
17,690


$
(6,217
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Loss (income) from discontinued operations, net of tax


5,100



(1,095
)Depreciation and amortization


20,729



20,815Non-cash advertising


1,753



1,736Non-cash stock-based compensation


17,021



10,657Deferred and other income taxes


14,835



14,977Impairment of auction rate securities






27,406Changes in operating assets and liabilities:Accounts receivable


6,010



6,275Accrued expenses and other long-term liabilities


(276
)


(286
)Due to HLTH


951



563Deferred revenue


4,248



5,367Other


(587
)


(2,651
)Net cash provided by continuing operations


87,474



77,547Net cash provided by discontinued operations


728



3,205Net cash provided by operating activities


88,202



80,752Cash flows from investing activities:Proceeds from maturities and sales of
    available-for-sale
    securities


1,800



43,300Purchases of
    available-for-sale
    securities






(127,900
)Purchases of property and equipment


(14,131
)


(15,014
)Cash received from sale of businesses, net of fees


2,840



1,133Net cash used in continuing operations


(9,491
)


(98,481
)Net cash used in discontinued operations


(8
)


(40
)Net cash used in investing activities


(9,499
)


(98,521
)Cash flows from financing activities:Proceeds from issuance of common stock


4,823



3,453Tax benefit on stock-based awards


65



315Net cash provided by financing activities


4,888



3,768Net increase (decrease) in cash and cash equivalents


83,591



(14,001
)Cash and cash equivalents at beginning of period


191,659



213,753Cash and cash equivalents at end of period

$
275,250


$
199,752    6




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##### Table of Contents



WEBMD
    HEALTH CORP.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In thousands, except share and per share data,
    unaudited)
  1.
    Summary
    of Significant Accounting Policies  Background
    and Basis of Presentation
  one-to-one
  e-newsletters e-detailing WebMD the Magazine
  Interim
    Financial Statements
   7




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form 8-K
  Seasonality
    Accounting
    Estimates
    Net
    Income (Loss) Per Common Share
   8




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Numerator:Income (loss) from continuing
    operations(1)

$
12,454


$
9,962


$
22,525


$
(7,312
)Income (loss) from discontinued operations, net of
    tax(1)

$
188


$
804


$
(5,041
)

$
1,095Denominator: (shares in thousands)Weighted-average shares  Basic


57,777



57,770



57,676



57,699Employee stock options and Deferred Shares


1,067



1,341



769



Adjusted weighted-average shares after assumed
    conversions  Diluted


58,844



59,111



58,445



57,699Basic income (loss) per common share:Income (loss) from continuing operations

$
0.22


$
0.17


$
0.39


$
(0.13
)Income (loss) from discontinued operations


0.00



0.02



(0.09
)


0.02Net income (loss)

$
0.22


$
0.19


$
0.30


$
(0.11
)Diluted income (loss) per common share:Income (loss) from continuing operations

$
0.21


$
0.17


$
0.39


$
(0.13
)Income (loss) from discontinued operations


0.00



0.01



(0.09
)


0.02Net income (loss)

$
0.21


$
0.18


$
0.30


$
(0.11
)     (1)
    
    Adjusted for the effect of
    non-vested restricted stock if dilutive to income (loss) per
    common share.     9




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Reclassifications
    Recent
    Accounting Pronouncements
  Accounting
    Pronouncements Adopted During 2009
        other-than-temporary
     10




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting
    Pronouncements to be Adopted in the Future
    2.
    Discontinued
    Operations    Three Months Ended September 30,


Nine Months Ended September 30,2009


2008


2009


2008Revenue

$
1,875


$
3,590


$
4,066


$
7,794Income (loss) before taxes


348



1,561



(8,432
)


2,172Gain on disposal before taxes


27







27



     Assets of discontinued operations:Accounts receivable, net

$
1,058Property and equipment, net


98Goodwill


11,044Intangible assets, net


362Other assets


13Total assets

$
12,575Liabilities of discontinued operations:Accrued expenses

$
113Deferred revenue


876Deferred tax liability


1,610Total liabilities

$
2,599  11




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    Transactions
    with HLTH  Merger
    with HLTH
    Agreements
    with HLTH
    Charges
    from HLTH to the Company
  Corporate Services:
  Healthcare Expense:
  Stock-Based Compensation Expense:
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Corporate services

$
1,312


$
838


$
3,442


$
2,572Healthcare expense


2,234



2,144



6,486



6,122Stock-based compensation expense


105



79



(111
)


184  12




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Related
    Party Transaction  Fidelity
    Human Resources Services Company LLC
    5.
    Fair
    Value of Financial Instruments and Credit Facility    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.    As of September 30, 2009


