##### 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 March 31,
    2011oro

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
  non-accelerated Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2
  o þ




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##### 



WEBMD
    HEALTH CORP.
    QUARTERLY REPORT ON
    FORM 10-Q
    For the period ended March 31, 2011
    TABLE OF CONTENTS
   
 PageNumberForward-Looking Statements


3PART I

Financial Information


4Item 1.

Financial Statements:


4Consolidated Balance Sheets as of March 31,
    2011 (unaudited) and December 31, 2010


4Consolidated Statements of Operations for the
    three months ended March 31, 2011 and 2010 (unaudited)


5Consolidated Statements of Cash Flows for the
    three months ended March 31, 2011 and 2010 (unaudited)


6Notes to Consolidated Financial Statements


7Item 2.

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


24Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


41Item 4.

Controls and Procedures


41PART II

Other Information


42Item 1.

Legal Proceedings


42Item 1A.

Risk Factors


42Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


57Item 6.

Exhibits


57Signatures


58Exhibit 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 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;
    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 other risks and uncertainties described in Part II,
    Item 1A of this Quarterly Report on
    Form 10-Q.    Form 10-Q
 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)
  March 31,


December 31,2011


2010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
1,065,383


$
400,501Accounts receivable, net of allowance for doubtful accounts of
    $1,710 at March 31, 2011 and $1,493 at December 31,
    2010


128,760



134,448Prepaid expenses and other current assets


13,389



12,161Deferred tax assets


22,459



23,467Total current assets


1,229,991



570,577Property and equipment, net


59,220



61,516Goodwill


202,104



202,104Intangible assets, net


21,970



22,626Deferred tax assets


67,335



71,125Other assets


47,584



14,254TOTAL ASSETS

$
1,628,204


$
942,202LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accrued expenses

$
46,333


$
53,181Deferred revenue


96,824



97,043Liabilities of discontinued operations


17,185



17,327Total current liabilities


160,342



167,5512.25% convertible notes due 2016


400,000



2.50% convertible notes due 2018


400,000



Other long-term liabilities


22,056



21,756Commitments 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; 62,403,290 shares
    issued at March 31, 2011 and 62,401,272 shares issued
    at December 31, 2010


624



624Additional paid-in capital


9,450,676



9,462,373Treasury stock, at cost; 4,601,914 shares at March 31,
    2011 and 2,485,391 shares at December 31, 2010


(244,526
)


(129,589
)Accumulated deficit


(8,560,968
)


(8,580,513
)Stockholders equity


645,806



752,895TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
1,628,204


$
942,202    4




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##### Table of Contents



WEBMD
    HEALTH CORP.
  CONSOLIDATED STATEMENTS OF OPERATIONS
 (In
    thousands, except per share data, unaudited)
  Three Months EndedMarch 31,2011


2010Revenue

$
131,609


$
108,030Cost of operations


48,449



42,994Sales and marketing


32,294



28,407General and administrative


22,821



18,809Depreciation and amortization


6,424



7,015Interest income


16



3,409Interest expense


3,141



5,139Loss on convertible notes






3,727Gain (loss) on investments


14,060



(28,848
)Other expense, net


53



298Income (loss) before income tax provision (benefit)


32,503



(23,798
)Income tax provision (benefit)


12,958



(20,008
)Net income (loss)

$
19,545


$
(3,790
)Net income (loss) per common share:Basic

$
0.33


$
(0.07
)Diluted

$
0.32


$
(0.07
)Weighted-average shares outstanding used in computing per share
    amounts:Basic


58,184



52,191Diluted


67,173



52,191    5




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##### Table of Contents



WEBMD
    HEALTH CORP.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In
    thousands, unaudited)
  Three Months EndedMarch 31,2011


2010Cash flows from operating activities:Net income (loss)

$
19,545


$
(3,790
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


6,424



7,015Non-cash interest, net


516



2,090Non-cash stock-based compensation


9,813



7,837Deferred income taxes


4,798



(21,463
)Loss on convertible notes






3,727(Gain) loss on investments


(14,060
)


