================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark one)
[X]  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________TO__________.

                         COMMISSION FILE NUMBER 0-22212


                            ONHEALTH NETWORK COMPANY
             (Exact name of registrant as specified in its charter)

              WASHINGTON                              41-1686038
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
   incorporation or organization)

        808 HOWELL STREET, SUITE 400
            SEATTLE, WASHINGTON                        98101
( Address of principal executive offices)            (Zip Code)

       Registrant's telephone number, including area code: (206) 583-0100

            ------------------------------------------------------




Securities registered pursuant to Section 12(b) of the Act:
                                                 NONE

Securities registered pursuant to Section 12(g) of the Act:
                                                Common Stock, $0.01 par value

     Indicate by a check mark whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Number of shares outstanding of the registrant's common stock as of
April 30, 2000:   24,697,701

================================================================================


<PAGE>


                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----
                          PART I. FINANCIAL INFORMATION

   ITEM 1. Financial Statements..............................................3

           Consolidated Balance Sheets as of March 31, 2000
               and December 31, 1999.........................................3

           Consolidated Statements of Operations for the Three
               Months Ended March 31, 2000 and 1999..........................4

           Consolidated Statements of Cash Flows for the Three
               Months Ended March 31, 2000 and 1999..........................5

           Notes to Consolidated Financial Statements .......................6

   ITEM 2. Management's Discussion and Analysis of Financial Condition
               and Results of Operations....................................11


                           PART II. OTHER INFORMATION

   ITEM 1. Legal Proceedings................................................15

   ITEM 6. Exhibits and Reports on Form 8-K.................................16


                                       2
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                    ONHEALTH NETWORK COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        March 31,          December 31,
                                                          2000                 1999
                                                     ----------------    ---------------
<S>                                                  <C>                 <C>
ASSETS:
Current assets:
      Cash and cash equivalents                      $      12,664       $      10,142
      Restricted cash                                          500                 500
      Accounts receivable, net of allowances
        of $448 (2000) and $413 (1999)                       2,574               1,870
      Inventories                                                -                  15
      Prepaid advertising                                    6,009               6,848
      Deferred financing costs                              19,831                   -
      Other current assets
                                                               428                 401
                                                     ----------------    ---------------
Total current assets                                        42,006              19,776

Furniture and equipment, net
                                                             2,489               2,137
Intangibles and goodwill, net                               10,005              10,754
Other non-current assets                                        58                  53
                                                     ================    ===============
Total assets                                         $      54,558       $      32,720
                                                     ================    ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Notes payable                                   $      15,000       $       2,000
     Current maturities of capital lease
       obligations                                              10                  13
     Accounts payable                                        8,375               6,515
     Deferred revenue                                        1,122                 859
     Other accrued expenses                                  1,473               2,383
                                                     ----------------    ---------------
Total current liabilities                                   25,980              11,770

Non-current liabilities                                         52                  55

Commitments and contingencies

Shareholders' equity:
      Preferred stock, $0.01 par value;
        authorized, 1,000; issued and
        outstanding, none                                        -                   -
      Common stock, $0.01 par value;
        authorized, 100,000; issued
        and outstanding, 24,693 (2000)
        and 23,812 (1999)                                      247                 238
      Additional paid-in-capital                           195,354             162,662
      Accumulated deficit                                 (158,727)           (136,842)
      Deferred compensation                                 (8,348)             (5,163)
                                                     ----------------    ---------------
Total shareholders' equity                                  28,526              20,895
                                                     ----------------    ---------------
Total liabilities and shareholders' equity           $      54,558       $      32,720
                                                     ================    ===============
</TABLE>


     The accompanying notes are an integral part of the financial statements

                                       3
<PAGE>



                    ONHEALTH NETWORK COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                       March 31,
                                                          ---------------------------------
                                                               2000              1999
                                                          --------------    ---------------
<S>                                                       <C>               <C>
Net revenue                                               $       2,664     $         200

Costs and expenses:
     Product development, editorial and design                    2,673             1,215
     Sales and marketing                                         12,186             2,366
     General and administrative                                   2,793               874
     Amortization of intangibles and goodwill                       749                 -
     Stock-based compensation                                     3,143                12
                                                          --------------    ---------------
         Total costs and expenses                                21,544             4,467
                                                          --------------    ---------------
Loss from operations                                            (18,880)           (4,267)

     Interest income                                                151               107
     Interest expense                                            (3,158)                -
                                                          --------------    ---------------
         Total interest expense, net                             (3,007)              107
                                                          --------------    ---------------
Net loss                                                  $     (21,887)    $      (4,160)
                                                          ==============    ===============

Net loss per common share-
     Basic and diluted                                    $       (0.94)    $       (0.28)
                                                          ==============    ===============

Weighted average number of common shares
      Outstanding                                                23,390            14,930
                                                          ==============    ===============
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       4
<PAGE>



                                  ONHEALTH NETWORK COMPANY AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (In thousands)
                                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                        --------------------------------------
                                                                              2000                 1999
                                                                        ----------------     ---------------

<S>                                                                     <C>                  <C>
Cash flows from operating activities:
     Net loss                                                           $    (21,887)        $      (4,160)
     Adjustments to reconcile net loss to cash used in
      operating activities:
          Depreciation and amortization                                           191                   69
          Provision for (recoveries of) doubtful
             accounts and returns                                                  36                   19
          Common stock issued for services                                          -                  164
          Amortization of prepaid advertising and
             promotional agreements                                               878                    -
          Amortization of intangibles and goodwill                                749                    -
          Amortization of deferred compensation                                 3,143                   12
          Non-cash interest expense                                             2,989                    -
          Other                                                                     -                    5
          Changes in assets and liabilities:
             (Increase) decrease in accounts receivable                          (739)                 259
             Decrease in inventories                                               15                    -
             Increase in other current assets                                    (269)                 (73)
             (Increase) decrease in other non-current assets                       (5)                  81
             Increase in accounts payable                                       1,860                  458
             Increase (decrease) in other accrued expenses                        432                 (900)
                                                                        ----------------     ---------------
Net cash used in operating activities                                         (12,607)              (4,066)