As of December 31, 2008Fair Value


Amortized





Gross


Amortized





GrossEstimate


Cost


Fair


Unrealized


Cost





UnrealizedUsing:


Basis


Value


Losses


Basis


Fair Value


LossesCash and Cash Equivalents


Level 1


$
275,250


$
275,250


$



$
191,659


$
191,659


$
Auction Rate
    Securities(1)


Level 3



148,887
(2)


126,564



(22,323
)(2)


137,840



133,563



(4,277
)     (1)
    
    The face (par) value of the auction
    rate securities was $163,000 and $164,800 as of
    September 30, 2009 and December 31, 2008, respectively.(2)
    
    Amounts reflect cumulative effect
    of adoption of new authoritative guidance as discussed below. 13




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Nine Months EndedSeptember 30,2009


2008Fair value as of the beginning of the period

$
133,563


$
Transfers to Level 3






169,200Redemptions


(1,800
)


(3,700
)Impairment charge included in earnings






(27,406
)Interest income accretion included in earnings






244Unrealized loss included in other comprehensive income


(5,199
)


(5,490
)Fair value as of the end of the period

$
126,564


$
132,848   other-than-temporary,
  other-than-temporary other-than-temporary other-than-temporarily other-than-temporarily other-than-temporary
   14




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Non-Recourse
    Credit Facility
     15




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.
    Comprehensive
    Income (Loss)  available-for-sale
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Unrealized gain (loss) on securities

$
1,134


$
(4,107
)

$
(5,199
)

$
(5,490
)Other comprehensive gain (loss)


1,134



(4,107
)


(5,199
)


(5,490
)Net income (loss)


12,791



10,766



17,690



(6,217
)Comprehensive income (loss)

$
13,925


$
6,659


$
12,491


$
(11,707
)   7.
    Intangible
    Assets    September 30, 2009

December 31, 2008Weighted










WeightedGross








Average

Gross








AverageCarrying


Accumulated





Remaining

Carrying


Accumulated





RemainingAmount


Amortization


Net


Useful Life(a)

Amount


Amortization


Net


Useful Life(a)Content

$
15,954


$
(15,286
)

$
668


1.1

$
15,954


$
(14,541
)

$
1,413


1.7Customer relationships


32,430



(15,377
)


17,053


8.3


32,430



(12,872
)


19,558


8.7Technology and patents


14,700



(14,543
)


157


0.2


14,700



(13,370
)


1,330


0.8Trade names


6,030



(2,492
)


3,538


6.7


6,030



(2,094
)


3,936


7.4Total

$
69,114


$
(47,698
)

$
21,416




$
69,114


$
(42,877
)

$
26,237     (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 31:2009 (October 1st to December 31st)

$
1,3242010


3,2312011


2,4642012


2,4642013


2,464Thereafter


9,469  16




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Restructuring    9.
    Commitments
    and Contingencies  Roberta
    Feinstein v. WebMD Health Corporation, et al.
  Roberta Feinstein v. WebMD
    Health Corporation, et al.
  Other
  Form 8-K
    10.
    Stock-Based
    Compensation    HLTH
    Plans
   17




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise Price


Contractual Life


IntrinsicShares


per Share


(In Years)


Value(1)Outstanding at January 1, 2009


7,685,557


$
13.80Exercised


(1,115,305
)


9.11Forfeited


(628,205
)


16.46Net transfers from HLTH


315,375



11.73Outstanding at September 30, 2009


6,257,422


$
14.26



2.3


$
19,349Vested and exercisable at the end of the period


5,850,172


$
14.52



1.9


$
17,659     (1)
    
    The aggregate intrinsic value is
    based on the market price of HLTHs Common Stock on
    September 30, 2009, which was $14.61, 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 September 30, 2009.    Restricted
    Stock Awards
    Weighted-AverageGrant DateShares

Fair ValueBeginning balance at January 1, 2009





$
Net transfers from HLTH


23,000



11.29Ending balance at September 30, 2009


23,000



11.29  18




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  WebMD
    Plans
    Stock
    Options
    WeightedWeighted

AverageAverage

Remaining

AggregateExercise Price

Contractual Life

IntrinsicShares

per Share

(In Years)

Value(1)Outstanding at January 1, 2009


10,284,236


$
25.46Granted


604,900



27.68Exercised


(312,051
)


17.73Forfeited


(675,250
)


27.89Outstanding at September 30, 2009


9,901,835


$
25.68



8.2


$
88,616Vested and exercisable at the end of the period


3,091,658


$
24.09



6.4


$
34,630     (1)
    
    The aggregate intrinsic value is
    based on the market price of the Companys Class A
    Common Stock on September 30, 2009, which was $33.12, 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 September 30, 2009.   19




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Nine Months EndedSeptember 30,2009