28,848Changes in operating assets and liabilities:Accounts receivable


5,688



(2,429
)Prepaid expenses and other, net


622



(1,829
)Accrued expenses and other long-term liabilities


(7,642
)


(14,224
)Deferred revenue


(219
)


21,665Net cash provided by continuing operations


25,485



27,447Net cash used in discontinued operations


(142
)


(8,233
)Net cash provided by operating activities


25,343



19,214Cash flows from investing activities:Proceeds from sales of
    available-for-sale
    securities






4,500Proceeds received from ARS option


5,240



Purchases of property and equipment


(4,849
)


(3,114
)Finalization of sale price of discontinued operations






(1,430
)Net cash provided by (used in) investing activities


391



(44
)Cash flows from financing activities:Proceeds from exercise of stock options


10,220



28,224Cash used for withholding taxes due on stock-based awards


(3,172
)


(22,449
)Net proceeds from issuance of 2.50% Notes and
    2.25% Notes


774,745



Repurchases of
    31/8%
    Notes






(22,565
)Purchases of treasury stock


(150,000
)


(13,345
)Excess tax benefit on stock-based awards


7,355



1,413Net cash provided by (used in) financing activities


639,148



(28,722
)Net increase (decrease) in cash and cash equivalents


664,882



(9,552
)Cash and cash equivalents at beginning of period


400,501



459,766Cash and cash equivalents at end of period

$
1,065,383


$
450,214    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
    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 10-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 March 31,2011


2010Numerator:Net income (loss)

$
19,545


$
(3,790
)Effect of participating non-vested restricted stock


(170
)


Net income (loss)  Basic


19,375



(3,790
)Interest expense on 2.50% Notes, net of tax


1,503



Interest expense on 2.25% Notes, net of tax


315



Net income (loss)  Diluted

$
21,193


$
(3,790
)Denominator:Weighted-average shares  Basic


58,184



52,191Employee stock options and restricted stock


2,527



2.50% Notes


5,377



2.25% Notes


1,085



Adjusted weighted-average shares after assumed
    conversions  Diluted


67,173



52,191Net income (loss) per common share  Basic

$
0.33


$
(0.07
)Net income (loss) per common share  Diluted

$
0.32


$
(0.07
)     Three Months Ended March 31,2011


2010Options and restricted stock


1,968



16,928Convertible notes






11,8391,968



28,767   Recent
    Accounting Pronouncement
     9




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 2009-13 2009-13). 2009-13
  2009-13 2009-13,
  2009-13, 2009-13 2009-13
  Reclassifications
    2.
    Discontinued
    Operations  EPS
   10




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      3.
    Convertible
    Notes  Repurchase
    and Conversions of
    31/8% Notes
  1 8 1 8 1 8 1 8 1 8
  2.50% Convertible
    Notes due 2018
   11




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2.25% Convertible
    Notes due 2016
    4.
    Related
    Party Transaction  Fidelity
    Employer Services Company LLC
    5.
    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. 12




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   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.    March 31, 2011

December 31, 2010Fair Value

Amortized



Gross

Amortized



GrossEstimate

Cost

Fair

Unrealized

Cost

Fair

UnrealizedUsing:

Basis

Value

Gains

Basis

Value

Gains (Losses)Cash and cash equivalents


Level 1


$
1,065,383


$
1,065,383


$



$
400,501


$
400,501


$
ARS Option


Level 3


$
13,065


$
13,065


$



$
4,245


$
4,245


$
     Three Months Ended March 31,2011


2010ARS


Auction Rate


SeniorOption


Securities


Secured NotesFair value as of the beginning of the period

$
4,245


$
279,701


$
63,826Redemptions


(5,240
)


(4,500
)


(Loss) gain included in earnings


14,060



(29,508
)