Cash flows from investing activities:
     Capital expenditures                                                        (543)                 (64)
                                                                        ----------------     ---------------
Net cash used in investing activities                                            (543)                 (64)

Cash  flows from  financing  activities:
     Net proceeds from issuance of common stock:
         Private placements                                                         -               14,278
         Exercise of options                                                      288                  860
         Exercise of warrants                                                     388                  624
         Proceeds from short-term loan                                         15,000                    -
         Payment of financing related costs                                        (1)                   -
         Payments on capital lease obligation                                      (3)                   -
                                                                        ----------------     ---------------
Net cash provided by financing activities                                      15,672               15,762
                                                                        ----------------     ---------------
Net increase in cash and cash equivalents                                       2,522               11,632
Cash and cash equivalents at beginning of year                                 10,142                2,119
                                                                        ================     ===============
Cash and cash equivalents at end of period                              $      12,664        $      13,751
                                                                        ================     ===============
</TABLE>



     The accompanying notes are an integral part of the financial statements

                                       5
<PAGE>


                    ONHEALTH NETWORK COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000
                                   (UNAUDITED)



NOTE 1.         DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
                ACCOUNTING POLICIES

Description of Business

OnHealth  Network  Company,  formerly  known  as  IVI  Publishing,   Inc.,  (the
"Company"),   is  engaged  in  electronic   publishing  of  health  and  medical
information in interactive multimedia formats through its web site onhealth.com,
providing and supporting a broad range of personal health information,  referral
and nurse counseling services to customers throughout the United States.

Principles of Consolidation

The  consolidated  financial  statements  include  the  financial  statement  of
OnHealth and its wholly-owned subsidiaries,  Health Decision International,  LLC
("HDI") and BabyData.com,  Inc. ("BabyData"). All material intercompany balances
and transactions have been eliminated.

Intangible Assets

Intangible  assets consist of goodwill,  which represents costs in excess of the
fair value of the net  assets  acquired,  and  identifiable  intangibles,  which
include web  development  costs,  customer base,  database  content,  internally
developed software, and assembled work force. Intangible assets are amortized on
a straight-line basis over their estimated useful lives of three to five years.

Reclassifications

Certain 1999 amounts have been reclassified to conform to current year financial
statement presentation.

Deferred Financing Costs

Deferred  financing  costs  represent the fair value of the common stock warrant
issued  in  connection  with a  financing  arrangement.  These  costs  are being
amortized over the term of the financing arrangement.

Impact of Recently Issued or Adopted Accounting Standards

In March 2000, the FASB issued  Interpretation No. 44 (FIN No. 44),  "Accounting
for Certain Transactions Involving Stock Compensation,  an interpretation of APB
Opinion No. 25." FIN No. 44 will be effective July 1, 2000. This  interpretation
provides  guidance for applying APB Opinion No. 25 "Accounting  for Stock Issued
to Employees." Management has not determined the impact that adoption of FIN No.
44 will have on the Company's financial position or results of operations.

In March 2000,  the  Emerging  Issues Task Force  (EITF) of the FASB  reached a
consensus on Issue No. 00-2,  "Accounting for Web Site Development  Costs" which
provides guidance on when to capitalize versus expense costs incurred to develop
a web  site.  The  consensus  is  effective  for web site  development  costs in
quarters  beginning  after June 30, 2000.  Management has not yet determined the
impact  that  adoption of Issue No.  00-2 will have on the  Company's  financial
position or results of operations.

NOTE 2.         BASIS OF PRESENTATION

The accompanying unaudited financial statements of OnHealth Network Company have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information  and  with  the  instructions  to Form  10-Q and
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  In the  opinion  of  management,  subject  to  potential
adjustments  as  discussed  in Note 11, all  adjustments  (consisting  of normal
recurring  adjustments)  considered  necessary for a fair presentation have been

                                      6
<PAGE>

included.  Operating  results for the three  months ended March 31, 2000 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2000. The accompanying  unaudited  financial  statements  should be
read in conjunction with the financial statements and the notes thereto included
in the OnHealth Network Company report to the Securities and Exchange Commission
on Form 10-K for the year ended  December  31,  1999.  The  Company  anticipates
amending its 1999 10-K (see Note 11).


NOTE 3.         RESTRICTED CASH

On August 19,  1999,  the Company  pledged  $500,000 of cash for an  irrevocable
standby  letter  of credit  related  to the lease of new  office  space  that is
classified as restricted  cash on the balance  sheet.  The letter of credit will
expire on  August  20,  2000 and will only be drawn on in the event the  Company
fails  to  comply  with the  terms  and  conditions  as set  forth in the  lease
agreement.

NOTE 4.         LOSS PER COMMON SHARE

Basic earnings per share ("EPS")  excludes any dilutive  effects of common stock
equivalents - options,  warrants and convertible securities - and is computed by
dividing  the  net  loss  by  the  weighted-average   number  of  common  shares
outstanding  during the period.  Diluted EPS is computed by dividing net loss by
the   weighted-average   number  common  shares  and  common  stock  equivalents
outstanding.  Excluded from the  computation of the  weighted-average  number of
common  shares  outstanding  at March 31,  2000 are  447,554  shares,  which are
forfeitable subject to the continued employment of certain key employees.

The effects of common stock  equivalents  are excluded from the  computation for
the periods presented as their effects are anti-dilutive.

