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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 0-24975
      Emdeon Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-3236644(State of
    incorporation)

(I.R.S. employer identification
    no.)669 River Drive, Center 2
    Elmwood Park, New Jersey(Address of principal
    executive office)

07407-1361(Zip code)   (201) 703-3400
 (Registrants telephone
    number including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value
    $0.0001 per share

The Nasdaq Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



TABLE OF
    CONTENTS
  
  PageForward-Looking
    Statements


2Definitions of
    Certain Measures


2PART IItem 1.

Business


4Item 1A.

Risk
    Factors


42Item 1B.

Unresolved Staff
    Comments


63Item 2.

Properties


63Item 3.

Legal
    Proceedings


63Item 4.

Submission of
    Matters to a Vote of Security Holders


63PART IIItem 5.

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


64Item 6.

Selected Financial
    Data


67Item 7.

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


69Item 7A.

Quantitative and
    Qualitative Disclosures about Market Risk


93Item 8.

Financial
    Statements and Supplementary Data


93Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


93Item 9A.

Controls and
    Procedures


94Item 9B.

Other
    Information


94PART IIIItem 10.

Directors and
    Executive Officers of the Registrant


95Item 11.

Executive
    Compensation


95Item 12.

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


95Item 13.

Certain
    Relationships and Related Transactions


95Item 14.

Principal
    Accountant Fees and Services


95PART IVItem 15.

Exhibits and
    Financial Statement Schedules


96Signatures


97Financial
    Statements


F-1Index to
    Exhibits


E-1EX-2.3 AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENTEX-10.2 WEBMD HEALTH CORP. LONG-TERM INCENTIVE PLANEX-12.1 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGESEX-21 SUBSIDIARIES OF THE REGISTRANTEX-23.1 CONSENT OF ERNST & YOUNG, LLPEX-31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICEREX-31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICEREX-32.1 SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICEREX-32.2 SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER    ® ® ® ® ® ® ® ® ® ® ® ® ® ® tm sm
  tm tm tm ® ® ® ® ®
 1




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FORWARD-LOOKING
    STATEMENTS  Form 10-K
    
    the inability to successfully deploy new or updated applications
    or services;
    the failure to achieve sufficient levels of customer utilization
    and market acceptance of new or updated products and services;
    difficulties in forming and maintaining relationships with
    customers and strategic partners;
    the inability to attract and retain qualified personnel;
    the anticipated benefits from acquisitions not being fully
    realized or not being realized within the expected time frames;
    general economic, business or regulatory conditions affecting
    the healthcare, information technology, Internet and plastics
    industries being less favorable than expected; and
    the Risk Factors described in Item 1A of this Annual Report.        DEFINITIONS
    OF CERTAIN MEASURES  The WebMD Health Network
  
    A unique user or unique visitor during
    any calendar month is an individual computer that accesses a Web
    site in The WebMD Health Networkduring the course of
    such calendar month, as determined by WebMDs tracking
    technology. Accordingly, with respect to such calendar month,
    once an individual computer accesses that Web site in The
    WebMD Health Network, that computer will generally be
    included in the total number of unique users or visitors for
    that month, regardless of the method by which such computer
    accesses that Web site (i.e., whether directed by an individual
    or by automated software programs). Similarly, with respect to
    any calendar month, a computer accessing a specific Web site in
    The WebMD Health Networkmay only be counted once as a
    single unique user or visitor regardless of the number of times
    such computer accesses that Web site or the number of
    individuals who may use such computer. However, if that computer
    accesses more than one site within The 2




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WebMD Health Networkduring a calendar month, it will be
    counted once for each such site. A computer that does not access
    any of the Web sites in The WebMD Health Networkduring a
    particular calendar month is not included in the total number of
    unique users or visitors for that calendar month, even if such
    computer has in the past accessed one or more of these Web
    sites. In addition, if a computer blocks WebMDs tracking
    technology, it will be counted as a unique user or visitor in a
    particular month each time it visits one of these Web sites.  
    A page view is a Web page that is sent to the
    browser of a computer upon a request made by such computer and
    received by a server in The WebMD Health Network. The
    number of page views in The WebMD Health Networkis not limited by its number of unique users or visitors.
    Accordingly, each unique user or visitor may generate multiple
    page views.
    With respect to any given time period, aggregate page
    views are the total number of page views
    during such time period on all of the Web sites in The WebMD
    Health Network. Aggregate page views do not include page
    views from WebMDs private portals.   3




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##### Table of Contents



PART I  Item 1.
    Business  INTRODUCTION
  Corporate
    Information
    07407-1361 (201) 703-3400.
  Overview
    of Our Businesses
  WebMD.
  
    Public Online Portals.  WebMDs
    consumer health portals enable individuals to obtain detailed
    information on a particular disease or condition, locate
    physicians, store individual healthcare information, assess
    their personal health status, receive periodic
    e-newsletters
    and alerts on topics of individual interest, and participate in
    online communities with peers and experts. WebMDs
    professional portals make it easier for physicians and
    healthcare professionals to access clinical reference sources,
    stay abreast of the latest clinical information, learn about new
    treatment options, earn continuing medical education (or CME)
    credit and communicate with peers. WebMDs network of
    public portals provides a means for advertisers and sponsors to
    reach, educate and inform large audiences of health-involved
    consumers and clinically active physicians. WebMD generates
    revenue by providing healthcare and consumer products companies
    with opportunities to reach its public portals audience through
    a variety of content sponsorship formats and advertising
    products. In addition, WebMD creates and distributes accredited
    online CME programs funded by grants from a variety of sponsors.
    Private Online Portals.  WebMDs
    private portals provide a cost-effective platform for employers
    and health plans to provide their employees and plan members
    with access to personalized health and benefit information and
    decision support technology that helps them make more informed
    benefit, provider and treatment choices. WebMD also offers
    related services for the use of such employees and members,
    including lifestyle education and personalized telephonic health
    coaching. WebMDs private portals provide a secure,
    personalized user experience by integrating individual user data
    (including personal health information), plan-specific data from
    our employer or health plan clients and much of the content,
    decision-support technology and personal communication services
    that we make available through our public portals. WebMD
    generates revenues by licensing its private portals to employers
    and payers for use by their employees and members. WebMDs
    private portals do not have any advertisements and do not
    generate revenue from advertising or sponsorship.
    Publishing and Other Services.  WebMD
    also provides complementary offline health content. WebMDs
    offline publications include The Little Blue Book,a
    physician directory, ACP Medicine and ACS Surgery:
    Principles of Practice, its medical reference textbooks, and
    WebMD the Magazine,a consumer publication launched in
    early 2005 that WebMD distributes free of charge to physician
    office waiting rooms.   4




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ViPS.
  
    Government Solutions Group.  Through its
    Government Solutions Group, ViPS provides customized services
    and specialized project personnel to federal and state agencies,
    both as a prime contractor and as a subcontractor of other
    government contractors. ViPS consultants manage projects
    of various sizes, assess workflows, design complex database
    architecture, integrate third-party packages and perform data
    analysis and analytic reporting functions. ViPS contracts
    with the federal government are typically on a cost-plus fee
    structure.
    Healthpayer Solutions Group.  Through
    its HealthPayer Solutions Group, ViPS develops and markets
    software for commercial healthcare payers, including data
    warehouses and tools for medical management, physician
    performance measurement,
    HEDIS®
    (Health Plan Employer Data and Information Set) compliance
    reporting, healthcare fraud detection and financial management.
    ViPS receives license fees from its healthcare payer customers,
    typically based on the number of covered members, for use of its
    software and provides business and information technology
    consulting services to payer customers on a
    time-and-materials
    basis or a fixed-fee basis.    Porex.
  Emdeon Business Services (EBS).
   5




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Significant
    Corporate Transactions During 2006
  EPS Sale.
      EBS Sale.
  
    Financial Terms.  We received cash
    proceeds of approximately $1.2 billion at closing, and
    received approximately $10.7 million subsequent to
    December 31, 2006 in connection with a preliminary working
    capital adjustment. The acquisition of EBS by EBSCo was financed
    with approximately $925 million in bank debt and an
    investment of approximately $320 million by General
    Atlantic. The bank debt is an obligation of Emdeon Business
    Services LLC and its subsidiaries and is guaranteed by EBSCo,
    but is not an obligation of or guaranteed by Emdeon or any of
    Emdeons subsidiaries.
    Obligation to Change Our Name.  Under
    the transaction agreements for the EBS Sale, EBSCo and its
    subsidiaries received our rights to the name Emdeon
    for use in their businesses. We have agreed to change the name
    of our company on or before May 16, 2007. Our ticker symbol
    will remain HLTH.
    Relationship with WebMD.  In connection
    with the EBS Sale, EBS agreed to continue its strategic
    relationships with WebMD and to market WebMDs online
    decision-support platform and tools that support consumer
    directed health plans and health savings accounts to its payer
    customers for integration into their consumer directed health
    plan offerings. In addition, EBS agreed to license certain
    de-identified data to Emdeon and its subsidiaries, including
    WebMD, for use in the development and commercialization of
    certain applications that use clinical information, including
    consumer decision-support applications. 6




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
    Accounting Treatment.  EBS is not
    treated as a discontinued operation in the Consolidated
    Financial Statements included in this Annual Report because we
    retained a significant ownership interest. Our 48% ownership
    interest in EBSCo is being accounted for under the equity method
    beginning on November 17, 2006, the day after the EBS Sale
    was completed. Accordingly, EBS is included in our 2006
    consolidated financial results for 47 days in the fourth quarter
    of 2006 and for all prior periods. However, for the remaining 45
    days of the fourth quarter of 2006, it is reflected in the line
    item Equity in earnings of EBS Master LLC.
    Governance of EBSCo and Related
    Matters.  EBSCo is managed by a Board of
    Directors initially comprised of six members, three of whom were
    designated by us and three of whom were designated by General
    Atlantic. We have appointed the following three individuals to
    serve as directors of EBSCo: Kevin M. Cameron, our Chief
    Executive Officer; James V. Manning, a member of our Board of
    Directors and Chairman of the Audit Committee of the Board; and
    Charles A. Mele, our Executive Vice President and General
    Counsel. The right to designate directors continues so long as
    the parties respective interests in EBSCo continue to
    exceed a certain threshold. Within two years from the closing
    date of the EBS Sale, such Board of Directors will be
    reconstituted to consist of seven members, up to two of whom may
    be appointed by us and up to two of whom may be appointed by
    General Atlantic (so long as the parties respective
    interests in EBSCo continue to exceed a certain threshold), and
    three of whom must be independent directors to be jointly
    designated by us and General Atlantic. Under the LLC Agreement,
    certain fundamental transactions and other matters involving
    EBSCo require the approval of us and of General Atlantic, so
    long as the parties respective interests in EBSCo continue
    to exceed a certain threshold. Following the second anniversary
    of the closing date of the EBS Sale, either Emdeon or General
    Atlantic may cause a sale of EBSCo, subject to a minimum
    required return for the other party in the case of a sale prior
    to the third anniversary of such closing date, and, at all
    times, subject to the other partys right of first offer.
    The LLC Agreement contains other customary provisions regarding
    the management and operation of EBSCo and the rights and
    obligations of its members, including provisions relating to:
    registration rights, restrictions on transfer of interests in
    EBSCo, rights of first offer with respect to certain transfers
    of interests in EBSCo, drag-along and tag-along rights with
    respect to certain transfers of interests in EBSCo, preemptive
    rights and information rights.    Tender Offer.
  Recent
    Developments
  Redesign of WebMD.com and Launch of New Content Management
    System. WebMD.com WebMD.com The WebMD
    Health Network.
  Reimbursement to WebMD for Use of Net Operating Loss
    Carryforwards.
 7




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Available
    Information
  www.emdeon.com Form 10-K, Form 10-Q, Form 8-K, www.wbmd.com
    WebMD
  Overview
    
    enable consumers to obtain detailed information on a particular
    disease or condition, locate physicians, store individual
    healthcare information, assess their personal health status,
    receive periodic
    e-newsletters
    and alerts on topics of individual interest, and participate in
    online communities with peers and experts;
    provide physicians and healthcare professionals with access to
    clinical reference sources, stay abreast of the latest clinical
    information, learn about new treatment options, earn continuing
    medical education (or CME) credit and communicate with
    peers; and
    enable employers and health plans to provide their employees and
    plan members with personalized health and benefit information
    and decision-support technology that helps them make more
    informed benefit, provider and treatment choices.  The WebMD Health Network www.WebMD.com WebMD Health www.Medscape.com Medscape from WebMD The WebMD Health Network , The WebMD Health Network
  WebMD.com Medscape from WebMD
 8




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The WebMD
    Health Network.
      The Little Blue Book, ACP Medicine ACS Surgery: Principles of
    Practice WebMD the
    Magazine,
  WebMDs
    Public Portals: The WebMD Health Network
  Introduction
  The WebMD Health Network
  Owned Web Sites. The WebMD Health Network The WebMD Health
    Networks
  9




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Consumer Portal Site

Descriptionwww.webmd.com

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

A health information site for
    consumers that is written and edited by practicing physicians,
    including an online medical dictionary with more than
    16,000 medical terms.www.rxlist.com

An online drug directory with over
    1,500 drug monographs, which are comprehensive descriptions of
    pharmaceutical products (including chemical name, brand names,
    molecular structure, clinical pharmacology, directions and
    dosage, side effects, drug interactions and precautions).www.emedicinehealth.com

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

WebMDs flagship Web site for
    physicians and other healthcare professionals.www.emedicine.com

A site for physicians and other
    healthcare professionals containing articles on over 6,500
    diseases and disorders.www.medgenmed.com

The worlds first
    online-only, primary source, peer-reviewed general medical
    journal.www.theheart.org

One of the leading cardiology Web
    sites, known for its depth and breadth of content in this area.www.medsite.com

A site for physicians where they
    can access CME programs and manage their sponsored events.   Other Sites. AOL Health with WebMD FoxNews Health
    Channel with WebMD Psychologytoday.com HealthBoards.com. The WebMD Health Network The WebMD Health Network
  Acquisitions
    Included in the Public Portals in 2006
  Medsite. e-detailing E-details e-detailing.
  eMedicine  www.eMedicineHealth.com
  Consumer
    Portals in The WebMD Health Network
  Introduction.
 10




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Overview of Content and Service
    Offerings. WebMD Health The
    WebMD Health Network The
    WebMD Health Network. The WebMD Health
    Network
  Decision-Support Services.
  Feature

DescriptionPersonalized Self Assessment

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

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

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

Provides access to over 80
    interactive calculators, quizzes and slide shows to assess or
    demonstrate health topics, including a target heart rate
    calculator, body mass index calculator, pregnancy calculator and
    ovulation calendar.WebMD®
    Physician Finder

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

Offerings that educate users on
    issues surrounding choosing and using health plans and managing
    their healthcare from a financial and quality perspective. Other
    coverage topics, such as Medicare, are addressed and resources
    and tools are available to users.WebMD Health Manager

WebMD Health Manager is a free
    online service featuring a personal health record (a secure
    application that assists consumers in gathering, storing, and
    sharing essential health data in one centralized location),
    secure message center, personal health risk assessments for
    overall health as well as 15 condition-specific assessments,
    doctor reports, medication summaries, health calendar with
    reminders and alerts, printable health emergency card, family
    member health record keeping, weight loss, fitness and smoking
    cessation programs, and fully personalized
    e-newsletter.  11




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Membership; Online Communities. e-newsletters
  Feature

DescriptionCommunity Centers

Community Centers are designed to
    allow members to share their experiences and exchange
    information with other members with a similar health condition
    or concern. Community Centers, which may include blogs,
    moderated message boards and posted member columns, are featured
    in each of the more than 60 WebMD Health Centers and connect to
    over 140 expert-led and
    peer-to-peer
    message boards.e-Newsletters

Allows consumers to receive
    personalized
    e-mail
    newsletters on general health-related subjects and topics
    targeted to their particular health concerns. In 2006, WebMD
    offered newsletters, clinical alerts and
    e-mail
    reports covering approximately 30 topic areas, and delivered to
    approximately 4 million registered members.Expert Blogs

Expert physicians and patients
    alike chronicle their experiences with one another in these
    online journals.Ask an Expert

A forum within which users can
    post their health questions for experts. Provides over five new
    events each week and contains an archive of approximately 800
    transcripts.   .
  Professional
    Portals in The WebMD Health Network
  Introduction. Medscape from WebMD, theheart.org eMedicine Medsite Medscape from
    WebMD
    Medscape from WebMD.
  
    timely medical news relating to a variety of specialty areas and
    coverage of professional meetings and conferences;
    CME activities; and
    full-text medical journal articles and drug and medical
    literature databases.  Medscapes
 12




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Medscape General Medicine MedGenMed  MedGenMed, www.medgenmed.com MedGenMeds
  thehealth.org.
  Medsite. e-detailing
  Membership. Medscape from WebMD Medscape MedPulse ® e-mail Medscape
  Continuing Medical Education (CME). Medscape Medscapes Medscape
    Medscape Medscape
 13




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Advertising
    and Sponsorship
  The WebMD Health Network The WebMD
    Health Network The WebMD
    Health Network
      
    Media Solutions.  These are traditional online
    advertising solutions, such as banners, used to reach
    health-involved consumers. In addition, clients can sponsor a
    variety of condition-specific or specialty-specific
    e-newsletters,
    keyword searches and specific educational programs.
    Sponsored Editorial Solutions.  These are
    customized collections of articles, topics, and decision-support
    tools and applications, sponsored by clients and distributed
    within WebMD Health.
    Patient Education Centers.  Patient education
    centers are sponsored destinations on Medscapefor
    physicians to access patient education materials on a particular
    topic or condition.
    E-details.E-details
    are promotional interactive online programs that provide
    clinical education and information to physicians about medical
    conditions, treatments and products.  The WebMD Health Network
  
    the network displayed over three billion pages of
    healthcare information to users visiting its sites in 2006,
    which we believe is a much larger number of pages than was
    published by any other sponsor supported health-oriented Web
    portal;
    WebMDs ability to help advertisers and sponsors reach
    specific groups of consumers and physicians by specialty,
    product, disease, condition or wellness topic, which typically
    produces a more efficient and productive marketing campaign;
    WebMDs ability to provide advertisers and other sponsors
    with objective measures of the effectiveness of their online
    marketing, such as activity levels within the sponsored content
    area; and 14




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
    the broad reach of Medscapeseducational related
    activities for physicians and other healthcare professionals.    
    Conference Coverage.  Coverage of major medical
    conferences.
    CME Circle.  Third-party CME activities,
    including symposia, monographs and CD-ROMs, which WebMD
    distributes online.
    CME Live.  Original online events featuring
    live streaming video, audio and synchronized visual presentation
    by experts.
    CME Cases.  Original CME activities presented
    by healthcare professionals in a patient case format.
    Resource Centers.  Grant-based collections of
    content relating to conditions such as congestive heart failure
    or breast cancer. These centers include news, expert columns,
    guidelines and reference material.  Sales
    and Marketing
    Private
    Portals
  Introduction. out-of-pocket
  easy-to-use
 15




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The WebMD Health and Benefits
    Manager.
  