Interest income accretion included in earnings










287Changes in unrealized gains/losses included in other
    comprehensive income






40,806



1,362Fair value as of the end of the period

$
13,065


$
286,499


$
65,475   other-than-temporary
  other-than-temporary other-than-temporary
 13




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporarily other-than-temporarily other-than-temporary
        other-than-temporary
 14




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        March 31, 2011

December 31, 2010Carrying Amount

Fair Value

Carrying Amount

Fair ValueFinancial Assets:2.50% Notes

$
400,000


$
402,252


$



$
2.25% Notes


400,000



386,416







   6.
    Comprehensive
    Income    Three MonthsEndedMarch 31,2011


2010Unrealized holding gains

$



$
13,837Unrealized losses recognized in earnings






28,848Other comprehensive income






42,685Net income (loss)


19,545



(3,790
)Comprehensive income

$
19,545


$
38,895   7.
    Stock
    Repurchase Program, 2010 Tender Offers and Other
    Repurchases   15




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      8.
    Intangible
    Assets    March 31, 2011


December 31, 2010Weighted











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


$
(15,954
)

$




Customer relationships


34,057


$
(19,283
)


14,774



7.2



34,057


$
(18,760
)


15,297



7.5Technology and patents


14,700



(14,700
)










14,700



(14,700
)






Trade names-definite lives


6,030



(3,298
)


2,732



5.2



6,030



(3,165
)


2,865



5.4Trade names-indefinite lives


4,464







4,464



n/a



4,464







4,464



n/aTotal

$
75,205


$
(53,235
)

$
21,970






$
75,205


$
(52,579
)

$
22,626     (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
    (April 1st

    to
    December 31st)

$
1,9702012

$
2,6272013

$
2,6272014

$
2,6272015

$
2,617Thereafter

$
5,038   9.
    Commitments
    and Contingencies  Legal
    Proceedings
  Investigations
    by United States Attorney for the District of South Carolina and
    the SEC
   16




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       17




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Directors &
    Officers Liability Insurance Coverage Litigation
  and/or
       18




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    agreed-upon
     19




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##### 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.
  class-related
  Daniel
    Rodimer, et.al., on behalf of themselves and all others
    similarly situated v. Apple, Inc., et. al.
    Other
    Legal Proceedings
  Form 10-K,
 20




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##### Table of Contents



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


AverageAverage


Remaining


AggregateExercise Price


Contractual Life


IntrinsicShares


per Share


(In Years)


Value(1)Outstanding at January 1, 2011


10,227,755


$
30.79Granted


408,400



52.82Exercised


(873,029
)


28.35Cancelled


(110,594
)


37.25Outstanding at March 31, 2011


9,652,532


$
31.87



7.3


$
208,715Vested and exercisable at the end of the period


3,869,804


$
28.06



6.0


$
98,646     (1)
    
    The aggregate intrinsic value is
    based on the market price of the Companys Common Stock on
    March 31, 2011, which was $53.42, 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 March 31, 2011.   21




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months EndedMarch 31,2011

2010Expected dividend yield

0.0%

0.0%Expected volatility

0.30

0.25Risk-free interest rate

1.97%

1.61%Expected term (years)

4.6

3.4Weighted average fair value of options granted during the period

$15.38

$8.52   Restricted
    Stock Awards
    WeightedAverageGrant DateShares


Fair ValueBalance at January 1, 2011


1,106,751


$
33.13Granted


129,000



53.90Vested


(139,243
)


25.72Forfeited


(9,000
)


42.89Balance at March 31, 2011


1,087,508


$
36.47       Other
   22




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##### Table of Contents



WEBMD
    HEALTH CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Summary
    of Stock-Based Compensation Expense
    Three Months EndedMarch 31,2011


2010Stock options

$
6,623


$
5,787Restricted stock


3,104



1,958Other


86



92Total stock-based compensation expense

$
9,813


$
7,837Included in:Cost of operations

$
2,103


$
1,789Sales and marketing


2,391



2,193General and administrative


5,319



3,855Total stock-based compensation expense

$
9,813


$
7,837       11.
    Other
    Expense, Net    Three Months Ended March 31,2011


2010Reduction of tax
    contingencies(a)