2008Expected dividend yield


0
%


0
%Expected volatility


0.56



0.44Risk free interest rate


1.46
%


2.46
%Expected term (years)


3.31



3.25Weighted-average fair value of options granted during the period

$
11.03


$
10.75   Restricted
    Stock Awards
    Weighted-AverageGrant DateShares


Fair ValueBeginning balance at January 1, 2009


706,009


$25.22Granted


59,000


30.54Vested


(91,688
)

21.74Forfeited


(50,908
)

29.65Ending balance at September 30, 2009


622,413


25.88     Employee
    Stock Purchase Plan
   20




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
      Summary
    of Stock-Based Compensation Expense
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008HLTH Plans:Stock options

$
49


$
70


$
(167
)

$
126Restricted stock


56



9



56



26WebMD Plans:Stock options


4,495



2,655



14,011



8,163Restricted stock


929



469



2,887



1,331ESPP














32Other


132



372



323



1,097Total stock-based compensation expense

$
5,661


$
3,575


$
17,110


$
10,775Included in:Cost of operations

$
1,743


$
997


$
4,921


$
2,930Sales and marketing


1,948



1,215



5,499



3,602General and administrative


2,055



1,300



6,601



4,125Income (loss) from continuing operations


5,746



3,512



17,021



10,657Income (loss) from discontinued operations, net of tax


(85
)


63



89



118Total stock-based compensation expense

$
5,661


$
3,575


$
17,110


$
10,775     11.
    Subsequent
    Events  Tender
    Offer for WebMD Common Stock
   21




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  HLTH
    Merger
    Form 10-K Form 10-Q
  1 8 1 8
  Porex
    Corporation v. Kleanthis Dean Haldopoulos, Benjamin T.
    Hirokawa and Micropore Plastics, Inc.
    Investigations
    by United States Attorney for the District of South Carolina and
    the SEC
   22




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         23




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Directors &
    Officers Liability Insurance Coverage Litigation
  and/or
       24




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  agreed-upon
        25




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##### Table of Contents



ITEM 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This Item 2 contains forward-looking statements with
    respect to possible events, outcomes or results that are, and
    are expected to continue to be, subject to risks, uncertainties
    and contingencies, including those identified in this Item. See
    Forward-Looking Statements on page 3.
  Overview
    
    Introduction.  This section provides a general
    description of our company, background information on certain
    trends and developments affecting our company, a description of
    our merger with HLTH Corporation (which we refer to as the HLTH
    Merger) and certain effects of the HLTH Merger and a discussion
    of how seasonal factors may impact the timing of our revenue.
    Critical Accounting Policies and
    Estimates.  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 contained in Exhibit 99.3 to the Current Report
    on
    Form 8-K
    that we filed on July 2, 2009 with the Securities and
    Exchange Commission (which we refer to as the SEC).
    Transactions with HLTH.  This section describes
    the services that we received from HLTH Corporation (which we
    refer to as HLTH) and the costs of these services, as well as
    the fees we charged HLTH for our services and our tax sharing
    agreement with HLTH.
    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.
    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
    September 30, 2009.
    Factors That May Affect Our Future Financial Condition or
    Results of Operations.This section describes
    circumstances or events that could have a negative effect on our
    financial condition or results of operations, or that could
    change, for the worse, existing trends in some or all of our
    businesses. The factors discussed in this section are in
    addition to factors that may be described elsewhere in this
    Quarterly Report.    Introduction
  Our
    Company
  e-newsletters
 26




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##### Table of Contents



e-detailing WebMD the
    Magazine
  Recent
    Developments
  Tender Offer for WebMD Common Stock.
  Completion of the HLTH Merger.
    Sale of Porex; Senior Secured Notes.
 27




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##### Table of Contents



Effects of the HLTH Merger.
    
    Convertible Notes.  As a result of the HLTH
    Merger, WebMD assumed HLTHs obligations under the
    31/8% Convertible
    Notes due September 1, 2025 (which we refer to as the
    31/8% Notes)
    and the 1.75% Convertible Subordinated Notes due
    June 15, 2023 (which we refer to as the 1.75% Notes
    and, collectively with the
    31/8% Notes,
    the Notes). Following the Merger, the Notes became convertible,
    in accordance with and subject to the provisions of the
    respective indentures pursuant to which they were issued, into
    the right to receive shares of WebMD Common Stock equal to the
    shares of Common Stock of HLTH into which such Notes would have
    been convertible prior to the completion of the HLTH Merger,
    multiplied by the .4444 HLTH Merger exchange ratio. As of the
    closing of the HLTH Merger, there were $250,300 principal amount
    of the
    31/8% Notes
    outstanding (the conversion of which would result in the
    issuance of a total of approximately 7,145,000 shares of
    Common Stock of WebMD, representing a conversion price of $35.03
    per share of WebMD Common Stock or 28.5503 shares of WebMD
    Common Stock for each $1,000 principal amount) and $264,583
    principal amount of the 1.75% Notes outstanding (the
    conversion of which would result in the issuance of a total of
    approximately 7,640,000 shares of Common Stock of WebMD,
    representing a conversion price of $34.63 per share of WebMD
    Common Stock or 28.8759 shares of WebMD Common Stock for
    each $1,000 principal amount). The
    31/8% Notes
    are convertible at any time at the option of the holder and the
    1.75% Notes are convertible if the sale price of
    WebMDs Common Stock exceeds 120% of the conversion price
    for specified periods and in certain other circumstances.  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
   28