    WebMD Personal Health Manager.  WebMD Personal
    Health Manager includes health risk assessment tools, an
    electronic personal health record and a suite of treatment
    decision-support applications. These services enable employees
    and plan members to assess their overall health risks,
    understand their risks with regard to specific conditions and
    store this information as well as other medical data, including
    medication and treatment history, in an electronic health
    record. WebMDs services enable employees and plan members
    to receive targeted information, programs or messages specific
    to the individual employees or plan members needs,
    based upon the information they store in their master profile.
    WebMD Benefit Manager.  WebMD Benefit Manager
    is a set of benefit decision-support applications that explain
    and provide comparisons of health plan benefit choices,
    facilitating informed selection and use of the employees
    benefit options. For example, CostCompare allows an employee to
    forecast and model individual premium and
    out-of-pocket
    costs for the different types of benefit programs the plan
    sponsor may offer. A newly developed product, The Cost
    Estimator, will provide a resource for consumers to estimate the
    total treatment costs of over 300 procedures, interventions or
    tests.
    WebMD Provider Decision-Support.  As a result
    of our acquisitions of HealthShare Technology, Inc. in March
    2005 and Subimo, LLC in December 2006, WebMD offers as either
    part of our platform or as 16




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##### Table of Contents



point solutions, tools that enable employees and health plan
    members to compare relative cost and quality measures of
    hospitals in order to select the hospital they believe is most
    suited to their individual needs. These comparisons are based on
    evidence-based measures, such as volume of patients treated for
    particular illnesses or procedures, mortality rates, unfavorable
    outcomes for specific problems, average number of days patients
    stayed in hospitals and average hospital treatment charges. The
    WebMD Provider Decision-Supporttools also assist
    employees and members in selecting insurance coverage, tax
    preferred accounts funding, drugs and physicians.  
    WebMD Integration Services.  WebMD offers a set
    of sophisticated integration services that facilitates access
    from the WebMD Health and Benefits Manager to third-party Web
    sites. This functionality allows employers and health plans to
    present their benefit programs within a single, unified
    interface, enabling end-users to access third-party Web sites
    without leaving our secure portals. Users of WebMDs
    application integration services are able to, among other
    things, view medical claims at their health plan sites, re-order
    medication from a pharmacy site and import medical, pharmacy and
    lab claims data. In addition, WebMDs Data Interchange
    services import data from medical, pharmacy and lab claims
    information into the WebMD Health and Benefits Manager enhancing
    our benefit decision support capabilities.
    WebMD Site Manager.  WebMD Site Manager is an
    online service and administrative suite of applications that
    enables WebMDs clients to manage many of the WebMD Health
    and Benefits Manager functions locally without assistance from
    WebMD staff. With Site Manager, employers and health plans are
    able to analyze aggregate health data, address population health
    risks more effectively and proactively implement preventive
    programs. Site Managers messaging capabilities also allow
    employers to streamline their communication with their employees.    
    reduced benefits administration, communication, and customer
    service costs;
    more efficient coordination of messaging through the use of
    integrated member profiles;
    increased tax savings through increased employee participation
    in Flexible Spending Accounts or HSAs;
    reduced hospital, physician and drug costs through more informed
    utilization of the benefit plan;
    increased enrollment in health management programs including
    disease management or health coaching;
    increased member satisfaction with the employer and the benefit
    plan;
    increased conformance with benefit plan and clinical
    protocols; and
    enhanced health risk stratification that assists employers and
    health plans in selecting health management programs that are
    appropriate to the needs of their unique populations.    
    increased tax savings through increased participation in
    Flexible Spending Accounts;
    reduced benefit costs through more informed choice of benefit
    plan options and more informed use of the chosen benefit plan;
    improved health outcomes through more informed choice of
    providers and treatment choices; and
    improved understanding and management of health conditions
    through access to support tools and educational information.  Personal Health Record Study for
    CMS.
 17




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##### Table of Contents



fee-for-service
  Relationships
    with Private Portal Licensees
    The WebMD Health Network The WebMD
    Health Networks
  Relationship
    with Fidelity Human Resources Services Company LLC
  ®
       18




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Acquisitions
    Included in Our Private Portals in 2006
  Summex. one-on-one
  Subimo.
  Sales
    and Marketing
    Technological
    Infrastructure
  easy-to-use
    User
    Privacy and Trust
  General.
  
    URAC.  WebMD was awarded
    e-Health
    accreditation from URAC, an independent accrediting body that
    has reviewed and approved the WebMD.comsite and the
    private portal deployment of WebMD Personal Health Managerfor compliance with its more than 45 quality and ethics
    standards.
    TRUSTe.  WebMD is a licensee of the TRUSTe
    Privacy Program. TRUSTe is an independent, non-profit
    organization whose goal is to build users trust and
    confidence in the Internet. In January 2005, a panel of privacy
    experts, sponsored by TRUSTe, ranked WebMD among the ten most
    trusted companies in America for privacy based on the
    WebMD.com site and WebMD Personal Health Manager. 19




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##### Table of Contents




    Health on the Net Foundation.  The
    WebMD.com,eMedicine.com, eMedicineHealth.com,
    MedicineNet.comand Subimo.comsites and WebMD
    Personal Health Managercomply with the principles of the
    HON Code of Conduct established by the Health on the Net
    Foundation.  Privacy Policies.
  Advertising and Promotion
    Policies.
  Publishing
    and Other Services
    The Little Blue Book. The Little
    Blue Book The Little Blue Book up-to-date The Little Blue Book
  Reference Publications. ACP Medicine ACS Surgery: Principles and Practice. ACP
    Medicine ACS Surgery ACP Medicine
  WebMD the Magazine. WebMD the Magazine WebMD the Magazine WebMD the Magazine
  The Little Blue Book WebMD the Magazine
  Competition
   20




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##### Table of Contents



Public
    Portals
  not-for-profit
  
    publishers and distributors of traditional offline media,
    including television and magazines targeted to consumers, as
    well as print journals and other specialized media targeted to
    healthcare professionals, many of which have established or may
    establish their own Web sites or partner with other Web sites;
    offline medical conferences, CME programs and symposia;
    vendors of e-detailing services and the in-house detailing
    efforts of WebMDs clients; and
    vendors of healthcare information, products and services
    distributed through other means, including direct sales, mail
    and fax messaging.    
    the competitors for advertisers and sponsors described above; and
    public sector, non-profit and other Web sites that provide
    healthcare information without advertising or sponsorships from
    third parties, such as NIH.gov, CDC.gov, AHA.org, and ACS.org.    Private
    Portals
    
    providers of decision-support tools, such as Hewitt Associates
    LLP;
    wellness and disease management vendors, including Mayo
    Foundation for Medical Education and Research, Staywell
    Productions/MediMedia USA, Inc. and Matria Healthcare;
    suppliers of online and offline health management applications,
    including HealthMedia, Health
    A-Z, a
    United Healthcare company, A.D.A.M Inc., Consumer Health
    Interactive and Harris HealthTrends (which is owned by
    Healthways, Inc.); and
    health information services and health management offerings of
    health plans and their affiliates, including those of Humana,
    Aetna and United Healthcare.  Offline
    Publications
   21




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VIPS
  Overview
    Government
    Solutions
    
    ViPS Medicare System (VMS):  This CMS system is
    used by the four Durable Medical Equipment Medicare
    Administrative Contractors to manage and process all claims for
    durable medical equipment, prosthetics, orthotics and supplies
    across the nation. ViPS was awarded this task order under the
    Professional Information Technology Services (PITS) contract
    vehicle.
    Personal Health Record (PHR):  This CMS study
    tested the feasibility of Medicare data and its use within PHRs.
    As prime contractor, ViPS partnered with WebMD on the study. It
    focused on such critical factors as how to populate and test the
    viability of personal health records with Medicare
    fee-for-service
    eligibility and claims data. As future opportunities arise in
    this critical area of consumer-driven healthcare, we believe
    ViPS expertise in healthcare data management positions it
    well to compete for additional related projects.    
    Retiree Drug Subsidy (RDS) Provisions of the
    MMA.  Under the MMA, employers are eligible for a
    financial subsidy from Medicare if they keep retiree
    beneficiaries on their prescription drug plan rather than have
    them move to the new Medicare prescription drug benefit. ViPS,
    acting as the prime contractor to the government, has engaged
    Group Health Incorporated (GHI), Pinnacle Business Solutions and
    Northrop Grumman Corporation as subcontractors to engage in
    systems development for this project, as well as processing
    enrollment applications and payment requests, issuing payments
    and remittance advices to eligible employers, providing a call
    center, conducting outreach activities, performing fraud
    analysis and offering related training.
    Drug Data Processing System.  As the prime
    contractor on this project, ViPS is responsible for developing a
    system to receive, validate and store Medicare prescription drug
    event data related to the new Medicare prescription drug
    benefit. The resulting drug data warehouse is used to analyze
    program performance and perform payment reconciliation. The
    scope of ViPS work was expanded in July 2005 to include
    development of a parallel solution using Teradata technology as
    the core platform for future CMS data warehouse solutions.
    Customer Support for Medicare Modernization
    (CSMM).  Under the CSMM project, ViPS is
    responsible for helping the various Part D Plans interface
    with CMS to provide the new Medicare prescription drug benefit.
    These activities include facilitating data center connectivity
    and access 22




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##### Table of Contents



privileges, facilitating testing between the Plans and CMS and
    supporting a wide variety of ad hoc reporting for CMS. ViPS
    established the CSMM Technical Help Desk and an informational
    web site. This has been identified by CMS as a critical
    initiative for the Part D program. CMS has continued to
    extend the role of this Help Desk and in January 2007 approved
    an expanded task order for ViPS to provide Help Desk resources
    for support to the Enterprise Data Centers.  
    Centralized Medicare Beneficiary Eligibility Transaction
    System.   This system gives healthcare providers
    and other submitters, network service providers and
    clearinghouses access to Medicare beneficiary eligibility
    information. As the prime contractor, ViPS is providing overall
    program management and conducting independent testing of the
    systems and subcontracting with EBS for help desk support and
    Northrop Grumman Corporation for IT security.
    Medicare Beneficiary Database Suite of
    Systems.  This system consists of a centralized
    repository for Medicare beneficiary entitlement, eligibility and
    demographic data that is critical to a host of dependent systems
    supporting the Medicare programs including the new Medicare
    prescription drug benefit. ViPS, working as a subcontractor to
    Northrop Grumman, designed, developed and continues to support
    this system.
    Coordination of Benefits (COB).  COB, as a key
    CMS function, includes an expanded scope to collect Part D
    COB data. The COB contract established, as a centralized
    operation under a single contractor, the performance of all
    activities that support the collection, management and reporting
    of other insurance coverage of Medicare beneficiaries. ViPS, as
    a subcontractor to Group Health Incorporated (GHI), developed,
    implemented and currently maintains the multiple subsystems that
    collectively are responsible for processing these COB functions.
    National Provider Identifier (NPI) Crosswalk
    System.  Prior to the implementation of the NPI,
    providers used any number of identifiers to submit claims,
    including identifiers for Part A, Part B and Durable
    Medical Equipment Resource Center systems, as well as
    identifiers for the National Council for Prescription Drug
    Programs and Unique Physician Identification Number, or UPIN.
    With CMS NPI initiative, these multiple identifiers were
    replaced with a single identifier, and healthcare providers are
    in the process of beginning to submit claims using their NPI
    rather than their legacy identifiers. In order to support the
    transition to NPIs, CMS required a system to map the legacy
    provider identifiers to the single NPI identifier. ViPS,
    partnered with Maricom Systems Incorporated, designed and
    implemented the mapping system and continues to support the NPI
    Crosswalk system. For additional information regarding
    implementation of the NPI, see Government
    Regulation  Health Insurance Portability and
    Accountability Act of 1996  NPI Standard.
    Medicare Secondary Payer Recovery Contractor
    (MSPRC).  The MSPRC contract established, as a
    centralized operation under a single contractor, the performance
    of all Medicare secondary payer, or MSP, recovery activities.
    ViPS, as the technical partner to Chickasaw Nation Industries,
    currently maintains the multiple subsystems that collectively
    are responsible for processing the MSP recovery functions.    HealthPayer
    Solutions
  ®
  
    MCSourcetm.  MCSource
    is a medical management decision support system that consists of
    an integrated suite of analytical and Web-based applications
    designed to give health plans the ability to 23




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address critical issues such as medical cost and utilization,
    provider profiling, disease management, program evaluation,
    quality improvement and medical review. MCSources
    foundation is a data warehouse that can store all types of
    administrative healthcare information. MCSource is designed to
    support the complexities and usage volumes of large,
    information-driven health plans and has been deployed to more
    than 20 customers, including the Blue Cross Blue Shield Federal
    Employee Program (FEP), where it is used to manage a data
    warehouse covering approximately four million lives and five
    years of member data.  
    MedMeasurestm.  HEDIS®
    (Health Plan Employer Data and Information Set) is a set of
    standardized measures, updated annually, that are used by
    managed healthcare plans to measure, among other things, quality
    of care and service. MedMeasures is a business intelligence
    application that supports HEDIS compliance reporting for health
    plans that use HEDIS results to make improvements in their
    quality of care and service. Employers, consultants and
    consumers may use HEDIS data, along with other accreditation
    information, to help them select a health plan.
    PrismMDtm.  PrismMD
    is a business intelligence application with advanced
    capabilities and rich functionality for physician performance
    measurement that reports quality and efficiency metrics to
    support health plan administrators in managing multiple
    incentive programs. PrismMDalso includes a sophisticated
    notification system to deliver feedback to physicians and health
    plan medical directors about physician practice, empowering them
    to make informed care decisions.
    STARSentineltm.  STARSentinel
    is an early-warning detection business intelligence application
    that looks at health plan data and evaluates claims against
    providers claims histories, specialty profiles and common,
    documented fraud schemes. By calling early attention to
    questionable patterns, STARSentinel helps prioritize cases and
    helps health plans use their resources efficiently.  ®
  Competition
  Government
    Solutions
  Inc./CGI-AMS;
   24




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HealthPayer
    Solutions
    POREX
  Overview
        Porex
    Products
  Porous Plastics.
  
    Filtering.  In filtration applications, the
    pore structure acts as both a surface filter and a depth filter.
    The structure acts as a surface filter by trapping particles
    larger than its average pore size and as a depth filter by
    trapping much smaller particles deep in its complex channels.
    Unlike the direct passages in woven synthetic materials and
    metal screens, the pores in porous plastics join to form many
    tortuous paths. Examples of these applications include: filters
    for drinking water purification, air filters, fuel filters for
    power tools and appliances and other liquid filters for
    clarification of drugs, blood separation and chemicals.
    Venting.  In venting applications, the pore
    structure allows gases to easily escape while retaining fluids.
    Examples of these applications include: vents for medical
    devices, printers and automotive batteries; and caps and
    closures.
    Wicking.  When used as a wicking device, the
    pore structure creates capillary channels for liquid transfer
    allowing fluid to flow, or wick, from a reservoir. Examples of
    these applications include: nibs or tips for writing
    instruments, such as highlighters and coloring markers; fluid
    delivery components for printers and copiers; fragrance wicks;
    and absorbent media for diagnostic testing. 25




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
    Diffusing.  When used in diffusion
    applications, porous plastic components emit a multitude of
    small, evenly distributed bubbles. Examples of these
    applications include air diffusers for fermentation, metal
    finishing and plating.
    Muffling.  In muffling applications, exhaust
    air is channeled through a tortuous path, causing significant
    sound reduction by breaking up and diffusing the sound waves.
    Examples of these applications include industrial mufflers for
    pneumatic equipment.    Other Porous Media. sub-micron ®
  Markets for Our Porous Plastic
    Products.
  
    Healthcare Products.  We manufacture a variety
    of porous plastic components for the healthcare industry that
    are incorporated into the products of other manufacturers. These
    components are used to vent or diffuse gases or fluids and are
    used as membrane supports, including catheter vents,
    self-sealing valves in surgical vacuum canisters, fluid
    filtration components and components for diagnostic devices.
    Surgical Products.  We also use proprietary
    porous plastic technology to produce
    MEDPOR®
    Biomaterial implantable products for use in reconstructive and
    aesthetic surgery of the head and face. These permanent
    implants, which are composed of biocompatible porous
    high-density plastics, are biomaterial alternatives for
    replacement or augmentation of bone and cartilage. Their unique
    porous structure allows for rapid in-growth of the
    patients tissue and capillary blood vessels. Since the
    initial product introduction in 1985, we have continued to
    introduce new shapes and sizes of MEDPOR products to meet
    surgeons needs.
    Consumer Products.  Our porous plastics are
    used in a variety of office and home products. These products
    include writing instrument tips, or nibs, which we supply to
    manufacturers of highlighting pens and childrens coloring
    markers. The porous nib conducts the ink stored in the pen
    barrel to the writing surface by capillary action. Our porous
    plastic components are also found in products such as air
    fresheners, power tool dust canisters and computer printers. We
    also produce a variety of porous plastic water filters used to
    improve the taste and safety of drinking water.
    Industrial Products.  We manufacture a variety
    of custom porous plastic components for industrial applications,
    designed to customer specifications as to size, rigidity,
    porosity and other needs, including automobile battery vents and
    various types of filters and filtration components.
    Operating Room Products.  We also produce
    two product lines for the operating room supplies market:
    surgical markers and surgical drainage systems.  Raw
    Materials
   26




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Marketing
      Competition
  ®
      Emdeon
    Business Services
  Introduction
   27




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Description
    of Services and Customer Relationships
    
    beginning with patient insurance eligibility and benefit
    verification,
    continuing through the claim submission process and tracking the
    status of the claim,
    followed by electronic remittance distribution and payment
    posting, and
    concluding with balance billing the patient for non-covered
    charges.  print-and-mail print-and-mail
      Other
    Relationships
  Relationships with Software Vendors and Other Service
    Providers.
 28




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Relationships with Other
    Clearinghouses.
  Competition
    
    healthcare transaction processing companies, including those
    providing electronic
    and/or
    Internet-based services and those providing services through
    other means, such as paper and fax;
    healthcare information technology system vendors;
    healthcare information technology consulting service
    providers; and
    health insurance companies, pharmacy benefit management
    companies and pharmacies that provide electronic transaction
    services for use by healthcare providers
    and/or by
    their members and customers.      EMPLOYEES
    DEVELOPMENT
    AND ENGINEERING
     29




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INTELLECTUAL
    PROPERTY
               30




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Porex Corporation v. Kleanthis
    Dean Haldopoulos, Benjamin T. Hirokawa and Micropore Plastics,
    Inc.
  GOVERNMENT
    REGULATION
  Introduction
  General.
  Healthcare Regulation.
    Other Regulation.
 31




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##### Table of Contents



Regulation
    of Drug and Medical Device Advertising and Promotion
    direct-to- over-the-counter
  FDA-regulated
  Drug Advertising.
  over-the-counter
  and/or and/or
 32




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and/or
  ® two-day
  Continuing Medical
    Education.
     33




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CME-related Medscape from WebMD.
    
    discouraging pharmaceutical companies from engaging in
    educational activities;
    slowing their internal approval for educational
    programs; and
    requiring WebMD to make changes in how it offers or provides
    educational programs.    Medical
    Professional Regulation
    Consumer
    Protection Regulation
  General.
  CAN-SPAM Act.
 34




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##### Table of Contents



e-newsletters e-newsletters
  Regulation of Advertisements Sent by
    Fax.
        Little Blue Book
  COPPA. WebMD Health,
 35




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##### Table of Contents



Regulation of Contests and
    Sweepstakes.
  FACTA.
  Data Protection Regulation. and/or
  Other Consumer Protection
    Regulation.
    Regulation
    of Healthcare Relationships
  Anti-Kickback Laws. Anti-Kickback
   36




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Anti-Kickback (e-prescribing) e-prescribing e-prescribing, e-prescribing e-prescribing
    False Claims Laws.
  Regulation
    of Medical Devices
  Overview.
 37




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Access to U.S. Market. and/or
  
    510(k) Clearance Process.  To obtain 510(k)
    clearance, Porex must submit a premarket notification
    demonstrating that the proposed device is substantially
    equivalent in intended use and in safety and effectiveness to a
    predicate device  either a previously
    510(k) cleared class I or class II device or a
    preamendment class III device for which the FDA has not
    called for PMA applications. The FDAs 510(k) clearance
    process usually takes from four to 12 months, but it can
    last longer. After a device receives 510(k) clearance, any
    modification that could significantly affect its safety or
    effectiveness, or that would constitute a major change in its
    intended use, requires a new 510(k) clearance or could even
    require a PMA approval. The FDA requires that each manufacturer
    make this determination in the first instance, but the FDA can
    review any such decision. If the FDA disagrees with that
    decision, the agency may retroactively require the manufacturer
    to seek 510(k) clearance or PMA approval. The FDA also can
    require the manufacturer to cease marketing
    and/or
    recall the modified device until 510(k) clearance or PMA
    approval is obtained.
    PMA Approval Process.  If a product is not
    eligible for 510(k) clearance, the product is placed in
    class III and must follow the PMA approval process, which
    requires proof of the safety and effectiveness of the device to
    the FDAs satisfaction. A PMA approval application must
    provide extensive preclinical and clinical trial data and also
    information about the device and its components regarding, among
    other things, device design, manufacturing and labeling. As part
    of the PMA approval application review, the FDA will inspect the
    manufacturers facilities for compliance with the Quality
    System Regulation, which requires manufacturers to follow
    elaborate design, testing, control, documentation and other
    quality assurance procedures during the manufacturing process.
    The PMA approval pathway is costly, lengthy and uncertain. It
    generally takes from one to three years or longer. After
    approval of a PMA approval application, a new PMA approval or
    PMA supplement approval may be required in the event of a
    modification to the device, its labeling or its manufacturing
    process.
    Clinical Studies.  A clinical study is
    generally required to support a PMA approval application and is
    sometimes required for a 510(k) premarket notification. For
    significant risk devices, such studies generally
    require submission of an application for an Investigational
    Device Exemption, or IDE. The IDE application must be supported
    by appropriate data, such as animal and laboratory testing
    results, showing that it is safe to test the device on humans
    and that the testing protocol is scientifically sound. The IDE
    must be approved in advance by the FDA for a specified number of
    patients. Clinical studies may begin once the IDE application is
    approved by the FDA and the appropriate institutional review
    boards at the study sites. For nonsignificant risk
    devices, one or more institutional review boards must review the
    study, but submission of an IDE application to the FDA for
    advance approval is not required. Both types of studies are
    subject to record keeping, reporting and other IDE regulation
    requirements. 38




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##### Table of Contents



Post-market Regulation.
  International.
  Health
    Insurance Portability and Accountability Act of 1996
  General.
  Transaction Standards.
     39




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##### Table of Contents



NPI Standard.
  Privacy Standards.
   40




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##### Table of Contents



Security Standards. and/or
  Other
    Restrictions Regarding Confidentiality and Privacy of Health
    Information
    International
    Data Regulation
  non-U.S. users.
 41