The components of basic and diluted loss per common share are as follows:

                                               Three Months Ended
                                                 March 31, 2000
                                         -------------------------------
                                               2000           1999
                                         --------------- ---------------
                                      (In thousands, except per share data)

   Net loss (numerator)                  $     (21,887)   $     (4,160)
                                         ===============  ===============

   Weighted average common shares
       outstanding denominator)                 23,390          14,930
                                         ===============  ===============

   Loss per share:
       Basic and diluted                 $       (0.94)    $     (0.28)
                                         ===============  ===============



NOTE 5.         COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS

<TABLE>
<CAPTION>
                                                                 March 31,            December 31,
        (In thousands)                                             2000                   1999
        (Unaudited)                                        -----------------     -----------------
       <S>                                                   <C>                   <C>

       Furniture and equipment:
            Computer hardware                                $       2,510         $       2,205
            Software                                                   490                   349
            Equipment                                                    6                     6
            Furniture & fixtures                                       480                   470
            Leasehold improvements                                      78                    71
            Construction in progress                                   237                   157
                                                             -----------------     -----------------
                                                                     3,801                 3,258
            Less accumulated depreciation                           (1,312)               (1,121)
                                                             -----------------     -----------------
       Total                                                 $       2,489         $       2,137
                                                             =================     =================

                                       7
<PAGE>


       Intangibles and Goodwill:
            Web development costs                            $          43         $          43
            Customer base                                            2,400                 2,400
            Database content                                         3,900                 3,900
            Internally developed software                            1,300                 1,300
            Assembled work force                                       130                   130
            Goodwill                                                 3,486                 3,486
                                                             -----------------     -----------------
                                                                    11,259                11,259
       Less accumulated amortization                                (1,254)                 (505)
                                                             -----------------     -----------------
       Total                                                 $      10,005         $      10,754
                                                             =================     =================

       Other accrued expenses:
            Litigation loss                                  $           -         $         195
            Legal fees                                                 225                   225
            Royalties                                                  220                   425
            Accrued wages and benefits                                 428                   410
            Interest payable                                           171                   676
            Other                                                      429                   452
                                                             -----------------     -----------------
       Total                                                 $       1,473         $       2,383
                                                             =================     =================
</TABLE>

NOTE 6.         MERGER WITH HEALTHEON/WEBMD

On  February  15,  2000,  the  Company  agreed  to  merge  with  Healtheon/WEBMD
Corporation  ("Healtheon/WEBMD").  As a result of the merger,  each share of the
Company's  common stock shall be converted  into and  exchanged for the right to
receive .189435 shares of Healtheon/WEBMD common stock. The merger is subject to
certain  conditions  and approval of the Company's  shareholders.  The merger is
expected to be completed in either the second or third quarter of 2000.

In connection with the merger agreement,  Healtheon/WEBMD has agreed to lend the
Company up to $30 million for working  capital needs.  The Company  borrowed $15
million on February 24, 2000 and may make  additional  loans beginning on May 1,
2000.  The loans bear interest at prime rate plus 2% and are due on February 15,
2001.

Simultaneous  with the  execution of the  Healtheon/WEBMD  loan  agreement,  the
Company granted  Healtheon/WEBMD  a warrant to purchase  5,800,000 shares of the
Company's  common stock with an exercise price of $10.75 per share.  The warrant
is fully vested and exercisable immediately and expires on February 15, 2003. On
February 15, 2001, the Company has the right to call a portion of the warrant in
excess of 3,000,000 shares, or 2,800,000 shares.  The fair value of the warrant,
approximately  $22.6  million,  has been valued at the date of issuance  using a
Black-Scholes  option  pricing  model and will be amortized as interest  expense
over the one-year  loan period.  During the quarter  ended March 31, 2000,  $2.8
million of the  deferred  financing  costs have been  amortized  and included in
interest expense. In addition, the Company granted  Healtheon/WEBMD a warrant to
purchase  500,000 shares of the Company's common stock with an exercise price of
$0.01 per share. The warrant is exercisable in the event the merger agreement is
terminated  and  any  principal  and  interest  arising  under  the  loans  from
Healtheon/WEBMD  remain  outstanding  90 days after the  termination  date.  The
warrant will vest as to 250,000  shares after 90 days,  125,000 shares after 180
days and 125,000 after 270 days.

As a result of this merger,  Healtheon/WEBMD  expects to file a Proxy  Statement
and Prospectus with the SEC as promptly as reasonably possible. The shareholders
of the Company will  consider  adoption  and  approval of this merger  agreement
within 30 days after  declaration of the  effectiveness  of the  Healtheon/WEBMD
Registration  Statement.  If it is  determined  by the  Board  of  Directors  of
Healtheon/WEBMD  that, as a result of developments in the SEC  investigation  of
the Company`s  stock option grants (see Note 11) there will be a material  delay
in the effectiveness of the Registration  Statement,  then  Healtheon/WEBMD  may
terminate this merger agreement.  The Company will have 20 days, after notice by
Healtheon/WEBMD  of it's intent to terminate,  to resolve the Material  Delay to
Healtheon/WEBMD's reasonable satisfaction.  The Company has not been notified of
an intent to terminate by Healtheon/WEBMD.


                                       8
<PAGE>


NOTE 7.         NOTE PAYABLE

In  connection  with the  acquisition  of HDI  described  in Note 9, the Company
assumed a $2,000,000 note payable to G.D. Searle & Company ("Searle"), which was
secured by all tangible and intangible property of HDI. Interest on the note was
stated at 30% per annum.  All  principal  and interest  were due on December 18,
2000,  with  a call  option  by  Searle  on  June  30,  2000.  A  result  of the
acquisition, the Company and Searle entered into a release and Note Cancellation
Agreement,  whereby the Company intended to repay the principal and interest due
by issuing  Searle  registered  shares of the  Company's  common  stock.  If the
Company was unable to provide  Searle with  registered  shares on or before June
30,  2000,  then  Searle had the option to call the note and all  principal  and
interest  would  be  due in  cash.  On  March  31,  2000,  the  note,  including
approximately  $882,000  in  accrued  interest,  was  paid  by  issuing  688,190
registered shares of the Company's common stock to Searle.

