##### Table of Contents



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, 2005oro

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: None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Common Stock, par value $.0001 per share
   þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



TABLE OF
    CONTENTS
  PageForward-Looking
    Statements


2PART IItem 1.


Business


3Item 1A.


Risk Factors


46Item 1B.


Unresolved Staff
    Comments


66Item 2.


Properties


66Item 3.


Legal
    Proceedings


68Item 4.


Submission of
    Matters to a Vote of Security Holders


72PART IIItem 5.


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


73Item 6.


Selected Financial
    Data


75Item 7.


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


77Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


101Item 8.


Financial
    Statements and Supplementary Data


102Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


102Item 9A.


Controls and
    Procedures


102Item 9B.


Other
    Information


102PART IIIItem 10.


Directors and
    Executive Officers of the Registrant


103Item 11.


Executive
    Compensation


103Item 12.


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


103Item 13.


Certain
    Relationships and Related Transactions


103Item 14.


Principal
    Accountant Fees and Services


103PART IVItem 15.


Exhibits and
    Financial Statement Schedules


104Signatures


105Financial
    Statements


F-1Index to
    Exhibits


E-1EX-10.23 AMENDED AND RESTATED LONG TERM INCENTIVE PLANEX-10.57 FORM OF RESTRICTED STOCK AGREEMENTEX-10.58 FORM OF NON QUALIFIED STOCK OPTION AGREEMENT / 2000 PLANEX-10.59 FORM OF NON QUALIFIED STOCK OPTION AGREEMENT / 1996 PLANEX-12.1 RATIO OF EARNINGS TO FIXED CHARGESEX-21.1 SUBSIDIARIES OF THE REGISTRANTEX-23.1 CONSENT OF PUBLIC ACCOUNTING FIRMEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO    ® ® ® tm ® DX ® tm tm tm ® ® ® sm ® ® ® ® ® ® ® ® ® ® sm ® ® ® ® ® tm ® sm
 1




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##### Table of Contents



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;
    diversion of resources to the process of evaluating alternatives
    with respect to our Emdeon Business Services and Emdeon Practice
    Services segments and uncertainties regarding the outcome of the
    process and its effects on those segments and on our company as
    a whole;
    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.     2




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##### Table of Contents



PART I  Item 1.
    Business  INTRODUCTION
  General
    Information
        07407-1361 (201) 703-3400.
  www.emdeon.com Form 10-K, Form 10-Q, Form 8-K, www.wbmd.com
  Overview
    of Our Businesses
    
    Emdeon Business Services.  We provide
    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, we provide clinical
    communications services that improve the delivery of healthcare
    by enabling physicians to manage laboratory orders and results,
    hospital reports and electronic prescriptions. We also provide
    decision support solutions, data warehousing solutions and
    consulting services to governmental, Blue Cross Blue Shield and
    commercial healthcare payers and perform software maintenance
    and consulting services for governmental agencies involved in
    healthcare.   3




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
    Emdeon Practice Services.  We have been
    helping medical practices automate practice management and
    streamline clinical workflow for nearly 25 years. Our
    innovative practice management and electronic health records
    software solutions are used by large and small medical practices
    in all specialties to improve efficiency and enhance patient
    care. Our systems and services automate:  
    scheduling, billing and other administrative tasks,
    maintenance of electronic medical records and
    documentation of patient encounters.  print-and-mail
    
    WebMD.  We are a leading provider of
    health information services to consumers, physicians and other
    healthcare professionals, employers and health plans through our
    public and private online portals and health-focused
    publications.  
    Public Online Portals.  Our public
    network of health portals enables consumers and physicians to
    readily access healthcare information relevant to their specific
    areas of interest and specialty. We provide a means for
    advertisers and sponsors to reach, educate and inform large
    audiences of health-involved consumers and clinically active
    physicians. We generate revenue by providing healthcare and
    consumer products companies with opportunities to reach our
    public portals audience through a variety of content sponsorship
    formats and advertising products. In addition, we create and
    distribute accredited online continuing medical education (or
    CME) programs funded by grants from a variety of sponsors.
    Private Online Portals.  Our 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. We generate revenues by
    licensing our private portals to employers and payers for use by
    their employees and members. Our private portals do not have any
    advertisements and do not generate revenue from advertising or
    sponsorship. 4




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##### Table of Contents




    Publishing and Other Services.  We also
    provide complementary offline health content. Our offline
    publications include The Little Blue Book,a physician
    directory, ACP Medicine and ACS Surgery: Principles of
    Practice, our medical reference textbooks, and WebMD the
    Magazine,a consumer publication launched in early 2005 that
    we distribute free of charge to physician office waiting rooms.
    We also conduct in-person CME as a result of our acquisition of
    the assets of Conceptis Technologies, Inc. (which we refer to as
    Conceptis) in December 2005.    
    Porex.  Porex develops, manufactures and
    distributes proprietary porous plastic products and components
    used in healthcare, industrial and consumer applications. Our
    Porex customers include both end-users of our finished products,
    as well as manufacturers that include our components in their
    products for the medical device, life science, research and
    clinical laboratory, surgical and other markets. Porex is an
    international business with manufacturing operations in North
    America, Europe and Asia and customers in more than 65
    countries. Porex revenue was $79.1 million in 2005 and
    $77.1 million in 2004.    Recent
    Developments
  Evaluation of Strategic Alternatives Related to Emdeon
    Business Service and Emdeon Practice Service
    Segments.
  New Stock Repurchase Program.
  Acquisition of eMedicine.com, Inc.
 5




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HEALTHCARE
    INFORMATION SERVICES AND TECHNOLOGY SOLUTIONS
      Emdeon
    Business Services
  Overview
      print-and-mail
   6




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Customer
    and Vendor Relationships
  Customers.
  
    Healthcare Providers.  Emdeon Business Services
    can help healthcare providers automate every step of the
    reimbursement cycle, including: checking patient coverage
    eligibility information; seeking pre-authorization from a payer
    for services; submitting and tracking claims; and automated
    payment posting, credit card billing and patient statement
    processing. Our EDI connectivity services reduce paperwork and
    the need for communication by mail, telephone and fax, resulting
    in cost savings for providers, as well as for payers. These
    services also expedite the reimbursement process, which can
    result in a lower average number of outstanding accounts
    receivable days for providers. In addition, the use of EDI for
    eligibility and other coverage-related transactions can save
    hospital, physician and dentist office staff significant amounts
    of time compared to phone or other individual verification
    methods and allow them to provide faster answers to patient
    questions regarding coverage.
    Healthcare Payers.  
    General.  For a healthcare payer, the
    administrative cost of supporting patient medical encounters
    includes eligibility and benefit information distribution,
    intake of paper and electronic claims, claim adjudication,
    payment and explanation of benefits (or EOB) distribution, as
    well as a wide variety of member and provider service and
    communication activities. Emdeon Business Services provides
    services that help automate and reduce the cost and improve the
    accuracy of these processes. Specifically, our electronic
    transaction services automate the data exchange between
    healthcare providers and payers for patient eligibility and
    benefits information, claims transactions, remittance
    information, referrals, claim status information and other
    processes.
    Managed Gateway Services.  Payers can outsource
    to us responsibility for acting as the gateway through which
    their electronic claims are received. We believe that payers
    using us as their managed gateway for inbound claims and
    claim-related transactions benefit from cost savings, improved
    reliability and improved auto-adjudication rates. Our systems
    can apply customized payer-specific business rules to these
    transaction processes to further improve payer auto-adjudication
    rates (which means the percentage of claims that are adjudicated
    by the payers computer systems, without review by payer
    personnel), which provides additional cost savings to our
    clients. These automation tools, in conjunction with our imaging
    and scanning services for inbound transactions and
    print-and-mail
    services for remittances and other outbound communications,
    allow payers to better focus on their core activities: provider
    network management, employer marketing and contracting, benefit
    plan design, and member service. In addition, by outsourcing
    patient encounter transaction processes to us, payers can reduce
    their capital expenses and operating costs.  Information System Vendors.
  Clearinghouses.
 7




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Our
    Reimbursement Cycle Solutions
  General.
  
    beginning with patient insurance eligibility and benefit
    verification,
    continuing through the claim submission process,
    followed by tracking the reimbursement through claim status
    inquiries, and
    concluding with electronic remittance information and payment
    posting.      and/or
  ABF. print-and-mail
    ExpressBill. print-and-mail
 8




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
    Patient Mailings.  On behalf of healthcare
    provider customers, we print invoices, account statements,
    collection letters, recall notices and other communications and
    mail them to patients.
    Paper Claims.  Claims that cannot be sent
    electronically to payers can be sent by healthcare providers
    electronically to ExpressBill, where we print and mail them on
    their behalf.
    Payment Processing.  We process payments on
    behalf of providers and other customers, receiving and
    depositing checks, posting payments and transmitting funds in
    accordance with customer instructions.
    Electronic Presentment and Payment
    Services.  Our electronic presentment and payment
    services offer healthcare providers the ability to present
    statement and invoice images to patients electronically and to
    receive payment via the Internet.  Proprietary Transaction Management
    Applications.
  
    Emdeon Claim Master.  Through our Emdeon Claim
    Master service, providers can securely access our transaction
    services through the Internet. Emdeon Claim Master can be used
    as a stand-alone system or as a complement to a practice
    management system or hospital information system. Claims are
    captured from the source healthcare information system and
    incorporated into the Emdeon Claim Master relational database to
    be tracked through event-driven updates. The Emdeon Claim Master
    database serves as the repository for all claim management
    functions including viewing, editing (in real time), correcting,
    submitting and managing payer responses. During validation,
    claims are separated into clean claims and those
    needing additional information. Clean claims are passed on to
    our clearinghouse in a HIPAA-compliant format and then submitted
    to the appropriate payers. Claims needing additional information
    are edited, corrected, and then submitted. With Emdeon Claim
    Masters wide array of reporting and display options,
    providers can clearly understand the location and status of any
    claim or batch of claims at any given time, including the status
    of all claims in the system, types of claim errors and list of
    claims sorted by dollar amount, work queue and payer.
    Emdeon Office.  Through our Emdeon Office
    Internet-based service, providers can securely access our
    transaction services through either a standard
    dial-up or
    high speed DSL or cable modem. Emdeon Office can be used as a
    stand-alone system or as a complement to a practice management
    system through an import and data management function that
    allows transactions to be generated from the practice management
    system and submitted through Emdeon Office. In addition, our
    practice management system vendor partners may elect to market a
    private-label brand version of Emdeon Office.
    Emdeon Assistant.  Emdeon Assistant integrates
    with hospital information systems to automate various
    registration activities such as insurance eligibility
    verification, credit checking and address verification. Emdeon
    Assistant can be configured to automatically perform real-time
    tasks during patient registration. This saves the registration
    staff time by eliminating the need to use separate systems for
    registration and for eligibility verification. The eligibility
    response can be automatically stored within the patient record
    as a permanent reference.
    Emdeon Self-Pay and Receivable
    Analysis.  Emdeon Self-Pay and Receivable Analysis
    is an electronic screening service designed to verify Medicaid
    and other forms of insurance eligibility in an electronic batch
    format. The healthcare provider submits a file electronically
    and the file is processed against the Emdeon payer databases to
    determine eligibility. Emdeon Business Services customers use
    this service to identify Medicaid and other forms of eligibility
    that may apply to patients who have been classified as not
    having coverage. The resulting reclassification often results in
    significant reimbursements.
    Emdeon Accupost.  Emdeon Accupost automates the
    posting of payments received from governmental and commercial
    payers that provide an electronic remittance advice into the
    providers financial 9




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Our
    Clinical Solutions
    
    electronic ordering of clinical tests and the reporting of test
    results between healthcare providers and labs, and
    electronic prescribing that references medication histories,
    payer formularies, and drug usage reports at the point of care.    ViPS
    Government Solutions.
    
    Centralized Medicare Beneficiary Eligibility Transaction
    System.  This system will be used by healthcare
    providers and other submitters, network service providers and
    clearinghouses. ViPS is providing overall program management for
    this system. For this project, ViPS, acting as the prime
    contractor to the government, is working with other Emdeon
    Business Services units and benefiting from their EDI expertise
    and is also working with Northrop Grumman Mission Systems.
    System to Support the Retiree Drug Subsidy 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, is working
    with Group Health Incorporated (GHI), Arkansas Blue Cross Blue
    Shield and Northrop Grumman Mission Systems on this project,
    which includes responsibility for processing enrollment
    applications and payment requests, issuing payments and 10




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remittance advices to eligible employers, providing a call
    center, conducting outreach activities, performing fraud
    analysis and providing related training.  
    Customer Support for Medicare Modernization
    (CSMM).  Under the CSMM task order, ViPS is
    responsible for providing support to the various Part D
    Plans in order to enable them to interface with CMS to provide
    the new prescription drug benefit. The support includes
    facilitating data center connectivity and access 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.
    Drug Data Processing System (DDPS).  The goal
    of this project is to develop and implement a system to receive
    and validate the new Medicare drug claim data, populate a data
    warehouse, interface with other CMS systems, and perform
    analysis of the data to support payment reconciliation. The
    scope of work was expanded in July 2005 to include development
    of a parallel solution using Teradata technology. We understand
    that CMSs vision is that this technology will ultimately
    replace the core solution and be the basis for its future data
    warehouse solutions.
    Coordination of Benefits (COB).  COB is at the
    center of several of the new MMA initiatives, including an
    expanded scope to collect Part D COB data. The COB contract
    establishes, 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 GHI,
    developed, implemented, and currently maintains the multiple
    subsystems that collectively are responsible for processing
    these COB functions.    Healthpayer Solutions. ®
  
    MCSource.  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 address critical issues such as medical
    cost and utilization, provider profiling, disease management,
    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 BCBS Federal Employee Program,
    where it is used to manage a data warehouse covering
    approximately four million lives and five years of member data.
    STARSentinel.  STARSentinel is an early-warning
    detection system 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 with
    maximum productivity.
    MedMeasures
    Suite.  HEDIS®
    (Health Plan Employer Data and Information Set) is a set of
    standardized measures, updated annually, that is used by managed
    health care plans to measure, among other things, quality of
    care and service. Employers, consultants and consumers use HEDIS
    data, along with other accreditation information, to help them
    select a health plan. Health plans use HEDIS results to make
    improvements in their quality of care and service. Our
    MedMeasures Suite supports HEDIS reporting and other quality
    initiatives through an integrated data warehouse and decision
    support environment.   11