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##### Table of Contents



Item 1A.
    Risk
    Factors      Risks
    Related to WebMD
  If
    WebMD is unable to provide content and services that attract and
    retain users to The WebMD Health Network on a consistent basis,
    its advertising and sponsorship revenue could be
    reduced
  The WebMD Health Network
  
    its ability to hire and retain qualified authors, journalists
    and independent writers;
    its ability to license quality content from third
    parties; and
    its 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 applications, features and
    services for WebMDs public and private portals may be more
    difficult than expected, may take longer and cost more than
    expected and may not result in sufficient increases in revenue
    to justify the costs
    and/or
 42




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WebMD
    faces significant competition for its products and
    services
    
    WebMDs public portals face competition from numerous other
    companies, both in attracting users and in generating revenue
    from advertisers and sponsors. WebMD competes for users with
    online services and Web sites that provide health-related
    information, including commercial sites as well as public sector
    and
    not-for-profit
    sites. WebMD competes for advertisers and sponsors with both
    health-related Web sites and general purpose consumer online
    services and portals and other high-traffic Web sites that
    include both healthcare-related and non-healthcare-related
    content and services.
    WebMDs private portals compete with providers of
    healthcare decision-support tools and online health management
    applications; wellness and disease management vendors; and
    health information services and health management offerings of
    health plans and their affiliates.
    WebMDs Publishing and Other Services segments
    products and services compete with numerous other online and
    offline sources of healthcare information, including traditional
    medical reference publications, print journals and other
    specialized publications targeted to physicians, some of which
    have a more complete range of titles and better access to
    traditional distribution channels than WebMD has.    Failure
    to maintain and enhance the WebMD brand could have a
    material adverse effect on WebMDs business
    WebMDs
    online businesses have a limited operating history
   43




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##### Table of Contents



and/or
  If
    WebMD is unable to provide healthcare content for its offline
    publications that attracts and retains users, its revenue will
    be reduced
  The
    Little Blue Book, up-to-date The
    Little Blue Book, The Little Blue Book
  WebMD the Magazine WebMD the Magazine
  The
    timing of WebMDs advertising and sponsorship revenue may
    vary significantly from quarter to quarter
      
    the timing of FDA approval for new products or for new approved
    uses for existing products;
    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.  Lengthy
    sales and implementation cycles for WebMDs private online
    portals make it difficult to forecast revenues from these
    applications
     44




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WebMD
    may be unsuccessful in its efforts to increase advertising and
    sponsorship revenue from consumer products
    companies
    WebMD
    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
      WebMDs
    Internet-based services are dependent on the development and
    maintenance of the Internet infrastructure
  denial-of-service
   45




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##### Table of Contents



WebMD
    relies on bandwidth providers, data center providers, other
    third parties and its own systems for key aspects of the process
    of providing products and services to its users, and any failure
    or interruption in the services provided by these third parties
    or WebMDs own systems could harm WebMDs
    business
    
    damage from fire, power loss and other natural disasters;
    communications failures;
    software and hardware errors, failures and crashes;
    security breaches, computer viruses and similar disruptive
    problems; and
    other potential interruptions.      Implementation
    of additions to or changes in hardware and software platforms
    used to deliver WebMDs online services may result in
    performance problems and may not provide the additional
    functionality that was expected
   46




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If the
    systems WebMD uses to provide online portals experience security
    breaches or are otherwise perceived to be insecure, its business
    could suffer
  denial-of-service
  WebMD
    faces potential liability related to the privacy and security of
    personal information it collects from consumers and healthcare
    professionals
    Failure
    to maintain its CME accreditation could adversely affect
    WebMDs ability to provide online CME
    offerings
  ACCME-accredited
  Medscape
    from WebMD.
 47




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##### Table of Contents



Government
    regulation and industry initiatives could adversely affect the
    volume of sponsored online CME programs implemented through
    WebMDs Web sites or require changes to how WebMD offers
    CME
    
    may discourage pharmaceutical companies from engaging in
    educational activities;
    may slow their internal approval for such programs;
    may reduce the volume of sponsored educational programs
    implemented through WebMDs Web sites to levels that are
    lower than in the past; and
    may require WebMD to make changes to how it offers or provides
    educational programs, including CME.      Risks
    Related to ViPS
  ViPS
    depends on CMS for a significant portion of its revenues and, if
    ViPS reputation or relationship with CMS were harmed,
    ViPS financial results would be adversely
    affected
     48




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ViPS
    depends on being retained as a subcontractor by other CMS
    contractors for a significant portion of its revenues and, if
    ViPS reputation or relationships with CMS or such
    contractors were harmed, ViPS financial results would be
    adversely affected
    CMS
    may modify, curtail or terminate contracts prior to their
    completion and, if ViPS does not replace them, its financial
    results may suffer
    ViPS
    CMS contracts may be terminated and ViPS may be liable for
    penalties under a variety of procurement rules and
    regulations
    
    The Federal Acquisition Regulation and supplements, which
    regulate the formation, administration and performance of
    U.S. Government contracts;
    The Truth in Negotiations Act, which requires certification and
    disclosure of cost and pricing data in connection with contract
    negotiations; and
    The Cost Accounting Standards, which impose accounting
    requirements that govern ViPS right to reimbursement under
    certain cost-based government contracts.   49




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Risks Applicable to Our
    Entire Company and to Ownership of Our Securities 
    Contractual relationships with governmental customers may impose
    special burdens and additional risks on us that are not
    generally found in contracts with other customers
  ViPS
    is subject to routine audits and cost adjustments by CMS, which,
    if resolved unfavorably to ViPS, could adversely affect its
    profitability
    Changes
    in government regulations or practices could adversely affect
    ViPS financial results
  and/or
  If
    subcontractors with which ViPS works fail to satisfy their
    obligations to ViPS or to the customers, ViPS reputation
    and financial results could be adversely affected
  agreed-upon
  If
    ViPS systems experience security breaches or are otherwise
    perceived to be insecure, its business could
    suffer
  denial-of-service
 50




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##### Table of Contents



Lengthy
    sales, installation and implementation cycles for some ViPS
    applications may result in unanticipated fluctuations in its
    revenues
    ViPS
    could be subject to breach of warranty, product liability or
    other claims if software or services it provides contain errors
    or do not meet contractual performance standards
      ViPS
    HealthPayer Solutions Group depends on Blue Cross Blue Shield
    Plans and the Blue Cross Blue Shield Association for a
    significant portion of it revenue and, if its reputation or
    relationship with the BCBS business community were harmed, that
    business would be adversely affected.
     51




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Risks
    Related to Porex
  Porexs
    success depends upon demand for its products, which in some
    cases ultimately depends upon end-user demand for the products
    of its customers
  quarter-to-quarter
  Porexs
    product offerings must meet changing customer
    requirements
    
    develop new uses of existing porous plastics technologies and
    applications;
    innovate and develop new porous plastics technologies and
    applications;
    commercialize those technologies and applications;
    manufacture at a cost that allows it to price its products
    competitively;
    manufacture and deliver its products in sufficient volumes and
    on time;
    accurately anticipate customer needs; and
    differentiate its offerings from those of its competitors.    Potential
    new or enhanced Porex products may not achieve sufficient sales
    to be profitable or justify the cost of their
    development
    Porex
    may not be able to source the raw materials it needs or may have
    to pay more for those raw materials
   52




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Disruptions
    in Porexs manufacturing operations could have a material
    adverse effect on its business and financial
    results
    Porex
    may not be able to keep third parties from using technology it
    has developed
    The
    nature of Porexs products exposes it to product liability
    claims that may not be adequately covered by indemnity
    agreements or insurance
  and/or
   53




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Economic,
    political and other risks associated with Porexs
    international sales and geographically diverse operations could
    adversely affect Porexs operations and financial
    results
    
    changes in foreign currency exchange rates;
    changes in a specific countrys or regions political
    or economic conditions, particularly in emerging markets;
    trade protection measures and import or export licensing
    requirements;
    changes in tax laws;
    differing protection of intellectual property rights in
    different countries; and
    changes in regulatory requirements.  Environmental
    regulation could adversely affect Porexs
    business
      Risks
    Related to Our Investment in EBSCo
  We
    have a minority investment in EBSCo, which is now a highly
    leveraged company
    The
    financial results of EBSCo and the value of our investment in it
    could be adversely affected to the extent healthcare payers
    conduct electronic data interchange, or EDI, transactions
    without using a clearinghouse or if their ability to do so
    allows them to terminate or modify their relationships with
    us
   54




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##### Table of Contents



The
    financial results of EBSCo and the value of our investment in it
    could be adversely affected to the extent healthcare payers and
    providers compete with EBS or, instead of using a third-party
    provider, perform internally some of the same services that EBS
    offers
    The
    financial results of EBSCo and the value of our investment in it
    could be adversely affected if it does not maintain
    relationships with practice management system vendors and large
    submitters of healthcare EDI transactions
    New or
    updated products and services of EBS will not become profitable
    unless they achieve sufficient levels of market
    acceptance
    
    the business process outsourcing services for payers that it has
    developed internally and through acquisitions;
    electronic billing, payment and remittance services for
    healthcare payers and providers that complement our existing
    paper based paid claims communication and patient billing
    services; and
    its other pre- and post-adjudication services for payers and
    providers.   55




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EBSs
    ability to provide transaction services depends on services
    provided by telecommunications companies
    If
    EBSs systems experience security breaches or are otherwise
    perceived to be insecure, its business could
    suffer
  denial-of-service
  Performance
    problems with EBSs systems or system failures, whether
    caused by hardware, software or other problems, could cause EBS
    to lose business or incur liabilities
    
    damage from fire, power loss and other natural disasters;
    communications failures;
    software and hardware errors, failures or crashes;
    security breaches, computer viruses and similar disruptive
    problems; and
    other potential interruptions. 56




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Risks
    Related to Providing Products and Services to the Healthcare
    Industry
  Reductions
    in expenditures by healthcare industry participants could
    adversely affect us
    
    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 or in tax
    benefits applicable to healthcare expenditures; and
    adverse changes in business or economic conditions affecting
    healthcare payers or providers, pharmaceutical companies,
    medical device manufacturers or other healthcare industry
    participants.    
    changes in the billing patterns of healthcare providers;
    changes in the design of health insurance plans;
    changes in the contracting methods payers use in their
    relationships with providers; and
    decreases in marketing expenditures by pharmaceutical companies
    or medical device manufacturers, including as a result of
    governmental regulation or private initiatives that discourage
    or prohibit promotional activities by pharmaceutical or medical
    device companies.      
    spending on marketing and educational services;
    their use of the Internet as a vehicle for marketing and
    education; or
    their use of any specific service or combination of services
    that WebMD provides. 57




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Government
    regulation of healthcare creates risks and challenges with
    respect to the compliance efforts and business strategies of
    WebMD, ViPS, Porex and EBS
    
    because WebMDs public portals business involves
    advertising and promotion of prescription and
    over-the-counter
    drugs and medical devices, any increase in regulation of these
    areas could make it more difficult for WebMD to contract for
    sponsorships and advertising;
    because WebMD is the leading distributor of online CME to
    healthcare professionals, any failure to maintain its status as
    an accredited CME provider or any change in government
    regulation of CME or in industry practices could adversely
    affect WebMDs business;
    because Porex manufactures medical devices for implantation, it
    is subject to extensive FDA regulation, as well as foreign
    regulatory requirements;
    because we provide products and services to healthcare
    providers, our sales and promotional practices must comply with
    federal and state anti-kickback laws; and
    in providing health information to consumers, we must not engage
    in activities that could be deemed to be practicing medicine and
    a violation of applicable laws.    
    because EBS is in the business of applying information
    technology to healthcare, various aspects of HIPAA have had and
    are expected to continue to have significant consequences for
    EBS; and
    EBSs healthcare connectivity and transaction-related
    administrative services must be provided in compliance with
    federal and state false claims laws.    Risks
    Applicable to Our Entire Company and to Ownership of Our
    Securities
  The
    ongoing investigations by the United States Attorney for the
    District of South Carolina and the SEC could negatively impact
    our company and divert management attention from our business
    operations
   58




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The
    dispositions of Emdeon Practice Services and Emdeon Business
    Services may create contractual liabilities, including for
    indemnifications, as well as other risks and
    liabilities
    We
    depend on EBS to provide us with certain services required by us
    for the operation of our business
      If
    certain transactions occur with respect to our capital stock,
    limitations may be imposed on our ability to utilize our net
    operating loss carryforwards and tax credits to reduce our
    income taxes
    Our
    success depends, in part, on our attracting and retaining
    qualified executives and employees
   59




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Recent
    and pending management changes may disrupt our operations and
    our ability to recruit and retain other personnel
    Contractual
    relationships with governmental customers may impose special
    burdens and additional risks on us that are not generally found
    in contracts with other customers
    
    termination when appropriated funding for the current fiscal
    year is exhausted;
    termination for the governmental customers convenience,
    subject to a negotiated settlement for costs incurred and profit
    on work completed, along with the right to place contracts out
    for bid before the full contract term, as well as the right to
    make unilateral changes in contract requirements, subject to
    negotiated price adjustments;
    most-favored pricing disclosure requirements that
    are designed to ensure that the government can negotiate and
    receive pricing akin to that offered commercially and
    requirements to submit proprietary cost or pricing data to
    ensure that government contract pricing is fair and reasonable;
    commercial customer price tracking requirements that require
    contractors to monitor pricing offered to a specified class of
    customers and to extend price reductions offered to that class
    of customers to the government;
    reporting and compliance requirements related to, among other
    things: conflicts of interest; equal employment opportunity,
    affirmative action for veterans and for workers with
    disabilities, and accessibility for the disabled;
    broader audit rights than we would usually grant to
    non-governmental customers; and
    specialized remedies for breach and default, including setoff
    rights, retroactive price adjustments, and civil or criminal
    fraud penalties, as well as mandatory administrative dispute
    resolution procedures instead of state contract law remedies.  and/or conflict-of-interest
   60




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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 selling products or
    services
    We
    have incurred losses and may incur losses in the
    future
    Acquisitions,
    business combinations and other transactions may be difficult to
    complete and, if completed, may have negative consequences for
    our business and our securityholders
      
    cash and cash equivalents on hand and marketable securities;
    proceeds from the incurrence of indebtedness; and 61




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
    proceeds from the issuance of additional common stock, preferred
    stock, convertible debt or other securities.    
    cause substantial dilution of the percentage ownership of our
    stockholders at the time of the issuance;
    cause substantial dilution of our earnings per share;
    subject us to the risks associated with increased leverage,
    including a reduction in our ability to obtain financing or an
    increase in the cost of any financing we obtain;
    subject us to restrictive covenants that could limit our
    flexibility in conducting future business activities; and
    adversely affect the prevailing market price for our outstanding
    securities.    Our
    business will suffer if we fail to successfully integrate
    acquired businesses and technologies or to assess the risks in
    particular transactions
    
    our ability to maintain relationships with the customers of the
    acquired business;
    our ability to cross-sell products and services to customers
    with which we have established relationships and those with
    which the acquired businesses have established relationships;
    our ability to retain or replace key personnel;
    potential conflicts in payer, provider, strategic partner,
    sponsor or advertising relationships;
    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
   62




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties            Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   63




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##### Table of Contents



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


Low2005First quarter

$
9.30


$
7.31Second quarter


10.57



8.26Third quarter


11.70



9.76Fourth quarter


11.13



6.612006First quarter

$
11.18


$
8.32Second quarter


12.44



10.41Third quarter


12.60



11.45Fourth quarter


12.78



11.37     
    quarter-to-quarter
    variations in operating results;
    operating results being different from analysts estimates
    or opinions;
    changes in analysts earnings estimates;
    announcements of new technologies, products, services or pricing
    policies by us or our competitors;
    announcements of acquisitions or strategic partnerships by us or
    our competitors;
    developments in existing customer or strategic relationships;
    actual or perceived changes in our business strategy;
    developments in new or pending litigation and claims;
    sales of large amounts of our Common Stock;
    changes in market conditions in the healthcare, information
    technology, Internet or plastic industries;
    changes in general economic conditions; and
    fluctuations in the securities markets in general.   64




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##### Table of Contents



Holders
    Dividends
    Repurchases
    of Equity Securities During the Fourth Quarter of 2006
    Issuer
    Purchases of Equity Securities
  Maximum NumberTotal Number


(or Approximate Dollarof Shares


Value) of SharesPurchased as


that MayPart of


Yet BeAverage Price


Publicly Announced


Purchased UnderTotal Number


Paid per


Plans or


the PlansPeriod

of Shares Purchased


Share


Programs(1)


or Programs(1)10/01/06-10/31/06





$







$
1,236,157,044
(3)11/01/06-11/30/06


29,188
(2)

$
11.71






$
1,691,157,044
(3)12/01/06-12/31/06


130,146,230
(2)

$
12.00



130,145,104


$
88,675,627Total


130,175,418


$
12.00



130,145,104


$
88,675,627     (1)
    
    Except for 129,234,164 shares of Emdeon common stock
    purchased by Emdeon, at $12.00 per share, pursuant to a
    tender offer announced in October 2006 and completed in December
    2006, these repurchases were made under a stock repurchase
    program (the Repurchase Program) pursuant to which
    purchases could be made, from time to time, in market purchases
    or private transactions. The Repurchase Program was originally
    announced on January 23, 2006, at which time Emdeon was
    authorized to use up to $48 million to purchase shares of
    its common stock. On February 8, 2006, the maximum
    aggregate amount authorized for purchases under the Repurchase
    Program was increased to $68 million; and on March 28,
    2006, it was increased to $83 million. In December 2006,
    following the completion of the tender offer, Emdeon terminated
    the Repurchase Program and announced a new stock repurchase
    program (the New Repurchase Program), at which time
    Emdeon was authorized to use up to $100 million to purchase
    shares of its common stock, from time to time, in market
    purchases or private transactions.(2)
    
    Includes 29,188 shares and 1,126 shares withheld from
    restricted stock that vested during November 2006 and December
    2006, respectively, to satisfy withholding tax requirements
    related to the vesting of the awards. The value of these shares
    was determined based on the closing fair market value of Emdeon
    common stock on the date of vesting.(3)
    
    Reflects authorization to purchase, at $12.25 per share,
    100,000,000 shares of Emdeon common stock pursuant to the
    tender offer referred to above in Note 1. That amount was
    later increased to 140,000,000 shares of Emdeon common
    stock at $12.00 per share. 65




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##### Table of Contents



Performance
    Graph
    line-of-business. Form 10-K line-of-business.
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    Emdeon Corp, The NASDAQ Composite Index
    The RDG Internet Composite Index And A Peer Group
  
   *
    
    $100 invested on 12/31/01 in stock or index-including
    reinvestment of dividends.  12/01


3/02


6/02


9/02


12/02


3/03


6/03


9/03


12/03


3/04


6/04


9/04


12/04Emdeon Corp


100



109



80



72



121



128



154



127



127



126



132



99



116NASDAQ Composite


100



97



78



63



72



70



86



95



107



107



109



102



117RDG Internet Composite


100



91



77



60



74



74



88



97



105



102



113



103



116Peer Group


100



100



80



56



59



58



62



82



86



98



92



86



101   3/05

6/05


9/05


12/05


3/06


6/06


9/06


12/06120


145



157



120



153



176



166



175108


111



117



121



131



122



125



137100


106



110



114



118



106



114



127100


122



145



148



161



139



154



168  66




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended December 31,2006(1)(2)(3)


2005


2004


2003(4)


2002(In thousands, except per share data)Consolidated Statement of
    Operations Data:Revenue

$
1,098,608


$
1,026,475


$
918,097


$
706,676


$
633,097Costs and expenses:Cost of operations


623,758



595,654



536,289



417,852



376,426Development and engineering


33,649



35,653



33,141



24,774



24,502Sales, marketing, general and
    administrative


288,015



254,887



244,516



208,185



219,230Depreciation and amortization


61,976



60,905



48,707



51,475



114,842Legal expense


2,578



17,835



9,230



3,959



Gain on sale of EBS


352,297















Loss (gain) on investments






6,365



(457
)


(1,659
)


(6,547
)Interest income


32,339



21,527



18,716



22,855



19,578Interest expense


18,779



16,322



19,251



15,201



8,451Other expense (income), net


1,674



3,765



4,535



(4,218
)


(9,694
)Income (loss) from continuing
    operations before income tax provision (benefit)


452,815



56,616



41,601



13,962



(74,535
)Income tax provision (benefit)


56,193



(1,001
)


4,223



3,689



(4,354
)Minority interest in WebMD Health
    Corp. (WHC)


706



908











Equity in earnings of EBS Master
    LLC


763















Income (loss) from continuing
    operations


396,679



56,709



37,378



10,273



(70,181
)Income (loss) from discontinued
    operations, net of tax


371,060



16,265



1,956



(27,279
)


20,479Net income (loss)

$
767,739


$
72,974


$
39,334


$
(17,006
)

$
(49,702
)Basic income (loss) per common
    share:Income (loss) from continuing
    operations

$
1.42


$
0.17


$
0.12


$
0.03


$
(0.23
)Income (loss) from discontinued
    operations


1.33



0.04



0.00



(0.09
)


0.07Net income (loss)

$
2.75


$
0.21


$
0.12


$
(0.06
)

$
(0.16
)Diluted income (loss) per common
    share:Income (loss) from continuing
    operations

$
1.25


$
0.16


$
0.11


$
0.03


$
(0.23
)Income (loss) from discontinued
    operations


1.12



0.05



0.01



(0.08
)


0.07Net income (loss)

$
2.37


$
0.21


$
0.12


$
(0.05
)

$
(0.16
)Weighted-average shares
    outstanding used in computing income (loss) per common share:Basic


279,234



341,747



320,080



304,858



304,168Diluted


331,642



352,852



333,343



325,811



304,168   67




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##### Table of Contents



As of December 31,2006(1)(2)


2005


2004


2003(4)


2002(In thousands)Consolidated Balance Sheet
    Data:Cash, cash equivalents and
    short-term investments

$
648,831


$
423,003


$
101,655


$
266,097


$
181,268Long-term marketable securities


2,633



4,430



515,838



456,034



456,716Working capital (excluding assets
    and liabilities of discontinued operations)


638,339



413,816



63,221



207,273



116,268Total assets


1,451,943



2,195,683



2,292,234



2,129,642



1,766,248Convertible notes


650,000



650,000



649,999



649,999



300,000Minority interest in WHC


102,294



43,229











Convertible redeemable
    exchangeable preferred stock


98,768



98,533



98,299







Stockholders equity


381,852



1,074,736



1,224,216



1,178,597



1,153,801     (1)
    
    For the year ended
    December 31, 2006, the consolidated financial position and
    results of operations reflect the sale of a 52% interest in our
    Emdeon Business Services segment, excluding the ViPS business
    unit (which we refer to as EBS) as of November 16, 2006.
    Accordingly, the consolidated balance sheet as of
    December 31, 2006 excludes the assets and liabilities of
    EBS and the consolidated statement of operations for the year
    ended December 31, 2006 include the operations of EBS for
    the period January 1, 2006 through November 16, 2006.(2)
    
    On September 14, 2006, we
    completed the sale of the Emdeon Practice Services segment.
    Accordingly, the following selected consolidated financial data
    has been reclassified to reflect the historical results of the
    Emdeon Practice Services segment as discontinued operations for
    this and all prior periods presented.(3)
    
    On January 1, 2006, we adopted
    Statement of Financial Accounting Standards No. 123
    (Revised 2004): Share Based Payment that resulted in
    additional non-cash stock-based compensation expense during
    2006. See Results of Operations included in
    Item 7-Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.(4)
    
    On August 1, 2003, we
    completed the sale of two operating units of our Porex segment.
    Accordingly, the following selected consolidated financial data
    has been reclassified to reflect the historical results of these
    two operating units as discontinued operations for this and all
    prior periods presented. 68




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##### Table of Contents



Item 7.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations



This Item 7 contains forward-looking statements 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 2.