NOTE 8.         STOCK OPTIONS AND WARRANTS

On February 15, 2000,  shareholders  owning in excess of 40% of the  outstanding
common  stock of OnHealth  entered into voting  agreements  providing a proxy to
Healtheon/WEBMD  in support of the merger  agreement with  Healtheon/WEBMD  (see
Note 6). This triggered the acceleration  provisions within outstanding employee
stock option agreements.  As a result, all unvested options,  with the exception
of the  options  granted to certain  key  employees  of the  Company  who waived
acceleration  until  closing  or  termination  of the merger  agreement,  became
immediately exercisable.  The number of options that vested on February 15, 2000
as a result of this  situation  was  approximately  2.1  million.  The number of
options granted to certain key employees that were unvested on February 15, 2000
and  will  vest  upon  closing  or  termination  of  the  merger   agreement  is
approximately 3.4 million.

NOTE 9.         SEGMENT INFORMATION

We have  identified  our  reportable  segments  based on how our  operations are
managed and how results are viewed by management. The Company reports operations
in two  business  segments:  OnHealth  and HDI.  Accounting  policies of the two
segments are the same as those described in Note 1.  Description of Business and
Summary of Significant  Accounting  Policies.  There were no intersegment  sales
during the periods  presented.  The following  table  contains  certain  segment
information for the three month periods ended March 31, 2000 and 1999.

                                                        Three Months Ended
                                                             March 31,
                                                    ----------------------------
                                                         2000            1999
                                                    ------------    ------------
                                                           (In thousands)
       Net revenue:
         OnHealth                                   $     2,010     $      200
         HDI                                                654              -
                                                    ------------    ------------
       Consolidated net revenue                     $     2,664     $      200
                                                    ============    ============

       Amortization of intangibles and goodwill:
         OnHealth                                   $       749     $        -
         HDI                                                  -              -
                                                    ------------    ------------
       Consolidated amortization of intangibles
         and goodwill                               $       749     $        -
                                                    ============    ============

       Stock-based compensation:
         OnHealth                                   $     3,143     $       12
         HDI                                                  -              -
                                                    ------------    ------------
       Consolidated stock-based compensation        $     3,143     $       12
                                                    ============    ============

       Interest expense, net:
         OnHealth                                   $   (3,004)     $      107
         HDI                                                (3)              -
                                                    ------------    ------------
       Consolidated interest expense, net           $   (3,007)     $      107
                                                    ============    ============

                                       9
<PAGE>

       Net loss:
         OnHealth                                   $  (21,253)     $   (4,160)
         HDI                                              (634)              -
                                                    ------------    ------------
       Consolidated net loss                        $  (21,887)     $   (4,160)
                                                    ============    ============

       Total assets:
         OnHealth                                   $    53,271     $    32,720
         HDI                                              1,287               -
                                                    ------------    ------------
       Consolidated total assets                    $    54,558     $    32,720
                                                    ============    ============


NOTE 10.        SUPPLEMENTAL CASH FLOW INFORMATION

                                                        Three Months Ended
                                                             March 31,
                                                      ------------------------
                                                          2000         1999
                                                      ----------    ----------
                                                              (In thousands)
  Cash paid during the periods for:
    Interest expense                                  $       1      $      -
    Income taxes                                              -             -

  Non-cash investing and financing transactions:
    Common stock issued for debt                          2,882             -
    Fair value of common stock warrant                   22,612             -
    Common stock issued as litigation settlement            196             -
    Common stock issued for services                          8         1,969
    Deferred compensation related to stock options        6,328             -

NOTE 11.        SEC INVESTIGATION AND COMPANY'S SPECIAL INVESTIGATION

In October 1999, the Division of  Enforcement,  Pacific  Regional  Office of the
Securities  and Exchange  Commission  ("SEC"),  notified the Company that it was
initiating an investigation of the Company's policies and procedures  concerning
the granting of stock options.  The Company has provided information to the SEC.
In addition, The Company's Board of Directors hired independent legal counsel to
conduct its own special investigation.  As a result of the Company's own special
investigation, the Company became aware of certain instances where stock options
were granted to new employees  with exercise  prices that were below fair market
value  on  the  date  of  grant.  Based  on the  preliminary  findings  of  this
investigation,  the  Company  recorded  $1.8  million  of  deferred  stock-based
compensation  in 1999.  As a result of the  ongoing  investigation,  the Company
recorded an  additional  $8.8 million of deferred  stock-based  compensation  in
2000,  related  primarily to grants to existing  employees with exercise  prices
below  the fair  market  value  as of the date of  grant.  The  Company  will be
recognizing amortization of the deferred compensation over the vesting period of
the underlying  options as a stock-based  compensation  charge. The SEC has been
given a copy of the report of the special investigation and has taken deposition
of various members of management and Company employees.

The Company is continuing to work with independent legal counsel to conclude the
special  investigation.  The  Company  anticipates  restating  it's 1999 10-K to
reflect the additional non-cash expense associated with remeasuring the value of
certain  stock option  grants.  Until this  process is complete  there can be no
certainty  as to whether the  financial  statements  for 1999 will need  further
adjustment or whether  other periods will be impacted,  including the results of
first quarter 2000.  Upon completion of this work, the Company will file amended
Form 10-Ks and Form 10-Qs as necessary.

The SEC  investigation  is still in  process  and has not  been  finalized.  The
Company  intends to cooperate with this  investigation.  However,  until the SEC
investigation is completed,  the Company could,  among other things, be required
to record additional  stock-based  compensation charges and could be required to
pay a fine.  The Company is unable to assess the likely  outcome of this matter.
As a result,  there can be no assurance that this  investigation will not have a
material  adverse  affect on the  Company's  financial  position  or  results of
operations.

NOTE 12.        LEGAL PROCEEDINGS

In June 1999, Jon Fisse, the Company's newly named Chief Operating Officer, left
the Company  before the Company and Mr. Fisse were able to agree on the terms of
his employment agreement and both parties commenced litigation.  A settlement of
this litigation was reached during January 2000,  which resulted in the issuance
of 22,500  shares of the  Company's  common  stock,  for which an accrual in the
amount of $195,000 was recorded in 1999.