$



$
178Legal
    expense(b)


(53
)


(476
)Other expense, net

$
(53
)

$
(298
)     (a)
    
    Represents the reduction of certain
    sales and use tax contingencies resulting from the expiration of
    various statutes.(b)
    
    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. 23




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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 and its business; 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 our Annual
    Report on
    Form 10-K
    for the year ended December 31, 2010 filed with the
    Securities and Exchange Commission (which we refer to as the
    SEC).
    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
    March 31, 2011.
    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.
  Our Business.
  e-newsletters e-detailing WebMD the Magazine
 24




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##### Table of Contents



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,
    including internal approvals relating to compliance with the
    laws and regulations applicable to the marketing of healthcare
    products. Recently, we have seen a trend toward the lengthening
    of this internal review process as it applies to our services
    for pharmaceutical companies. 25




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##### Table of Contents




    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 26




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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 March 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 WebMDcommunity.  
    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 Communityalso
    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 March 31, 2011, Medscape
    Mobilehad attracted approximately one million registered
    users.
    WebMD for iPhoneand WebMD for iPadare 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
    May 6, 2011, these applications had been downloaded more
    than five 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 27




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##### Table of Contents



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 have filed lawsuits challenging the
    constitutionality of certain provisions of the Reform
    Legislation. As of May 9, 2011, two federal courts have
    ruled that the requirement for individuals to carry insurance is
    unconstitutional, but other courts have upheld this provision,
    and the Supreme Court has rejected a request for expedited
    review of one of the rulings against the provision, suggesting
    that an extended appellate process is likely.      Background
    Information on Certain Transactions and Other Significant
    Developments
  Merger with HLTH.
 28




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Convertible Notes. 1 8 1 8 1 8 1 8
      Tender Offers.
  Sale of Porex; Senior Secured Notes.
 29




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Auction Rate Securities.
  Directors & Officers Liability Insurance Coverage
    Litigation. and/or
       30




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agreed-upon
          Indemnification Obligations to Former Officers and Directors
    of EPS.
 31




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Seasonality
    Critical
    Accounting Estimates and Policies
  Critical
    Accounting Estimates
     32




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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 the Company
    substantially completes its contractual deliverables as
    determined by the applicable agreements.    No. 2009-13 2009-13). 2009-13
  2009-13 2009-13,
  2009-13, 2009-13 2009-13
 33




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
    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.     34




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
    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 March 31, 2011, there was
    approximately $79.6 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 2.7 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 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). 35




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Results
    of Operations
    Three Months Ended March 31,2011


2010$


%(a)


$


%(a)Revenue

$
131,609



100.0


$
108,030



100.0Cost of operations


48,449



36.8



42,994



39.8Sales and marketing


32,294



24.5



28,407



26.3General and administrative


22,821



17.3



18,809



17.4Depreciation and amortization


6,424



4.9



7,015



6.5Interest income


16







3,409



3.2Interest expense


3,141



2.4



5,139



4.8Loss on convertible notes










3,727



3.4Gain (loss) on investments


14,060



10.7



(28,848
)


(26.7
)Other expense, net


53







298



0.3Income (loss) before income tax provision (benefit)


32,503



24.7



(23,798
)


(22.0
)Income tax provision (benefit)


12,958



9.8



(20,008
)


(18.5
)Net income (loss)

$
19,545



14.9


$
(3,790
)


(3.5
)     (a)
    
    Amounts may not add due to rounding.  e-detailing WebMD the
    Magazine
         36




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Three Months Ended March 31,2011


2010Stock-based compensation expense included in:Cost of operations

$
2,103


$
1,789Sales and marketing


2,391



2,193General and administrative


5,319



3,855Total stock-based compensation expense

$
9,813


$
7,837   Three
    Months Ended March 31, 2011 and 2010
    Revenue
    Costs and
    Expenses
  Cost of Operations.
  Sales and Marketing.
  General and Administrative.
 37