Overview



Managements discussion and analysis of financial condition
    and results of operations, or MD&A, is provided as a
    supplement to the Consolidated Financial Statements and notes
    thereto included elsewhere in this Annual Report beginning on
    page F-1
    and to provide an understanding of our results of operations,
    financial condition and changes in financial condition. Our
    MD&A is organized as follows: 
    Introduction.  This section provides a general
    description of our company, a brief discussion of our operating
    segments, a description of certain recent developments, a
    description of significant transactions completed during 2006, a
    summary of the acquisitions we completed during the last three
    years and background information on certain trends, strategies
    and other matters discussed in this MD&A.
    Critical Accounting Estimates and
    Policies.  This section discusses those accounting
    policies that both are considered important to our financial
    condition and results of operations, and require us to exercise
    subjective or complex judgments in making estimates and
    assumptions. In addition, all of our significant accounting
    policies, including our critical accounting policies, are
    summarized in Note 1 to the Consolidated Financial
    Statements included in this Annual Report.
    Results of Operations and Results of Operations by Operating
    Segment. These sections provide our analysis and outlook for
    the significant line items on our consolidated statements of
    operations, as well as other information that we deem meaningful
    to understand our results of operations on both a company-wide
    and a
    segment-by-segment
    basis.
    Liquidity and Capital Resources.  This section
    provides an analysis of our liquidity and cash flows and
    discussions of our contractual obligations and commitments, as
    well as our outlook on our available liquidity as of
    December 31, 2006.
    Recent Accounting Pronouncements.  This section
    provides a summary of the most recent authoritative accounting
    standards and guidance that have either been recently adopted or
    may be adopted in the future.    Introduction
     69




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##### Table of Contents



Operating
    Segments
    
    WebMD.  WebMD provides both public and
    private online portals. WebMDs public portals for
    consumers enable them to obtain detailed information on a
    particular disease or condition, analyze symptoms, locate
    physicians, store individual healthcare information, receive
    periodic e-newsletters on topics of individual interest, enroll
    in interactive courses and participate in online communities
    with peers and experts. WebMDs public portals for
    physicians and healthcare professionals make it easier for them
    to access clinical reference sources, stay abreast of the latest
    clinical information, learn about new treatment options, earn
    continuing medical education (which we refer to as CME) credit
    and communicate with peers. WebMDs private portals enable
    employers and health plans to provide their employees and plan
    members with access to personalized health and benefit
    information and decision-support technology that helps them make
    more informed benefit, provider and treatment choices. In
    addition, WebMD publishes: medical reference textbooks; The
    Little Blue Book,a physician directory; and, since 2005,
    WebMD the Magazine, a consumer magazine distributed to
    physician office waiting rooms. WebMD also conducts in-person
    CME as a result of the acquisition of the assets of Conceptis
    Technologies, Inc. in December 2005.
    ViPS.  ViPS provides healthcare data
    management, analytics, decision-support and process automation
    solutions and related information technology services to
    governmental, Blue Cross Blue Shield and commercial healthcare
    payers. ViPS develops tools for disease management, predictive
    modeling, provider performance,
    HEDIS®
    quality improvement, healthcare fraud detection and financial
    management. Consultants and outsourcing services are also
    provided to assess workflow, perform software maintenance,
    design complex database architectures and perform data analysis
    and analytic reporting functions.
    Porex.  Porex develops, manufactures and
    distributes proprietary porous plastic products and components
    used in healthcare, industrial and consumer applications, which
    include porous components and finished products for both
    business-to-business
    and OEM applications. Porex also provides technologically
    advanced sterile surgical products used in
    craniofacial/oculoplastic reconstruction and aesthetic/cosmetic
    surgery in hospitals, clinics and private practice surgical
    offices.
    Emdeon Business Service.  EBS provides
    solutions that automate key business and administrative
    functions for healthcare payers and providers, including:
    electronic patient eligibility and benefit verification;
    electronic and paper claims processing; electronic and paper
    paid-claims
    communication services; and patient billing, payment and
    communications services. In addition, EBS provides clinical
    communications services that improve the delivery of healthcare
    by enabling physicians to manage laboratory orders and results,
    hospital reports and electronic prescriptions. As a result of
    the EBS Sale, 70




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##### Table of Contents



beginning November 17, 2006, the results of EBS are no
    longer included in the segment results. See
     Significant Transactions Completed During
    2006.  
    Corporate.  The Corporate segment provides
    shared services across all our operating segments. These
    services include executive personnel, accounting, tax, treasury,
    legal, human resources, risk management and certain information
    technology functions. Corporate service costs include
    compensation related costs, insurance and audit fees, leased
    property, facilities cost, legal and other professional fees,
    software maintenance and telecommunication costs. Additionally,
    in connection with the EPS Sale and EBS Sale, we entered into
    transition services agreements whereby we have agreed to provide
    EPS and EBS with certain administrative services, including
    payroll, accounting, purchasing and procurement, tax, and human
    resource services, as well as information technology (which we
    refer to as IT) support. Additionally, EBS will provide us
    certain administrative services. These services will be provided
    through the Corporate segment, and the related transition
    services fee we charge to EBS and EPS, net of the fee we will
    pay to EBS, will also be included in the Corporate segment,
    partially offsetting the cost of providing these services. In
    addition, under the transition services agreement related to
    EBS, EBS provides certain administrative services to Emdeon,
    including telecommunication infrastructure and management
    services, data center support and purchasing and procurement
    services. Some of the services provided by EBS to Emdeon are, in
    turn, used to fulfill Emdeons obligations to provide
    transition services to EPS. See  Significant
    Transactions Completed During 2006.  Significant
    Transactions Completed During 2006
  EPS Sale. One-third
    EBS Sale.
 71




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de-identified
  Tender Offer.
  New Stock Repurchase Plan.
  Acquisitions
    
    On December 15, 2006, through WHC, we acquired Subimo, a
    privately held provider of healthcare decision support
    applications to large employers, health plans and financial
    institutions. The total purchase consideration for Subimo was
    approximately $59,320, comprised of $32,820 in cash paid at
    closing, net of cash acquired, $26,000 of WHC equity and $500 of
    estimated acquisition costs. The $26,000 of WHC equity, equal to
    640,930 shares of WHC Class A Common Stock, will not
    be issued until December 2008, subject to certain conditions.
    While a maximum of 246,508 of these shares may be used to settle
    any outstanding claims or warranties against the sellers, the
    remaining 394,422 of these shares will be issued with certainty.
    Accordingly, we recorded a gain to equity of $11,627, in
    connection with the issuance of these 394,422 WHC shares. The
    results of operations of Subimo have been included in our
    financial statements from December 15, 2006, the closing
    date of the acquisition, and are included in the WebMD segment.
    On September 11, 2006, through WHC, we acquired the
    interactive medical education, promotion and physician
    recruitment businesses of Medsite. The total purchase
    consideration for Medsite was approximately $31,467, comprised
    of $30,682 in cash, net of cash acquired, and $785 of estimated
    acquisition costs. The results of operations of Medsite have
    been included in our financial statements from
    September 11, 2006, the closing date of the acquisition,
    and are included in the WebMD segment. 72




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
    On July 18, 2006, we acquired IPN, a privately held
    provider of healthcare electronic data interchange services. The
    total purchase consideration for IPN was approximately $3,907,
    comprised of $3,799 in cash, net of cash acquired, and $108 of
    estimated acquisition costs. In addition, we agreed to pay up to
    an additional $3,000 in cash over a two-year period beginning in
    August 2007 if certain financial milestones are achieved. The
    IPN business is part of the EBS businesses that were sold on
    November 16, 2006. Accordingly, the results of operations
    of IPN have been included in our financial statements,
    specifically within our EBS segment, from July 18, 2006,
    the closing date of the acquisition, through November 16,
    2006, the closing date of the EBS Sale. The obligation to pay up
    to $3,000 in earn out payments was transferred in connection
    with the EBS Sale and is no longer our obligation.
    On June 13, 2006, through WHC, we acquired Summex, a
    provider of health and wellness programs that include online and
    offline health risk assessments, lifestyle education and
    personalized telephonic health coaching. The total purchase
    consideration for Summex was approximately $30,191, comprised of
    $29,691 in cash, net of cash acquired, and $500 of estimated
    acquisition costs. In addition, we have agreed to pay up to an
    additional $10,000 in cash over a two-year period if certain
    financial milestones are achieved. The results of operations of
    Summex have been included in our financial statements from
    June 13, 2006, the closing date of the acquisition, and are
    included in the WebMD segment.
    On January 17, 2006, through WHC, we acquired eMedicine, a
    privately held online publisher of medical reference information
    for physicians and other healthcare professionals. The total
    purchase consideration for eMedicine was approximately $25,195,
    comprised of $24,495 in cash, net of cash acquired, and $700 of
    estimated acquisition costs. The results of operations of
    eMedicine have been included in our financial statements from
    January 17, 2006, the closing date of the acquisition, and
    are included in the WebMD segment.    
    On December 2, 2005, through WHC, we acquired the assets of
    and assumed certain liabilities of Conceptis, a privately held
    Montreal-based
    provider of online and offline medical education and promotion
    aimed at physicians and other healthcare professionals. The
    total purchase consideration for Conceptis was approximately
    $19,859, comprised of $19,256 in cash and $603 of estimated
    acquisition costs. The results of operations of Conceptis have
    been included in our financial statements from December 2,
    2005, the closing date of the acquisition, and are included in
    the WebMD segment.
    On March 14, 2005, through WHC, we acquired HealthShare, a
    privately held company that provides online tools that compare
    cost and quality measures of hospitals for use by consumers,
    providers and health plans. The total purchase consideration for
    HealthShare was approximately $29,985, comprised of $29,533 in
    cash, net of cash acquired, and $452 of estimated acquisition
    costs. The results of operations of HealthShare have been
    included in our financial statements from March 14, 2005,
    the closing date of the acquisition, and are included in the
    WebMD segment.    
    On December 24, 2004, through WHC, we acquired MedicineNet,
    a privately held health information Web site for consumers. The
    total purchase consideration for MedicineNet was approximately
    $17,223, comprised of $16,732 in cash, net of cash acquired, and
    $491 of acquisition costs. In addition, we have agreed to pay up
    to an additional $15,000 during the three months ended
    March 31, 2006, if the number of page views on
    MedicineNets Web sites exceeds certain thresholds for the
    year ended December 31, 2005. We paid $7,250 in April 2006
    as a result of these thresholds being met. The results of
    operations of MedicineNet have been included in the WebMD
    segment. 73




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
    During October 2004, we acquired Esters, a privately held
    distributor of porous plastic products and components. The total
    purchase consideration for Esters was approximately $3,333,
    comprised of $3,160 in cash, net of cash acquired, and $173 of
    acquisition costs. The results of operations of Esters have been
    included in our financial statements from the closing date of
    the acquisition and are included in the Porex segment.
    On October 1, 2004, through WHC, we acquired RxList, a
    privately held provider of an online drug directory for
    consumers and healthcare professionals. The total purchase
    consideration for RxList was approximately $5,216, comprised of
    $4,500 in cash at the time of acquisition, $500 paid in 2006 and
    $216 of acquisition costs. In addition, we have agreed to pay up
    to an additional $2,500 during each of the three month periods
    ended March 31, 2006 and 2007, if the number of page views
    on RxLists Web sites exceeds certain thresholds for each
    of the three month periods ended December 31, 2005 and
    2006, respectively. We paid $2,387 in February 2006 as a result
    of the achievement of those page views exceeding certain
    thresholds. The results of operations of RxList have been
    included in our financial statements from October 1, 2004,
    the closing date of the acquisition, and are included in the
    WebMD segment.
    On August 11, 2004, we completed the acquisition of ViPS, a
    privately held provider of information technology, decision
    support solutions and consulting services to government, Blue
    Cross Blue Shield and commercial healthcare payers. The total
    purchase consideration for ViPS was approximately $166,588,
    comprised of $165,208 in cash, net of cash acquired, and $1,380
    of acquisition costs. The results of operations of ViPS have
    been included in our financial statements from August 11,
    2004, the closing date of the acquisition, and are reflected as
    its own operating segment.
    On July 15, 2004, we acquired the assets of Epor, a
    privately held company based in Los Angeles, California. Epor
    manufactures porous plastic implant products for use in
    aesthetic and reconstructive surgery of the head and face. The
    total purchase consideration for Epor was approximately $2,547,
    comprised of $2,000 in cash at the time of acquisition, $490 to
    be paid over five years, of which $90 was paid during 2005 and
    an additional $100 was paid during 2006, and $57 of acquisition
    costs. The results of operations of Epor have been included in
    our financial statements from July 15, 2004, the closing
    date of the acquisition, and are included in the Porex segment.
    On April 30, 2004, we acquired Dakota, a privately held
    provider of automated healthcare claims processing technology
    and business process outsourcing services. We paid approximately
    $38,979 in cash, net of cash acquired, $527 of acquisition costs
    and agreed to pay up to an additional $25,000 in cash over a
    three-year
    period beginning in April 2005 if certain financial milestones
    are achieved. No payment was made in April 2005 or April 2006 in
    connection with the first and second earn out years ending March
    2005 and March 2006, respectively. The Dakota business is part
    of the EBS businesses that were sold on November 16, 2006.
    Accordingly, the results of operations of Dakota have been
    included in our financial statements, specifically within our
    EBS segment from April 30, 2004, the closing date of the
    acquisition, through November 16, 2006, the closing date of
    the EBS Sale. The obligation to pay up to $25,000 in earn out
    payments is the obligation of Emdeon and was not transferred in
    connection with the EBS Sale.  Background
    Information on Certain Trends and Strategies
  Increased Online Marketing and Education Spending for
    Healthcare Products. product-related
  Changes in Health Plan Design; Health Management
    Initiatives.
 74




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Changes in CMS Procurement Procedures.
  Critical
    Accounting Estimates and Policies
  Critical
    Accounting Estimates
     75




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##### Table of Contents



Critical
    Accounting Policies
    
    Revenue  Our revenue recognition
    policies for each reportable operating segment are as follows:  WebMD.
  ViPS.
  Porex.
  Emdeon Business Services. paid-claims
  
    Long-Lived Assets  Our long-lived
    assets consist of property and equipment, goodwill and other
    intangible assets. Goodwill and other intangible assets arise
    from the acquisitions we have made. The amount assigned to
    intangible assets is subjective and based on our estimates of
    the future benefit of the intangible asset using accepted
    valuation techniques, such as discounted cash flow and
    replacement cost models. Our long-lived assets, excluding
    goodwill, are amortized over their estimated useful lives, which
    we determined based on the consideration of several factors,
    including the period of time the 76




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asset is expected to remain in service. We evaluate the carrying
    value and remaining useful lives of
    long-lived
    assets, excluding goodwill, whenever indicators of impairment
    are present. We evaluate the carrying value of goodwill
    annually, or whenever indicators of impairment are present. We
    use a discounted cash flow approach to determine the fair value
    of goodwill. There was no impairment of goodwill noted as a
    result of our impairment testing in 2006, 2005 or 2004.  
    Investments  Our investments, at
    December 31, 2006, consisted principally of certificates of
    deposit, auction rate securities, money market funds, asset back
    securities and U.S. Treasury Notes. Each reporting period
    we evaluate the carrying value of our investments and record a
    loss on investments when we believe an investment has
    experienced a decline in value that is other than temporary. Our
    investments are classified as
    available-for-sale
    and are carried at fair value. We do not recognize gains on an
    investment until sold. Unrealized gains and losses are recorded
    as a component of accumulated other comprehensive income. Once
    realized, the gains and losses and declines in value determined
    to be
    other-than-temporary
    are recorded. A decline in value is deemed to be
    other-than-temporary
    if we do not have the intent and ability to retain the
    investment until any anticipated recovery in market value, the
    extent and length of the time to which the market value has been
    less than cost and the financial condition and near-term
    prospects of the investment.
    Sale of Subsidiary Stock  Our WHC
    subsidiary issues their Class A Common Stock in various
    transactions, which results in a dilution of our percentage
    ownership in WHC. We account for the sale of WHC Class A
    Common Stock in accordance with the Securities and Exchange
    Commissions Staff Accounting Bulletin No. 51
    Accounting for Sales of Stock by a Subsidiary. The
    difference between the carrying amount of our investment in WHC
    before and after the issuance of WHC Class A Common Stock is
    considered either a gain or loss and is reflected as a component
    of our stockholders equity. During 2006, WHC issued
    Class A Common Stock for the following transactions, which
    resulted in our ownership in WHC decreasing to 84.6%, as of
    December 31, 2006, from 85.8%, as of December 31, 2005:  
    Acquisition of Subimo.  During the fourth
    quarter of 2006, WHC purchased Subimo for cash and agreed to the
    future issuance of WHC Class A Common Stock (see
     Introduction  Acquisitions above
    for further details) and, accordingly, we recorded a gain to
    equity of $11,627 in connection with the issuance of the
    non-contingent portion of this WHC Class A Common Stock.
    Other issuances.  During 2006, WHC stock
    options were exercised and restricted stock awards were released
    in accordance with WHCs 2005 Long-Term Incentive Plan and
    WHC issued WHC Class A Common Stock to its Board of
    Directors as payment for their services. The issuance of these
    shares resulted in an aggregate gain of $5,152. We expect to
    continue to record gains in the future related to the future
    issuances of WHC Class A Common Stock in these types of
    transactions.  
    Equity Investment in EBSCo  We account
    for our equity investment in EBSCo in accordance with APB
    Opinion No. 18, The Equity Method of Accounting for
    Investments in Common Stock (which we refer to as
    APB 18), which stipulates that the equity method should be
    used to account for investments whereby an investor has
    the ability to exercise significant influence over
    operating and financial policies of an investee, but does
    not exercise control. APB 18 generally considers an
    investor to have the ability to exercise significant influence
    when it owns 20% or more of the voting stock of an investee. We
    believe our equity investment in EBSCo meets these criteria. We
    assess the recoverability of the carrying value of our
    investment whenever events or changes in circumstances indicate
    a loss in value that is other than a temporary decline. A
    decline in value is deemed to be
    other-than-temporary,
    but not limited to, if we do not have the intent and ability to
    retain the investment until any anticipated recovery in carrying
    amount of the investment, inability of the investment to sustain
    an earnings capacity which would justify the carrying amount or
    the current fair value of the investment is less than its
    carrying amount. The current fair value of our equity investment
    in EBSCo exceeds its carrying amount.
    Stock-Based Compensation  In December
    2004, the Financial Accounting Standards Board (which we refer
    to as FASB) issued Statement of Financial Accounting Standard
    (which we refer to as 77