                                       10
<PAGE>


ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Net Revenue

Net  revenue  for the three  month  period  ended March 31, 2000 and 1999 was as
follows:


                                         Three Months Ended March 31,
                                     -----------------------------------
                                           2000               1999
                                     ----------------   ----------------
                                               (In thousands)

  Online                             $       1,982      $         146
  Services and communication                   502                  -
  Product sales and licensing                  152                 19
  Contract development and other                28                 35
                                     ----------------   ----------------
  Net revenue                        $       2,664      $         200
                                     ================   ================

Online revenue

Online revenue is generated  through the sale of advertising  and sponsorship on
our  onhealth.com  Web site. The increase in online  revenue of  $1,836,000,  or
1,257%,  from the three month  period ended March 31, 1999 to the same period in
2000 was the result of an increase in user traffic on our onhealth.com Web site,
the  number of site  sponsorship  and  advertising  clients  and the size of the
advertising  contracts  from the prior  year.  Online  revenue  is  expected  to
increase due principally to an increase in the number of advertising clients.

Services and communication revenue

Services  and  communication  revenue,  a line of revenue  for Health  Decisions
International  ("HDI"), which was acquired by us on November 29, 1999, includes,
among others, nurse counseling and personal care management  services.  Services
and  communication  revenue is expected to increase in 2000 as the operations of
HDI will be included in our consolidated financial statements for a full year.

Product sales and licensing revenue

In the first  quarter of 2000,  product  sales and  licensing  revenue  consists
primarily  of  health   information   software  licensing  and  brochure  sales,
newsletters and book sales  generated by HDI. In 1999 it consisted  primarily of
OnHealth's CD-ROM related retail distribution sales, direct mail sales,  product
sales and royalties on licenses to original equipment  manufacturers (OEM's) and
end users. Product sales and licensing revenue increased in the first quarter of
2000 from the same period in 1999 by $132,000 or 695%, primarily due to brochure
sales,  newsletters and book sales generated by HDI. Product sales and licensing
revenue  related to brochures and  newsletters is expected to increase over 1999
as the  operations  of HDI  will  be  included  in  our  consolidated  financial
statements for a full year.  CD-ROM related product sales and licensing  revenue
have declined steadily over the past few years. The decrease  generally reflects
market conditions for CD-ROM products, our cancellation of a CD-ROM distribution
agreement,  and the lack of new CD-ROM product  releases as we shifted our focus
toward online efforts.  We do not anticipate  receiving any significant  product
sales and licensing revenue from CD-ROM products in the future.

Contract development revenue and other

Contract  development  revenue is generated through the use of our personnel and
facilities for the creation of custom  multimedia  products.  In the three month
period ended March 31, 2000,  contract  development and other revenue  decreased
$7,000,  or 20% from the three month period  ended March 31, 1999.  The decrease
generally  reflects  our shift  toward the online  efforts  and is  expected  to
decrease.


                                       11
<PAGE>


COSTS AND EXPENSES

Total  costs and  expenses  for the three  month  period  ended  March 31,  2000
increased  $17,077,000 or 382%, to $21,544,000  from $4,467,000  during the same
period in 1999. The increase was primarily due to increased  sales and marketing
efforts  related to our  onhealth.com  Web site,  the  increase  in  stock-based
compensation  expense,  increase in personnel and use of contractors to develop,
market and sell its products  and services and the addition of HDI's  results of
operations for the first quarter of 2000.

Product Development, Editorial & Design

Product  development,   editorial  and  design  expenses  consist  primarily  of
compensation  and related costs for our development,  editorial,  design systems
staff,  consulting  fees,  third-party  content  acquisition  costs and Web site
maintenance  and  enhancement  costs related to our  onhelath.com  Web site. The
increase  in product  development,  editorial  and design  expenses in the first
quarter of 2000 of  $1,458,000,  or 120%, to $2,673,000  from  $1,215,000 in the
first  quarter  of  1999  was  primarily  due to  the  increase  in  the  use of
consultants  and staff  required to enhance and  maintain the  onhealth.com  Web
site. Product development,  editorial & design expenses are expected to increase
in  2000 as we  continue  to  build  our  infrastructure  and  increase  product
offerings.

Sales and Marketing

Sales  and  marketing   expenses   consist   primarily  of  salaries  and  sales
commissions, advertising costs, travel and public relations. Sales and marketing
expenses  increased  in the first  quarter of 2000 by  $9,820,000,  or 415%,  to
$12,186,000  from  $2,366,000  in the first  quarter of 1999.  The  increase was
primarily  the result of  increased  advertising  expenses as well as  increased
headcount.  In addition, the operating expenses of HDI are included in the first
quarter of 2000. The broad-based consumer targeted advertising  campaign,  which
includes online, television,  radio and outdoor advertising,  commenced early in
the third  quarter of 1999.  We intend to continue our  advertising  campaign in
2000 and, as a result,  we expect sales and marketing  expenses to increase over
1999 amounts.

General and Administrative

General and  administrative  expenses consist  primarily of salaries and related
costs for general corporate functions,  including finance,  accounting and legal
expenses,  investor relations and fees for other professional services.  General
and administrative expenses increased in the first quarter of 2000 from the same
period in the 1999 by $1,919,000,  or 220%, to $2,793,000  from $874,000.  HDI's
operating  results  have been  included  in the  first  quarter  of 2000,  which
contributed to a significant portion of the increase.  The increase was also due
to increased  personnel costs, as a result of increased  headcount,  legal fees,
and accounting fees. We expect general and  administrative  expenses to increase
in 2000 as the operations of HDI will be included in our consolidated  financial
statements for a full year.