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Depreciation and Amortization.
  Interest Income.
  Interest Expense. 1 8 1 8 1 8
  Gain (Loss) on Investments.
  Other Expense, Net.
  Income Tax Provision (Benefit).
  Supplemental
    Financial and Operating Information
   38




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Three Months Ended March 31,2011


2010RevenuePublic portal advertising and sponsorship

$
110,363


$
86,257Private portal services


21,246



21,773$
131,609


$
108,030Earnings before interest, taxes, non-cash and other items
    (Adjusted EBITDA)

$
37,858


$
25,657Interest, taxes, non-cash and other itemsInterest income


16



3,409Interest expense


(3,141
)


(5,139
)Income tax (provision) benefit


(12,958
)


20,008Depreciation and amortization


(6,424
)


(7,015
)Non-cash stock-based compensation


(9,813
)


(7,837
)Loss on convertible notes






(3,727
)Gain (loss) on investment


14,060



(28,848
)Other expense, net


(53
)


(298
)Net income (loss)

$
19,545


$
(3,790
)     Public Portal Advertising and
    Sponsorship.
  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
 39




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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 Quarterly 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
          1 8
 40




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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),
 41




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##### Table of Contents



PART II
    OTHER INFORMATION ITEM 1.
    Legal
    Proceedings    ITEM 1A.
    Risk
    Factors      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
 42




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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
   43




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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
   44




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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
    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
   45




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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
    
    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
   46




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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
 47




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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
       48




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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.      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
   49




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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 50




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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 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. 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
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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
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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
   53




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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.      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
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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
  WebMD has been built, in part, through
    acquisitions.
  
    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.   55




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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 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
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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


the Plans or
    Programs(4)01/01/11 - 01/31/11


1,925,672
(2)

$
52.07






$
15,085,94602/01/11 - 02/28/11


1,475


$
53.06






$
15,085,94603/01/11 - 03/31/11


913,065
(3)

$
57.37






$
15,085,946Total


2,840,212


$
53.77



     (1)
    
    Includes the following number of
    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: 5,182 in
    January, 1,475 in February and 44,558 in March. The value of
    these shares was determined based on the closing price of WebMD
    Common Stock on the date of vesting.(2)
    
    Includes 1,920,490 shares
    repurchased on January 5, 2011 with a portion of the net
    proceeds from the sale of the Companys
    2.50% Convertible Notes due 2018. The price paid for these
    shares was equal to the closing price of WebMD Common Stock on
    that date. For additional information see Notes 3 and 7 to
    the Consolidated Financial Statements included in this Quarterly
    Report.(3)
    
    Includes 868,507 shares
    repurchased on March 8, 2011 with a portion of the net
    proceeds from the sale of the Companys
    2.25% Convertible Notes due 2016. The price paid for these
    shares was equal to the closing price of WebMD Common Stock on
    that date. For additional information see Notes 3 and 7 to
    the Consolidated Financial Statements included in this Quarterly
    Report.(4)
    
    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 7 to the Consolidated
    Financial Statements included in this Quarterly Report.  ITEM 6.
    Exhibits  page E-1
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SIGNATURES    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))4
.1

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, 2011)4
.2

Form of 2.50% Convertible Note Due 2018 (included in
    Exhibit 4.1)4
.3

Indenture, dated as of March 14, 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 March 15, 2011, to the
    Registrants Current Report on
    Form 8-K
    filed on March 14, 2011)4
.4

Form of 2.25% Convertible Note Due 2016 (included in
    Exhibit 4.3)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     *
    
    XBRL Interactive Data File will be
    filed by amendment to this Form 10-Q within 30 days of the
    filing date of this Form 10-Q, as permitted by Rule
    405(a)(2)(ii) of Regulation S-T. E-1