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SFAS) No. 123, (Revised 2004): Share-Based
    Payment (which we refer to as SFAS 123R), which
    replaces SFAS No. 123, Accounting for
    Stock-Based Compensation, (which we refer to as
    SFAS 123) and supersedes APB Opinion No. 25,
    Accounting for Stock Issued to Employees.
    SFAS 123R requires all
    share-based
    payments to employees, including grants of employee stock
    options, to be recognized as compensation expense over the
    service period (generally the vesting period) in the
    consolidated financial statements based on their fair values. We
    adopted SFAS 123R on January 1, 2006, and elected to
    use the modified prospective transition method and as a result,
    prior period results were not restated. Under the modified
    prospective method, awards that were granted or modified on or
    after January 1, 2006, are measured and accounted for in
    accordance with SFAS 123R. Unvested stock options and
    restricted stock awards that were granted prior to
    January 1, 2006, will continue to be accounted for in
    accordance with SFAS 123, using the same grant date fair
    value and same expense attribution method used under
    SFAS 123, except that all awards are recognized in the
    results of operations over the remaining vesting periods. The
    impact of forfeitures that may occur prior to vesting is also
    estimated and considered in the amount recognized for all
    stock-based compensation beginning January 1, 2006. As of
    December 31, 2006, approximately $40,709 and $46,383 of
    unrecognized stock-based compensation expense related to
    unvested awards (net of estimated forfeitures) is expected to be
    recognized over a weighted-average period of approximately 1.48
    years and 2.04 years, related to the Emdeon and WHC stock-based
    compensation plans. The total recognition period for the
    remaining unrecognized stock-based compensation expense for both
    the Emdeon and WHC stock-based compensation plans is
    approximately four years; however, the majority of this cost
    will be recognized over the next two years, in accordance with
    our vesting provisions.    
    Deferred Tax Assets  Our deferred tax
    assets are comprised primarily of net operating loss (which we
    refer to as NOL) carryforwards. At December 31, 2006, we
    had NOL carryforwards of approximately $1.2 billion, which
    expire at varying dates from 2011 through 2026. These loss
    carryforwards may be used to offset taxable income in future
    periods, reducing the amount of taxes we might otherwise be
    required to pay. As of December 31, 2006, valuation
    allowances were established for all domestic net deferred tax
    assets because of the uncertainty of realization of the deferred
    tax assets due to a lack of history of generating taxable
    income. Realization is dependent upon generating sufficient
    taxable income prior to the expiration of the NOL carryforwards
    in future periods. Although realization is not currently
    assured, management evaluates the need for a valuation allowance
    each quarter, and in the future, should management determine
    that realization of net deferred tax assets is more likely than
    not, some or all of the valuation allowance will be reversed,
    and our effective tax rate may be reduced. The valuation
    allowance excludes the impact of any deferred items related to
    certain of our foreign operations as the realization of the
    deferred items for these operations is likely.
    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 the
    varying application of 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. 78




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Results
    of Operations
    Years Ended December 31,2006


2005


2004$


%


$


%


$


%Revenue

$
1,098,608



100.0


$
1,026,475



100.0


$
918,097



100.0Costs and expenses:Costs of operations


623,758



56.8



595,654



58.0



536,289



58.4Development and engineering


33,649



3.1



35,653



3.5



33,141



3.6Sales, marketing, general and
    administrative


288,015



26.2



254,887



24.9



244,516



26.6Depreciation and amortization


61,976



5.6



60,905



5.9



48,707



5.3Legal expense


2,578



0.2



17,835



1.7



9,230



1.0Gain on sale of EBS


352,297



32.1















Loss (gain) on investments










6,365



0.6



(457
)


Interest income


32,339



2.9



21,527



2.1



18,716



2.0Interest expense


18,779



1.7



16,322



1.6



19,251



2.1Other expense, net


1,674



0.2



3,765



0.4



4,535



0.5Income from continuing operations
    before income tax provision (benefit)


452,815



41.2



56,616



5.5



41,601



4.5Income tax provision (benefit)


56,193



5.1



(1,001
)


(0.1
)


4,223



0.4Minority interest in WHC


706



0.1



908



0.1







Equity in earnings of EBS Master LLC


763



0.1















Income from continuing operations


396,679



36.1



56,709



5.5



37,378



4.1Income from discontinued
    operations, net of tax


371,060



33.8



16,265



1.6



1,956



0.2Net income

$
767,739



69.9


$
72,974



7.1


$
39,334



4.3   WebMD the
    Magazine.
   79




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##### Table of Contents



print-and-mail
                
    Non-cash stock-based compensation
    expense.  Expense for 2006 reflects the adoption
    of SFAS 123R on January 1, 2006, which requires all
    share-based
    payments to employees, including grants of employee stock
    options, to be recognized as compensation expense over the
    service period (generally the vesting period) in the
    consolidated financial statements based on their fair values.
    Expense for 2005 and 2004 primarily related to restricted stock
    awards and stock option modifications, as well as the
    amortization of deferred compensation related to certain
    acquisitions in 2000. The following table summarizes the
    non-cash
    stock-based
    compensation expense included in cost of operations, development
    and engineering, and sales, marketing, general and
    administrative expense in 2006, 2005 and 2004:  Years Ended December 31,2006


2005


2004Stock-based compensation expense
    included in:Cost of operations

$
11,280


$



$
Development and engineering


993







Sales, marketing, general and
    administrative


32,682



4,880



7,860Total

$
44,955


$
4,880


$
7,860   
    Non-cash advertising expense.  Expense related
    to the use of WHCs prepaid advertising inventory that WHC
    received from News Corporation in exchange for equity
    instruments Emdeon issued in connection with an agreement Emdeon
    entered into with News Corporation in 1999 and subsequently
    amended in 2000. This
    non-cash
    advertising expense is included in cost of operations when we
    utilize 80




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##### Table of Contents



this advertising inventory in conjunction with offline
    advertising and sponsorship programs and is included in sales,
    marketing, general and administrative expense when WHC uses the
    asset for promotion of WHCs brand or the brand of one of
    Emdeons other subsidiaries.  
    Non-cash distribution expense.  Expense related
    to the amortization of a warrant that Emdeon issued to AOL as
    part of a strategic alliance Emdeon entered into with Time
    Warner in May 2001 under which WebMD became the primary provider
    of healthcare content, tools and services for use on certain AOL
    properties. The value of the warrant was amortized over the
    original three-year term of the strategic alliance and
    accordingly we have not recorded any non-cash distribution
    expense since April 2004. Non-cash distribution expense is
    reflected in sales, marketing, general and administrative
    expense within the accompanying consolidated statements of
    operations.  Modification
    to the Classification of Results
  print-and-mail
    2006
    and 2005
    Revenue
     81




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##### Table of Contents



Costs and
    Expenses
  Cost of Operations.
  WebMD the Magazine
    Development and Engineering.
  Sales, Marketing, General and
    Administrative.
   82




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##### Table of Contents



Depreciation and Amortization.
  Legal Expense.
  Gain on Sale of EBS.
  Loss (Gain) on Investments. 1 4 1 4
  Interest Income.
  Interest Expense.
  Other Expense, Net. 1 4
 83




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##### Table of Contents



Income Tax Provision (Benefit).
  Minority Interest in WHC.
  Income from Discontinued Operations, Net of
    Tax.
  2005
    and 2004
    Revenue
    paid-claims
  Costs and
    Expenses
  Cost of Operations. WebMD the Magazine.
 84




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##### Table of Contents



Development and Engineering.
  Sales, Marketing, General and
    Administrative. stock-based
    Depreciation and Amortization.
  Legal Expense.
  85




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##### Table of Contents



Loss (Gain) on Investments. 1 4
  Interest Income.
  Interest Expense.
  Other Expense, Net. 1 4
  Income Tax Provision (Benefit).
  Minority Interest in WHC.
  Income from Discontinued Operations, Net of
    Tax.
  Results
    of Operations by Operating Segment
  1 4 stock-based
  Reclassification of Segment Information.
 86




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##### Table of Contents



Years Ended December 31,2006(a)


2005


2004RevenueEmdeon Business Services

$
661,090


$
689,305


$
682,100WebMD


253,881



168,238



134,317ViPS


98,874



90,313



24,693Porex


85,702



79,124



77,099Inter-segment eliminations


(939
)


(505
)


(112
)$
1,098,608


$
1,026,475


$
918,097Earnings before interest,
    taxes, non-cash and other itemsEmdeon Business Services

$
152,911


$
138,529


$
128,361WebMD


53,079



27,546



26,307ViPS


20,529



16,913



4,277Porex


24,974



22,524



22,650Corporate


(43,414
)


(49,481
)


(50,758
)208,079



156,031



130,837Interest, taxes, non-cash and
    other itemsDepreciation and amortization


(61,976
)


(60,905
)


(48,707
)Non-cash stock-based compensation


(44,955
)


(4,880
)


(7,860
)Non-cash advertising and
    distribution


(7,414
)


(10,870
)


(18,826
)Legal expense


(2,578
)


(17,835
)


(9,230
)Interest income


32,339



21,527



18,716Interest expense


(18,779
)


(16,322
)


(19,251
)Income tax (provision) benefit


(56,193
)


1,001



(4,223
)Minority interest in WHC


(706
)


(908
)


Equity in earnings of EBS Master
    LLC


763







Gain on sale of EBS


352,297







(Loss) gain on investments






(6,365
)


457Other expense


(4,198
)


(3,765
)


(4,535
)Income from continuing operations


396,679



56,709



37,378Income from discontinued
    operations, net of tax


371,060



16,265



1,956Net income

$
767,739


$
72,974


$
39,334     (a)
    
    The EBS segment was sold on
    November 16, 2006 and, therefore, the operations of the EBS
    segment are included only for the period January 1, 2006
    through November 16, 2006. 87




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##### Table of Contents



2006
    and 2005
    Emdeon Business Services.
    WebMD.
    ViPS.
    Porex.
   88




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##### Table of Contents



Corporate.
  Inter-Segment Eliminations.
  2005
    and 2004
    Emdeon Business Services.
    WebMD.
    ViPS.
 89




---



##### Table of Contents



Porex.
    Corporate. Sarbanes-Oxley
  Inter-Segment Eliminations.
  Liquidity
    and Capital Resources
    Cash
    Flow
  available-for-sale.
   90




---



##### Table of Contents



available-for-sale available-for-sale
  1 4 1 8 1 8
    Contractual
    Obligations and Commitments
    Less Than








More ThanTotal


1 Year


1-3 Years


4-5 Years


5 Years(In thousands)Long-term
    debt(a)

$
727,688


$
15,500


$
31,000


$
371,813


$
309,375Leases(b)


60,870



11,580



19,311



14,782



15,197Purchase
    obligations(c)


4,047



4,047











Other long term liabilities


730



289



441







Total

$
793,335


$
31,416


$
50,752


$
386,595


$
324,572     (a)
    
    Long-term debt includes our
    31/8% Notes,
    and our 1.75% Convertible Subordinated Notes due 2023,
    which are first puttable at the option of the holders in 2012
    and 2010, respectively. Amounts include our contractual interest
    payments through the earliest date at which these notes are
    puttable by the holder.(b)
    
    The lease amounts are net of
    sublease income. 91




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##### Table of Contents



(c)
    
    Purchase obligations include
    amounts committed under legally enforceable contracts or
    purchase orders for goods and services with defined terms as to
    price, quantity and delivery.    Off-Balance
    Sheet Arrangements
    Outlook
    on Future Liquidity
    roll-out
  Recent
    Accounting Pronouncements
  available-for-sale
 92




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    Rate Sensitivity
      1 8
    Exchange
    Rate Sensitivity
    Item 8.
    Financial
    Statements and Supplementary Data  Financial
    Statements
  Form 10-K.
 Item 9.  Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   93




---



##### Table of Contents



Item 9A.
    Controls
    and Procedures  Rule 13a-15(b), Rule 13a-15(e),
  Rule 13a-15(d), Rule 13(a)-15(f),
 Item 9B.  Other
    Information



None.

94




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##### Table of Contents



PART III    Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services   95




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a)(1)-(2)
    Financial Statements and Schedules
  page F-1
  (a)(3)
    Exhibits
  page E-1,
 96




---



##### Table of Contents



SIGNATURES    EMDEON CORPORATION
  By:
    /s/  Mark
    D. Funston   Executive Vice President and
 Chief Financial Officer
  POWER OF
    ATTORNEY
  attorneys-in-fact, Form 10-K attorneys-in-fact,
    Signature

Capacity

Date/s/  Kevin
    M. CameronKevin
    M. Cameron

Director; Chief Executive Officer
    (principal executive officer)

March 1, 2007/s/  Mark
    D. FunstonMark
    D. Funston

Executive Vice President and Chief
    Financial Officer (principal financial and accounting officer)

March 1, 2007/s/  Mark
    J. Adler,
    M.D.Mark
    J. Adler, M.D.

Director

March 1, 2007/s/  Paul
    A. BrookePaul
    A. Brooke

Director

March 1, 2007/s/  Neil
    F. DimickNeil
    F. Dimick

Director

March 1, 2007/s/  James
    V. ManningJames
    V. Manning

Director

March 1, 2007/s/  Herman
    SarkowskyHerman
    Sarkowsky

Director

March 1, 2007 97




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##### Table of Contents



Signature

Capacity

Date/s/  Joseph
    E. SmithJoseph
    E. Smith

Director

March 1, 2007/s/  Martin
    J. WygodMartin
    J. Wygod

Director

March 1, 2007  98




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##### Table of Contents



Emdeon
    Corporation
    Index to Consolidated Financial Statements and Supplemental
    Data  Form 10-K
  PageHistorical Financial
    Statements:Report of
    Management on Internal Control Over Financial
    Reporting


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


F-3Report of
    Independent Registered Public Accounting Firm


F-4Consolidated
    Balance Sheets at December 31, 2006 and 2005


F-5Consolidated
    Statements of Operations for the Years Ended December 31,
    2006, 2005 and 2004


F-6Consolidated
    Statements of Stockholders Equity for the Years Ended
    December 31, 2006, 2005 and 2004


F-7Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2006, 2005 and 2004


F-8Notes to
    Consolidated Financial Statements


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


S-1    F-1




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##### Table of Contents



REPORT OF
    MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the company are being made
    only in accordance with authorizations of management and
    directors of the company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    the companys assets that could have a material effect on
    the financial statements.      Internal
    Control  Integrated Framework
  Form 10-K
  page F-3.
   F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING                   Ernst &
    Young LLP
    F-3




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               
    F-4




---



##### Table of Contents



EMDEON
    CORPORATION
  CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
  December 31,2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
614,691


$
155,616Short-term investments


34,140



267,387Accounts receivable, net of
    allowance for doubtful accounts of $1,296 at December 31,
    2006 and $6,909 at December 31, 2005


121,608



195,317Inventory


9,922



10,791Due from EBS Master LLC


30,716



Prepaid expenses and other current
    assets


31,871



30,936Assets of discontinued operations






254,247Total current assets


842,948



914,294Marketable equity securities


2,633



4,430Property and equipment, net


72,040



95,686Goodwill


337,669



895,975Intangible assets, net


129,473



235,271Investment in EBS Master LLC


1,521



Other assets


65,659



50,027TOTAL ASSETS

$
1,451,943


$
2,195,683LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
3,996


$
7,739Accrued expenses


113,175



170,102Deferred revenue


87,438



68,390Liabilities of discontinued
    operations






68,436Total current liabilities


204,609



314,6671.75% convertible subordinated
    notes due 2023


350,000



350,00031/8% convertible
    notes due 2025


300,000



300,000Other long-term liabilities


14,420



14,518Minority interest in WebMD Health
    Corp. (WHC)


102,294



43,229Convertible redeemable exchangeable
    preferred stock, $0.0001 par value; 10,000 shares
    authorized, issued and outstanding at December 31, 2006 and
    December 31, 2005


98,768



98,533Commitments and contingenciesStockholders equity:Preferred stock, $0.0001 par
    value; 4,990,000 shares authorized; no shares issued






Common stock, $0.0001 par
    value; 900,000,000 shares authorized;
    449,600,747 shares issued at December 31, 2006;
    428,624,239 shares issued at December 31, 2005


45



43Additional paid-in capital


12,290,126



12,121,431Deferred stock compensation






(3,699
)Treasury stock, at cost;
    287,770,823 shares at December 31, 2006;
    150,296,414 shares at December 31, 2005


(2,585,769
)


(950,482
)Accumulated deficit


(9,332,660
)


(10,100,164
)Accumulated other comprehensive
    income


10,110



7,607Total stockholders equity


381,852



1,074,736TOTAL LIABILITIES AND
    STOCKHOLDERS EQUITY

$
1,451,943


$
2,195,683    F-5




---



##### Table of Contents



EMDEON
    CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)  Years Ended December 31,2006


2005


2004Revenue:Services

$
998,252


$
932,273


$
825,405Products


100,356



94,202



92,692Total revenue


1,098,608



1,026,475



918,097Cost of operations:Services


581,108



555,208



497,644Products


42,650



40,446



38,645Total cost of operations


623,758



595,654



536,289Development and engineering


33,649



35,653



33,141Sales, marketing, general and
    administrative


288,015



254,887



244,516Depreciation and amortization


61,976



60,905



48,707Legal expense


2,578



17,835



9,230Gain on sale of EBS


352,297







Loss (gain) on investments






6,365



(457
)Interest income


32,339



21,527



18,716Interest expense


18,779



16,322



19,251Other expense, net


1,674



3,765



4,535Income from continuing operations
    before income tax provision (benefit)


452,815



56,616



41,601Income tax provision (benefit)


56,193



(1,001
)


4,223Minority interest in WHC


706



908



Equity in earnings of EBS Master
    LLC


763







Income from continuing operations


396,679



56,709



37,378Income from discontinued
    operations, net of tax


371,060



16,265



1,956Net income

$
767,739


$
72,974


$
39,334Basic income per common share:Income from continuing operations

$
1.42


$
0.17


$
0.12Income from discontinued operations


1.33



0.04



0.00Net income

$
2.75


$
0.21


$
0.12Diluted income per common share:Income from continuing operations

$
1.25


$
0.16


$
0.11Income from discontinued operations


1.12



0.05



0.01Net income

$
2.37


$
0.21


$
0.12Weighted-average shares
    outstanding used in computing income per common share:Basic


279,234



341,747



320,080Diluted


331,642



352,852



333,343    F-6




---



##### Table of Contents



EMDEON
    CORPORATION
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
 (In thousands, except share data)
  Stockholders EquityAccumulatedAdditional


Deferred











Other


TotalCommon Stock


Paid-In


Stock


Treasury Stock


Accumulated


Comprehensive


StockholdersShares


Amount


Capital


Compensation


Shares


Amount


Deficit


Income


EquityBalances at December 31,
    2003


384,751,705


$
38


$
11,726,734


$
(4,683
)


76,576,865


$
(347,858
)

$
(10,212,054
)

$
16,420


$
1,178,597Net income


























39,334







39,334Net decrease in unrealized gains on
    securities






























(10,581
)


(10,581
)Foreign currency translation
    adjustment






























2,118



2,118Comprehensive income


































30,871Issuance of common stock for option
    exercises, ESPP, 401(k) and other issuances


9,289,615



1



38,051























38,052Issuance of warrants in connection
    with strategic alliances and services










15























15Accretion of convertible redeemable
    exchangeable preferred stock


























(184
)






(184
)Deferred stock compensation










13,001



(13,001
)


















Stock compensation expense










70



8,905



















8,975Purchase of treasury stock


















4,272,630



(32,110
)










(32,110
)Adjustment to deferred stock
    compensation for terminations










(960
)


960



















Balances at December 31,
    2004


394,041,320



39



11,776,911



(7,819
)


80,849,495



(379,968
)


(10,172,904
)


7,957



1,224,216Net income


























72,974







72,974Net increase in unrealized gains on
    securities






























2,976



2,976Foreign currency translation
    adjustment






























(3,326
)


(3,326
)Comprehensive income


































72,624Issuance of common stock for option
    exercises, ESPP, 401(k) and other issuances


11,385,269



1



48,570























48,571Gain on issuance of WHC
    Class A Common Stock










82,275























82,275Conversion of
    31/4% convertible
    subordinated notes


23,197,650



3



214,014























214,017Accretion of convertible redeemable
    exchangeable preferred stock


























(234
)






(234
)Deferred stock compensation










2,241



(2,241
)


















Stock compensation expense










330



3,451



















3,781Purchase of treasury stock under
    repurchase program


















2,541,000



(21,246
)