Amortization of Intangibles and Goodwill

Amortization of intangibles and goodwill  totaled  $749,000 in the first quarter
of  2000  and is  related  to the  amortization  of  goodwill  and  identifiable
intangibles  recorded  in  connection  with the 1999  business  acquisitions  of
BabyData and HDI. There was no such  amortization  in the first quarter of 1999.
Amortization  of intangibles and goodwill are expected to increase in 2000, as a
full year of amortization will be included in the financial statements.

Stock-based Compensation

Stock-based  compensation is principally comprised of the portion of acquisition
related  consideration  which  is  contingent  on the  continued  tenure  of key
employees,  which must be  recorded  as  compensation  expense  under  generally
accepted accounting  principles,  and the compensation  expense related to stock
option grants.  Stock-based  compensation  recorded in the first quarter of 2000
includes  amortization of the  compensation  arrangements in connection with the
acquisitions  of BabyData.com in the third quarter of 1999 and HDI in the fourth
quarter of 1999,  aggregating  $887,000.  The stock-based  compensation  amounts
related to options  granted  with an exercise  price less than the fair value of
the  underlying  common  stock is  $2,256,000  in the first  quarter of 2000 and
$13,000 in first quarter of 1999.  Stock-based  compensation expense is expected
to increase in 2000, as the remaining  amortization  related to the two 12-month
employment contracts,  which became effective September 9, 1999 and November 29,
1999,  and the  remaining  amortization  related to stock option  grants will be
included in the financial statements.

As  announced,  the  Company  has  initiated  a special  investigation  into its
practice  of  granting  employee  stock  options  and the  accounting  treatment
thereof.  The  Company  anticipates  restating  its  1999  10-K to  reflect  the
additional  non-cash  expense  associated with  remeasuring the value of certain
stock option grants.  Until this process is complete,  there can be no certainty
as to whether the financial  statements for 1999 will need further adjustment or
whether other  periods will be impacted,  including the results of first quarter
2000. Upon completion of this work, the Company will file amended Form 10-Ks and
Form 10-Qs as necessary.

                                       12
<PAGE>

Interest Income

Interest  income was  $151,000 in the first  quarter of 2000 and $107,000 in the
first  quarter  of 1999.  The  increase  for the 2000  period  was due to higher
average  cash  balances  resulting  from the proceeds of a $15 million loan from
Healtheon in February 2000.

Interest Expense

Interest  expense was  $3,158,000  million in the first  quarter of 2000,  which
included  non-cash  interest of  $2,780,000  related to the  Healtheon  warrant,
non-cash interest of $208,000 related to the Searle note payable and interest of
$163,000 related to the Healtheon note payable.

Income Taxes

We have not  recorded a current or deferred  provision  for income taxes for the
periods presented due to the history of losses incurred.


LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2000, we had cash and cash  equivalents of $12,644,000.  Total cash
used by operating  activities  during the first quarter of 2000 was $12,607,000,
which was primarily due to a net loss of $19,794,000.  Investing activities used
net cash of $543,000  primarily for  purchases of computer  equipment due to the
growth in personnel as well as upgrades.  Financing  activities provided cash of
$15,672,000 through the proceeds from the Healtheon note payable;  proceeds from
the exercise of warrants, $388,000; and the exercise of stock options $288,000.

In  February  2000,  we  agreed  to  merge  with   Healtheon/WEBMD   Corporation
("Healtheon/WEBMD").  In connection with the merger  agreement,  Healtheon/WEBMD
has agreed to lend us up to $30 million for working  capital needs.  The amounts
borrowed under this line of credit are due on February 15, 2001. As of March 31,
2000, the Company has drawn $15 million against this line of credit.  We believe
our cash and cash equivalents,  including the $30 million lending  commitment by
Healtheon/WEBMD,  will be sufficient to fund our operations through December 31,
2000.  Operations  generated  a negative  cash flow  during 1999 and we expect a
significant  use of cash in 2000 as it  markets  and  expands  it Web site.  Any
material  unforeseen  increase in expenses or reductions  in projected  revenues
will  likely  require  us to  seek  additional  debt  or  equity  financing.  If
additional cash is required,  we may need to reduce our  expenditures or curtail
certain operations. There can be no assurance that additional capital, on a debt
or equity  basis,  will be found,  or if found  that it will be on  economically
viable terms.

YEAR 2000

We  have  experienced  no  disruptions  or  problems  regarding  the  year  2000
changeover. As part of our year 2000 plan, prior to January 1, 2000, we assessed
its internal systems consisting primarily of desktop and network computers,  and
third-party software utilized in our day-to-day  operations.  Our assessment was
completed  as of January 1, 2000 and  indicated  all systems  were  operating as
normal.  As of the date of the  filing  of this  document,  all of our  internal
hardware  and software  continue to operate as normal and  to-date,  all vendors
utilized  by us in our daily  operations  are  operating  normally  and have not
indicated any year 2000 anomalies.  Based upon the successful transition through
the  January 1, 2000  rollover  period,  we do not  anticipate  any  problems to
materialize.  Our expenditures for the year 2000 effort were not material and we
do not expect to incur any material costs in 2000 with regards to year 2000.

                                       13
<PAGE>

FORWARD-LOOKING STATEMENTS

Statements  contained  herein that are not based on historical  fact,  including
without  limitation  statements  containing the words "believes," "may," "will,"
"estimate," "continue," "anticipates," "intends," "expects" and words of similar
import,  constitute  "forward-looking  statements"  within  the  meaning  of the
Private  Securities   Litigation  Reform  Act  of  1995.  Such   forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results,  events or developments to be materially different
from any future  results,  events or  developments  expressed or implied by such
forward-looking statements.
Such factors include, among others, the following:

o        the expectation that the Company will see a growth in revenues and
         positive net income as a on-line health network;
o        the ability to increase consumer awareness of the Company's Web site;
o        the ability to increase our advertising base,
o        technology changes and the continued acceptance of the Internet;
o        general economic and business conditions;
o        competition;
o        the ability to attract and retain qualified personnel;
o        liability and other claims asserted against the Company; and
o        and other factors referenced in the Company's filings with the
         Securities and Exchange Commission.