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Sales and
    Marketing
    
    We promote our services for providers to organizations that have
    relationships with or access to a large number of providers,
    such as practice management systems vendors, hospital
    information systems vendors, practice management companies and
    other clearinghouses. In certain cases, we agree to pay a sales
    commission to these organizations as an inducement to use Emdeon
    Business Services as the clearinghouse for the transactions made
    through their systems or by providers with which they have
    relationships. We also market our services directly to small and
    large physician practices, dentists, hospitals and other
    healthcare providers. We offer our payer customers the
    opportunity to work with us in targeted programs to educate
    physicians and dentists to increase the utilization of
    electronic services. When a payer agrees to participate in such
    a program, Emdeon utilizes information supplied by the payer to
    target providers that may not be sending claims electronically.
    A team of sales, marketing and account management personnel
    market our services directly to healthcare payers. In addition,
    in the post-adjudication services area, we have established
    relationships with vendors of claims processing software.
    In the pharmacy EDI area, Emdeon Business Services has
    established relationships with large retail pharmacy chains and
    pharmacy software vendors.
    A team of account management personnel, supported by
    professional services representatives, markets our ViPS
    Government Solutions Group products and services. The Government
    Solutions Group extends its government sales capabilities
    through relationships with leading government contractors,
    including Computer Sciences Corp., SAIC, BearingPoint and
    Northrop Grumman. ViPS often bids on government projects
    together with one or more of these companies. ViPS is seeking to
    extend its government services reach into additional government
    agencies.
    ViPS Healthpayer Solutions Group markets its products and
    services nationally through a direct sales organization. Because
    of ViPS long-standing industry relationships, particularly
    with BCBS plan organizations and other large commercial payers,
    ViPS is often invited to bid on contracts to be awarded based on
    competitive bidding procedures.    Emdeon
    Practice Services
  Overview
    
    automate scheduling, billing, receivables management and other
    administrative and financial management tasks,
    enable providers to maintain electronic medical records and to
    automate the documentation of patient encounters, and
    facilitate the use of electronic data interchange for
    administrative and clinical healthcare transactions.   12




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##### Table of Contents




    our Emdeon Network Services administrative transactions
    services, generally on a per provider per month subscription
    basis or a per transaction basis; and
    our clinical transaction services, on a per provider per month
    subscription basis.  Practice
    Management Systems
  Intergy Practice. easy-to-navigate point-and-click
        The Medical Manager.
 13




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##### Table of Contents



Medware.
  HealthPro XL.
  Other Practice Management
    Systems.
  Clinical
    Solutions
    Intergy EHR.
  
    PhysicianFlow technology that enables physicians to access
    information from a variety of sources  including
    the patient chart, imaging systems, practice management systems,
    and laboratory systems  all from one screen.
    clinical encounter forms that guide the creation of
    documentation and capture structured data to facilitate correct
    coding and outcomes reporting. Physicians can review and approve
    coding as they create the encounter note so that billed
    procedures are appropriately documented. Intergy EHR provides a
    forms library for major medical specialties, including primary
    care, pediatrics, obstetrics/gynecology, cardiology, orthopedics
    and others.
    a clinical workflow manager, integrated with the electronic
    chart, that allows the physician to communicate with staff
    members and that automatically generates tasks list items for
    the physician when, for example, a lab report is ready, a
    transcription needs to be signed or a prescription needs
    approval. 14




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
    KnowledgeLink technology to enable physicians to access
    information from Medscape and other drug and medical reference
    information. This enables the physician to share education with
    the patient at the time of care, and document the event in the
    encounter notes.
    a selection of various input devices for physicians, including
    desktop, laptop and tablet PCs, and handheld personal digital
    assistant (PDA) devices. Handheld systems can be used for
    offline charge capture, schedule review and dictation, and
    tablet PCs for full mobile functionality. Physicians also can
    assign tasks and access clinical information from Intergy EHR
    systems connected to the practice over the Internet or over a
    wireless network.
    a prescription module that automates the process of writing and
    tracking prescriptions, providing improved efficiency with both
    the clinical and administrative aspects of the prescription
    process and can be linked to our optional clinical transaction
    services (see  Transaction Services
    below).
    a Laboratory System module that allows providers to access,
    review and maintain all lab results from within the Intergy EHR
    system. Practices may also arrange to place orders and receive
    accurate and timely lab test results via a direct,
    bi-directional link with the laboratory. Test results are
    received electronically from the laboratory and are stored
    directly in the patients file for viewing, printing and
    analysis.    Intergy EHR Imaging.
  Image Director.
  Intergy PACS.
  Intergy EHR PDA. point-of-care ® point-of-care
  
    appointment schedules, hospital rounds information and clinical
    tasks needing the providers attention;
    a user-friendly electronic prescription writer, with integrated
    drug utilization review, or DUR, and formulary checking, which
    electronically submits prescriptions to the patients
    chosen pharmacy and, at the same time, adds prescription
    information directly to the patients electronic medical
    record in the Intergy EHR system;
    electronic lab ordering and reporting of results that can be
    viewed using the handheld device; 15




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
    their patients electronic medical records, including
    demographic data, progress notes, medications, lab results,
    procedure histories and other information and transcribed
    patient documentation; and
    a fully customized encounter form for capturing patient charges,
    which displays procedure and diagnosis codes in customized
    checklists and automatically posts charge information to the
    practice management system.      Maintenance
    and Support Services
    
    provide customers with access to our telephone help desk,
    typically advising customers in the use and operation of our
    software and services and remotely accessing customers
    systems to provide support; and
    in most cases, provide customers with periodic releases updating
    our software.  on-site
  Transaction
    Services
  Emdeon Network Services.
   16




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##### Table of Contents



Clinical Transaction Services.
  Additional
    Features and Modules
  Remote Monitoring System.
  Analytics Reporting.
  Sales and
    Marketing
      WebMD
  Overview
    
    enable consumers 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;
    make it easier for physicians and other 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; and
    enable employers and health plans to provide their employees and
    plan members with access to personalized health and benefit
    information and decision-support technology that helps them make
    more informed benefit, provider and treatment choices.  The WebMD Health Network www.WebMD.com WebMD Health www.Medscape.com Medscape from WebMD
 17




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##### Table of Contents



The
    WebMD Health Network The WebMD Health Network
  The WebMD
    Health Network.
      WebMDs
    Public Portals: The WebMD Health Network
  Introduction
  The WebMD Health Network
 18




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##### Table of Contents



Owned Web Sites. The WebMD Health Network The WebMD
    Health Network
  Portal Site

Descriptionwww.webmd.com

WebMD
    Health, WebMDs
    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
    1,400 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.medscape.com

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

A site for physicians and other
    healthcare professionals containing articles on
    7,000 diseases and disorders.www.emedicinehealth.com

A health information site
    containing articles written and edited by physicians for
    patients and consumers.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.   Other Sites. AOL Health with WebMD FoxNews Health
    Channel with WebMD Psychologytoday.com HealthBoards.com.
  Consumer
    Portals in The WebMD Health Network
  Introduction.
  Overview of Content and Service
    Offerings. WebMD Health The
    WebMD Health Network The WebMD Health
    Network
 19




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##### Table of Contents



Decision-Support Services.
  Membership; Online Communities. e-newsletters e-newsletters. WebMD Health Manager.
  Relationship with AOL.
    Professional
    Portals in the WebMD Health Network
  Introduction. Medscape from WebMD, theheart.org eMedicine
    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.  Content.
 20




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##### Table of Contents



Medscape General Medicine (MedGenMed), MedGenMed, www.medgenmed.com MedGenMeds
  Membership. Medscape MedPulse ® e-mail Medscape
  Continuing Medical Education (CME). Medscape Medscape
    Medscape
  Recent
    Public Portals Acquisitions
  www.theheart.org.
 21




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##### Table of Contents



www.eMedicineHealth.com
  Advertising
    and Sponsorship
  The WebMD Health Network The WebMD
    Health Network
  The WebMD Health Network
  
    we displayed over 2.3 billion pages of healthcare
    information to users visiting The WebMD Health Networksites in 2005, which we believe was 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
    the broad reach of Medscapeseducational related
    activities.    
    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 Content 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.    
    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.These are original online events
    featuring live streaming video, audio and synchronized visual
    presentation by experts. 22




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
    CME Cases.These are original CME activities
    presented by healthcare professionals in a patient case format.
    Resource Centers.Resource centers are
    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
    The WebMD Health Network. The
    WebMD Health Network The WebMD Health
    Network,
  Private
    Portals
  Introduction. out-of-pocket
  easy-to-use
   23




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##### Table of Contents



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 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 yearlong resource for consumers to
    estimate the total treatment costs of over 300 procedures,
    interventions or tests.
    WebMD Integration Services.  WebMD offers a set
    of sophisticated integration services that facilitates seamless
    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 WebMDs 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 Data
    Interchange services import data from medical, pharmacy and lab
    claims information into the WebMD Health and Benefits Manager.
    WebMD Provider Decision-Support.  As a result
    of WebMDs acquisition of HealthShare Technology, Inc.
    (which we refer to as HealthShare) in March 2005, its
    decision-support suite now provides the capability for 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 charges for procedures or illnesses.
    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 24




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##### Table of Contents



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; and
    increased conformance with benefit plan and clinical protocols.    
    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.  Relationships with Private Portal
    Licensees.
  The WebMD Health Network The WebMD Health Network
  Sales and Marketing.
 25




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##### Table of Contents



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.com site and its
    private portal deployment of WebMD Health Personal Managerfor compliance with its more than 50 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.
    Health on the Net Foundation.  WebMDs
    WebMD.com and MedicineNet.com sites comply 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
  Offline
    Publications
    The Little Blue Book. The Little Blue Book. The Little Blue Book The Little Blue Book The Little Blue Book up-to-date
 26




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##### Table of Contents



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
  Offline
    CME Services
    Seasonality
      Competition
    for Our Healthcare Information Services and Technology
    Solutions
    Competitors
    to Emdeon Business Services and Emdeon Practice
    Services
    
    healthcare information system vendors and support providers,
    including physician practice management system and EMR system
    vendors and support providers;
    transaction processing companies, including those providing EDI
    and/or
    Internet-based services and those providing services through
    other means, such as paper and fax;
    large information technology consulting service providers; and
    health insurance companies, pharmacy benefit management
    companies and pharmacies that provide or are developing
    electronic transaction services for use by healthcare providers
    and/or by
    their members and customers. 27




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Competitors
    to WebMD
    Public Portals. not-for-profit
 28




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##### Table of Contents




    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; 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.  Private Portals.
  
    providers of decision-support tools, such as Hewitt Associates
    LLP and Subimo, LLC;
    wellness and disease management vendors, including Mayo
    Foundation for Medical Education and Research and Staywell
    Productions/MediMedia USA, Inc.;
    suppliers of online health management applications, including
    HealthMedia, Health A-Z and Consumer Health Interactive; and
    health information services and health management offerings of
    health plans and their affiliates, including those of Humana,
    Aetna and United Healthcare.  Offline Publications.
  POREX
  Overview
      Porex
    Products
  Porous Plastics.
 29




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
    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.
    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. ®
  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. 30




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##### Table of Contents




    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.  Competition
  ®
    Raw
    Materials
    Marketing
     31




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EMPLOYEES
    DEVELOPMENT
    AND ENGINEERING
      INTELLECTUAL
    PROPERTY
         32




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##### Table of Contents



Porex Corporation v.
    Kleanthis Dean Haldopoulos, Benjamin T. Hirokawa and Micropore
    Plastics, Inc.
  GOVERNMENT
    REGULATION
  Introduction
  General.
  Healthcare Regulation.
 33




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##### Table of Contents



Other Regulation. e-mail,
  Health
    Insurance Portability and Accountability Act of 1996
  General.
  
    the Standards for Electronic Transactions, published
    August  17, 2000, which we refer to as the Transaction
    Standards;
    the Standards for Privacy of Individually Identifiable Health
    Information, published December 28, 2000, which we refer to
    as the Privacy Standards;
    the Standard Unique Employer Identifier, published May 31,
    2002;
    the Health Insurance Reform: Security Standards, published
    February 20, 2003, which we refer to as the Security
    Standards; and
    the Standard Unique Health Identifier for Health Care Providers,
    published January 23, 2004, which we refer to as the NPI
    Standard.    Transaction Standards.
 34




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35




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##### Table of Contents



Privacy Standards.
    Unique Employer Identifier
    Standard.
 36




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##### Table of Contents



Security Standards.
    NPI Standard.
  Other
    Restrictions Regarding Confidentiality and Privacy of Patient
    Information
    Other
    Regulation of Transaction Services
   37




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##### Table of Contents



International
    Data Regulation
    Regulation
    of Healthcare Relationships
  Anti-kickback Laws.
  (e-prescibing) e-prescribing e-prescribing e-prescribing
   38




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##### Table of Contents



False Claims Laws.
  Regulation
    of Medical Devices
  Overview.
  Access to U.S. Market.
  