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
    Porex Corporation v. Kleanthis Dean Haldopoulos,
    Benjamin T. Hirokawa and Micropore Plastics,
    Inc.  On September 24, 2005, HLTHs
    former subsidiary, Porex Corporation, filed a complaint in the
    Superior Court of Fulton County against two former employees of
    Porex, Dean Haldopoulos and Benjamin Hirokawa, and their
    corporation, Micropore Plastics, Inc. (which we refer to as
    Micropore), alleging misappropriation of Porexs trade
    secrets and breaches of Haldopoulos and Hirokawas
    employment agreements, and seeking monetary and injunctive
    relief. The lawsuit was subsequently transferred to the Superior
    Court of DeKalb County, Georgia. On October 24, 2005, the
    defendants filed an Answer and Counterclaims against Porex. In
    the Answer and Counterclaims, the defendants allege that Porex
    breached non-disclosure and standstill agreements in connection
    with a proposed transaction between Porex and Micropore and
    engaged in fraud. The defendants also seek punitive damages and
    expenses of litigation. In connection with HLTHs recent
    sale of Porex (described above under  Sale of
    Porex; Senior Secured Notes), HLTH agreed to indemnify
    Porex for any liability that may be incurred by Porex with
    respect to defendants counterclaim against Porex and for
    certain legal fees of Porex in connection with the case.  
    Investigations by United States Attorney for the District of
    South Carolina and the SEC.As previously
    disclosed, the United States Attorney for the District of South
    Carolina has been conducting an investigation of HLTH, which
    HLTH first learned about on September 3, 2003. Based on the
    information available to WebMD, it believes that the
    investigation relates principally to issues of financial
    accounting improprieties relating to Medical Manager
    Corporation, a predecessor of HLTH (by its merger into HLTH in
    September 2000), and, more specifically, HLTHs former
    Medical Manager Health Systems, Inc. subsidiary. Medical Manager
    Health Systems was a predecessor to Emdeon Practice Services,
    Inc., a subsidiary that HLTH sold to Sage Software in September
    2006. WebMD (and previously HLTH) has been cooperating and WebMD
    intends to continue to cooperate fully with the
    U.S. Attorneys Office. As previously reported, the
    Board of Directors of HLTH formed a special committee consisting
    solely of independent directors to oversee this matter with the
    sole authority to direct HLTHs response to the allegations
    that have been raised and that special committee was
    reconstituted as a committee of the Board of Directors of WebMD
    following the HLTH Merger. As previously disclosed, WebMD
    understands that the SEC is also conducting a formal
    investigation into this matter. In connection with the EPS Sale,
    HLTH agreed to indemnify Sage Software with respect to this
    matter.   29




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##### Table of Contents




    Directors & Officers Liability Insurance Coverage
    Litigation.  On July 23, 2007, HLTH commenced
    litigation (which we refer to as the Coverage Litigation) in the
    Court of Chancery of the State of Delaware in and for
    New Castle County against ten insurance companies in which
    HLTH was seeking to compel the defendant companies (which we
    refer to collectively as the Defendants) to honor their
    obligations under certain directors and officers liability
    insurance policies (which we refer to as the Policies). HLTH was
    seeking an order requiring the Defendants to advance
    and/or
    reimburse expenses that HLTH has incurred and that WebMD expects
    to continue to incur for the advancement of the reasonable
    defense costs of initially ten, and now eight, former officers
    and directors of HLTHs former EPS subsidiary who were
    indicted in connection with the investigation by United States
    Attorney for the District of South Carolina described above in
     Investigations by United States Attorney for
    the District of South Carolina and the SEC (which we refer
    to as the Investigation).   30




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##### Table of Contents



agreed-upon
   31




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Accounting Treatment of the HLTH Merger. Form 10-K Form 10-Q
  Background
    Information on Certain Trends and Developments
  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 continued availability of new treatment options and 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 is the consumers
    fastest growing health information resource, according to a
    national study released in August 2008 by the 32