Given these uncertainties,  readers are cautioned not to place undue reliance on
such forward-looking  statements. The Company disclaims any obligation to update
any such factors or to publicly  announce the result of any  revisions to any of
the  forward-looking  statements  contained  herein to reflect  future  results,
events or developments.

Additional  information  on other risk factors  which could affect the Company's
financial  results are included in the  Company's  Annual  Report for the fiscal
year  ended  December  31,  1999 on Form  10-K and  other  Company  reports  and
statements on file with the Securities and Exchange Commission.


                                       14
<PAGE>


                                     PART II
                                OTHER INFORMATION


ITEM 1.           LEGAL PROCEEDINGS

In June 1999, Jon Fisse, the Company's newly named Chief Operating Officer, left
the Company  before the Company and Mr. Fisse were able to agree on the terms of
his employment agreement and both parties commenced litigation.  A settlement of
this litigation was reached during January 2000,  which resulted in the issuance
of 22,500 shares of the Company's common stock.

In October 1999, the Company  received a subpoena duces tecum by the Division of
Enforcement,  Pacific Regional Office of the Securities and Exchange  Commission
("SEC") requesting certain documents from the Company pursuant to a formal order
of private  investigation  in connection  with possible  federal  securities law
violations. As stated by the SEC in the letter accompanying the subpoena, "[t]he
investigation  and the subpoena do not mean that we have  concluded  that you or
anyone else has broken the law.  Also, the  investigation  does not mean that we
have a negative opinion of any person, entity or security".  The Company intends
to cooperate fully with the SEC, and has been providing  information to the SEC.
Because the SEC  investigation  is still in process and has not been  finalized,
the Company is unable to establish the  likelihood  or impact of an  unfavorable
outcome. As a result, there can be no assurance that this investigation will not
have a material adverse affect on the Company's financial position or results of
operations.  However, the Company does not currently believe that an unfavorable
outcome  would  have  a  material  adverse  impact  on the  Company's  financial
condition.

In addition, the Company's Board of Directors hired independent legal counsel to
conduct its own special investigation. As a result of the special investigation,
the Company became aware of certain  instances  where stock options were granted
to employees with exercise  prices that were below fair market value on the date
of grant. The Company recorded deferred  stock-based compensation in 1999 and in
2000. The Company will be recognizing  amortization of the deferred compensation
over the vesting period of the underlying options as a stock-based  compensation
charge. The SEC has been given a copy of the report of the special investigation
and has taken deposition of various members of management and Company employees.

The Company is continuing to work with independent legal counsel to conclude the
special  investigation.  The  Company  anticipates  restating  its 1999  10-K to
reflect the additional non-cash expense associated with remeasuring the value of
certain stock options  granted.  Until this process is complete  there can be no
certainty  as to whether the  financial  statements  for 1999 will need  further
adjustment or whether  other periods will be impacted,  including the results of
first quarter 2000.  Upon completion of this work, the Company will file amended
Form 10-Ks and Form 10-Qs as necessary.

                                       15
<PAGE>


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibit Listing.

     Certain exhibits have been  previously filed  with the  Commission and are
incorporated herein by reference.


                            ONHEALTH NETWORK COMPANY
                                  EXHIBIT INDEX
                                 MARCH 31, 2000

<TABLE>
<CAPTION>
   Exhibit
   NUMBER                                              DESCRIPTION                                           REF.
  --------       ----------------------------------------------------------------------------------------    ----
     <S>     <C>                                                                                             <C>

     2.1     Agreement and Plan of Reorganization among OnHealth Network Company, BabyData.com Inc., BB
               Acquisition, Inc. and the stockholders of BabyData.com Inc. dated as of September 9,
               1999.                                                                                         (L)
     2.2     Agreement and Plan of Reorganization among OnHealth Network Company, Demand Management,
               Inc., DMISub, Inc., Health Decisions, Inc., HDISub, Inc., Health Decisions International,
               LLC and Donald M. Vickery, the sole shareholder of HDI and DMI dated as of
               November 19, 1999.*                                                                           (M)
     2.3     Agreement and Plan of Merger dated February 15, 2000 by and among Healtheon/WebMD
               Corporation, Tech Acquisition Corporation and OnHealth Network Company.                       (N)
     3.1     Amended and Restated Articles of Incorporation of the Company.                                  (K)
     3.2     Bylaws of the Company.                                                                          (A)
     4.1     Form of Stock Certificate.                                                                      (B)
     9.1     Voting Agreement dated February 15, 2000 executed by Healtheon/WebMD Corporation, Tech
               Acquisition Corporation and OnHealth Network Company and Jon C. Baker, Van Wagoner
               Funds, Inc., David R. Wilmerding, Michael A. Brochu, Rebecca Farwell, Robert N.
               Goodman, Ann Kirschner, Ram Shriram, Ronald Stevens and Rick Thompson.                        (N)
    10.1     License Agreement, dated April 24, 1991, among the Company, William Morrow Company and Mayo
               Foundation for Medical Education and Research, as amended.                                    (B)
    10.2     Electronic Publishing License, Development and Marketing Agreement, dated April 28, 1993,
               between the Company and Mayo Foundation for Medical Education and Research.                   (B)
    10.3     401(k) Savings and Investment Plan.                                                             (B)
    10.4     1997 Stock Option Plan, as amended.                                                             (C)
    10.5     IVI Publishing, Inc. Director Stock Option Plan, as amended.                                    (D)
    10.6     License Agreement, dated February 9, 1994, between the Company and Time Life, Inc. and
               First Amendment to Titles Development Agreement, dated as of February 9, 1994 between
               the Company and Time Life, Inc.                                                               (D)
    10.8     License, Development and Marketing Agreement, dated September 28, 1994, between the Company
               and Time Life, Inc.*                                                                          (E)
    10.9     1994 License, Development and Marketing Agreement, dated September 27, 1994, between the
               Company and Mayo Foundation for Medical Education and Research.*                              (E)
    10.10    Agreement between America's Health Network, Inc. and the Company, dated May 25, 1995.*          (F)
    10.11    Amendment No. 2 to License Agreement among William Morrow Company, Mayo Foundation for
               Medical Education and Research and the Company, dated December 29, 1995.*                     (F)
    10.12    Financial Advisor and Consulting Agreement with Frazier & Company  LP, dated
               July 14, 1994, as amended by a letter agreement, dated June 28, 1995.**                       (G)
    10.13    Settlement Agreement and Mutual Release dated September 12, 1997 between the Company and
               Mayo Foundation for Medical Education and Research.                                           (H)
    10.14    Sublicense Agreement dated September 12, 1997 between the Company and Mayo Foundation for
               Medical Education and Research.                                                               (H)
    10.15    Letter Agreement dated November 9, 1997 between the Company and Robert Goodman.**               (I)
    10.16    Subscription  Agreement,  dated January 29, 1999, among the Company and certain investors
               named therein.                                                                                (J)