    510(k) Clearance Process.  To obtain 510(k)
    clearance, we 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 each manufacturer to 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. 39




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
    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 in 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.  Post-market Regulation.
  Products. DX DX and/or DX
  DX
  DX DX
 40




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##### Table of Contents



and/or
      Regulation
    of Drug and Medical Device Advertising and Promotion
  direct-to-consumer over-the-counter
    Drug Advertising.
 41




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##### Table of Contents



over-the-counter
  and/or and/or and/or
  ®
  Continuing Medical
    Education.
   42




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##### Table of Contents




    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 our Medscape Web site to levels that are
    lower than in the past; and
    may require us to make changes to how we offer or provide
    educational programs, including CME.    Medical
    Professional Regulation
    Consumer
    Protection Regulation
  General.
  CAN-SPAM Act. e-newsletters e-newsletters
 43




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##### Table of Contents



Regulation of Advertisements Sent by
    Fax.
      COPPA. WebMD Health,
  Regulation of Contests and
    Sweepstakes.
  FACTA.
  Data Protection Regulation.
 44




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Other Consumer Protection
    Regulation.
   45




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##### Table of Contents



Item 1A.
    Risk
    Factors      Risks
    Related to the Businesses of
    Emdeon Business Services and Emdeon Practice Services
  The
    financial results of Emdeon Business Services could be adversely
    affected to the extent 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
    Some
    of our customers compete with us and some, instead of using a
    third party provider, perform internally some of the same
    services that we offer
   46




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Emdeon
    Business Services transaction volume and financial results
    could be adversely affected if we do not maintain relationships
    with practice management system vendors and large submitters of
    healthcare EDI transactions
    Contractual
    relationships with governmental customers may impose special
    burdens on us and provide special benefits to those customers,
    including the right to change or terminate the contract in
    response to budgetary constraints or policy
    changes
    
    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: 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
 47




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##### Table of Contents



Lengthy
    sales, installation and implementation cycles for some Emdeon
    Business Services applications and some Emdeon Practice Services
    applications may result in unanticipated fluctuations in their
    revenues
  Emdeon Practice Services.
  ViPS.
  Emdeon
    Practice Services faces competition in providing support
    services to owners of The Medical Manager and other
    systems
      Risks
    Related to the Businesses of WebMD
  WebMD
    has incurred and may continue to incur losses
  and/or
   48




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##### Table of Contents



The
    timing of WebMDs advertising and sponsorship revenue may
    vary significantly from quarter to quarter
      
    timing of Food and Drug Administration, or 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
      If
    WebMD is unable to provide content that attracts and retains
    users to The WebMD Health Network at a level that is attractive
    to advertisers and sponsors, WebMDs revenue will be
    reduced
    
    its ability to hire and retain qualified authors, journalists
    and independent writers; 49




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##### Table of Contents




    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.    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 ACP Medicine ACS
    Surgery: Principles and Practice, up-to-date The
    Little Blue Book, The Little Blue Book
  ACP Medicine ACS Surgery up-to-date
  WebMD the Magazine WebMD the Magazine
  A
    decline in user traffic levels for The WebMD Health Network
    could have a material adverse effect on its advertising and
    sponsorship revenue
  e-mailed The WebMD Health
    Network
  The WebMD
    Health Network The WebMD
    Health Network The WebMD Health Networks
 50




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##### Table of Contents



WebMD
    may be unsuccessful in its efforts to increase advertising and
    sponsorship revenue from consumer products
    companies
    WebMD
    may be subject to claims brought against it as a result of
    content it provides
      WebMD
    faces potential liability related to the privacy and security of
    personal information it collects from consumer and healthcare
    professionals through its Web sites
    Changes
    in industry guidelines or government regulation could adversely
    affect WebMDs online Medscape CME offerings
   51




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##### Table of Contents



Medscape
    from WebMD,
      
    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 MedscapeWeb site 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 the Development and Performance of the Products and
    Services
    of Emdeon Business Services, Emdeon Practice Services and
    WebMD
  Our
    ability to generate revenue could suffer if we do not continue
    to update and improve our existing products and services and
    develop new ones
   52




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Developing
    and implementing new or updated products and services may take
    longer and cost more than expected
    New or
    updated products and services will not become profitable unless
    they achieve sufficient levels of market
    acceptance
  and/or
  
    our updated electronic medical records products;
    the business process outsourcing services for payers we have
    developed internally and through acquisitions; and
    our updated clinical transaction services.    pre-existing
  Achieving
    market acceptance of new or updated products and services is
    likely to require significant efforts and
    expenditures
   53




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We
    could be subject to breach of warranty, product liability or
    other claims if our software products, information technology
    systems or transmission systems contain errors or experience
    failures
        Performance
    problems with our systems or system failures, whether caused by
    hardware, software or other problems, could cause us 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.   54




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During
    times when we are making significant changes to our products and
    services or to systems we use to provide services, there are
    increased risks of performance problems
      If our
    systems or the Internet experience security breaches or are
    otherwise perceived to be insecure, our business could
    suffer
  denial-of-service
  Performance
    problems with Emdeon Business Services systems could
    affect our relationships with customers of Emdeon Practice
    Services
    Emdeon
    Business Services ability to provide transaction services
    depends on services provided by telecommunications
    companies
   55




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##### Table of Contents



Risks
    Applicable to Our Use of the Internet
    Our
    Internet-based services are dependent on the development and
    maintenance of the Internet infrastructure
  denial-of-service
    Delivery
    of Web-based services requires uninterrupted communications and
    computer service from third-party service providers and our own
    systems
    Third
    parties may challenge the enforceability of our online
    agreements
   56




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##### Table of Contents



Government
    regulation of the Internet could adversely affect our
    business
      Risks
    Related to Providing Products and Services to the Healthcare
    Industry
  Developments
    in the healthcare industry could adversely affect our
    business
    
    government regulation or private initiatives that affect the
    manner in which healthcare providers interact with patients,
    payers or other healthcare industry participants, including
    changes in pricing or means of delivery of healthcare products
    and services;
    consolidation of healthcare industry participants;
    reductions in governmental funding for healthcare; and
    adverse changes in business or economic conditions affecting
    healthcare payers or providers, pharmaceutical 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.     57




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
    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 we provide.    Governmental
    and private initiatives to support adoption of healthcare
    information technology may encourage additional companies to
    enter our markets, may provide advantages to our competitors and
    may result in the development of technology solutions that
    compete with ours
    
    For example, the Centers for Medicare & Medicaid
    Services (CMS) and the HHS Office of Inspector General (OIG)
    have proposed creating exceptions or safe harbors,
    for electronic health records software and related services, to
    current prohibitions on physician self-referrals and kickbacks.
    The goal of this initiative is to allow hospitals and physicians
    to have interoperable electronic health records systems without
    violating existing laws that govern their relationships. The
    rule change may cause additional competitors, including
    providers of hospital information systems, to compete to provide
    systems for use by our existing and potential physician practice
    customers and may reduce the prices we are able to charge for
    our systems and services.
    In addition, as part of its initiatives, HHS has indicated that
    it intends to facilitate the development and transfer of
    knowledge and technology used by the federal government to the
    private sector. As a result, the CMS has been collaborating with
    the Veterans Health Administration (VHA) and other key federal
    agencies on the development and distribution of electronic
    health record software called VistA-Office EHR for
    use in clinics and physician offices, based on the VistA system
    VHA uses for its own hospitals. VistA-Office EHR will compete
    with our IntergyEHR solution and appears likely to be offered at
    a significantly lower cost than IntergyEHR.  not-for-profit
  Government
    regulation of healthcare creates risks and challenges with
    respect to our compliance efforts and our business
    strategies
   58




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
    because we are 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
    Emdeon Business Services and Emdeon Practice Services and, to a
    lesser extent, WebMD;
    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 us to contract for
    sponsorships and advertising;
    because we sell items and services to healthcare providers and
    physicians, our sales and promotional practices must comply with
    federal and state anti-kickback laws;
    our healthcare connectivity and transaction-related
    administrative services must be provided in compliance with
    federal and state false claims 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.    Risks
    Related to Porexs Business and Industry
  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.   59




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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
      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
   60




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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
    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;
    potentially negative consequences from changes in tax laws;
    differing protection of intellectual property; and
    unexpected changes in regulatory requirements.  Environmental
    regulation could adversely affect Porexs
    business
     61




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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
      Recent
    and pending management changes may disrupt our operations and
    our ability to recruit and retain other personnel
    We
    cannot assure you that the decision to evaluate strategic
    alternatives with respect to our Emdeon Business Services and
    Emdeon Practice Services segments will result in us pursuing a
    transaction or that any such transaction would be successfully
    completed
   62




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Whether
    or not we pursue a transaction involving Emdeon Business
    Services and Emdeon Practice Services, there may be negative
    impacts on the businesses in those segments as a result of the
    evaluation of strategic alternatives
    Our
    success depends, in part, on our attracting and retaining
    qualified executives and employees
    We
    face significant competition for our products and
    services
    
    Key competitors to Emdeon Business Services and Emdeon Practice
    Services include: healthcare information system vendors and
    support providers, including physician practice management
    system and EMR system vendors and support providers; transaction
    processing companies, including those providing EDI
    and/or
    Internet-based services and those providing services through
    other means, such as paper and fax; large information technology
    consulting service providers; and health insurance companies,
    pharmacy benefit management companies and pharmacies that
    provide or are developing electronic transaction services for
    use by healthcare providers
    and/or by
    their members and customers. In addition, major software,
    hardware, information systems and business process outsourcing
    companies, both with and without healthcare companies as their
    partners, offer or have announced their intention to offer
    products or services that are competitive with those of Emdeon
    Business Services and Emdeon Practice Services.
    WebMDs public portals face competition from numerous other
    companies, both in attracting users and in generating revenue
    from advertisers and sponsors. We compete for users with online
    services and Web sites that provide health-related information,
    including both commercial sites and
    not-for-profit
    sites. We compete for advertisers and sponsors with 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. Since there are no substantial barriers to
    entry into the markets in which WebMDs public portals
    participate, we expect that competitors will continue to enter
    these markets.
    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.   63




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Third
    parties may bring claims as a result of the activities of our
    strategic partners or resellers of our products and
    services
    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 and may continue to incur losses
    Acquisitions,
    business combinations and other transactions may be difficult to
    complete and, if completed, may have negative consequences for
    our business and our securityholders
   64




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##### Table of Contents




    cash and cash equivalents on hand and marketable securities;
    proceeds from the incurrence of indebtedness; and
    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.     65




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We may
    not be able to raise additional funds when needed for our
    business or to exploit opportunities
    We
    expect that accounting for employee stock options using the fair
    value method will have a material impact on our consolidated
    results of operations and earnings per share
    Our
    use of a new corporate name and the related rebranding of some
    of our products and services could cause temporary disruptions
    in some of our businesses
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Headquarters
    Emdeon
    Business Services, Emdeon Practice Services and WebMD
    
    Nashville, Tennessee for Emdeon Business Services
    headquarters and primary data and call centers and
    Medifaxs operations; 66




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
    Towson, Maryland;
    Columbia, Maryland;
    St. Louis, Missouri;
    Somerset, New Jersey;
    Costa Rica;
    El Paso, Texas;
    Thousand Oaks, California;
    Waterloo, Iowa;
    Scottsdale, Arizona; and
    Toledo, Ohio.      
    Avon, Connecticut;
    Atlanta, Georgia;
    Acton, Massachusetts;
    Fords, New Jersey;
    Montreal, Canada;
    North Syracuse, New York;
    Omaha, Nebraska;
    Portland, Oregon; and
    San Clemente, California.    Porex
   67




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##### Table of Contents



Item 3.
    Legal
    Proceedings  Investigations
    by United States Attorney for the District of South Carolina and
    the SEC
       68




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##### Table of Contents



Litigation
    Regarding Distribution of Shares in Healtheon Initial Public
    Offering
   69




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##### Table of Contents



Rule 10b-5
            Porex
    Mammary Implant Litigation
     70




---



##### Table of Contents



Dakota
    Imaging, Inc. v. Sandeep Goel and Pradeep
    Goel
         71




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##### Table of Contents



M.D.
    On-Line, Inc. Litigation
    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
  Other
    Legal Proceedings
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   72




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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      High


Low2004First quarter

$
10.23


$
8.26Second quarter


9.65



8.26Third quarter


9.28



6.68Fourth quarter


8.33



6.462005First quarter

$
9.30


$
7.31Second quarter


10.57



8.26Third quarter


11.70



9.76Fourth quarter


11.13



6.61       
    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 and 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.   73




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##### Table of Contents



Repurchases of Equity Securities During the Fourth Quarter of
    2005
    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 Plans orPeriod

of Shares Purchased


Share


Programs(1)


Programs(1)10/01/05-10/31/05


210,000


$
9.92



210,000


$
54,852,35311/01/05-11/30/05


1,879,694
(2)


7.76



1,878,000



492,000,000
(3)12/01/05-12/31/05


66,905,919



8.20



66,905,919



Total


68,995,613


$
8.19



68,993,919


$
     (1)
    
    Except for 66,905,919 shares of Emdeon common stock
    purchased by Emdeon, at $8.20 per share, pursuant to a
    tender offer announced in November 2005 and completed in
    December 2005, these repurchases were made pursuant to 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 March 29, 2001, at which time
    Emdeon was authorized to use up to $50 million to purchase
    shares of its common stock. In November 2001, the maximum
    aggregate amount authorized for purchases under the Repurchase
    Program was increased to $100 million; in November 2002, it
    was increased to $150 million; in August 2004, it was
    increased to $200 million; and in November 2005 it was
    increased to $345 million. In connection with the
    announcement of the tender offer later in November 2005, as
    described above, the Repurchase Program was terminated. In
    January 2006, Emdeon announced a new stock repurchase program
    (the New Repurchase Program), at which time Emdeon
    was authorized to use up to $48 million to purchase shares
    of its common stock, from time to time, in market purchase or
    private transactions. In February 2006, the maximum aggregate
    amount authorized for purchases under the New Repurchase Program
    was increased to $68 million.(2)
    
    Includes 1,694 shares withheld from restricted stock that vested
    during November 2005 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 $8.20 per share,
    60,000,000 shares of Emdeon common stock pursuant to the
    tender offer referred to above in Note 1. That amount was
    later increased to 66,905,919 shares of Emdeon common stock. 74




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##### Table of Contents



Sales of
    Unregistered Securities During the Fourth Quarter of
    2005
    Item 6.
    Selected
    Financial Data    Years Ended
    December 31,2005


2004


2003


2002


2001(In thousands)Consolidated Statements of
    Operations Data:Revenue

$
1,276,879


$
1,160,351


$
963,980


$
871,696


$
842,020Costs and expenses:Cost of operations


717,047



666,431



564,939



509,744



568,321Development and engineering


58,494



54,161



42,985



43,467



43,572Sales, marketing, general and
    administrative


333,288



324,027



282,482



283,424



448,082Depreciation, amortization and other


71,767



57,765



62,434



125,593



2,394,857Legal expense


17,835



9,230



3,959







Impairment of long-lived and other
    assets


















3,816,115Restructuring and integration
    charge (benefit)






4,535







(5,850
)


266,755Loss (gain) on investments


6,365



(457
)


(1,659
)


(6,547
)


Interest income


21,531



18,717



22,901



19,590



30,409Interest expense


16,324



19,253



15,214



8,491



507Other expense (income), net


3,765



(121
)


(4,218
)


(3,844
)


Income (loss) from continuing
    operations before income tax (benefit) provision and minority
    interest


73,525



44,244



20,745



(63,192
)


(6,665,780
)Income tax (benefit) provision


(357
)


4,910



4,140



(10,079
)


2,588Minority interest in WebMD Health
    Corp., net of tax


908















Income (loss) from continuing
    operations


72,974



39,334



16,605



(53,113
)


(6,668,368
)(Loss) income from discontinued
    operations, net of tax










(33,611
)