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Center for Studying Health System Change. Researchers found that
    32 percent of American consumers (approximately
    70 million adults) conducted online health searches in
    2007, compared with 16 percent in 2001. More than half of
    those surveyed said the information changed their overall
    approach to maintaining their health. Four in five said the
    information helped them better understand how to treat an
    illness or condition.  
    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 of this
    amount 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. 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 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.    
    Changes in Health Plan Design; Health Management
    Initiatives.In a healthcare market where a
    greater share of the responsibility for healthcare costs and
    decision-making has been increasingly shifting to consumers, use
    of information technology (including personal health records) 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,
    respectively. Increasing usage of our services requires us to
    continue to deliver and improve the underlying technology and
    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 in the
    industries most seriously affected by recent adverse changes in
    general economic conditions (including those in the financial
    services and automotive industries), 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. 33




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##### Table of Contents




    Healthcare Reform Legislation.  Congress is
    currently considering significant healthcare reform legislation.
    Healthcare reform legislation, if enacted, may increase
    governmental involvement in healthcare and health insurance, may
    change the way health insurance is funded (including the role
    that employers play in such funding), may change reimbursement
    rates and other terms of such insurance coverage, may affect the
    way information technology is used in healthcare, and may
    otherwise change the environment in which healthcare industry
    participants operate and the specific roles such participants
    play in the industry. One important focus of healthcare reform
    is control of healthcare costs over the long term. We believe
    that our services can play an important role in efforts to
    reduce healthcare costs. Accordingly, healthcare reform may
    create opportunities for us, including with respect to personal
    health record applications and health and benefits
    decision-support tools and, more generally, with respect to our
    capabilities in providing health and wellness information and
    education. However, we are unable to predict future legislation
    or proposals with any certainty or to predict the effect they
    could have on our business, and healthcare industry participants
    may respond to healthcare reform legislation or to the
    uncertainties created by potential legislation by reducing their
    expenditures or postponing expenditure decisions, including
    expenditures for our services.    Divestiture of the Little Blue Book Print Directory
    Business.
  Non-Recourse Credit Facility.
   34




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##### Table of Contents



Seasonality
    Critical
    Accounting Policies and Estimates
        
    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, 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 35




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##### Table of Contents



consideration less the fair value of the undelivered elements.
    In instances where fair value does not exist for the undelivered
    elements, revenue is recognized when 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 our estimates of the future
    benefit of the intangible assets using accepted valuation
    techniques, such as discounted cash flow and replacement cost
    models. Our long-lived assets, excluding goodwill, are amortized
    over their estimated useful lives, which we determined 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, whenever indicators of impairment are
    present. We evaluate the carrying value of goodwill annually,
    and whenever indicators of impairment are present. We use a
    discounted cash flow approach to determine the fair value of
    goodwill. There was no impairment of goodwill noted as a result
    of our impairment testing in 2008.
    Fair Value of Investments.  We hold investments
    in ARS which are 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 our ARS investments 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, all auctions involving these securities have
    failed. The result of a failed auction is that these ARS 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 for our ARS holdings develop. We cannot be
    certain regarding the amount of time it will take for an auction
    market or other markets to develop. Additionally, approximately
    one-half of the auction rate securities we hold were, during
    2009, either downgraded below AAA or placed on watch
    status by one or more of the major credit rating agencies.     36




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
    Stock-Based Compensation.  In December 2004,
    the FASB issued authoritative guidance which requires all
    share-based payments to employees, including grants of employee
    stock options, to be recognized as compensation expense over the
    service period (generally the vesting period) in the
    Consolidated Financial Statements based on their fair values.
    The fair value of each option granted is estimated on the date
    of grant using the Black-Scholes option pricing model. The
    assumptions used in this model are expected dividend yield,
    expected volatility, risk-free interest rate and expected term.
    We elected to use the modified prospective transition method.
    Under the modified prospective transition method, awards that
    were granted or modified on or after January 1, 2006 are
    measured and accounted for in accordance with this guidance.
    Unvested stock options and restricted stock awards that were
    granted prior to January 1, 2006 will continue to be
    accounted for, using the same grant date fair value and same
    expense attribution method used under previously issued
    authoritative guidance, except that all awards are recognized in
    the results of operations over the remaining vesting periods.
    The impact of forfeitures that may occur prior to vesting is
    also estimated and considered in the amount recognized for all
    stock-based compensation beginning January 1, 2006. As of
    September 30, 2009, approximately $994 and $63,864 of
    unrecognized stock-based compensation expense related to
    unvested awards of WebMD employees (net of estimated
    forfeitures) is expected to be recognized over a
    weighted-average period of approximately 3.4 years and 3.3
    years, related to the HLTH and WebMD stock-based compensation
    plans, respectively.
    Deferred Tax Assets.  Our deferred tax assets
    are comprised primarily of net operating loss carryforwards on a
    separate return basis. Subject to certain limitations, these
    loss carryforwards 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 deferred tax
    assets are reserved for by a valuation allowance. In determining
    the need for a valuation allowance, management determined the
    probability of realizing deferred tax assets, taking into
    consideration factors including historical operating results,
    expectations of future earnings and taxable income. Management
    will continue to evaluate the need for a valuation allowance
    and, in the future, should management determine that realization
    of the net deferred tax asset is more likely than not, some or
    all of the remaining valuation allowance will be reversed, and
    our effective tax rate may be reduced by such reversal.
    Transactions with HLTH.  As discussed further
    below, our expenses reflect a services fee for an allocation of
    costs for corporate services provided by HLTH. Our expenses also
    reflect the allocation of a portion of the cost of HLTHs
    healthcare plans and the allocation of stock-based compensation
    expense related to restricted stock awards and other stock-based
    compensation. We were also included in the consolidated federal
    tax return filed by HLTH thru the date of the HLTH Merger.  Transactions
    with HLTH
  Agreements
    with HLTH
    Charges
    from HLTH to WebMD
  Corporate Services:
 37