(21,246
)Purchase of treasury stock in
    tender offer


















66,905,919



(549,268
)










(549,268
)Adjustment to deferred stock
    compensation for terminations










(2,910
)


2,910



















Balances at December 31,
    2005


428,624,239



43



12,121,431



(3,699
)


150,296,414



(950,482
)


(10,100,164
)


7,607



1,074,736Net income


























767,739







767,739Net decrease in unrealized gains on
    securities






























(1,108
)


(1,108
)Foreign currency translation
    adjustment






























3,611



3,611Comprehensive income


































770,242Issuance of common stock for option
    exercises, ESPP and other issuances


20,976,508



2



151,237























151,239Accretion of convertible redeemable
    exchangeable preferred stock


























(235
)






(235
)Reversal of deferred stock
    compensation  adoption of SFAS 123R










(3,699
)


3,699



















Stock compensation expense










26,720























26,720Purchase of treasury stock under
    repurchase program


















8,240,245



(83,167
)










(83,167
)Purchase of treasury stock in
    tender offer


















129,234,164



(1,552,120
)










(1,552,120
)Gain on issuances of WHC
    Class A Common Stock










16,779























16,779Minority interest impact of cash
    transferred to WHC










(22,342
)






















(22,342
)Balances at December 31,
    2006


449,600,747


$
45


$
12,290,126


$




287,770,823


$
(2,585,769
)

$
(9,332,660
)

$
10,110


$
381,852




---



##### Table of Contents



EMDEON
    CORPORATION
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
  Years Ended December 31,2006


2005


2004Cash flows from operating
    activities:Net income

$
767,739


$
72,974


$
39,334Adjustments to reconcile net
    income to net cash provided byoperating activities:Income from discontinued
    operations, net of tax


(371,060
)


(16,265
)


(1,956
)Depreciation and amortization


61,976



60,905



48,707Minority interest in WHC


706



908



Equity in earnings of EBS Master
    LLC


(763
)






Amortization of debt issuance costs


2,906



2,541



2,975Non-cash advertising and
    distribution


7,414



10,870



18,826Non-cash stock-based compensation


44,955



4,880



7,860Bad debt expense


1,627



2,527



(1,653
)Loss (gain) on investments






6,365



(457
)Gain on sale of EBS


(352,297
)






Loss on redemption of convertible
    debt






1,902



Reversal of income tax valuation
    allowance applied to goodwill


30,770



174



Changes in operating assets and
    liabilities:Accounts receivable


(45,434
)


(30,021
)


(23,156
)Inventory


190



(755
)


(761
)Prepaid expenses and other, net


(12,131
)


2,629



2,746Accounts payable


162



(6,212
)


6,418Accrued expenses and other
    long-term liabilities


20,621



7,480



(47,647
)Deferred revenue


15,654



7,954



8,817Net cash provided by continuing
    operations


173,035



128,856



60,053Net cash provided by discontinued
    operations


25,985



32,430



29,991Net cash provided by operating
    activities


199,020



161,286



90,044Cash flows from investing
    activities:Proceeds from maturities and sales
    of
    available-for-sale
    securities


928,284



1,063,606



1,408,091Purchases of
    available-for-sale
    securities


(686,815
)


(758,687
)


(1,308,303
)Purchases of property and equipment


(54,885
)


(50,876
)


(29,629
)Cash paid in business
    combinations, net of cash acquired


(152,772
)


(93,712
)


(249,332
)Proceeds from the sale of EBS


1,199,872







Advances to EBS Master LLC


(20,016
)






Proceeds from the sale of
    discontinued operations


522,604







Other changes in equity of
    discontinued operations


28,279



23,176



19,557Net cash provided by (used in)
    continuing operations


1,764,551



183,507



(159,616
)Net cash used in discontinued
    operations


(26,010
)


(34,575
)


(28,536
)Net cash provided by (used in)
    investing activities


1,738,541



148,932



(188,152
)See accompanying notes. F-8




---



##### Table of Contents



Years Ended December 31,2006


2005


2004Cash flows from financing
    activities:Proceeds from issuance of Emdeon
    and WHC common stock


156,078



48,571



38,052Purchases of treasury stock under
    repurchase program


(83,167
)


(21,246
)


(32,110
)Purchases of treasury stock in
    tender offer


(1,552,120
)


(549,268
)


Payments of notes payable and other


(437
)


(631
)


(602
)Net proceeds from issuance of
    convertible debt






289,875



Issuance of WHC common stock in
    initial public offering






123,344



Redemption of convertible debt






(86,694
)


Net proceeds from issuance of
    preferred shares










98,115Net cash (used in) provided by
    continuing operations


(1,479,646
)


(196,049
)


103,455Net cash used in discontinued
    operations










Net cash (used in) provided by
    financing activities


(1,479,646
)


(196,049
)


103,455Effect of exchange rates on cash


1,135



(678
)


1,024Net increase in cash and cash
    equivalents


459,050



113,491



6,371Changes in cash attributable to
    discontinued operations


25



2,145



(1,455
)Cash and cash equivalents at
    beginning of period


155,616



39,980



35,064Cash and cash equivalents at end
    of period

$
614,691


$
155,616


$
39,980    F-9




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
 (In thousands, except share and per share data)
  1.
    Summary
    of Significant Accounting Policies  Background
    Basis of
    Presentation
        Business
    
    WebMDprovides both public and private online portals.
    WebMDs public portals for consumers enable them to obtain
    detailed information on a particular disease or condition,
    analyze symptoms, locate physicians, store individual healthcare
    information, receive periodic
    e-newsletters
    on topics of individual interest, enroll in interactive courses
    and participate in online communities with peers and experts.
    WebMDs public portals for physicians and healthcare
    professionals make it easier for them to access clinical
    reference sources, stay abreast of the latest clinical
    information, learn about new treatment options, earn continuing
    medical education (CME) credit and communicate with
    peers. WebMDs private portals enable employers and health
    plans to provide their employees and plan members with access to
    personalized health and benefit information and decision-support
    technology that helps them make more informed benefit, provider
    and treatment choices. In addition, WebMD publishes: medical
    reference textbooks; The Little Blue Book, a physician
    directory; and, since 2005, WebMD the Magazine,a
    consumer magazine distributed to physician office waiting rooms.
    WebMD also conducts in-person CME as a result of the acquisition
    of the assets of Conceptis Technologies, Inc. in December 2005. F-10




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  
    ViPS (formerly a business unit of EBS)provides
    healthcare data management, analytics, decision-support and
    process automation solutions and related information technology
    services to governmental, Blue Cross Blue Shield and commercial
    healthcare payers. ViPS develops tools for disease management,
    predictive modeling, provider performance,
    HEDIS®
    quality improvement, healthcare fraud detection and financial
    management. Consultants and outsourcing services are also
    provided to assess workflow, perform software maintenance,
    design complex database architectures and perform data analysis
    and analytic reporting functions.
    Porexdevelops, manufactures and distributes proprietary
    porous plastic products and components used in healthcare,
    industrial and consumer applications, which include porous
    components and finished products for both
    business-to-business
    and OEM applications. Porex also provides technologically
    advanced sterile surgical products used in
    craniofacial/oculoplastic reconstruction and aesthetic/ cosmetic
    surgery in hospitals, clinics and private practice surgical
    offices.
    Emdeon Business Servicesprovides solutions that automate
    key business and administrative functions for healthcare payers
    and providers, including electronic patient eligibility and
    benefit verification; electronic and paper claims processing;
    electronic and paper paid-claims communication services; and
    patient billing, payment and communications services. In
    addition, EBS provides clinical communications services that
    improve the delivery of healthcare by enabling physicians to
    manage laboratory orders and results, hospital reports and
    electronic prescriptions. As a result of the EBS Sale, beginning
    November 17, 2006, the results of EBS are no longer
    included in the segment results. See Note 3.
    Corporateincludes services shared across all operating
    segments, such as executive personnel, accounting, tax,
    treasury, legal, human resources, risk management and certain
    information technology functions. Corporate service costs
    include compensation related costs, insurance and audit fees,
    leased property, facilities cost, legal and other professional
    fees, software maintenance and telecommunication costs.
    Additionally, in connection with the EBS Sale and EPS Sale, the
    Company entered into transition services agreements whereby the
    Company will provide EPS and EBS certain administrative
    services, including payroll, accounting, purchasing and
    procurement, tax, and human resource services, as well as
    information technology (IT) support. Additionally,
    EBS will provide certain administrative services to the Company.
    See Note 2 and Note 3. These services will be provided
    through the Corporate segment, and the related transition
    services fee the Company charges to EBS and EPS, net of the fee
    the Company will pay to EBS will also be included in the
    Corporate segment, which approximates the cost of providing
    these services.  Principles
    of Consolidation
    Accounting
    Estimates
   F-11




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Minority
    Interest
    Sale of
    Stock by a Subsidiary
    Cash and
    Cash Equivalents
   F-12




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Marketable
    Securities
  available-for-sale held-to-maturity held-to-maturity; available-for-sale. available-for-sale. Held-to-maturity available-for-sale
  other-than-temporary available-for-sale other-than-temporary
  Equity
    Investment in EBS Master LLC
    other-than-temporary,
  Allowance
    for Doubtful Accounts
    Inventory
  first-in, work-in-process work-in-process work-in-process
 F-13




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Long-Lived
    Assets
  Property
    and Equipment
    Computer equipment

3 to 5 yearsBuildings

Up to 40 yearsOffice equipment, furniture and
    fixtures

3 to 7 yearsSoftware and Web site development
    costs

3 yearsLeasehold improvements

Shorter of useful life or lease
    term     Goodwill
    and Intangible Assets
    Customer relationships

2 to 15 yearsTrade names

3 to 10 yearsTechnology and patents

3 to 40 yearsNon-compete agreements, content
    and other

2 to 5 years   Recoverability
      Software
    Development Costs
  Software
    to be Sold, Leased or Otherwise Marketed
   F-14




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Internal
    Use Software
  No. 98-1, (SOP 98-1). SOP 98-1
  Web
    Site Development Costs
  No. 00-2
  Restricted
    Cash
    Deferred
    Charges
  1 8
  Revenue
  Recognition
     F-15




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    decision-support
          Products
    and Services
   F-16




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Sales,
    Use and Value Added Tax
    Advertising
    Costs
    Foreign
    Currency
    Concentration
    of Credit Risk
    Income
    Taxes and Tax Contingencies
    Accounting
    for Stock-Based Compensation
   F-17




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Net
    Income Per Common Share
   F-18




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2006


2005


2004Numerator:Income from continuing
    operations  Basic

$
396,679


$
56,709


$
37,378Interest expense on convertible
    notes


18,406







Income from continuing
    operations  Diluted

$
415,085


$
56,709


$
37,378Income from discontinued
    operations, net of tax

$
371,060


$
16,265


$
1,956Denominator:Common stock


268,596



331,109



311,721Convertible redeemable
    exchangeable preferred stock


10,638



10,638



8,359Weighted-average
    shares  Basic


279,234



341,747



320,080Employee stock options, restricted
    stock and warrants


10,392



11,105



13,263Convertible notes


42,016







Weighted-average
    shares  Diluted


331,642



352,852



333,343Basic income per common share:Income from continuing operations

$
1.42


$
0.17


$
0.12Income from discontinued operations


1.33



0.04



0.00Net income

$
2.75


$
0.21


$
0.12Diluted income per common share:Income from continuing operations

$
1.25


$
0.16


$
0.11Income from discontinued operations


1.12



0.05



0.01Net income

$
2.37


$
0.21


$
0.12     Years Ended December 31,2006


2005


2004Options and warrants


50,505



60,007



83,986Convertible notes






42,016



55,12950,505



102,023



139,115   Discontinued
    Operations
   F-19




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
  available-for-sale
      Reclassifications
    2.
    Discontinued
    Operations     F-20




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2006


2005


2004Revenue

$
212,329


$
304,175


$
296,115Earnings before taxes


19,469



16,909



2,643Taxes on earnings


1,567



644



687Gain on disposal, net of tax


353,158







Income from discontinued
    operations, net of tax

$
371,060


$
16,265


$
1,956     December 31,2005Assets of discontinued operations:Goodwill

$
179,574Accounts receivable, net


37,753Property and equipment, net


20,346Other assets


16,574Total

$
254,247Liabilities of discontinued
    operations:Deferred revenue

$
47,450Accounts payable and accrued
    liabilities


20,151Other liabilities


835Total

$
68,436    F-21




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      3.
    Sale of
    Interest in Emdeon Business Services       F-22




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        December 31, 2005Assets:Goodwill

$
681,612Accounts receivable, net


108,609Intangible assets, net


119,069Property and equipment, net


46,667Other assets


8,441Total

$
964,398Liabilities:Accounts payable and accrued
    liabilities

$
82,476Deferred revenue


20,585Other liabilities


584Total

$
103,645     For the Period fromNovember 17, 2006throughDecember 31,2006Statement of Operations Data:Revenue

$
87,903Cost of operations


56,639Net loss


990   F-23




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006Balance Sheet Data:Current assets

$
165,218Non-current assets


1,196,825Total Assets

$
1,362,043Current liabilities

$
126,587Non-current liabilities


962,972Shareholders equity


272,484Total Liabilities and
    Shareholders Equity

$
1,362,043   4.
    Stock-Based
    Compensation    Emdeon
    Plans
    Stock
    Options
   F-24




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted


Weighted AverageAverage


RemainingExercise Price


Contractual Life


AggregateShares


Per Share


(In Years)


Intrinsic Value(1)Outstanding at January 1, 2004


104,760,726


$
12.86Granted


19,230,750



8.31Exercised


(7,796,440
)


4.42Cancelled


(9,937,784
)


15.18Outstanding at December 31,
    2004


106,257,252



12.44Granted


3,920,913



9.03Exercised


(9,235,018
)


4.81Cancelled


(12,760,052
)


13.37Outstanding at December 31,
    2005


88,183,095



12.96Granted


9,845,500



10.10Exercised


(20,277,247
)


7.40Cancelled


(14,151,477
)


14.08Outstanding at December 31,
    2006


63,599,871


$
14.04



4.7


$
95,618Vested and exercisable at the end
    of the year


51,760,375


$
15.05



3.9


$
62,585     (1)
    
    The aggregate intrinsic value is
    based on the market price of Emdeons Common Stock on
    December 29, 2006, the last trading day in December, which
    was $12.39, less the applicable exercise price of the underlying
    option. This aggregate intrinsic value represents the amount
    that would have been realized if all of the option holders had
    exercised their options as of December 29, 2006.    Outstanding


ExercisableWeighted


Weighted





WeightedAverage


Average





AverageExercise


Remaining





ExercisePrice


Contractual





PricePer


Life





PerExercise Prices

Shares


Share


(In Years)


Shares


Share$0.25-$7.94


6,635,665


$
5.75



5.32



4,988,153


$
5.29$7.95-$8.77


6,569,077



8.55



7.29



3,481,255



8.54$8.78-$10.00


5,140,623



9.22



7.84



1,978,885



9.20$10.01-$11.55


7,599,535



11.49



3.72



7,285,548



11.53$11.56-$12.50


6,723,599



11.92



7.31



3,095,162



12.04$12.54-$13.50


7,688,665



12.99



3.68



7,688,665



12.99$13.63-$16.06


10,351,540



15.09



3.10



10,351,540



15.09$16.13-$21.69


6,889,317



18.84



3.36



6,889,317



18.84$22.18-$105.00


6,001,850



32.94



2.87



6,001,850



32.9463,599,871


$
14.04



4.74



51,760,375


$
15.05  F-25




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2006


2005


2004Expected dividend yield


0
%


0
%


0
%Expected volatility


0.37



0.50



0.58Risk free interest rate


4.54
%


3.48
%


1.70
%Expected term (years)


4.46



3.25-5.50



3.25-5.50Weighted fair value of options
    granted during the year

$
3.79



$3.68



$3.68   Restricted
    Stock Awards
    Years Ended December 31,2006


2005


2004Weighted





Weighted





WeightedAverage Grant





Average Grant





Average GrantDate Fair





Date Fair





Date FairShares


Value


Shares


Value


Shares


ValueBalance at the beginning of the
    year


1,042,557


$
8.24



1,637,609


$
8.02



214,927


$
6.31Granted


2,298,010



10.66



239,000



9.38



1,584,800



8.20Vested


(562,575
)


8.39



(481,716
)


8.04



(70,532
)


6.31Forfeited


(477,146
)


9.13



(352,336
)


8.26



(91,586
)


8.49Balance at the end of the year


2,300,846


$
10.44



1,042,557


$
8.24



1,637,609


$
8.02     WebMD
    Plans
   F-26




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options
    WeightedWeighted


AverageAverage


RemainingExercise


Contractual


AggregatePrice


Life


IntrinsicShares


Per Share


(In Years)


Value(1)Outstanding at January 1, 2004





$
Granted


4,574,900



18.31Exercised






Cancelled


(41,800
)


18.31Outstanding at December 31,
    2005


4,533,100



18.31Granted


1,683,700



38.16Exercised


(291,154
)


18.05Cancelled


(523,863
)


27.84Outstanding at December 31,
    2006


5,401,783


$
23.59



9.0


$
89,309Vested and exercisable at the end
    of the year


796,731


$
18.38



8.8


$
17,245     (1)
    
    The aggregate intrinsic value is
    based on the market price of WHCs Class A Common Stock on
    December 29, 2006, the last trading day in December, which
    was $40.02, less the applicable exercise price of the underlying
    option. This aggregate intrinsic value represents the amount
    that would have been realized if all of the option holders had
    exercised their options as of December 29, 2006. F-27




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Outstanding


ExercisableWeighted





WeightedWeighted


Average





AverageAverage


Remaining





ExerciseExercise


Contractual





PricePrice


Life





PerExercise Prices

Shares


Per Share


(In Years)


Shares


Share$17.50


3,673,883


$
17.50



8.70



726,231


$
17.50$24.00-$29.90


337,725



27.70



8.90



68,800



27.32$30.41-$37.97


421,050



36.03



9.60



1,700



30.48$38.01-$39.77


467,075



38.46



9.50







$40.02-$47.30


502,050



41.11



9.80







5,401,783


$
23.59



9.00



796,731


$
18.38     Years Ended December 31,2006


2005Expected dividend yield


0
%


0
%Expected volatility


0.60



0.60Risk free interest rate


4.69
%


4.05
%Expected term (years)


3.24



3.25-5.50Weighted fair value of options
    granted during the year

$
17.33



$8.75  F-28




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock Awards
    Years Ended December 31,2006


2005Weighted





WeightedAverage





AverageGrant Date





Grant DateShares


Fair Value


Shares


Fair ValueBalance at the beginning of the
    year


376,621


$
17.55






$
Granted


184,710



39.50



376,621



17.55Vested


(94,418
)


17.61







Forfeited


(25,230
)


39.00







Balance at the end of the year


441,683


$
25.49



376,621


$
17.55     Other
      Employee
    Stock Purchase Plan
   F-29




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Summary
    of Stock-Based Compensation Expense
    Years Ended December 31,2006


2005


2004Emdeon Plans:Stock options

$
20,685


$
462


$
3,821Restricted stock


5,635



3,318



5,154WHC Plans:Stock options


17,810







Restricted stock


3,736



874



Employee Stock Purchase Plan


406







Other


409



85



Total stock-based compensation
    expense

$
48,681


$
4,739


$
8,975Included in:Cost of operations

$
11,280


$



$
Development and engineering


993







Sales, marketing, general and
    administrative


32,682



4,880



7,860Gain on sale of EBS


30







Equity in earnings of EBS Master
    LLC


310







Income from continuing operations


45,295



4,880



7,860Income from discontinued
    operations, net of tax


3,386



(141
)


1,115Total stock-based compensation
    expense

$
48,681


$
4,739


$
8,975    F-30




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended December 31,2005


2004Net income as reported

$
72,974


$
39,334Add: Non-cash stock-based employee
    compensation expense included in reported net income


4,739



8,975Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards


(37,218
)


(67,569
)Pro forma net income (loss)

$
40,495


$
(19,260
)Net income (loss) per common share:Basic and diluted  as
    reported

$
0.21


$
0.12Basic  pro forma

$
0.12


$
(0.06
)Diluted  pro forma

$
0.11


$
(0.06
)   5.
    Business
    Combinations  2006
    Acquisitions
    e-detailing
 F-31




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         F-32




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005
    Acquisitions
      2004
    Acquisitions
   F-33




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         F-34




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      F-35




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Balance Sheet Data
    Other








TotalAccounts


Deferred


Tangible Assets


Intangible





PurchaseReceivable


Revenue


(Liabilities), net


Assets


Goodwill


Price2006Subimo

$
1,725


$
(6,900
)

$
5,284


$
11,300


$
47,911


$
59,320Medsite


2,469



(13,124
)


(826
)


9,000



33,948



31,467IPN


358







(143
)






3,692



3,907Summex


1,064



(1,173
)


(47
)


10,200



20,147



30,191eMedicine


1,717



(2,612
)