3,411



(3,950
)Net income (loss)

$
72,974


$
39,334


$
(17,006
)

$
(49,702
)

$
(6,672,318
)Basic income (loss) per common
    share:Income (loss) from continuing
    operations

$
0.21


$
0.12


$
0.05


$
(0.17
)

$
(19.13
)Income (loss) from discontinued
    operations










(0.11
)


0.01



(0.01
)Net income (loss)

$
0.21


$
0.12


$
(0.06
)

$
(0.16
)

$
(19.14
)Diluted income (loss) per common
    share:Income (loss) from continuing
    operations

$
0.21


$
0.12


$
0.05


$
(0.17
)

$
(19.13
)Income (loss) from discontinued
    operations










(0.10
)


0.01



(0.01
)Net income (loss)

$
0.21


$
0.12


$
(0.05
)

$
(0.16
)

$
(19.14
)Weighted-average shares outstanding
    used in computing net income (loss) per common share:Basic


341,747



320,080



304,858



304,168



348,570Diluted


352,852



333,343



325,811



304,168



348,570   75




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##### Table of Contents



As of
    December 31,2005


2004


2003


2002


2001(In thousands)Consolidated Balance Sheets
    Data:Cash, cash equivalents and
    short-term investments

$
426,897


$
107,694


$
270,681


$
186,484


$
378,762Long-term marketable securities


4,481



515,881



456,034



456,716



18,769Working capital


395,001



51,512



206,356



197,192



363,333Total assets


2,195,683



2,292,234



2,129,642



1,766,248



1,601,454Convertible notes


650,000



649,999



649,999



300,000



Other long-term liabilities


15,353



4,500



4,965



4,659



4,127Minority interest in WebMD Health
    Corp


43,229















Convertible redeemable exchangeable
    preferred stock


98,533



98,299











Stockholders equity


1,074,736



1,224,216



1,178,597



1,153,801



1,255,512  76




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
  page F-1
  
    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 2005, 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 Policies and
    Estimates.  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, as well as
    a discussion of our outstanding debt and commitments, as of
    December 31, 2005.
    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
    Operating
    Segments
    
    Emdeon Business Services (formerly known as WebMD Business
    Services).  We provide solutions that automate key
    business and administrative functions for healthcare payers and
    providers, including: 77




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##### Table of Contents



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, we provide clinical
    communications services that improve the delivery of healthcare
    by enabling physicians to manage laboratory orders and results,
    hospital reports and electronic prescriptions. We also provide
    decision support solutions, data warehousing solutions and
    consulting services to governmental, Blue Cross Blue Shield and
    commercial healthcare payers and perform software maintenance
    and consulting services for governmental agencies involved in
    healthcare.  
    Emdeon Practice Services (formerly known as WebMD Practice
    Services).  We develop and market information
    technology systems for healthcare providers and related
    services, primarily under The Medical Manager, Intergy,
    HealthPro XL, Medware and Emdeon Network Services brands. These
    systems and services allow physician offices to automate their
    scheduling, billing and other administrative tasks, to transmit
    transactions electronically, to maintain electronic medical
    records and to automate documentation of patient encounters.
    WebMD (formerly known as WebMD Health).  We
    provide health information services to consumers, physicians,
    healthcare professionals, employers and health plans through our
    public and private online portals and health-focused
    publications. Our public network of health portals enables
    consumers and physicians to readily access health information
    relevant to their specific areas of interest or specialty. Our
    public portals sell advertising and sponsorship programs,
    including online continuing medical education (CME)
    services, to companies interested in reaching consumers and
    physicians online, including pharmaceutical, biotechnology,
    medical device and consumer products companies. Our private
    portals are licensed to employers and health plans for use by
    their employees and members and provide access to personalized
    health and benefit information and decision support services. In
    addition, we provide offline CME services and publish medical
    reference textbooks, healthcare provider directories and
    WebMD the Magazine,a consumer magazine distributed to
    physician office waiting rooms.
    Porex.  We develop, manufacture and distribute
    proprietary porous plastic products and components used in
    healthcare, industrial and consumer applications, as well as in
    finished products used in the medical device and surgical
    markets.
    Corporate.  Our Corporate segment provides
    corporate services across all our other segments. These services
    include executive personnel, legal, accounting, tax, treasury,
    human resources, certain information technology functions and
    other services. 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.  Recent
    Developments
  Evaluation of Strategic Alternatives Related to Emdeon
    Business Service and Emdeon Practice Service
    Segments.
  New Stock Repurchase Program.
 78




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##### Table of Contents



Acquisition of eMedicine.com, Inc.
  Significant
    Transactions Completed During 2005
  Tender Offer and Stock Repurchase Program.
  Initial Public Offering of WHC; Our Relationship with
    WHC. one-for-one one-for-one
   79




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##### Table of Contents



Issuance of $300,000
    31/8% Convertible
    Notes Due 2025. 1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  Redemption of $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
  Acquisitions
    
    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 $19,603, comprised of $19,000 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 $29,883, comprised of $29,533 in
    cash, net of cash acquired, and $350 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. 80




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
    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 accrued $7,250 as of
    December 31, 2005 for a cash payment expected to be paid
    during 2006 as a result of these thresholds being met during
    2005. The results of operations of MedicineNet have been
    included in the WebMD segment.
    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 to be 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 accrued $2,387 as of
    December 31, 2005 for a cash payment made in February 2006
    related to RxLists achievement of page views exceeding
    certain thresholds during the three months ended
    December 31, 2005. 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. ViPS
    develops and provides a broad range of solutions for claims
    processing, provider performance measurement, quality
    improvement, fraud detection, disease management and predictive
    modeling. 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 included in the Emdeon Business Services
    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
    $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. Dakotas
    technology and services assist its customers in reducing costly
    manual processing of healthcare documents and increase
    auto-payment of medical claims through advanced data scrubbing.
    We paid approximately $38,979 in cash, net of cash acquired,
    $527 of acquisition costs and has 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 in connection with the first earn
    out year ending March 2005. The 81




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results of operations of Dakota have been included in our
    financial statements from April 30, 2004, the closing date
    of the acquisition, and are included in the Emdeon Business
    Services segment.  The Little Blue Book
  
    On December 22, 2003, we completed the acquisition of
    Medifax, a privately held company based in Nashville, Tennessee.
    Medifax provides real-time medical eligibility transaction
    services and other claims management solutions to hospitals,
    medical centers, physician practices and other medical
    organizations throughout the United States. These services
    enable healthcare providers to verify insurance coverage for
    their patients on a real-time basis. The total purchase
    consideration for Medifax was $268,428, comprised of $266,457 in
    cash, net of the cash acquired, and $1,971 of acquisition costs.
    Prior to closing, Medifax distributed its Pharmacy Services
    companies to its owner and these companies were not included in
    the transaction. The results of operations of Medifax from the
    closing date of the acquisition to December 31, 2003 were
    not material, thus the results of operations of Medifax have
    been included in our financial statements from January 1,
    2004, and are included in the Emdeon Business Services segment.
    On September 25, 2003, we completed the acquisition of CPS,
    a privately held dental clearinghouse based in Hartford,
    Connecticut. We paid $5,583 in cash, net of the cash acquired,
    and $70 of acquisition costs for CPS and agreed to pay up to an
    additional $4,200 beginning in 2005 if certain revenue related
    milestones are achieved. The additional payment may be made over
    a three-year period by issuing shares of our common stock or in
    cash. The additional payment may exceed $4,200 if all or a
    portion of the additional payment is made by issuing shares of
    our stock and if the value of our stock exceeds certain price
    levels. In April 2005, we paid $1,960 in cash as a result of the
    achievement of those certain financial milestones. The results
    of operations of CPS have been included in our financial
    statements from September 25, 2003, the closing date of the
    acquisition, and are included in the Emdeon Business Services
    segment.
    On July 17, 2003, we completed the acquisition of ABF, a
    privately held company based in St. Louis, Missouri. ABF
    provides healthcare paid-claims communications services for
    third-party administrators and health insurers. ABFs
    services allow its customers to outsource
    print-and-mail
    activities for the distribution of checks, remittance advice and
    explanations of benefits. The total purchase consideration for
    ABF was approximately $112,651, comprised of $108,128 in cash,
    net of the cash acquired, and $4,523 of acquisition costs for
    all of the outstanding capital stock of ABF. Additionally, we
    agreed to pay up to an additional $150,000 beginning in April
    2004 if certain financial milestones are achieved. The
    additional payment may be made over a three-year period by
    issuing shares of our common stock or, at our option in certain
    circumstances, in cash. The additional payment may exceed
    $150,000 if all or a portion of the additional payment is made
    by issuing shares of our stock and if the value of our stock
    exceeds certain price levels at the time of payment. We paid
    $17,455 in April 2004 and $40,434 in March 2005, in cash, as a
    result of the achievement of those financial milestones. In
    addition, we accrued $20,485 as of December 31, 2005 for a
    cash payment expected to be paid during early 2006 related to
    ABFs achievement of certain financial milestones during
    2005. The results of operations of ABF have been included in our
    financial statements from July 17, 2003, the closing date
    of the acquisition, and are included in the Emdeon Business
    Services segment.
    On May 29, 2003, through WHC, we acquired LBB, a company
    that maintains a database containing physician practice
    information, and publishes a pocket-sized reference book
    containing physician practice and contact information. The total
    purchase consideration for LBB was approximately $10,061,
    comprised of $9,926 in cash, net of the cash acquired, and
    acquisition costs of $135. Additionally, we paid, in cash,
    $1,500 in April 2004 and $1,000 in April 2005 as a result of LBB
    achieving certain financial milestones during the years ending
    December 31, 2003 and 2004, respectively. The results of
    operations of LBB have been included in our financial statements
    from May 29, 2003, the closing date of the acquisition, and
    are included in the WebMD segment. 82




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
    On April 30, 2003, through WHC, we acquired the assets and
    assumed certain liabilities of Optate, a provider of healthcare
    benefit decision support tools and solutions to its clients
    through online technology. The total purchase consideration for
    this acquisition was approximately $4,052, comprised of $4,000
    in cash and acquisition costs of $52. The results of operations
    of the acquired business have been included in our financial
    statements from April 30, 2003, the closing date of the
    acquisition, and are included in the WebMD segment.
    In 2003, we acquired seven practice services companies for an
    aggregate cost of $2,175, which was paid in cash, net of the
    cash acquired. Additionally, we will pay up to $675 beginning in
    2004 if certain of the acquired companies meet specified
    financial milestones. During 2004, we paid $155 in cash as a
    result of the achievement of certain financial milestones. The
    results of operations of these companies have been included in
    our financial statements from the respective acquisition closing
    dates and are included in the Emdeon Practice Services segment.  Background
    Information on Certain Trends and Strategies
    
    High Rates of Increase in Healthcare
    Costs.  According to the Centers for
    Medicare & Medicaid Services, or CMS, healthcare
    spending in the United States rose to $1.9 trillion in 2004 (or
    approximately six thousand three hundred dollars per person), up
    from $1.7 trillion in 2003, $1.6 trillion in 2002, $1.4
    trillion in 2001 and $1.3 trillion in 2000. The CMS report
    indicated a growth rate in healthcare spending of 7.9% in 2004,
    compared to 8.2% for 2003, and 9.1% for 2002. In addition, CMS
    indicated that healthcares share of gross domestic product
    was 16.0% for 2004. Another study recently released by CMS
    predicted that U.S. healthcare spending will increase by an
    average of 7.2% annually until 2015, at which time such spending
    will reach $4 trillion (or approximately twelve thousand three
    hundred dollars per person) and account for 20% of the gross
    domestic product. The difficulties involved in controlling
    healthcare costs have resulted in the following key trends:  
    Changes in Health Plan Design; Health Management
    Initiatives.  While overall healthcare costs are
    rising at a rapid annual rate, employers costs of
    providing healthcare benefits to their employees are increasing
    at an even faster rate. In response to these increases,
    employers are seeking to shift a greater portion of healthcare
    costs onto their employees and to redefine traditional health
    benefits. Employers and health plans want to motivate their
    members and employees to evaluate their healthcare decisions
    more carefully in order to be more cost-effective. As employers
    continue to implement high deductible and consumer-directed
    healthcare plans to achieve these goals, we believe that WebMD
    will be able to attract more employers and health plans to use
    its private online portals. In addition, health plans and
    employers have begun to recognize that encouraging the good
    health of their members and employees not only benefits the
    members and employees but also has financial benefits for the
    health plans and employers. Accordingly, many employers and
    health plans have been enhancing health management programs and
    taking steps to provide healthcare information and education to
    employees and members, including through online services. We
    believe that WebMD is well positioned to benefit from these
    trends because WebMDs private portals provide the tools
    and information employees and plan members need in order to make
    more informed decisions about healthcare provider, benefit and
    treatment options. Additionally, we believe that as consumers
    are required to bear increased financial responsibility for
    their healthcare, WebMDs public portals will benefit as
    consumers utilize WebMDs decision-support and personal
    health information applications to better manage their health
    decisions.
    Pay-for-Performance
    Initiatives.  Controlling costs by keeping people
    healthier and better managing chronic conditions has become a
    significant focus for Americas healthcare system. Both
    governmental and commercial payers have begun to reassess
    current healthcare provider compensation arrangements, which
    generally reimburse physicians and other healthcare providers
    based on the number and 83