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##### Table of Contents



Healthcare Expense:
  Stock-Based Compensation Expense:
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Corporate services

$
1,312


$
838


$
3,442


$
2,572Healthcare expense


2,234



2,144



6,486



6,122Stock-based compensation expense


105



79



(111
)


184   Recent
    Accounting Pronouncements
  Accounting
    Pronouncements Adopted During 2009
        other-than-temporary
 38




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##### Table of Contents



Accounting
    Pronouncements to be Adopted in the Future
   39




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##### Table of Contents



Results
    of Operations
    Three Months Ended September 30,


Nine Months Ended September 30,2009


2008


2009


2008$


%


$


%


$


%


$


%Revenue

$
111,568



100.0


$
96,797



100.0


$
300,463



100.0


$
263,451



100.0Costs and expenses:Cost of operations


41,965



37.6



34,225



35.4



117,759



39.2



97,120



36.9Sales and marketing


26,265



23.5



26,021



26.9



80,623



26.8



76,068



28.9General and administrative


15,961



14.3



14,774



15.3



45,826



15.3



42,465



16.1Depreciation and amortization


6,988



6.3



7,056



7.3



20,729



6.9



20,815



7.9Interest income


834



0.7



2,616



2.8



2,733



0.9



8,419



3.2Impairment of auction rate securities


























27,406



10.4Income from continuing operations before income tax provision


21,223



19.0



17,337



17.9



38,259



12.7



7,996



3.0Income tax provision


8,622



7.7



7,375



7.6



15,469



5.1



15,308



5.8Income (loss) from continuing operations


12,601



11.3



9,962



10.3



22,790



7.6



(7,312
)


(2.8
)Income (loss) from discontinued operations, net of tax


190



0.2



804



0.8



(5,100
)


(1.7
)


1,095



0.4Net income (loss)

$
12,791



11.5


$
10,766



11.1


$
17,690



5.9


$
(6,217
)


(2.4
)   e-detailing WebMD the Magazine
       40




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##### Table of Contents




    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
    HLTH issued in connection with an agreement it entered into with
    News Corporation in 1999 and subsequently amended in 2000. This
    non-cash advertising expense is included in sales and marketing
    expense when we use the asset for promotion of our brand.
    Non-cash stock-based compensation
    expense.  Expense related to awards of our
    restricted Class A Common Stock and awards of employee
    stock options, as well as awards of restricted HLTH Common Stock
    and awards of HLTH stock options that have been granted to
    certain of our employees. Expense also related to shares issued
    to our non-employee directors. Non-cash stock-based compensation
    expense is reflected in the same expense captions as the related
    salary costs of the respective employees.    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Advertising expense:Sales and marketing

$



$
178


$
1,753


$
1,736Stock-based compensation expense:Cost of operations

$
1,743


$
997


$
4,921


$
2,930Sales and marketing


1,948



1,215



5,499



3,602General and administrative


2,055



1,300



6,601



4,125Income (loss) from continuing operations


5,746



3,512



17,021



10,657Income (loss) from discontinued operations, net of tax


(85
)


63



89



118Total stock-based compensation expense

$
5,661


$
3,575


$
17,110


$
10,775   Three
    and Nine Months Ended September 30, 2009 and
    2008
    Revenue.
  Cost of Operations.
 41




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##### Table of Contents



Sales and Marketing.
  General and Administrative.
  Depreciation and Amortization.
  Interest Income.
 42