                                       16
<PAGE>


    10.17    Employment Agreement, dated August 16, 1999, between the Company and Ronald Stevens.**          (O)
    10.18    Employment Agreement, dated February 15, 2000, between the Company and Robert Goodman.**        (O)
    27       Financial Data Schedule (electronic version only)
-----------------------------------
<FN>
     (A)       Incorporated  herein by reference to the  Company's  Registration
               Statement on Form S-3, No.  333-69989,  filed with the Securities
               and Exchange Commission on December 31, 1998.
     (B)       Incorporated  herein by reference to the  Company's  Registration
               Statement on Form S-1, No. 33-67064,  (file number 0-22212) filed
               with the Securities and Exchange Commission in 1993.
     (C)       Incorporated  herein by  reference to the  Company's  Preliminary
               Proxy Statement for the Annual Meeting of Shareholders  held June
               16, 1998 on Form PRE 14A,  filed with the Securities and Exchange
               Commission on May 6, 1998.
     (D)       Incorporated  herein by reference to the  Company's  Registration
               Statement on Form S-1, No.  33-76496,  filed with the  Securities
               and Exchange Commission in 1994.
     (E)       Incorporated by reference to the Company's Form 10-K for the year
               ended  December 31, 1994,  filed with the Securities and Exchange
               Commission.
     (F)       Incorporated  by reference to Exhibit 10.14 to the Company's Form
               10-K/A  for the year  ended  December  31,  1995  filed  with the
               Securities and Exchange Commission on October 4, 1996.
     (G)       Incorporated  by reference to Exhibit 10.19 to the Company's Form
               10-K  for the  year  ended  December  31,  1995  filed  with  the
               Securities and Exchange Commission.
     (H)       Incorporated herein by reference to Exhibit 10.1 to the Company's
               Form 10-Q for the quarter ended September 30, 1997 filed with the
               Securities and Exchange Commission on November 12, 1997.
     (I)       Incorporated  herein by reference to the Company's  Form 10-K for
               the year ended  December 31, 1997,  filed with the Securities and
               Exchange Commission on April 15, 1998.
     (J)       Incorporated by reference to the Company's Form 10-K for the year
               ended  December 31, 1998,  filed with the Securities and Exchange
               Commission on March 31, 1999.
     (K)       Incorporated  herein by reference to the  Company's  Registration
               Statement on Form S-3, No.  333-81321,  filed with the Securities
               and Exchange Commission on June 22, 1999.
     (L)       Incorporated  herein by reference to the Company's Report on Form
               8-K,  filed  with  the  Securities  and  Exchange  Commission  on
               September 15, 1999.
     (M)       Incorporated  herein by reference to the Company's Report on Form
               8-K,  filed  with  the  Securities  and  Exchange  Commission  on
               December 14, 1999.
     (N)       Incorporated  herein by reference to the Company's Report on Form
               8-K,  filed  with  the  Securities  and  Exchange  Commission  on
               February 22, 2000.
     (O)       Incorporated  herein by reference to the Company's Report on Form
               10-K, filed with the Securities and Exchange  Commission on March
               28, 2000.

*        Portions of the Exhibit  have been  omitted  pursuant to the  Company's
         request for confidential  treatment  pursuant to Rule 24b-2 promulgated
         under the Securities Act of 1933, as amended.

**       Management Agreement or Compensatory Plan or Arrangement
</FN>
</TABLE>

         (b)      Reports on Form 8-K.

                  The following reports on Form 8-K were filed by the registrant
                  during the quarter ended March 31, 2000:

                  In a report filed on Form 8-K/A,  dated February 14, 2000, the
                  Company  amended  its  December  14,  1999 Form 8-K  filing to
                  include  the   financial   statements   of  Health   Decisions
                  International,  which it acquired on 11/29/99,  as well as the
                  related pro forma information.

                  In a report filed on Form 8-K,  dated  February 18, 2000,  the
                  Company  announced  the  Agreement  and  Plan of  Merger  with
                  Healtheon/WEBMD Corporation.

                                       17
<PAGE>


                  In a report filed on Form 8-K,  dated  February 22, 2000,  the
                  Company  reported  voting  agreements  entered  into  with the
                  Company's  stockholders and option holders, in connection with
                  the  Agreement   and  Plan  of  Merger  with   Healtheon/WEBMD
                  Corporation.

                  In a report  filed on Form  8-K,  dated  March 15,  2000,  the
                  Company filed its audited  financial  statements  for the year
                  ended  December 31, 1999, as well as the related  Management's
                  Discussion and Analysis of Financial  Condition and Results of
                  Operations.


                                       18
<PAGE>


                                    SIGNATURE

         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, in Seattle, Washington, on the 22nd day
of May, 2000.



                                  ONHEALTH NETWORK COMPANY


                                  By:  /S/ RON STEVENS
                                      -----------------------------
                                      Ron Stevens
                                      Chief Financial Officer