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complexity of the services provided to patients.
    Pay-for-performance
    initiatives reward healthcare providers for better outcomes and
    adherence to evidence-based guidelines. These initiatives
    typically create incentives for improvements in the quality of
    care and for an increased focus on preventive medicine and
    appropriate management of chronic illnesses. The goal is both
    better outcomes and reductions in hospitalizations and expensive
    procedures. Information technology plays an important role in
    pay-for-performance
    initiatives, including with respect to the delivery of quality
    care by providers and quality measurement by payers. Some
    pay-for-performance
    programs provide incentives for use of electronic medical record
    systems, such as Intergy EHR, by providers. ViPS provides
    software and services that help health plans identify and serve
    members who need the most care and to anticipate the future
    needs of member populations. In addition, WebMD provides online
    private portals that assist employers and health plans in
    educating and encouraging employees and plan members to lower
    health risks and to take a more active role in their healthcare.  
    Increasing Automation of the Healthcare Reimbursement
    Cycle.  Submission of claims electronically
    assists payers in reducing the cost of processing and servicing
    claims and can expedite the reimbursement process for providers.
    However, this is just a starting point for increasing
    administrative efficiency. We have been transforming Emdeon
    Business Services from an electronic transactions clearinghouse
    to a provider of more complete reimbursement cycle management
    services for healthcare providers and payers.  
    Our services for payers now also include conversion of paper
    claims to electronic ones and related document management
    services, as well as paid-claims communication services. We also
    act as the electronic transactions gateway for some of our payer
    customers, which allows us to work more closely with them to
    increase the quantity and improve the quality of the electronic
    transactions coming into their systems. In addition, by
    outsourcing patient encounter transaction processes to us,
    payers can reduce their capital expenses and operating costs.
    Our services for providers now also include systems to validate
    patient insurance benefits electronically, to edit and submit
    electronic claims, to manage remittance advices, to post
    payments automatically and to process patient statements.    
    Increased Use of Information Technology for Clinical
    Purposes.  Healthcare providers are under
    pressure to increase quality and reduce medical errors. While
    information technology systems and electronic transaction
    services are used by many physician offices for administrative
    and financial applications, their use in clinical workflow is
    much more limited, especially in smaller practices. However, we
    believe this is changing. Emdeon Practice Services and Emdeon
    Business Services are continuing to target the markets for
    clinical applications as one of their priorities. While it will
    be a long time before most physicians go to a paperless
    office, more physicians are beginning to incorporate
    information technology into their clinical workflow. As
    discussed above under  High Rates of Increase
    in Healthcare
    Costs  Pay-for-Performance
    Initiatives and below under  Governmental
    Initiatives Relating to Healthcare Information Technology,
    healthcare payers and governmental authorities are increasingly
    taking steps to encourage physicians to use information
    technology in their treatment of patients and clinical
    processes. Since clinical applications are generally designed
    for use by physicians, nurses and other healthcare providers,
    the markets for those applications present different 84




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challenges than the markets for administrative and financial
    applications, which are used mostly by administrative personnel,
    billing coordinators and financial managers. We have been and
    will continue to invest in the additional resources necessary to
    meet the challenges involved in developing and implementing
    clinical applications. We believe that success in the markets
    for clinical applications will become increasingly important in
    competing in the markets for administrative and financial
    applications.  
    Increased Online Marketing and Education Spending for
    Healthcare Products.  Pharmaceutical,
    biotechnology and medical device companies spend large amounts
    each year marketing their products and educating consumers and
    physicians about them, however, only a small portion of this
    amount is currently spent on online services. We believe that
    these companies, who comprise the majority of WebMDs
    advertisers and sponsors, are becoming increasingly aware of the
    effectiveness of the Internet relative to traditional media in
    providing health, clinical and product-related information to
    consumers and physicians, and this increasing awareness will
    result in increasing demand for WebMDs services.
    Governmental Initiatives Relating to Healthcare
    Information Technology.  There are currently
    numerous federal, state and private initiatives seeking ways to
    increase the use of information technology in healthcare,
    including in the physicians office. Most significantly, in
    April 2004, Executive Order 13335 directed the appointment of a
    National Coordinator for Health Information Technology to
    coordinate programs and policies regarding health information
    technology across the Federal government. In May 2004, David J.
    Brailer M.D., Ph.D., was appointed to serve in this
    position. The National Coordinator is charged with directing the
    health information technology programs within the Department of
    Health and Human Services, or HHS, and coordinating them with
    those of other relevant Executive Branch agencies. In addition,
    the mission of the National Coordinator includes supporting and
    encouraging the use of health information technology in the
    public and private health care delivery systems and coordinating
    partnerships between government agencies and private sector
    stakeholders to speed the adoption of health information
    technology. We share, and have been working towards, many of the
    same goals as the governmental initiatives relating to health
    information technology. We believe that our businesses may be
    good candidates to work with HHS and other governmental
    authorities on their initiatives and projects and may also
    benefit for the focus those initiatives create on the benefits
    of products and services of the types we provide.    Critical
    Accounting Policies and Estimates
   85




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
    Revenue  Our revenue recognition
    policies for each reportable operating segment are as follows:  Emdeon Business Services.
    Emdeon Practice Services.
  SOP No. 97-2, SOP No. 98-9, SOP No. 97-2, (SOP 98-9). SOP 98-9,
   86




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WebMD.
  Porex.
  
    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 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 2005, 2004 and
    2003.
    Investments  Our investments, at
    December 31, 2005, consisted principally of certificates of
    deposit, auction rate securities, U.S. Treasury Notes and
    marketable equity securities in publicly traded companies. 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. For the year ended
    December 31, 2005, we recorded a loss of $4,251 on
    marketable debt securities that we identified as securities to
    be liquidated for the redemption of the
    31/4% Notes.
    The loss represented the excess of the original book value of
    those investments over their market value.
    Deferred Tax Assets  Our deferred
    tax assets are comprised primarily of net operating loss
    carryforwards. At December 31, 2005, we had net operating
    loss carryforwards of approximately $2.1 billion. 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, 2005, a valuation
    allowance was established for all domestic net deferred tax
    assets because of the uncertainty of 87




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realization of the deferred tax assets due to a lack of earnings
    history. Realization is dependent upon generating sufficient
    taxable income prior to the expiration of the net operating loss
    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 will 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.  Results
    of Operations
    Years Ended
    December 31,2005


2004


2003$


%


$


%


$


%Revenue

$
1,276,879



100.0


$
1,160,351



100.0


$
963,980



100.0Costs and expenses:Cost of operations


717,047



56.1



666,431



57.4



564,939



58.6Development and engineering


58,494



4.6



54,161



4.7



42,985



4.5Sales, marketing, general and
    administrative


333,288



26.1



324,027



27.9



282,482



29.3Depreciation, amortization and
    other


71,767



5.6



57,765



5.0



62,434



6.5Legal expense


17,835



1.4



9,230



0.8



3,959



0.4Restructuring and integration
    charge










4,535



0.4







Loss (gain) on investments


6,365



0.5



(457
)


(0.1
)


(1,659
)


(0.2
)Interest income


21,531



1.7



18,717



1.6



22,901



2.4Interest expense


16,324



1.3



19,253



1.7



15,214



1.6Other expense (income), net


3,765



0.3



(121
)






(4,218
)


(0.4
)Income from continuing operations
    before income tax (benefit) provision and minority interest


73,525



5.8



44,244



3.8



20,745



2.1Income tax (benefit) provision


(357
)






4,910



0.4



4,140



0.4Minority interest in WebMD Health
    Corp., net of tax


908



0.1















Income from continuing operations


72,974



5.7



39,334



3.4



16,605



1.7Loss from discontinued operations,
    net of tax


















33,611



3.5Net income (loss)

$
72,974



5.7


$
39,334



3.4


$
(17,006
)


(1.8
)    88




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WebMD the Magazine.
  print-and-mail
          
    Non-cash advertising expense.  Expense related
    to the usage of our prepaid advertising inventory that we
    received from News Corporation in exchange for equity
    instruments we issued in connection with an agreement we entered
    into with News Corporation in 1999 and subsequently amended in
    2000. Our non-cash advertising expense is included in cost of
    operations when we utilize prepaid advertising in 89




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conjunction with offline advertising and sponsorship programs.
    Our non-cash advertising expense is included in sales,
    marketing, general and administrative expense when we utilize
    the prepaid advertising for promotion of our brand or the brand
    of one of our subsidiaries.  
    Non-cash distribution expense.  Expense related
    to the amortization of a warrant that we issued to AOL as part
    of a strategic alliance we entered into with Time Warner in May
    2001 under which we 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.
    Non-cash stock-based compensation
    expense.  Expense related to restricted stock
    awards in our common stock that have been granted to certain of
    our employees, as well as the intrinsic value of the unvested
    portion of stock options assumed in connection with certain
    acquisitions in 2000 and options granted in 2000 with exercise
    prices less than the fair market value of our stock on the date
    of grant. Non-cash stock-based compensation expense is reflected
    in sales, marketing, general and administrative expense within
    the accompanying consolidated statements of operations.  2005
    and 2004
  Revenue
      Costs and
    Expenses
  Cost of Operations. WebMD the Magazine.
 90




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Development and Engineering.
  Sales, Marketing, General and
    Administrative.
    Depreciation, Amortization and
    Other.
  Legal Expense.
 91




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Restructuring and Integration Charge.
  Loss (Gain) on Investments. 1 4
  Interest Income.
  Interest Expense.
  Other Expense (Income), Net. 1 4
  Income Tax (Benefit) Provision.
  2004
    and 2003
  Revenue
    print-and-mail
  Costs and
    Expenses
  Cost of Operations.
 92




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Development and Engineering.
  Sales, Marketing, General and
    Administrative.
  Depreciation, Amortization and
    Other.
  Legal Expense.
  Restructuring and Integration Charge.
  Loss (Gain) on Investments.
  Interest Income.
 93




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Interest Expense.
  Other Expense (Income), Net.
  Income Tax (Benefit) Provision.
  Discontinued Operations.
  Results
    of Operations by Operating Segment
  1 4
  Reclassification of Segment Information.
 94




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Years Ended
    December 31,2005


2004


2003RevenueEmdeon Business Services

$
758,851


$
686,585


$
505,729Emdeon Practice Services


304,175



296,115



302,640WebMD


168,238



134,317



110,665Porex


79,124



77,099



71,940Inter-segment eliminations


(33,509
)


(33,765
)


(26,994
)$
1,276,879


$
1,160,351


$
963,980Earnings before restructuring,
    interest, taxes, non-cash and other itemsEmdeon Business Services

$
154,512


$
131,834


$
94,218Emdeon Practice Services


29,378



14,533



20,924WebMD (a)


27,546



26,307



18,639Porex


22,524



22,650



20,532Corporate (a)


(50,301
)


(51,791
)


(43,992
)183,659



143,533



110,321Restructuring, interest, taxes,
    non-cash and other itemsDepreciation, amortization and
    other


(71,767
)


(57,765
)


(62,434
)Non-cash advertising and
    distribution services


(10,870
)


(18,826
)


(24,298
)Non-cash stock-based compensation


(4,739
)


(8,975
)


(12,449
)Legal expense


(17,835
)


(9,230
)


(3,959
)(Loss) gain on investments


(6,365
)


457



1,659Restructuring and integration
    charge






(4,535
)


Interest income


21,531



18,717



22,901Interest expense


(16,324
)


(19,253
)


(15,214
)Other (expense) income, net


(3,765
)


121



4,218Minority interest in WebMD Health
    Corp., net of tax


(908
)






Income tax benefit (provision)


357



(4,910
)


(4,140
)Income from continuing operations


72,974



39,334



16,605Loss from discontinued operations










33,611Net income (loss)

$
72,974


$
39,334


$
(17,006
)     (a)
    
    Earnings before restructuring,
    interest, taxes, non-cash and other items during the prior
    periods, for the Corporate and WebMD segments, have been
    reclassified to conform to the current period presentation for
    service fees charged to the WebMD segment from Corporate.  2005
    and 2004
    Emdeon Business Services.
 95




---



##### Table of Contents



Emdeon Practice Services.
    WebMD.
    Porex.
    Corporate.
 96




---



##### Table of Contents



Inter-Segment Eliminations.
  2004
    and 2003
    Emdeon Business Services. print-and-mail
    Emdeon Practice Services.
    WebMD.
    Porex.
 97




---



##### Table of Contents



Corporate
  Inter-Segment Eliminations.
  Liquidity
    and Capital Resources
    available-for-sale.
    available-for-sale available-for-sale
 98




---



##### Table of Contents



1 4 1 8
      Less Than








More ThanTotal


1 Year


1-3 Years


4-5 Years


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

$
743,240


$
15,552


$
31,000


$
377,938


$
318,750Leases(b)


100,184



22,511



37,094



20,284



20,295Purchase obligations(c)


39,207



26,001



10,373



2,833



Advertising relationship(d)


625



500



125







Total

$
883,256


$
64,564


$
78,592


$
401,055


$
339,045     (a)
    
    Long-term debt includes our
    31/8% Notes
    and our 1.75% Notes. Amounts include our contractual
    interest payments through the earliest date at which these notes
    are callable by Emdeon.(b)
    
    The lease amounts are net of
    sublease income.(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.(d)
    
    Advertising relationship represents
    a commitment for advertising placements to promote our WebMD
    brand.     99




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##### Table of Contents



Recent
    Accounting Pronouncements
  FAS 115-1 Other-Than-Temporary other-than-temporary other-than-temporary
  No. 05-06, (EITF 05-06), EITF 05-06
   100




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##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    Rate Sensitivity
      1 8
   101




---



##### Table of Contents



Exchange
    Rate Sensitivity
    Item 8.
    Financial
    Statements and Supplementary Data  Financial
    Statements
  Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rule 13a-15(b), Rule 13a-15(e),
  Rule 13a-15(d),
    Item 9B.
    Other
    Information   102




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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   103




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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,
 104




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##### Table of Contents



SIGNATURES    EMDEON CORPORATION
  By:
    /s/  Andrew
    C. Corbin    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 16, 2006/s/  Andrew
    C. CorbinAndrew
    C. Corbin

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

March 16, 2006/s/  Mark
    J. Adler, M.D.Mark
    J. Adler, M.D.

Director

March 16, 2006/s/  Paul
    A. BrookePaul
    A. Brooke

Director

March 16, 2006/s/  Neil
    F. DimickNeil
    F. Dimick

Director

March 16, 2006/s/  James
    V. ManningJames
    V. Manning

Director

March 16, 2006 105




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##### Table of Contents



Signature

Capacity

Date/s/  Herman
    SarkowskyHerman
    Sarkowsky

Director

March 16, 2006/s/  Joseph
    E. SmithJoseph
    E. Smith

Director

March 16, 2006/s/  Martin
    J. WygodMartin
    J. Wygod

Director

March 16, 2006  106




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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


F-3Report of
    Independent Registered Public Accounting Firm on Internal
    Control Over Financial Reporting


F-4Consolidated
    Balance Sheets at December 31, 2005 and 2004


F-5Consolidated
    Statements of Operations for the Years Ended December 31,
    2005, 2004 and 2003


F-6Consolidated
    Statements of Stockholders Equity for the Years Ended
    December 31, 2005, 2004 and 2003


F-7Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2005, 2004 and 2003


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-4.
   F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                 F-3




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING                   Ernst &
    Young LLP
    F-4




---



##### Table of Contents



EMDEON
    CORPORATION
  CONSOLIDATED BALANCE SHEETS
    (In thousands, except share and per share data)
  December 31,2005


2004ASSETSCurrent assets:Cash and cash equivalents

$
159,510


$
46,019Short-term investments


267,387



61,675Accounts receivable, net of
    allowance for doubtful accounts of $12,535 at December 31,
    2005 and $13,433 at December 31, 2004


233,070



204,447Inventory


14,251



14,367Prepaid expenses and other current
    assets


34,615



40,224Total current assets


708,833



366,732Marketable debt securities






511,864Marketable equity securities


4,481



4,017Property and equipment, net


116,032



89,677Goodwill


1,075,549



1,010,564Intangible assets, net


240,510



260,509Other assets


50,278



48,871TOTAL ASSETS

$
2,195,683


$
2,292,234LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
11,611


$
17,366Accrued expenses


186,381



198,311Deferred revenue


115,840



99,543Total current liabilities


313,832



315,2201.75% convertible subordinated
    notes due 2023


350,000



350,00031/8% convertible
    notes due 2025


300,000



31/4% convertible
    subordinated notes due 2007






299,999Other long-term liabilities


15,353



4,500Minority interest in WebMD Health
    Corp.