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##### Table of Contents



Income Tax Provision.
  Income (Loss) from Discontinued Operations, Net of
    Tax.
  Net Income (Loss).
  Supplemental
    Financial and Operating Information
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008RevenuePublic portal advertising and sponsorship

$
89,414


$
74,658


$
232,695


$
197,523Private portal services


22,154



22,139



67,768



65,928$
111,568


$
96,797


$
300,463


$
263,451Earnings before interest, taxes, non-cash and other items
    (Adjusted EBITDA)

$
33,123


$
25,467


$
75,029


$
60,191Interest, taxes, non-cash and other itemsInterest income


834



2,616



2,733



8,419Depreciation and amortization


(6,988
)


(7,056
)


(20,729
)


(20,815
)Non-cash advertising






(178
)


(1,753
)


(1,736
)Non-cash stock-based compensation


(5,746
)


(3,512
)


(17,021
)


(10,657
)Impairment of auction rate securities














(27,406
)Income tax provision


(8,622
)


(7,375
)


(15,469
)


(15,308
)Income (loss) from continuing operations


12,601



9,962



22,790



(7,312
)Income (loss) from discontinued operations, net of tax


190



804



(5,100
)


1,095Net income (loss)

$
12,791


$
10,766


$
17,690


$
(6,217
)    43




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##### Table of Contents



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.
    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. Our management
    recognizes that Adjusted EBITDA has inherent limitations because
    of the excluded items, particularly those items that are
    recurring in nature. In order to compensate for those
    limitations, management also reviews the specific items that are
    excluded from Adjusted EBITDA, but included in income (loss)
    from continuing operations or net income (loss), as well as
    trends in those items. The amounts of those items are set forth,
    for the applicable periods, in the reconciliations of Adjusted
    EBITDA to income (loss) from continuing operations or to net
    income (loss) above. 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. However, Adjusted
    EBITDA is intended to provide a supplemental way of comparing us
    with other public companies and is not intended as a substitute
    for comparisons based on income (loss) from continuing
    operations or net income (loss) calculated in
    accordance with GAAP. In making any comparisons to other
    companies, investors need to be aware that companies use
    different non-GAAP measures to evaluate their financial
    performance. Please see the Explanation of
    Non-GAAP Financial Information filed as
    Exhibit 99.1 to this Quarterly Report for additional
    background information regarding our use of Adjusted EBITDA.
    Exhibit 99.1 is incorporated in this MD&A by this
    reference.
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Liquidity
    and Capital Resources
      available-for-sale available-for-sale
    1 8 1 8
   45




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Factors
    That May Affect Our Future Financial Condition or Results of
    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
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The WebMD Health Network,
  Developing
    and implementing new and updated applications, features and
    services for our public and private portals 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
  We face
    significant competition for our healthcare information products
    and services
    
    Our public portals 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 Web sites that provide health-related information,
    including both commercial sites and
    not-for-profit
    sites. We compete for advertisers and sponsors with:
    health-related Web sites; general purpose consumer Web sites
    that offer specialized health
    sub-channels;
    other high-traffic Web sites 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
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Our
    online businesses have a limited operating history
  and/or
  Our
    failure to attract and retain qualified executives and employees
    may have a material adverse effect on our business
    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 roll outs 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. 48




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We may be
    unsuccessful in our efforts to increase advertising and
    sponsorship revenue from consumer products companies
    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 provide comparative information on hospital cost and
    quality depends on our ability to obtain the required data on a
    timely basis and, if we are unable to do so, our private portal
    services would be less attractive to clients
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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
      Expansion
    to markets outside the United States will subject us to
    additional risks
    
    difficulties in staffing and managing operations outside of the
    United States;
    fluctuations in currency exchange rates;
    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 recent adverse economic conditions in
    markets outside the United States; 50




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
    tariffs or other trade barriers;
    costs of providing and marketing products and services in
    different markets;
    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
      
    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
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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
  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
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Risks
    Related to the Healthcare Industry, Healthcare Regulation and
    Internet Regulation
  Developments
    in the healthcare industry could adversely affect our
    business
    
    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.   53




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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 Networkor in WebMD
    the Magazineviolates FDA or FTC 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. Members of Congress, physician groups and
    others have criticized the FDAs current policies, and have
    called for restrictions on advertising of prescription drugs to
    consumers and increased FDA enforcement. We cannot predict what
    actions the FDA or industry participants may take in response to
    these criticisms. 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 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 of our practices could result in
    adverse publicity and be costly for us to respond to.
    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 54




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determination that we are a healthcare provider and have acted
    improperly as a healthcare provider may result in liability to
    us.  Government
    regulation of the Internet could adversely affect our
    business
      We face
    potential liability related to the privacy and security of
    personal health information we collect from or on behalf of
    users of our services
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Failure
    to maintain CME accreditation could adversely affect Medscape,
    LLCs ability to provide online CME offerings
        