(1,076
)


6,390



20,776



25,1952005Conceptis


2,893



(2,866
)


(1,002
)


6,140



14,694



19,859HealthShare


1,925



(4,622
)


(427
)


8,500



24,609



29,9852004MedicineNet


1,081



(64
)


(385
)


6,600



17,241



24,473Esters


151







(199
)


1,200



2,181



3,333RxList










(19
)


1,054



6,568



7,603ViPS


12,573



(5,436
)


4,198



84,000



71,253



166,588Epor










23



200



2,324



2,547Dakota


2,587



(3,894
)


(553
)


13,100



28,266



39,506   Unaudited
    Pro Forma Information
    Years Ended December 31,2006


2005Revenue

$
1,123,469


$
1,073,797Income from continuing operations


389,154



46,849Net income


760,214



63,114Basic income per common share:Income from continuing operations

$
1.39


$
0.14Net income

$
2.72


$
0.18Diluted income per common share:Income from continuing operations

$
1.23


$
0.13Net income

$
2.35


$
0.18  F-36




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    WebMD
    Health Corp. Initial Public Offering; Relationships between the
    Company and WHC  Initial
    Public Offering
    Minority
    Interest
  one-for-one one-for-one
    Relationships
    between the Company and WHC
   F-37




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    paid-in-capital
  Gain Upon
    Sale of WHC Class A Common Stock
          7.
    Significant
    Transactions  America
    Online, Inc.
  agreed-upon
 F-38




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      News
    Corporation
    8.
    Restructuring
    and Integration Charges        9.
    Convertible
    Redeemable Exchangeable Preferred Stock   F-39




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              10.
    Convertible
    Notes  $300,000
    31/8% Convertible
    Notes due 2025
  1 8 1 8 1 8 1 8 1 8
 F-40




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1 8 1 8 1 8
  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  $350,000
    1.75% Convertible Subordinated Notes due 2023
      $300,000
    31/4% Convertible
    Subordinated Notes due 2007
  1 4 1 4 1 4 1 4 1 4 1 4 1 4
  1 4 1 4
 F-41




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1 4 1 4 1 4 1 4 1 4
  11.
    Segment
    Information  1 4
  Reclassification of Segment Information.
 F-42




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended December 31,2006(a)


2005


2004RevenueEmdeon Business Services

$
661,090


$
689,305


$
682,100WebMD


253,881



168,238



134,317ViPS


98,874



90,313



24,693Porex


85,702



79,124



77,099Inter-segment eliminations


(939
)


(505
)


(112
)$
1,098,608


$
1,026,475


$
918,097Earnings before interest,
    taxes, non-cash and other itemsEmdeon Business Services

$
152,911


$
138,529


$
128,361WebMD


53,079



27,546



26,307ViPS


20,529



16,913



4,277Porex


24,974



22,524



22,650Corporate


(43,414
)


(49,481
)


(50,758
)208,079



156,031



130,837Interest, taxes, non-cash and
    other itemsDepreciation and amortization


(61,976
)


(60,905
)


(48,707
)Non-cash stock-based compensation


(44,955
)


(4,880
)


(7,860
)Non-cash advertising and
    distribution


(7,414
)


(10,870
)


(18,826
)Legal expense


(2,578
)


(17,835
)


(9,230
)Interest income


32,339



21,527



18,716Interest expense


(18,779
)


(16,322
)


(19,251
)Income tax (provision) benefit


(56,193
)


1,001



(4,223
)Minority interest in WHC


(706
)


(908
)


Equity in earnings of EBS Master
    LLC


763







Gain on sale of EBS


352,297







(Loss) gain on investments






(6,365
)


457Other expense


(4,198
)


(3,765
)


(4,535
)Income from continuing operations


396,679



56,709



37,378Income from discontinued
    operations, net of tax


371,060



16,265



1,956Net income

$
767,739


$
72,974


$
39,334     (a)
    
    The EBS segment was sold on
    November 16, 2006 and, therefore, the operations of the EBS
    segment are included only for the period January 1, 2006
    through November 16, 2006. F-43




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     EmdeonBusiness











CorporateServices


WebMD


ViPS


Porex


and Other(a)


Total2006Products revenue

$
6,987


$
8,087


$



$
85,702


$
(420
)

$
100,356Services revenue


654,103



245,794



98,874







(519
)


998,252Capital expenditures


20,835



28,452



2,594



2,871



133



54,885Total assets






475,184



156,465



131,794



688,500



1,451,9432005Products revenue


8,734



7,828







77,924



(284
)


94,202Services revenue


680,571



160,410



90,313



1,200



(221
)


932,273Capital expenditures


28,808



18,126



1,305



2,330



307



50,876Total assets


964,398



376,889



165,424



122,228



566,744



2,195,6832004Products revenue


9,117



7,192



488



75,999



(104
)


92,692Services revenue


672,983



127,125



24,205



1,100



(8
)


825,405Capital expenditures


20,359



4,321







4,825



124



29,629     (a)
    Included in the Corporate column are the following:
    i) eliminations of inter-segment revenue transactions,
    ii) the assets of discontinued operations for 2005, and
    iii) all cash and cash equivalents of all U.S. based
    facilities, except for cash and cash equivalents of WebMD.    12.
    Long-Lived
    Assets  Property
    and Equipment
    December 31,2006


2005Computer equipment

$
21,797


$
60,336Land and buildings


14,901



14,123Office equipment, furniture and
    fixtures


28,782



50,643Software and Web site development
    costs


30,856



36,487Leasehold improvements


14,391



17,904Construction in process


5,379



11,616116,106



191,109Less: accumulated depreciation


(44,066
)


(95,423
)Property and equipment, net

$
72,040


$
95,686    F-44




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
    and Intangible Assets
      EmdeonBusinessServices


WebMD


ViPS


Porex


TotalBalance as of January 1, 2005

$
663,018


$
53,169


$
71,449


$
43,384


$
831,020Acquisitions during the period






36,079











36,079Contingent consideration for prior
    period acquisitions


19,379



10,638











30,017Tax reversals


(674
)










(600
)


(1,274
)Adjustments to finalize purchase
    price allocations


(111
)


783



(196
)


383



859Effects of exchange rates














(726
)


(726
)Balance as of January 1, 2006


681,612



100,669



71,253



42,441



895,975Acquisitions during the period


3,692



122,782











126,474Contingent consideration for prior
    period acquisitions (a)


(1,913
)














(1,913
)Tax reversals (b)


(40,522
)


(1,636
)






(298
)


(42,456
)Adjustments to finalize purchase
    price allocations






1,669











1,669Sale of EBS


(642,869
)














(642,869
)Effects of exchange rates














789



789Balance as of December 31,
    2006

$



$
223,484


$
71,253


$
42,932


$
337,669     (a)
    
    The Company adjusted goodwill by
    $2,539 in connection with an over accrual of contingent
    consideration in the Emdeon Business Services segment. In
    addition, the Company made a contingent consideration payment in
    the amount of $626 for a 2003 acquisition within the Emdeon
    Business Services segment.(b)
    
    Represents a reduction to goodwill
    as a result of the reversal of a portion of the income tax
    valuation allowances that were originally established in
    connection with the purchase accounting of prior acquisitions. A
    portion of these income tax valuation allowances, or $11,752,
    was reversed in connection with the utilization of net operating
    losses attributable to the discontinued operations, including
    the gain on disposal. F-45




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31, 2006


December 31, 2005Weighted











WeightedGross








Average


Gross








AverageCarrying


Accumulated





Remaining


Carrying


Accumulated





RemainingAmount


Amortization


Net


Useful Life(a)


Amount


Amortization


Net


Useful Life(a)Customer relationships

$
68,168


$
(13,300
)

$
54,868



11.1


$
382,877


$
(242,494
)

$
140,383



11.3Technology and patents


79,221



(27,453
)


51,768



17.1



176,146



(110,244
)


65,902



15.3Trade names


18,216



(4,443
)


13,773



8.0



40,716



(30,435
)


10,281



8.0Non-compete agreements, content and
    other


17,054



(7,990
)


9,064



2.6



22,254



(3,549
)


18,705



6.7Total

$
182,659


$
(53,186
)

$
129,473



12.6


$
621,993


$
(386,722
)

$
235,271



11.9     (a)
    
    The calculation of the weighted
    average remaining useful life is based on the net book value and
    the remaining amortization period (reflected in years) of each
    respective intangible asset.    Years Ending
    December 31,2007

$
24,4412008


21,0342009


15,0082010


7,6472011


6,884Thereafter


54,459   13.
    Accrued
    Expenses    December 31,2006


2005Accrued outside services

$
18,835


$
11,926Accrued acquisition contingent
    consideration






30,122Accrued compensation


28,504



35,276Accrued customer deposits


139



21,570Accrued income, sales and other
    taxes


35,048



20,678Other accrued liabilities


30,649



50,530$
113,175


$
170,102   14.
    Commitments
    and Contingencies  Legal
    Proceedings
  Investigations
    by United States Attorney for the District of South Carolina and
    the SEC
   F-46




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       F-47




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              F-48




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Litigation
    Regarding Distribution of Shares in Healtheon Initial Public
    Offering
    Rule 10b-5
         F-49




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Dakota
    Imaging, Inc. v. Sandeep Goel and Pradeep
    Goel
    Porex
    Corporation v. Kleanthis Dean Haldopoulos, Benjamin T.
    Hirokawa and Micropore Plastics, Inc.
    Ari
    Weitzner, M.D., P.C. et al. v. National
    Physicians Datasource LLC
  The Little Blue Book
  Anthony
    Vlastaris, et al. v. WebMD Publishing
    Services
  The Little Blue Book
 F-50




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  class-action
  Other
    Legal Proceedings
    Leases
      Years Ending December 31,2007

$
11,5802008


11,0742009


8,2372010


8,1702011


6,612Thereafter


15,197Total minimum lease payments

$
60,870   Other
    Contingencies
    15.
    Retirement
    Plans   F-51




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    16. Stockholders
    Equity
  Common
    Stock
  Tender
    Offers
      Stock
    Repurchase Programs
       F-52




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Preferred
    Stock
    Warrants
    Weighted AverageWeighted


RemainingAverage


Contractual LifeExercise Prices

Shares


Exercise Price


(In Years)$0.67-$9.25


2,417,944


$
9.23



1.35$15.00


3,000,000



15.00



0.13$30.00


42,094



30.00



1.485,460,038


$
12.56



0.68    F-53




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   17.
    Income
    Taxes    December 31,2006


2005Deferred tax assets:Federal net operating loss
    carryforwards

$
419,293


$
729,335State net operating loss
    carryforwards


67,521



83,353Federal tax credits


35,390



19,162Other accrued expenses


30,200



31,783Intangible assets






48,902Stock-based compensation


13,362



1,464Investment in EBS Master LLC


30,072



Other


8,355



19,854Total deferred tax assets


604,193



933,853Valuation allowance


(544,445
)


(910,519
)Net deferred tax assets


59,748



23,334Deferred tax liabilities:Intangible assets


(22,147
)


Convertible notes


(36,506
)


(21,958
)Other


(1,813
)


(2,027
)Total deferred tax liabilities


(60,466
)


(23,985
)Net deferred tax liabilities

$
(718
)

$
(651
)   December 31,2006


2005Reported as:Current deferred tax assets and
    liabilities

$
30,590


$
37,937Valuation allowance


(30,590
)


(37,937
)Current deferred tax assets, net






Non-current deferred tax assets
    and liabilities


513,137



871,931Valuation allowance


(513,855
)


(872,582
)Non-current deferred tax
    liabilities, net


(718
)


(651
)Net deferred tax liabilities

$
(718
)

$
(651
)  F-54




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2006


2005


2004Current:Federal

$
7,939


$
(5,742
)

$
State


15,499



85



2,186Foreign


1,985



4,482



2,037Current income tax provision
    (benefit)


25,423



(1,175
)


4,223Reversal of valuation allowance
    applied to goodwill


30,770



174



Total income tax provision
    (benefit)

$
56,193


$
(1,001
)

$
4,223     Years Ended December 31,2006


2005


2004United States federal statutory
    rate


35.0
%


35.0
%


34.0
%State income taxes (net of federal
    benefit)


1.3



1.5



3.5Goodwill amortization


12.6



(7.5
)


(9.7
)Valuation allowance


(79.1
)


16.3



3.4Cumulative effect of change in tax
    rate






(40.4
)


Settlement of tax contingencies


(0.7
)


(10.2
)


Reversal of valuation allowance
    applied to goodwill


6.8



0.3



Losses benefited to (from)
    discontinued operations


36.7



(2.3
)


(18.2
)Other


(0.2
)


5.5



(2.8
)Effective income tax rate


12.4
%


(1.8
)%


10.2
%        F-55




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              non-U.S. income non-U.S. income
   F-56




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   18.
    Fair
    Value of Financial Instruments  and/or
  December 31, 2006


December 31, 2005Cost Basis


Fair Value


Cost Basis


Fair ValueAssets:Cash and cash equivalents

$
614,691


$
614,691


$
155,616


$
155,616Short-term investments


34,140



34,140



268,109



267,387Marketable securities 
    long term


1,474



2,633



1,477



4,430Liabilities:Convertible notes


650,000



636,996



650,000



537,000Convertible redeemable
    exchangeable preferred stock


98,768



132,500



98,533



96,500   available-for-sale.
    December 31, 2006


December 31, 2005Cost or


Gross


Gross





Cost or


Gross


GrossAmortized


Unrealized


Unrealized





Amortized


Unrealized


UnrealizedCost


Gains


Losses


Fair Value


Cost


Gains


Losses


Fair ValueShort-TermCertificate of deposits and
    marketable debt securities

$
34,140


$



$



$
34,140


$
268,109


$
11


$
733


$
267,387Long-TermEquity securities

$
1,474


$
1,161


$
2


$
2,633


$
1,477


$
2,955


$
2


$
4,430   available-for-sale available-for-sale
  1 4 available-for-sale available-for-sale
 F-57




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    available-for-sale
  19.
    Other
    Expense, Net    Years Ended December 31,2006


2005


2004Transition services income(a)

$
(2,524
)

$



$
Advisory expense(b)


4,198







Loss on redemption of convertible
    debt(c)






1,902



Settlement of litigation(d)






1,863



Restructuring and integration
    charge(e)










4,535Other expense, net

$
1,674


$
3,765


$
4,535     (a)
    
    Represents the net income received
    from Sage Software and EBSCo in relation to the respective
    Transition Services Agreements. See Note 2 and 3.(b)
    
    Represents professional fees,
    primarily consisting of legal, accounting and financial advisory
    services related to the EBS Sale through September 26,
    2006, the date the Company entered into a definitive agreement
    with General Atlantic regarding the sale of this business.(c)
    
    Represents a write-off of the
    remaining unamortized deferred issuance costs related to the
    portion of the
    31/4% Notes
    that were redeemed, and the payment of the redemption premium.
    See Note 10.(d)
    
    Represents the settlement of
    litigation in 2005, in which the Company was named as a
    defendant.(e)
    
    Represents a charge related to the
    2000 restructuring plan. See Note 8.  20.
    Related
    Party Transactions     F-58




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   21.
    Comprehensive
    Income  available-for-sale
  Years Ended December 31,2006


2005


2004Foreign currency translation gains
    (losses)

$
3,611


$
(3,326
)

$
2,118Unrealized (losses) gains on
    securities:Unrealized holding losses


(1,108
)


(3,389
)


(10,124
)Less: reclassification adjustment
    for net gains (losses) realized in net income






(6,365
)


457Net unrealized (losses) gains on
    securities


(1,108
)


2,976



(10,581
)Other comprehensive income (loss)


2,503



(350
)


(8,463
)Net income


767,739



72,974



39,334Comprehensive income

$
770,242


$
72,624


$
30,871   non-U.S. subsidiaries.
    Years Ended December 31,2006


2005


2004Unrealized gains (losses) on
    securities

$
1,159


$
2,267


$
(709
)Foreign currency translation gains


8,951



5,340



8,666Total accumulated other
    comprehensive income

$
10,110


$
7,607


$
7,957   22.
    Supplemental
    Disclosures of Cash Flow Information    Years Ended December 31,2006


2005


2004Supplemental Disclosure of Cash
    Flow Information:Interest paid

$
15,802


$
13,131


$
16,190Taxes paid, net of refunds

$
23,210


$
5,727


$
5,635Supplemental Schedule of Non-Cash
    Investing and Financing activities:Conversion of $300,000
    31/4% Convertible
    Subordinated Notes to Emdeon Common Stock

$



$
214,880


$
Accretion of convertible
    redeemable exchangeable preferred stock

$
235


$
234


$
184Deferred stock compensation
    related to restricted stock awards

$



$
2,241


$
13,001SAB 51 gain

$
16,779


$
82,275


$
  F-59




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  23.
    Quarterly
    Financial Data (Unaudited)    2006First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
277,194


$
291,631


$
299,732


$
230,051Cost of operations


167,174



169,041



169,710



117,833Development and engineering


8,864



9,057



9,243



6,485Sales, marketing, general and
    administrative


70,180



72,033



74,390



71,412Depreciation and amortization


16,554



17,221



18,189



10,012Legal expense


542



275



1,023



738Interest (expense) income, net


(273
)


(235
)


1,876



12,192Gain on sale of EBS














352,297Other (expense) income, net






(2,072
)


(1,786
)


2,184Income from continuing operations
    before income tax provision


13,607



21,697



27,267



390,244Income tax provision


3,372



5,236



3,474



44,111Minority interest in WHC


(629
)


(164
)


140



1,359Equity in earnings of EBS Master
    LLC














763Income from continuing operations


10,864



16,625



23,653



345,537Income from discontinued
    operations, net of tax


5,567



6,556



358,048



889Net income

$
16,431


$
23,181


$
381,701


$
346,426Basic income per common share:Income from continuing operations

$
0.04


$
0.06


$
0.08


$
1.35Income from discontinued
    operations, net of tax


0.02



0.02



1.25



0.00Net income

$
0.06


$
0.08


$
1.33


$
1.35Diluted income per common share:Income from continuing operations

$
0.04


$
0.06


$
0.08


$
1.14Income from discontinued
    operations, net of tax


0.02



0.02



1.19



0.00Net income

$
0.06


$
0.08


$
1.27


$
1.14   F-60




---



##### Table of Contents



EMDEON CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2005First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
244,059


$
257,630


$
261,022


$
263,764Cost of operations


141,903



151,126



152,066



150,559Development and engineering


8,895



8,788



8,912



9,058Sales, marketing, general and
    administrative


62,456



62,971



63,865



65,595Depreciation and amortization


14,001



15,024



15,801



16,079Legal expense


4,160



4,283



5,904



3,488Loss (gain) on investments


3,832



(190
)






2,723Interest (expense) income, net


(461
)


43



2,128



3,495Other expense, net






1,902



1,863



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


8,351



13,769



14,739



19,757Income tax provision (benefit)


(201
)


1,917



1,851



(4,568
)Minority interest in WHC










38



870Income from continuing operations


8,552



11,852



12,850



23,455Income from discontinued
    operations, net of tax


1,297



4,314



1,257



9,397Net income

$
9,849


$
16,166


$
14,107


$
32,852Basic income per common share:Income from continuing operations

$
0.03


$
0.04


$
0.04


$
0.07Income from discontinued
    operations, net of tax


0.00



0.01



0.00



0.02Net income

$
0.03


$
0.05


$
0.04


$
0.09Diluted income per common share:Income from continuing operations

$
0.03


$
0.03


$
0.03


$
0.07Income from discontinued
    operations, net of tax


0.00



0.02



0.01



0.02Net income

$
0.03


$
0.05


$
0.04


$
0.09  F-61




---



##### Table of Contents



Schedule II.
    Valuation and Qualifying Accounts
  Years Ended December 31, 2006, 2005 and 2004Balance at


Charged toBeginning


Costs and











Balance atof Year


Expenses


Acquired


Write-offs


Other


End of Year(In thousands)December 31, 2006Allowance for Doubtful Accounts

$
6,909


$
1,627


$
229


$
(3,830
)

$
(3,639
)(b)

$
1,296Valuation Allowance for Deferred
    Tax Assets


910,519



(366,436
)


362











544,445December 31, 2005Allowance for Doubtful Accounts


6,420



2,527



60



(2,098
)






6,909Valuation Allowance for Deferred
    Tax Assets


872,098



8,437



12,893







17,091
(a)


910,519December 31, 2004Allowance for Doubtful Accounts


10,593



(1,592
)


152



(2,733
)






6,420Valuation Allowance for Deferred
    Tax Assets


876,200



115



(18,189
)






13,972
(a)


872,098     (a)
    
    Represents valuation allowance created through equity as a
    result of stock option and warrant exercises.(b)
    
    Represents the sale of the Emdeon Business Services segment on
    November 16, 2006. S-1




---



##### Table of Contents



INDEX TO
    EXHIBITS  Exhibit No.