43,229



Convertible redeemable exchangeable
    preferred stock, $0.0001 par value; 10,000 shares
    authorized, issued and outstanding at December 31, 2005 and
    December 31, 2004


98,533



98,299Commitments 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;
    428,624,239 shares issued at December 31, 2005;
    394,041,320 shares issued at December 31, 2004


43



39Additional paid-in capital


12,121,431



11,776,911Deferred stock compensation


(3,699
)


(7,819
)Treasury stock, at cost;
    150,296,414 shares at December 31, 2005;
    80,849,495 shares at December 31, 2004


(950,482
)


(379,968
)Accumulated deficit


(10,100,164
)


(10,172,904
)Accumulated other comprehensive
    income


7,607



7,957Total stockholders equity


1,074,736



1,224,216TOTAL LIABILITIES AND
    STOCKHOLDERS EQUITY

$
2,195,683


$
2,292,234    F-5




---



##### Table of Contents



EMDEON
    CORPORATION
 CONSOLIDATED
    STATEMENTS OF OPERATIONS
    (In thousands, except per share data)  Years Ended
    December 31,2005


2004


2003Revenue

$
1,276,879


$
1,160,351


$
963,980Costs and expenses:Cost of operations


717,047



666,431



564,939Development and engineering


58,494



54,161



42,985Sales, marketing, general and
    administrative


333,288



324,027



282,482Depreciation, amortization and
    other


71,767



57,765



62,434Legal expense


17,835



9,230



3,959Restructuring and integration
    charge






4,535



Loss (gain) on investments


6,365



(457
)


(1,659
)Interest income


21,531



18,717



22,901Interest expense


16,324



19,253



15,214Other expense (income), net


3,765



(121
)


(4,218
)Income from continuing operations
    before income tax (benefit) provision and minority interest


73,525



44,244



20,745Income tax (benefit) provision


(357
)


4,910



4,140Minority interest in WebMD Health
    Corp., net of tax


908







Income from continuing operations


72,974



39,334



16,605Loss from discontinued operations,
    net of tax










33,611Net income (loss)

$
72,974


$
39,334


$
(17,006
)Basic income (loss) per common
    share:Income from continuing operations

$
0.21


$
0.12


$
0.05Loss from discontinued operations










(0.11
)Net income (loss)

$
0.21


$
0.12


$
(0.06
)Diluted income (loss) per common
    share:Income from continuing operations

$
0.21


$
0.12


$
0.05Loss from discontinued operations










(0.10
)Net income (loss)

$
0.21


$
0.12


$
(0.05
)Weighted-average shares
    outstanding used in computing net income (loss) per common share:Basic


341,747



320,080



304,858Diluted


352,852



333,343



325,811    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,
    2002


374,661,064


$
37


$
11,682,443


$
(17,805
)


74,254,669


$
(327,542
)

$
(10,195,048
)

$
11,716


$
1,153,801Net loss


























(17,006
)






(17,006
)Net increase in unrealized gains on
    securities






























1,419



1,419Foreign currency translation
    adjustment






























3,285



3,285Comprehensive loss


































(12,302
)Issuance of common stock for option
    exercises, ESPP, 401(k) and other issuances


10,090,641



1



44,718























44,719Issuance of warrants in connection
    with strategic alliances and services










67























67Deferred stock compensation










25



(25
)


















Stock compensation expense










335



12,293



















12,628Purchase of treasury stock


















2,322,196



(20,316
)










(20,316
)Adjustment to deferred stock
    compensation for terminations










(854
)


854



















Balances 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 sale of WebMD Health Corp.
    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


$
1,074,736




---



##### Table of Contents



EMDEON
    CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)  Years Ended
    December 31,2005


2004


2003Cash flows from operating
    activities:Net income (loss)

$
72,974


$
39,334


$
(17,006
)Adjustments to reconcile net
    income (loss) to net cash provided by operating activities:Loss from discontinued operations










33,611Depreciation, amortization and
    other


71,767



57,765



62,434Minority Interest in WebMD Health
    Corp., net of tax


908







Amortization of debt issuance costs


2,541



2,975



2,246Non-cash advertising and
    distribution services


10,870



18,826



24,298Non-cash stock-based compensation


4,739



8,975



12,449Bad debt expense


6,410



3,606



6,328Loss (gain) on investments


6,365



(457
)


(1,659
)Gain on sale of property and
    equipment






(121
)


(3,100
)Loss on redemption of convertible
    debt


1,902







Reversal of income tax valuation
    allowance applied to goodwill


444







Changes in operating assets and
    liabilities:Accounts receivable


(30,613
)


(16,152
)


4,852Inventory


(224
)


(1,077
)


(2,660
)Prepaid expenses and other, net


2,683



3,514



4,276Accounts payable


(6,074
)


5,577



(651
)Accrued expenses and other
    long-term liabilities


7,526



(43,703
)


(42,419
)Deferred revenue


9,068



10,982



(5,890
)Net cash provided by continuing
    operations


161,286



90,044



77,109Net cash provided by discontinued
    operations










5,130Net cash provided by operating
    activities


161,286



90,044



82,239Cash flows from investing
    activities:Proceeds from maturities and sales
    of
    available-for-sale
    securities


1,063,606



1,408,091



1,079,897Proceeds from maturities and
    redemption of
    held-to-maturity
    securities










157,919Purchases of
    available-for-sale
    securities


(758,687
)


(1,308,303
)


(760,607
)Purchases of
    held-to-maturity
    securities










(590,113
)Purchases of property and equipment


(62,645
)


(38,800
)


(18,385
)Proceeds received from sale of
    property and equipment


400



417



9,779Proceeds from the sale of
    discontinued operations










46,500Other changes in equity of
    discontinued operations










1,754Cash paid in business
    combinations, net of cash acquired


(93,742
)


(249,557
)


(400,491
)Net cash provided by (used in)
    continuing operations


148,932



(188,152
)


(473,747
)Net cash used in discontinued
    operations










(2,529
)Net cash provided by (used in)
    investing activities


148,932



(188,152
)


(476,276
) F-8




---



##### Table of Contents



Years Ended
    December 31,2005


2004


2003Cash flows from financing
    activities:Proceeds from issuance of common
    stock


48,571



38,052



44,719Purchases of treasury stock under
    repurchase program


(21,246
)


(32,110
)


(20,316
)Purchases of treasury stock in
    Tender Offer


(549,268
)






Net proceeds from issuance of
    convertible debt


289,875







339,125Issuance of WebMD Health Corp.
    Class A common stock


123,344







Net proceeds from issuance of
    preferred shares






98,115



Redemption of convertible debt


(86,694
)






Payments of notes payable and other


(631
)


(602
)


(361
)Net cash (used in) provided by
    continuing operations


(196,049
)


103,455



363,167Net cash used in discontinued
    operations










(6,546
)Net cash (used in) provided by
    financing activities


(196,049
)


103,455



356,621Effect of exchange rates on cash


(678
)


1,024



1,423Net increase (decrease) in cash
    and cash equivalents


113,491



6,371



(35,993
)Changes in cash attributable to
    discontinued operations










3,945Cash and cash equivalents at
    beginning of period


46,019



39,648



71,696Cash and cash equivalents at end
    of period

$
159,510


$
46,019


$
39,648    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  Basis of
    Presentation
        Business
    
    Emdeon Business Services (formerly known as WebMD Business
    Services)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,
    Emdeon Business Services provides clinical communications
    services that improve the delivery of healthcare by enabling
    physicians to manage laboratory orders and results, hospital
    reports and electronic prescriptions. Emdeon Business Services
    also provides decision support solutions, data warehousing
    solutions and consulting services to governmental, Blue Cross
    Blue Shield and commercial healthcare payers and performs
    software maintenance and consulting services for governmental
    agencies involved in healthcare.
    Emdeon Practice Services (formerly known as WebMD Practice
    Services)develops and markets information technology
    systems for healthcare providers and related services, primarily
    under The Medical Manager, Intergy, HealthPro XL, Medware and
    Emdeon Network Services brands. These systems and services allow
    physician offices to automate their scheduling, billing and
    other F-10




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  administrative tasks, to transmit transactions electronically,
    to maintain electronic medical records and to automate
    documentation of patient encounters.  
    WebMD (formerly known as WebMD Health)provides health
    information services to consumers, physicians, healthcare
    professionals, employers and health plans through public and
    private online portals and health-focused publications.
    WebMDs public network of health portals enables consumer
    and physicians to readily access health information relevant to
    their specific areas of interest or specialty. WebMDs
    public portals sell advertising and sponsorship programs,
    including online continuing medical education (CME)
    services, to companies interested in reaching consumers and
    physicians online, including pharmaceutical, biotechnology,
    medical device and consumer products companies. WebMDs
    private portals are licensed to employers and health plans for
    use by their employees and members and provide access to
    personalized health and benefit information and decision support
    services. In addition, WebMD provides offline CME services and
    publishes medical reference textbooks, healthcare provider
    directories and WebMD the Magazine,a consumer magazine
    distributed to physician office waiting rooms.
    Porexdevelops, manufactures and distributes proprietary
    porous plastic products and components used in healthcare,
    industrial and consumer applications, as well as in finished
    products used in the medical device and surgical markets.
    Corporateincludes services shared across all operating
    segments, such as executive personnel, legal, accounting, tax,
    treasury, human resources, certain information technology
    functions and other services. 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.  Principles
    of Consolidation
    Accounting
    Estimates
   F-11




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Minority
    Interest
    Cash and
    Cash Equivalents
    Marketable
    Securities
  available-for-sale held-to-maturity held-to-maturity; available-for-sale. available-for-sale. Held-to-maturity available-for-sale available-for-sale.
  other-than-temporary available-for-sale other-than-temporary
  Allowance
    for Doubtful Accounts
    Inventory
  first-in, work-in-process
  December 31,2005


2004Raw materials and supplies

$
5,432


$
4,922Work-in-process


1,622



1,335Finished goods and other


7,197



8,110Total inventory

$
14,251


$
14,367  F-12




---



##### 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


3 yearsLeasehold improvements


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


3 to 15 yearsTrade names


1 to 10 yearsTechnology and patents


3 to 40 yearsNon-compete agreements, content
    and other


3 to 5 years   Recoverability
      Software
    Development Costs
  Software
    to be Sold, Leased or Otherwise Marketed
   F-13




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Internal
    Use Software
  No. 98-1, (SOP 98-1). SOP 98-1
  Restricted
    Cash
    Deferred
    Charges
  1 8 1 4 1 4 1 4
  Sale of
    Stock by a Subsidiary
    Revenue
    Recognition
     F-14




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        SOP No. 97-2, SOP No. 98-9, 97-2, (SOP 98-9). SOP 98-9,
     F-15




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Advertising
    Costs
    Foreign
    Currency
    Concentration
    of Credit Risk
     F-16




---



##### Table of Contents





EMDEON
    CORPORATION




NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)






Income
    Taxes and Tax Contingencies








Accounting
    for Stock-Based Compensation








|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                                                                                           |  | Years Ended
    December 31, |        
|                                                                                                                                                                                           |  | 2005                         |         |   | 2004 |   |         | 2003 | 
|                                                                                                                                                                                          
|Net income (loss) as reported                                                                                                                                                              |  | $                            | 72,974  |   |      | $ | 39,334  |      |  | $ | (17,006 | )
|Add: Stock-based employee
    compensation expense included in reported net income (loss)
    (including stock-based employee compensation expense related to
    discontinued operations) |  |                              | 4,739   |   |      |   | 8,975   |      |  |   | 12,628  |  
|Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards                                                                    |  |                              | (37,218 | ) |      |   | (67,569 | )    |  |   | (76,483 | )
|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  
|Pro forma net income (loss)                                                                                                                                                                |  | $                            | 40,495  |   |      | $ | (19,260 | )    |  | $ | (80,861 | )
|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  
|Net income (loss) per common share:                                                                                                                                                        |  |                              |         |   |      |   |         |      |  |   |         |  
|Basic  as reported                                                                                                                                                                        |  | $                            | 0.21    |   |      | $ | 0.12    |      |  | $ | (0.06   | )
|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  
|Diluted  as
    reported                                                                                                                                                                  |  | $                            | 0.21    |   |      | $ | 0.12    |      |  | $ | (0.05   | )
|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  
|Basic  pro forma                                                                                                                                                                          |  | $                            | 0.12    |   |      | $ | (0.06   | )    |  | $ | (0.27   | )
|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  
|Diluted  pro forma                                                                                                                                                                        |  | $                            | 0.11    |   |      | $ | (0.06   | )    |  | $ | (0.27   | )
|                                                                                                                                                                                           |  |                              |         |   |      |   |         |      |  |   |         |  