    The ACCME stated that due consideration should be given to
    eliminating commercial support of CME.
    The ACCME proposed that: (a) accredited providers must not
    receive communications from commercial interests announcing or
    prescribing any specific content that would be a preferred, or
    sought-after, topic for commercially supported CME (e.g.,
    therapeutic area, product-line, patho-physiology); and
    (b) receiving communications from commercial interests
    regarding a commercial interests internal criteria for
    providing commercial support would also not be permissible.    
    Commercial Support-Free
    Designation.  In order to clarify the distinction
    between CME that does include relationships with industry from
    CME that does not include relationships with industry, the ACCME
    is considering creating a new designation and review process for
    CME providers that wish to identify their program of CME as one
    that does not utilize funds donated by commercial interests. The
    designation would be termed: Commercial
    Support-Free. The ACCME has indicated that a range of
    standards for Commercial Support-Free CME are
    possible, including for example: (1) the CME provider not
    accepting any commercial support for any CME activity, or any
    part of its CME program; and (2) the CME provider not using
    funds from advertising or promotion, paid by commercial
    interests, to underwrite the costs of CME.
    Independent CME Funding Entity.  The ACCME is
    considering creating a granting entity that would accept
    unrestricted donations for the purpose of funding CME. The funds
    would be distributed to ACCME recognized and accredited
    organizations for development and presentation of ACCME-
    compliant CME. The ACCME is proposing for comment that the
    entity would: (1) be independent of the ACCME; (2) not
    provide funds to the ACCME; (3) be managed by its own
    governance structure; (4) establish its own granting
    criteria reflecting practice gaps established through methods
    consistent with ACCMEs content validation policies; and
    (5) fund CME done for U.S. learners.   56




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Government
    regulation and industry initiatives could adversely affect the
    volume of sponsored online CME programs implemented through our
    Web sites 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;
    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
  Negative
    conditions in the market for certain auction rate securities may
    result in WebMD incurring a loss on such investments
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other-than-temporary
  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 WebMDs capital
    stock, limitations may be imposed on WebMDs ability to
    utilize net operating loss carryforwards and tax credits to
    reduce its income taxes
        The
    ongoing investigations by the United States Attorney for the
    District of South Carolina and the SEC could negatively impact
    our company and how it is perceived
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We may
    not be successful in protecting our intellectual property and
    proprietary rights
    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 59




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
    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
    
    our ability to maintain relationships with the customers of the
    acquired business;
    our ability to retain or replace key personnel;
    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
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ITEM 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Sensitivity
        ITEM 4.
    Controls
    and Procedures  Rule 13a-15(b), Rule 13a-15(e),
  Rule 13a-15(d),
 61




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PART II
    OTHER INFORMATION
  ITEM 1.
    Legal
    Proceedings    ITEM 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Issuer
    Purchases of Equity Securities
  Total Number





Total Number of Shares


Approximate Dollar Value of Sharesof Shares


Average Price


Purchased as Part of Publicly


that May Yet Be Purchased UnderPeriod

Purchased(1)


Paid per Share


Announced Plans or Programs(2)


the Plans or Programs(2)7/01/09 - 7/31/09





$







$
30,000,0008/01/09 - 8/31/09





$







$
30,000,0009/01/09 - 9/30/09


17,683


$
33.15






$
30,000,000Total


17,683


$
33.15



     (1)
    
    Represents shares withheld from
    WebMD Restricted Class A Common Stock that vested during
    the respective periods in order to satisfy withholding
    requirements related to the vesting of the awards. The value of
    these shares was determined based on the closing price of WebMD
    Class A Common Stock on the vesting date.(2)
    
    Relates to the repurchase program
    that WebMD announced on December 4, 2008, at which time
    WebMD was authorized to use up to $30 million to purchase
    shares of its Class A Common Stock from time to time. As of
    September 30, 2009, no shares had been purchased under this
    repurchase program. For additional information, see Note 4
    to the Consolidated Financial Statements included in our Annual
    Report on
    Form 10-K
    for the year ended December 31, 2008.  ITEM 6.
    Exhibits  page E-1
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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
    1934, the registrant has duly caused this report to be signed on
    its behalf by the undersigned thereunto duly authorized.



WebMD
    Health Corp. By:
    /s/  Anthony
    Vuolo   Chief Operating Officer and
 Chief Financial Officer
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EXHIBIT INDEX  Exhibit No.

Description3
.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))10
.1

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)31
.1

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

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

Section 1350 Certification of Chief Executive Officer of
    Registrant32
.2

Section 1350 Certification of Chief Financial Officer of
    Registrant99
.1

Explanation of Non-GAAP Financial Measures  E-1