Description2.1*

Stock Purchase Agreement, dated as
    of August 8, 2006, between the Registrant and Sage
    Software, Inc. (incorporated by reference from Exhibit 2.1
    to the Registrants Current Report on
    Form 8-K
    filed on August 11, 2006)2.2*

Amended and Restated Agreement and
    Plan of Merger, dated as of November 15, 2006, among Emdeon
    Corporation, EBS Holdco, Inc., EBS Master LLC, Emdeon Business
    Services LLC, Medifax-EDI Holding Company, EBS Acquisition LLC,
    GA EBS Merger LLC and EBS Merger Co. (incorporated by reference
    from Exhibit 2.1 to the Registrants Current Report on
    Form 8-K
    filed on November 21, 2006)2.3*

Amended and Restated Limited
    Liability Company Agreement for EBS Master LLC2.4*

Asset Purchase Agreement, dated as
    of October 31, 2005, among Conceptis Technologies Inc.,
    WebMD, Inc., and Maple Leaf Medical Media, Inc. (incorporated by
    reference to Exhibit 10.60 to the Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005 of WebMD Health
    Corp. (WHC))2.5*

Agreement and Plan of Merger,
    dated as of January 17, 2006, among the WHC, ME Omaha,
    Inc., eMedicine.com, Inc., and Lilian Shackelford Murray, as
    Stockholders Representative (incorporated by reference to
    Exhibit 10.1 to the WHCs Current Report on
    Form 8-K
    filed on January 20, 2006)2.6*

Agreement and Plan of Merger,
    dated as of April 13, 2006, among Summex Corporation, the
    WHC, and FFGM, Inc. (incorporated by reference from
    Exhibit 10.1 to WHCs Current Report on
    Form 8-K
    filed on April 19, 2006)2.7*

Asset Purchase Agreement, dated as
    of July 19, 2006, among June Plum, Inc. (a wholly owned
    subsidiary of the Registrant), Medsite, Inc., Medsite
    Acquisition Corp., MedsiteCME, LLC and Medsite Pharmaceutical
    Services, LLC (incorporated by reference from Exhibit 10.1
    to WHCs Current Report on
    Form 8-K
    filed on July 25, 2006)2.8*

Unit Purchase Agreement, dated as
    of November 2, 2006, by and among WHC, Subimo, LLC and the
    Sellers referred to therein (incorporated by reference to
    Exhibit 2.1 to the Current Report on
    Form 8-K
    filed by WHC on November 8, 2006)2.9*

Agreement and Plan of Merger,
    dated as of July 9, 2004, by and among VIPS, Inc., WebMD
    Corporation, Envoy Corporation and Valor, Inc. (incorporated by
    reference to Exhibit 2.1 to the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2004)3.1

Eleventh Amended and Restated
    Certificate of Incorporation of the Registrant, as amended
    (incorporated by reference to Exhibit 3.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004)3.2

Certificate of Amendment of
    Eleventh Amended and Restated Certificate of Incorporation of
    the Registrant Changing its Name from WebMD Corporation to
    Emdeon Corporation (incorporated by reference to
    Exhibit 3.1 to the Registrants Current Report on
    Form 8-K
    filed on October 19, 2005)3.3

Certificate of Designations for
    Convertible Redeemable Exchangeable Preferred Stock, as amended
    (incorporated by reference to Exhibit 3.2 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004)3.4

Amended and Restated Bylaws of the
    Registrant, as currently in effect (incorporated by reference to
    Exhibit 3.2 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004)4.1

Specimen Common Stock certificate
    (incorporated by reference to Exhibit 4.1 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000)4.2

Indenture, dated as of
    June 25, 2003, between WebMD Corporation and The Bank of
    New York (incorporated by reference to Exhibit 4.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003)4.3

Form of 1.75% Convertible
    Subordinated Note Due 2023 (included in Exhibit 4.5) E-1




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##### Table of Contents



Exhibit No.

Description4.4

Registration Rights Agreement
    dated as of June 25, 2003 between WebMD Corporation and
    Banc of America Securities LLC (incorporated by reference to
    Exhibit 4.2 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003)4.5

Indenture, dated as of
    August 30, 2005, between WebMD Corporation and The Bank of
    New York (incorporated by reference to Exhibit 4.1 to
    Amendment, filed November 9, 2005 to the Registrants
    Current Report on
    Form 8-K
    filed on August 30, 2005)4.6

Form of
    31/8%
    Convertible Note Due 2025 (included in Exhibit 4.7)4.7

Registration Rights Agreement
    dated as of August 30, 2005 between the Registrant and
    Citigroup Global Markets Inc. (incorporated by reference to
    Exhibit 4.2 to the Amendment, filed November 9, 2005,
    to the Registrants Current Report on
    Form 8-K
    filed on August 30, 2005)4.8

Convertible Redeemable
    Exchangeable Preferred Stock Purchase Agreement, dated as of
    March 4, 2004, between CalPERs/PCG Corporate Partners, LLC
    and WebMD Corporation (incorporated by reference to
    Exhibit 4.9 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004)4.9

Form of Stock Certificate for
    Convertible Redeemable Exchangeable Preferred Stock (included in
    Exhibit 3.2)4.10

Form of Indenture for 10%
    Subordinated Notes due 2010 (included in Exhibit 3.3)4.11

Form of 10% Subordinated Note due
    2010 (included in Exhibit 3.3)10.1

Form of Indemnification Agreement
    to be entered into by the Registrant with each of its directors
    and officers (incorporated by reference to Exhibit 10.1 to
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002)10.2

WebMD Health Corp. Long-Term
    Incentive Plan for Employees of Subimo, LLC10.3

Healtheon/WebMD Media Services
    Agreement dated January 26, 2000 among the Registrant,
    Eastrise Profits Limited and Fox Entertainment Group, Inc.
    (incorporated by reference to Exhibit 10.5 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000) , as amended by
    Amendment dated February 15, 2001 (incorporated by
    reference to Exhibit 10.2 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001)10.4**

Employment Agreement, dated as of
    November 9, 2006, between the Registrant and Mark Funston
    (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on November 15, 2006)10.5**

Amended and Restated Employment
    Agreement, dated as of August 3, 2005 between the
    Registrant and Martin J. Wygod (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on August 5, 2005)10.6**

Letter Agreement, dated as of
    February 1, 2006 between the Registrant and Martin J. Wygod
    (incorporated by reference to Exhibit 10.3 to the
    Registrants Current Report on
    Form 8-K
    filed on February 2, 2006)10.7**

Employment Agreement, dated
    September 23, 2004, between the Registrant and Kevin
    Cameron (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed September 28, 2004)10.8**

Letter Agreement, dated as of
    February 1, 2006 between the Registrant and Kevin M.
    Cameron (incorporated by reference to Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K
    filed on February 2, 2006)10.9**

Amended and Restated Stock Option
    Agreement dated August 21, 2000 between the Registrant (as
    successor to Medical Manager Corporation) and Martin J. Wygod
    (incorporated by reference to Exhibit 10.21 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000, as amended by
    Amendment No. 1 on
    Form 10-K/A)10.10**

Letter Agreement, dated as of
    April 27, 2005, between the Registrant. and Wayne T.
    Gattinella (incorporated by reference to Exhibit 99.1 to
    the Registrants Current Report on
    Form 8-K
    filed on May 3, 2005) E-2




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##### Table of Contents



Exhibit No.

Description10.11**

Employment Agreement, dated as of
    April 28, 2005, between WebMD, Inc. and Wayne T. Gattinella
    (incorporated by reference to Exhibit 99.1 to the
    Registrants Current Report on
    Form 8-K
    filed on May 3, 2005)10.12**

Employment Agreement dated as of
    February 1, 2006, between the Registrant and Charles A.
    Mele (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed February 2, 2006)10.13**

Form of Amendment to the
    Registrants Equity Compensation Plans and Stock Option
    Agreements (incorporated by reference from Exhibit 10.1 to
    the Quarterly Report on
    Form 10-Q
    filed by the Registrant on November 9, 2006)10.14**

WebMD Corporation 2001 Employee
    Non-Qualified Stock Option Plan, as amended (incorporated by
    reference to Exhibit 10.46 to the Registrants
    Form 10-K
    for the year ended December 31, 2001, as amended by
    Amendment No. 1 on
    Form 10-K/A)10.15**

WebMD Corporation 2002 Restricted
    Stock Plan and Form of Award Agreement (incorporated by
    reference to Exhibit 10.21 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2002)10.16**

Amended and Restated Emdeon 1996
    Stock Plan (incorporated by reference to Exhibit 10.8 to
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006)10.17**

WebMD Corporation Amended and
    Restated 1998 Employee Stock Purchase Plan (incorporated by
    reference to Exhibit 99.27 to the Registrants
    Registration Statement on
    Form S-8
    (No. 333-47250)
    filed October 4, 2000)10.18**

Amended and Restated Emdeon
    Corporation 2000 Long-Term Incentive Plan (incorporated by
    reference from Annex E to the Registrants Proxy
    Statement for its 2006 Annual Meeting filed on August 14,
    2006)10.19**

WebMD, Inc. Amended and Restated
    1997 Stock Incentive Plan, as amended (incorporated by reference
    to Exhibit 10.2 to the Registrants Registration
    Statement on
    Form S-8
    (No. 33-90795)
    filed November 12, 1999)10.20**

Envoy Stock Plan (incorporated by
    reference to Exhibit 99.1 to the Registrants
    Registration Statement on
    Form S-8
    (No. 333-42616)
    filed July 31, 2000)10.21**

Amended and Restated 1989
    Class A Non-Qualified Stock Option Plan of Synetic, Inc.
    (incorporated by reference to Exhibit 10.1 to Synetic,
    Inc.s Registration Statement on
    Form S-1
    (No. 333-28654)
    filed May 18, 1989)10.22**

Amended and Restated 1989
    Class B Non-Qualified Stock Option Plan of Synetic, Inc.
    (incorporated by reference to Exhibit 10.2 to Synetic,
    Inc.s Registration Statement on
    Form S-1
    (No. 333-28654)
    filed May 18, 1989)10.23**

1991 Director Stock Option Plan of
    Synetic, Inc. (incorporated by reference to Exhibit 4.2 to
    Synetic, Inc.s Registration Statement on
    Form S-8
    (No. 333-46640)
    filed March 24, 1992)10.24**

Amended and Restated 1991 Special
    Non-Qualified Stock Option Plan of Synetic, Inc. (incorporated
    by reference to Exhibit 4.3 to Synetic, Inc.s
    Registration Statement on
    Form S-8
    (No. 333-36041)
    filed September 19, 1997)10.25**

Medical Manager Corporations
    1996 Amended and Restated Long-Term Incentive Plan (incorporated
    by reference to Exhibit 10.1 to Medical Manager
    Corporations (Commission File
    No. 0-29090)
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 1998)10.26**

Medical Manager Corporations
    1996 Amended and Restated Non-Employee Directors Stock
    Plan (incorporated by reference to Exhibit 10.2 to Medical
    Manager Corporations (Commission File
    No. 0-29090)
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 1997)10.27**

1996 Class C Stock Option
    Plan of Synetic, Inc. (incorporated by reference to
    Exhibit 4.1 to Synetic, Inc.s Registration Statement
    on
    Form S-8
    (No. 333-36041)
    filed September 19, 1997)10.28**

1997 Class D Stock Option
    Plan of Synetic, Inc. (incorporated by reference to
    Exhibit 4.2 to Synetic, Inc.s Registration Statement
    on
    Form S-8
    (No. 333-36041)
    filed September 19, 1997)10.29**

1998 Class E Stock Option
    Plan of Synetic, Inc. (incorporated by reference to
    Exhibit 4.1 to Synetic, Inc.s Registration Statement
    on
    Form S-8
    (No. 333-72517)
    filed February 17, 1999) E-3




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##### Table of Contents



Exhibit No.

Description10.30**

The 1999 Medical Manager
    Corporation Stock Option Plan for Employees of Medical Manager
    Systems, Inc. (incorporated by reference to Exhibit 10.28
    to Medical Manager Corporations Annual Report on
    Form 10-K
    for the year ended June 30, 1999)10.31**

1998 Porex Technologies Corp.
    Stock Option Plan of Synetic, Inc. (incorporated by reference to
    Exhibit 4.2 to Synetic, Inc.s Registration Statement
    on
    Form S-8
    (No. 333-72517)
    filed February 17, 1999)10.32**

CareInsite, Inc. 1999 Officer
    Stock Option Plan (incorporated by reference to
    Exhibit 10.18 to Amendment No. 6 to CareInsite,
    Inc.s Registration Statement on
    Form S-1
    (No. 333-75071)
    filed June 11, 1999)10.33**

CareInsite, Inc. 1999 Employee
    Stock Option Plan (incorporated by reference to
    Exhibit 10.17 to Amendment No. 6 to CareInsite,
    Inc.s Registration Statement on
    Form S-1
    (No. 333-75071)
    filed June 11, 1999)10.34**

CareInsite, Inc. 1999 Director
    Stock Option Plan (incorporated by reference to Annex H to
    the Proxy Statement/Prospectus, filed on August 7, 2000,
    and included in the Registrants Registration Statement on
    Form S-4
    (No. 333-39592)10.35**

Amendment to the Company Stock
    Option Plans of Medical Manager Corporation and CareInsite, Inc.
    (incorporated by reference to Exhibit 99.28 to the
    Registrants Registration Statement on
    Form S-8
    (No. 333-47250)
    filed October 4, 2000)10.36**

2003 Non-Qualified Stock Option
    Plan for Employees of Advanced Business Fulfillment, Inc.
    (incorporated by reference to Exhibit 10.2 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003)10.37**

2004 Non-Qualified Stock Option
    Plan for Employees of Dakota Imaging, Inc. (incorporated by
    reference to Exhibit 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004)10.38**

2004 Non-Qualified Stock Option
    Plan for Employees of VIPS, Inc. (incorporated by reference to
    Exhibit 10.2 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004)10.39**

Stock Option Agreement between the
    Registrant and Wayne Gattinella dated August 20, 2001
    (incorporated by reference to Exhibit 4.8 to the
    Registrants Registration Statement on
    Form S-8
    (No. 333-888420)
    filed May 16, 2002)10.40**

Employment Agreement, dated as of
    September 23, 2003, between the Registrant and Andrew
    Corbin (incorporated by reference to Exhibit 10.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003)10.41**

Letter Agreement between the
    Registrant and Andrew C. Corbin dated November 3, 2005
    (incorporated by reference to Exhibit 10.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2005)10.42**

Letter Agreement, dated as of
    July 10, 2006, between the Registrant, Emdeon Practice
    Services, Inc. and Andrew C. Corbin (incorporated by reference
    from Exhibit 10.1 to the Current Report on
    Form 8-K
    filed by the Registrant on July 11, 2006)10.43

Amended and Restated Tax Sharing
    Agreement between WHC and the Registrant (incorporated by
    reference from Exhibit 10.1 to the Registrants
    Current Report on
    Form 8-K
    filed on February 16, 2006)10.44

Contribution, Assignment and
    Assumption Agreement, dated as of September 6, 2005, by and
    between WHC and the Registrant (incorporated by reference to
    Exhibit 10.5 to the WHC Registration Statement)10.45**

Form of Restricted Stock Agreement
    between WHC and Employees (incorporated by reference to
    Exhibit 10.48 to the WHC Registration Statement)10.46**

Form of Restricted Stock Agreement
    between WHC and Non-Employee Directors (incorporated by
    reference to Exhibit 10.49 to the WHC Registration
    Statement)10.47**

Form of Non-Qualified Stock Option
    Agreement between WHC and Employees (incorporated by reference
    to Exhibit 10.50 to the WHC Registration Statement) E-4




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##### Table of Contents



Exhibit No.

Description10.48**

Form of Non-Qualified Stock Option
    Agreement between WHC and Non-Employee Directors (incorporated
    by reference to Exhibit 10.51 to the WHC Registration
    Statement)10.49**

Amended and Restated WebMD Health
    Corp. 2005 Long-Term Incentive Plan (incorporated by reference
    from Annex E to WHCs Proxy Statement for its 2006
    Annual Meeting filed on August 14, 2006)10.50**

Form of Restricted Stock Agreement
    between the Registrant and Employees for Grants Under the
    Registrants 2000 Long-Term Incentive Plan (incorporated by
    reference from Exhibit 10.57 to the Registrants Annual
    Report on Form 10-K for the year ended December 31,
    2005)10.51**

Form of Non-Qualified Stock Option
    Agreement between the Registrant and Employees for Grants Under
    the Registrants 2000 Long-Term Incentive Plan
    (incorporated by reference from Exhibit 10.58 to the
    Registrants Annual Report on Form 10-K for the year
    ended December 31, 2005)10.52**

Form of Non-Qualified Stock Option
    Agreement between the Registrant and Employees for Grants Under
    the Registrants 1996 Stock Plan (incorporated by reference
    from Exhibit 10.59 to the Registrants Annual Report on
    Form 10-K for the year ended December 31, 2005)12.1

Computation of Ratio of Earnings
    to Fixed Charges14.1

Code of Business Conduct
    (incorporated by reference to Exhibit 14.1 to the
    Registrants Current Report on
    Form 8-K
    filed February 9, 2006)21

Subsidiaries of the Registrant23.1

Consent of Ernst & Young
    LLP, Independent Registered Public Accounting Firm24.1

Power of Attorney (see
    page 97)31.1

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

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

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

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

Audit Committee Charter
    (incorporated by reference to Annex A to the
    Registrants Proxy Statement for its 2006 Annual Meeting
    filed on August 14, 2006)99.2

Compensation Committee Charter
    (incorporated by reference to Annex B to the
    Registrants Proxy Statement for its 2006 Annual Meeting
    filed on August 14, 2006)99.3

Nominating Committee Charter
    (incorporated by reference to Annex C to the
    Registrants Proxy Statement for its 2006 Annual Meeting
    filed on August 14, 2006)99.4

Governance & Compliance
    Committee Charter (incorporated by reference from Annex D
    to the Registrants Proxy Statement for its 2006 Annual
    Meeting filed on August 14, 2006)99.5

Restated Certificate of
    Incorporation of WHC (incorporated by reference to
    Exhibit 99.1 to the Registration Statement on
    Form 8-A
    filed by WHC on September 29, 2005 (referred to in this
    Exhibit Index as the WHC
    Form 8-A)99.6

By-laws of WHC (incorporated by
    reference to Exhibit 99.2 to the WHC
    Form 8-A)99.7

Form of Services Agreement between
    WHC and the Registrant (incorporated by reference to
    Exhibit 10.2 to WHCs Registration Statement on
    Form S-1
    (No. 333-124832)
    (referred to in this Exhibit Index as the WHC
    Registration Statement))99.8

Form of Indemnity Agreement
    between WHC and the Registrant (incorporated by reference to
    Exhibit 10.3 to the WHC Registration Statement)99.9

Form of Intellectual Property
    License Agreement between WHC and the Registrant (incorporated
    by reference to Exhibit 10.4 to the WHC Registration
    Statement)99.10

Form of Private Portal Services
    Agreement between the Registrant and WebMD, Inc. (incorporated
    by reference to Exhibit 10.6 to the WHC Registration
    Statement)99.11

Form of Content License Agreement
    between the Registrant and WebMD, Inc. (incorporated by
    reference to Exhibit 10.7 to the WHC Registration
    Statement) E-5




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##### Table of Contents



Exhibit No.

Description99.12

Form of Database Agreement between
    the Registrant and WebMD, Inc. (incorporated by reference to
    Exhibit 10.8 to the WHC Registration Statement)99.13

Amended and Restated Business
    Services Agreement, dated as of August 7, 2006, among
    Emdeon Practice Services, Inc. and WHC (incorporated by
    reference from Exhibit 10.1 to WHCs Current Report on
    Form 8-K
    filed on August 11, 2006)99.14

CDHP Marketing Plan Agreement,
    dated as of September 25, 2006, among EBS Master LLC, Envoy
    Corporation, Advanced Business Fulfillment LLC and WHC
    (incorporated by reference from Exhibit 10.2 to WHCs
    Current Report on
    Form 8-K
    filed on September 29, 2006)99.15

Amended and Restated Joint
    Development Agreement, dated as of August 7, 2006, among
    Emdeon Practice Services, Inc. and WHC (incorporated by
    reference from Exhibit 10.2 to WHCs Current Report on
    Form 8-K
    filed on August 11, 2006)99.16

Letter, dated February 2,
    2007, executed by WHC and the Registrant (incorporated by
    reference from Exhibit 10.1 to WHCs Current Report on
    Form 8-K
    filed on February 2, 2007)99.17

Amended and Restated Business
    Services Agreement, dated as of September 25, 2006, among
    EBS Master LLC, Envoy Corporation and WHC (incorporated by
    reference from Exhibit 10.1 to WHCs Current Report on
    Form 8-K
    filed on September 29, 2006)     *
    
    With respect to Exhibits 2.1 through 2.9, the exhibits and
    schedules to those Exhibits have been omitted pursuant to
    Item 601(b)(2) of Regulation S-K. The Registrant will
    furnish copies of any of the exhibits and schedules to the
    Securities and Exchange Commission upon request.**
    
    Agreement relates to executive compensation. E-6