Net
    Income (Loss) Per Common Share






F-17



---



##### Table of Contents





EMDEON
    CORPORATION




NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)








|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------ |  | ---------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                         |  | Years Ended
    December 31, |        
|                                                                         |  | 2005                         |         |  | 2004 |   |         | 2003 | 
|                                                                        
|Numerator:                                                               |  |                              |         |  |      |   |         |      |  |   |         |  
|Income from continuing operations                                        |  | $                            | 72,974  |  |      | $ | 39,334  |      |  | $ | 16,605  |  
|Loss from discontinued operations                                        |  |                              |        |  |      |   |        |      |  |   | (33,611 | )
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Net income (loss)                                                        |  | $                            | 72,974  |  |      | $ | 39,334  |      |  | $ | (17,006 | )
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Denominator:                                                             |  |                              |         |  |      |   |         |      |  |   |         |  
|Common stock                                                             |  |                              | 331,109 |  |      |   | 311,721 |      |  |   | 304,858 |  
|Convertible redeemable
    exchangeable preferred stock                  |  |                              | 10,638  |  |      |   | 8,359   |      |  |   |        |  
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Weighted-average
    shares  Basic                                      |  |                              | 341,747 |  |      |   | 320,080 |      |  |   | 304,858 |  
|Employee stock options, restricted
    stock and warrants                |  |                              | 11,105  |  |      |   | 13,263  |      |  |   | 20,953  |  
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Adjusted weighted-average shares
    after assumed conversions  Diluted |  |                              | 352,852 |  |      |   | 333,343 |      |  |   | 325,811 |  
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Basic income (loss) per common
    share:                                |  |                              |         |  |      |   |         |      |  |   |         |  
|Income from continuing operations                                        |  | $                            | 0.21    |  |      | $ | 0.12    |      |  | $ | 0.05    |  
|Loss from discontinued operations                                        |  |                              |        |  |      |   |        |      |  |   | (0.11   | )
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Net income (loss)                                                        |  | $                            | 0.21    |  |      | $ | 0.12    |      |  | $ | (0.06   | )
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Diluted income (loss) per common
    share:                              |  |                              |         |  |      |   |         |      |  |   |         |  
|Income from continuing operations                                        |  | $                            | 0.21    |  |      | $ | 0.12    |      |  | $ | 0.05    |  
|Loss from discontinued operations                                        |  |                              |        |  |      |   |        |      |  |   | (0.10   | )
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  
|Net income (loss)                                                        |  | $                            | 0.21    |  |      | $ | 0.12    |      |  | $ | (0.05   | )
|                                                                         |  |                              |         |  |      |   |         |      |  |   |         |  









|                     |  |                              |         |  |      |  |         |      |  |  |         | 
|-------------------- |  | ---------------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                     |  | Years Ended
    December 31, |        
|                     |  | 2005                         |         |  | 2004 |  |         | 2003 | 
|                    
|Options and warrants |  |                              | 60,007  |  |      |  | 83,986  |      |  |  | 82,267  | 
|Convertible notes    |  |                              | 42,016  |  |      |  | 55,129  |      |  |  | 55,129  | 
|                     |  |                              |         |  |      |  |         |      |  |  |         | 
|                     |  |                              | 102,023 |  |      |  | 139,115 |      |  |  | 137,396 | 
|                     |  |                              |         |  |      |  |         |      |  |  |         | 



F-18



---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Recent
    Accounting Pronouncements
  FAS 115-1 Other-Than-Temporary other-than-temporary other-than-temporary
  No. 05-06, (EITF 05-06), EITF 05-06
     F-19




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Reclassifications
    2.
    Business
    Combinations  2005
    Acquisitions
     F-20




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004
    Acquisitions
       F-21




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         F-22




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2003
    Acquisitions
      print-and-mail
 F-23




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    The Little Blue
    Book
     F-24




---



##### 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


Price (a)2005Conceptis


2,893



(2,940
)


(288
)


7,000



12,938


$
19,603HealthShare


1,925



(4,622
)


(612
)


8,500



24,692



29,8832004MedicineNet


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



39,5062003Medifax


10,122



(592
)


(12,785
)


92,700



178,983



268,428CPS


400







(621
)


2,392



5,442



7,613ABF


10,276







(5,753
)


47,000



139,502



191,025LBB


2,568



(3,465
)


(402
)


2,815



11,045



12,561Optate






(812
)


84



710



4,070



4,052Emdeon Practice Services Companies


82



(413
)


(17
)


1,054



1,624



2,330     (a)
    
    The Total Purchase Price includes
    contingent consideration payments made or accrued for as of
    December 31, 2005. F-25




---



##### Table of Contents



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


2004Revenue

$
1,291,669


$
1,224,676Net income

$
70,375


$
36,860Income per common share:Basic

$
0.21


$
0.12Diluted

$
0.20


$
0.11   3.
    WebMD
    Health Corp. Initial Public Offering; Relationships between the
    Company and WHC    one-for-one one-for-one
   F-26




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      4.
    Significant
    Transactions  America
    Online, Inc.
     F-27




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   News
    Corporation
    Microsoft
  e-commerce
  5.
    Restructuring
    and Integration Charges        6.
    Discontinued
    Operations   F-28




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For thePeriodJanuary 1, 2003throughAugust 1, 2003Revenue

$
31,004Loss from operations

$
30,120Loss on disposal


3,491Loss from discontinued operations,
    net of income taxes

$
33,611   7.
    Convertible
    Redeemable Exchangeable Preferred Stock         F-29




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       8.
    Convertible
    Notes  $300,000
    31/8% Convertible
    Notes due 2025
  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  1 8 1 8 1 8 1 8 1 8 1 8 1 8 1 8
  $350,000
    1.75% Convertible Subordinated Notes due 2023
     F-30




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    $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 1 4 1 4 1 4 1 4 1 4
  9.
    Segment
    Information  1 4
 F-31




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Reclassification of Segment Information.
 F-32




---



##### Table of Contents



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


2004


2003RevenueEmdeon Business Services

$
758,851


$
686,585


$
505,729Emdeon Practice Services


304,175



296,115



302,640WebMD


168,238



134,317



110,665Porex


79,124



77,099



71,940Inter-segment eliminations


(33,509
)


(33,765
)


(26,994
)$
1,276,879


$
1,160,351


$
963,980Earnings before restructuring,
    interest, taxes, non-cash and other itemsEmdeon Business Services

$
154,512


$
131,834


$
94,218Emdeon Practice Services


29,378



14,533



20,924WebMD (a)


27,546



26,307



18,639Porex


22,524



22,650



20,532Corporate (a)


(50,301
)


(51,791
)


(43,992
)183,659



143,533



110,321Restructuring, interest, taxes,
    non-cash and other itemsDepreciation, amortization and
    other


(71,767
)


(57,765
)


(62,434
)Non-cash advertising and
    distribution services


(10,870
)


(18,826
)


(24,298
)Non-cash stock-based compensation


(4,739
)


(8,975
)


(12,449
)Legal expense


(17,835
)


(9,230
)


(3,959
)(Loss) gain on investments


(6,365
)


457



1,659Restructuring and integration
    charge






(4,535
)


Interest income


21,531



18,717



22,901Interest expense


(16,324
)


(19,253
)


(15,214
)Other (expense) income, net


(3,765
)


121



4,218Minority interest in WebMD Health
    Corp., net of tax


(908
)






Income tax benefit (provision)


357



(4,910
)


(4,140
)Income from continuing operations


72,974



39,334



16,605Loss from discontinued operations










33,611Net income (loss)

$
72,974


$
39,334


$
(17,006
)     (a)
    
    Earnings before restructuring,
    interest, taxes, non-cash and other items during the prior
    periods, for the Corporate and WebMD segments, have been
    reclassified to conform to the current period presentation for
    service fees charged to the WebMD segment from Corporate.   F-33




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     10.
    Long-Lived
    Assets  Property
    and Equipment
    December 31,2005


2004Computer equipment

$
76,358


$
61,373Land and buildings


17,520



17,847Office equipment, furniture and
    fixtures


56,354



45,695Software


52,055



35,195Leasehold improvements


20,183



9,727Construction in process


13,122



12,581235,592



182,418Less: accumulated depreciation


(119,560
)


(92,741
)Property and equipment, net

$
116,032


$
89,677     Goodwill
    and Intangible Assets
   F-34




---



##### Table of Contents



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


EmdeonBusiness


PracticeServices


Services


WebMD


Porex


TotalBalance as of January 1, 2004

$
582,088


$
186,709


$
36,843


$
38,808


$
844,448Acquisitions during the period


99,829







14,942



4,122



118,893Contingent consideration for
    prior
    period acquisitions


60,955



155



1,500







62,610Tax reversals(a)


(7,141
)


(7,321
)










(14,462
)Adjustments to finalize purchase
    price allocations


(1,263
)






(116
)






(1,379
)Effects of exchange rates














454



454Balance as of January 1, 2005


734,468



179,543



53,169



43,384



1,010,564Acquisitions during the period










36,079







36,079Contingent consideration for
    prior
    period acquisitions


19,379



30



10,638







30,047Tax reversals (a)


(674
)










(600
)


(1,274
)Adjustments to finalize purchase
    price allocations


(307
)






783



383



859Effects of exchange rates














(726
)


(726
)Balance as of December 31,
    2005

$
752,866


$
179,573


$
100,669


$
42,441


$
1,075,549     (a)
    
    In accordance with EITF 93-7,
    Uncertainties Related to Income Taxes in a Purchase
    Business Combination, the Company reduced goodwill and
    accrued liabilities by $230 and $600 for the Emdeon Business
    Services and Porex segments, respectively, during 2005 and by
    $7,141 and $7,321 for the Emdeon Business Services and Emdeon
    Practice Services segments, respectively, during 2004. The net
    reduction primarily related to the favorable resolution of
    estimated tax liabilities established in connection with certain
    2000 acquisitions. Additionally, during 2005, the Company
    reduced goodwill by $444 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 within the Emdeon Business
    Services segment.    December 31, 2005


December 31, 2004Gross








GrossCarrying


Accumulated





Carrying


AccumulatedAmount


Amortization


Net


Amount


Amortization


NetCustomer relationships

$
377,356


$
(233,319
)

$
144,037


$
369,704


$
(217,874
)

$
151,830Technology and patents


236,421



(169,565
)


66,856



234,722



(155,687
)


79,035Trade names


40,716



(30,432
)


10,284



40,716



(26,923
)


13,793Non-compete agreements, content
    and other


24,913



(5,580
)


19,333



17,920



(2,069
)


15,851Total

$
679,406


$
(438,896
)

$
240,510


$
663,062


$
(402,553
)

$
260,509  F-35




---



##### Table of Contents



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

$
34,8642007


34,1102008


31,1122009


22,1122010


15,491Thereafter


102,821Total

$
240,510   11.
    Accrued
    Expenses    December 31,2005


2004Accrued outside services

$
12,410


$
13,142Accrued acquisition contingent
    consideration


30,122



43,500Accrued compensation


46,177



40,001Accrued customer deposits


21,570



19,804Accrued income, sales and other
    taxes


21,911



27,770Other accrued liabilities


54,191



54,094Total accrued expenses

$
186,381


$
198,311   12.
    Commitments
    and Contingencies  Legal
    Proceedings
  Investigations
    by United States Attorney for the District of South Carolina and
    the SEC
     F-36




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         F-37




---



##### 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-38




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Porex
    Mammary Implant Litigation
       F-39




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Dakota
    Imaging, Inc. v. Sandeep Goel and Pradeep
    Goel
            M.D.
    On-Line, Inc. Litigation
   F-40




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    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
  Other
    Legal Proceedings
    Leases
     F-41




---



##### Table of Contents



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

$
22,5112007


19,6102008


17,4842009


11,4802010


8,804Thereafter


20,295Total minimum lease payments

$
100,184   Other
    Contingencies
    13.
    Retirement
    Plans    14.
    Stockholders
    Equity  Common
    Stock
  Tender
    Offer
    Stock
    Repurchase Program
   F-42




---



##### Table of Contents



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


RemainingAverage


ContractualExercise Prices

Shares


Exercise Price


Life (In Years)$0.67-$9.25


2,417,944


$
9.23



2.35$15.00


3,000,000



15.00



1.13$30.00


42,094



30.00



2.48$38.13


100,000



38.13



0.025,560,038


$
13.02



1.65    F-43




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   15.
    Stock-Based
    Compensation Plans  Emdeon
    Corporation
    Stock
    Options          Years Ended
    December 31,2005


2004


2003Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExercisePrice Per





Price Per





Price PerShares


Share


Shares


Share


Shares


ShareOutstanding at the beginning of
    the year


106,257,252


$
12.44



104,760,726


$
12.86



108,232,050


$
12.73Granted


3,920,913



9.03



19,230,750



8.31



12,326,350



9.88Exercised


(9,235,018
)


4.81



(7,796,440
)


4.42



(8,773,510
)


4.73Cancelled


(12,760,052
)


13.37



(9,937,784
)


15.18



(7,024,164
)


15.82Outstanding at the end of the year


88,183,095



12.96



106,257,252



12.44



104,760,726



12.86Exercisable at the end of the year


69,309,116


$
14.08



77,325,908


$
13.72



73,927,473


$
14.03  F-44




---



##### Table of Contents



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


ExercisableWeighted


Weighted





WeightedAverage


Average





AverageExercise


Remaining





ExercisePrice


Contractual





PricePer


Life





PerExercise Prices

Shares


Share


(In Years)


Shares


Share$0.25-$6.00


8,849,513


$
4.33



4.74



8,253,501


$
4.30$6.04-$8.05


9,150,073



6.85



6.34



5,110,935



6.53$8.09-$8.59


10,388,083



8.51



8.08



3,477,588



8.48$8.60-$11.00


9,000,822



9.35



7.76



3,638,986



9.42$11.05-$11.55


9,383,986



11.54



4.43



9,364,362



11.55$11.56-$13.38


10,960,458



12.45



5.11



9,338,584



12.58$13.50-$15.60


9,035,323



14.09



3.89



9,035,323



14.09$15.88-$18.20


9,093,988



16.59



4.56



9,093,988



16.59$18.33-$30.45


9,939,478



24.57



3.84



9,614,478



24.72$30.65-$105.00


2,381,371



42.79



3.93



2,381,371



42.7988,183,095


$
12.96



5.39



69,309,116


$
14.08     Years Ended
    December 31,2005


2004


2003Expected dividend yield


0
%


0
%


0
%Expected volatility


0.50



0.58



0.85Risk free interest rate


3.48
%


1.70
%


1.33
%Expected post-vesting option lives
    (years)


0.75-3.0



0.75-3.0



0.75-3.0   Restricted
    Stock Awards
       F-45




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Employee
    Stock Purchase Plan
    WebMD
    Health Corp.
  Stock
    Options and Restricted Stock Awards
      2005Expected dividend yield


0
%Expected volatility


0.60Risk free interest rate


4.05
%Expected post-vesting option lives
    (years)


0.75-3.0  F-46




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   16.
    Income
    Taxes    December 31,2005


2004Deferred tax assets:Net operating loss carryforwards

$
812,688


$
770,471Capital loss carryforwards


7,422



4,623Restructuring costs






541Research and development tax
    credits


18,875



17,591Other accrued expenses


34,335



53,478Allowance for doubtful accounts


4,769



5,067Depreciation


4,407



4,674Intangible assets


84,242



64,608Prepaid assets


5,774



7,043Other


6,302



4,465Total deferred tax assets


978,814



932,561Valuation allowance


(953,289
)


(915,452
)Net deferred tax assets


25,525



17,109Deferred tax liabilities:Tax basis


(2,608
)


(2,541
)Convertible subordinated notes


(21,958
)


(12,212
)Other


(1,610
)


(2,356
)Total deferred tax liabilities


(26,176
)


(17,109
)Net deferred tax assets and
    liabilities

$
(651
)

$
   December 31,2005


2004Reported as:Current deferred tax assets and
    liabilities

$
43,113


$
60,859Valuation allowance


(43,113
)


(60,859
)Current deferred tax assets, net






Non-current deferred tax assets
    and liabilities


909,525



854,593Valuation allowance


(910,176
)


(854,593
)Non-current deferred tax
    liabilities, net


(651
)


Net deferred tax assets and
    liabilities

$
(651
)

$
  F-47




---



##### Table of Contents



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


2004


2003Current:Federal

$
(5,742
)

$



$
State


459



2,873



1,912Foreign


4,494



2,037



2,228Current income tax (benefit)
    provision


(789
)


4,910



4,140Deferred:Foreign


(12
)






Deferred income tax benefit


(12
)






Reversal of valuation allowance
    applied to goodwill


444







Total income tax (benefit)
    provision

$
(357
)

$
4,910


$
4,140     Years Ended
    December 31,2005


2004


2003United States federal statutory
    rate


35.0
%


34.0
%


34.0
%State income taxes (net of federal
    benefit)


2.2



4.0



3.3Minority interest


0.4







Goodwill amortization


(5.7
)


(9.1
)


(12.3
)Valuation allowance


3.9



(15.4
)


(2.0
)Cumulative effect of change in tax
    rate


(32.5
)






Settlement of tax contingencies


(8.3
)






Benefit applied to reduce goodwill


0.6







Other


3.9



(2.4
)


(3.0
)Effective income tax rate


(0.5
)%


11.1
%


20.0
%        F-48




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          non-U.S. income non-U.S. income
   F-49




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   17.
    Fair
    Value of Financial Instruments  and/or
  December 31, 2005


December 31, 2004Cost Basis


Fair Value


Cost Basis


Fair ValueAssets:Cash and cash equivalents

$
159,510


$
159,510


$
46,019


$
46,019Short-term investments


268,109



267,387



62,077



61,675Marketable
    securities  long term


1,492



4,481



516,188



515,881Liabilities:Convertible notes


650,000



537,000



649,999



615,124Convertible redeemable
    exchangeable preferred stock


98,533



96,500



98,299



94,750   available-for-sale.
    December 31, 2005


December 31, 2004Cost or


Gross


Gross





Cost or


Gross


GrossAmortized


Unrealized


Unrealized





Amortized


Unrealized


UnrealizedCost


Gains


Losses


Fair Value


Cost


Gains


Losses


Fair ValueShort-Term
    Certificate of deposits and marketable debt securities

$
268,109


$
11


$
733


$
267,387


$
62,077


$



$
402


$
61,675Long-Term
    Marketable debt securities

$



$



$



$



$
514,696


$
1,633


$
4,465


$
511,864Equity securities


1,492



2,991



2



4,481



1,492



2,527



2



4,017Total

$
1,492


$
2,991


$
2


$
4,481


$
516,188


$
4,160


$
4,467


$
515,881     1 4
 F-50




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale
  available-for-sale available-for-sale
  held-to-maturity available-for-sale available-for-sale held-to-maturity
  18.
    Related
    Party Transactions     F-51




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   19.
    Comprehensive
    Income (Loss)  available-for-sale
  Years Ended
    December 31,2005


2004


2003Foreign currency translation
    (losses) gains

$
(3,326
)

$
2,118


$
3,285Unrealized gains (losses) on
    securities:Unrealized holding (losses) gains


(3,389
)


(10,124
)


3,078Less: reclassification adjustment
    for net gains (losses) realized in net income


(6,365
)


457



1,659Net unrealized gains (losses) on
    securities


2,976



(10,581
)


1,419Other comprehensive (loss) income


(350
)


(8,463
)


4,704Net income (loss)


72,974



39,334



(17,006
)Comprehensive income (loss)

$
72,624


$
30,871


$
(12,302
)   non-U.S. subsidiaries.
    Years Ended
    December 31,2005


2004


2003Unrealized gains (losses) on
    securities

$
2,267


$
(709
)

$
9,872Foreign currency translation gains


5,340



8,666



6,548Total accumulated other
    comprehensive income

$
7,607


$
7,957


$
16,420   20.
    Supplemental
    Disclosures of Cash Flow Information    Years Ended
    December 31,2005


2004


2003Supplemental Disclosure of Cash
    Flow Information:Interest paid

$
13,131


$
16,190


$
12,714Taxes paid, net of refunds

$
5,727


$
5,635


$
7,215Supplemental Schedule of Non-Cash
    Investing and Financing activities:Conversion of
    31/4% Notes
    to Emdeon common stock

$
214,880


$



$
Accretion of convertible
    redeemable exchangeable preferred stock

$
234


$
184


$
Deferred stock compensation
    related to restricted stock awards

$
2,241


$
13,001


$
25  F-52




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   21.
    Quarterly
    Financial Data (Unaudited)    2005First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
303,934


$
322,556


$
323,153


$
327,236Cost of operations


172,163



181,950



182,910



180,024Development and engineering


14,640



14,457



14,681



14,716Sales, marketing, general and
    administrative


82,137



83,533



82,348



85,270Depreciation and amortization


16,504



17,541



18,895



18,827Legal expense


4,160



4,283



5,904



3,488Interest income (expense), net


(460
)


41



2,129



3,497Other expense, net


3,832



1,712



1,863



2,723Income before income tax provision
    and minority interest


10,038



19,121



18,681



25,685Income tax provision (benefit)


189



2,955



4,536



(8,037
)Minority interest in WebMD Health
    Corp., net of tax










38



870Net income

$
9,849


$
16,166


$
14,107


$
32,852Net income per common share:Basic and diluted

$
0.03


$
0.05


$
0.04


$
0.09   2004First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
271,214


$
281,881


$
299,615


$
307,641Cost of operations


162,642



163,961



168,571



171,257Development and engineering


11,096



12,991



14,392



15,682Sales, marketing, general and
    administrative


76,994



83,298



84,762



78,973Depreciation and amortization


12,585



13,148



15,189



16,843Legal expense


2,037



2,215



2,325



2,653Interest income (expense), net


735



(327
)


(331
)


(613
)Restructuring and other expense
    (income), net


(37
)


(447
)


4,441



Income before income tax provision


6,632



6,388



9,604



21,620Income tax provision


931



613



1,435



1,931Net income

$
5,701


$
5,775


$
8,169


$
19,689Net income per common share:Basic

$
0.02


$
0.02


$
0.03


$
0.06Diluted

$
0.02


$
0.02


$
0.02


$
0.06  F-53




---



##### Table of Contents



EMDEON
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   22.
    Subsequent
    Event   F-54




---



##### Table of Contents



Schedule II.  Valuation
    and Qualifying Accounts  Years Ended December 31,
    2005, 2004 and 2003Balance at


Charged toBeginning


Costs and











Balance atof Year


Expenses


Acquired


Write-offs


Other(a)


End of Year(In thousands)December 31, 2005Allowance for Doubtful Accounts

$
13,433


$
6,410


$
110


$
(7,418
)

$



$
12,535Valuation Allowance for Deferred
    Tax Assets


915,452



1,660



15,645







20,532



953,289December 31, 2004Allowance for Doubtful Accounts


20,500



3,606



157



(10,830
)






13,433Valuation Allowance for Deferred
    Tax Assets


926,767



(7,991
)


(18,145
)






14,821



915,452December 31, 2003Allowance for Doubtful Accounts


22,417



6,328



768



(9,013
)






20,500Valuation Allowance for Deferred
    Tax Assets


941,507



(1,423
)


(33,277
)






19,960



926,767     (a)
    
    Represents valuation allowance created through equity as a
    result of stock option and warrant exercises. S-1




---



##### Table of Contents



INDEX TO
    EXHIBITS  Exhibit No.

Description2
.1

Stock Purchase Agreement dated as
    of June 15, 2003 between WebMD Corporation and Joseph Q.
    DiMartini, individually and as Trustee U/A dated
    February 6, 1998 f/b/o Joseph Q. DiMartini, and as Trustee
    of the Joseph Q. DiMartini 2002 Irrevocable Trust dated
    October 14, 2002, Eric J. Schaefer, an individual, Daniel
    A. Schmitt, individually and as Trustee of the Daniel A. Schmitt
    Revocable Trust dated March 26, 1999, and as Trustee of the
    Daniel Schmitt 2002 Irrevocable Trust dated September 24,
    2002, and Dru A. Schmitt, individually and as Trustee U/A dated
    October 20, 1997 f/b/o Dru A. Schmitt (incorporated by
    reference to Exhibit 2.1 to the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2003)2
.2

Stock Purchase Agreement dated as
    of October 21, 2003 between TPG Holding Company Limited and
    Envoy Corporation (incorporated by reference to Exhibit 2.1
    to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003)2
.3

Amendment No. 1, dated as of
    November 28, 2003, to the Stock Purchase Agreement dated as
    of October 21, 2003 between TPG Holding Company Limited and
    Envoy Corporation (incorporated by reference to Exhibit 2.1
    to the Registrants Current Report on
    Form 8-K
    filed December 1, 2003)2
.4

Amendment No. 2, dated as of
    December 22, 2003, to the Stock Purchase Agreement dated as
    of October 21, 2003 between TPG Holding Company Limited and
    Envoy Corporation (incorporated by reference to Exhibit 2.1
    to the Registrants Current Report on
    Form 8-K
    filed December 24, 2003)2
.5

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 between WebMD
    Corporation and The Bank of New York, dated as of April 1,
    2002 (incorporated by reference to Exhibit 4.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2002)4
.3

Form of
    31/4% Convertible
    Subordinated Note Due 2007 (included in Exhibit 4.2)4
.4

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
.5

Form of 1.75% Convertible
    Subordinated Note Due 2023 (included in Exhibit 4.4)4
.6

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) E-1




---



##### Table of Contents



Exhibit No.

Description4
.7

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
.8

Form of
    31/8% Convertible
    Note Due 2025 (included in Exhibit 4.7)4
.9

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
.9

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
.10

Form of Stock Certificate for
    Convertible Redeemable Exchangeable Preferred Stock (included in
    Exhibit 3.2)4
.11

Form of Indenture for
    10% Subordinated Notes due 2010 (included in
    Exhibit 3.3)4
.12

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

Healtheon/WebMD Corporation
    Registration Rights Agreement dated January 26, 2000 among
    the Registrant, Eastrise Profits Limited, AHN/FIT Cable, LLC,
    AHN/FIT Internet, LLC, News America Incorporated and Fox
    Broadcasting Company (incorporated by reference to
    Exhibit 10.4 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 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001)10
.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

Warrant to Purchase Shares of
    Common Stock of WebMD, Inc. dated May 12, 1999 issued to
    Microsoft Corporation (incorporated by reference to
    Exhibit 10.9 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000)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*

Employment Agreement dated as of
    October 23, 2002 between the Registrant and Roger C.
    Holstein (incorporated by reference to Exhibit 10.14 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2002) E-2




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##### Table of Contents



Exhibit No.

Description10
.11*

Letter Agreement, dated as of
    April 27, 2005, between the Registrant. and Roger C.
    Holstein (incorporated by reference to Exhibit 99.3 to the
    Registrants Current Report on
    Form 8-K
    filed on May 3, 2005)10
.12*

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
.13*

Employment Agreement, dated as of
    April 28, 2005, between WebMD, Inc. and David Gang
    (incorporated by reference to Exhibit 99.2 to the
    Registrants Current Report on
    Form 8-K
    filed on May 3, 2005)10
.14*

Amendment, dated as of
    July 13, 2005, to the Employment Agreement between WebMD,
    Inc. and David Gang (incorporated by reference to
    Exhibit 99.1 to the Registrants Current Report on
    Form 8-K
    filed on July 14, 2005)10
.15*

Amendment, dated as of
    March 9, 2006, to the Employment Agreement between WebMD,
    Inc. and David Gang (incorporated by reference to
    Exhibit 10.1 to WHCs the Registrants Current
    Report on
    Form 8-K
    filed on March 15, 2006)10
.16*

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
.17*

Amended and Restated Employment
    Agreement, dated as of July 14, 2005 between WebMD Health
    Corp. (WHC), which was then known as WebMD Health
    Holdings, Inc., and Anthony Vuolo (incorporated by reference to
    Exhibit 99.2 to the Registrants Current Report on
    Form 8-K
    filed on July 19, 2005)10
.18*

Form of Amended and Restated Stock
    Option Agreement dated August 21, 2000, between the
    Registrant (as successor to Medical Manager Corporation) and
    each of Charles A. Mele and Anthony Vuolo (incorporated by
    reference to Exhibit 10.54 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2001, as amended by
    Amendment No. 1 on
    Form 10-K/A)10
.19*

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
.20*

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
.21*

Healtheon Corporation 1996 Stock
    Plan (incorporated by reference to Exhibit 10.2 to
    Amendment No. 2 to the Registrants Registration
    Statement on
    Form S-1
    (No.
    333-70553)
    filed February 10, 1999)10
.22*

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
.23*

Amended and Restated Emdeon
    Corporation 2000 Long-Term Incentive Plan10
.24*

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
.25*

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
.26*

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
.27*

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) E-3




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##### Table of Contents



Exhibit No.

Description10
.28*

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
.29*

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
.30*

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
.31*

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
.32*

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
.33*

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
.34*

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)10
.35*

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
.36*

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
.37*

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
.38*

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
.39*

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
.40*

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
.41*

Employment Agreement, dated as of
    September 11, 2000, between the Registrant and Kirk Layman
    (incorporated by reference to Exhibit 10.44 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2003)10
.42*

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
.43*

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
.44*

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
.45*

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) E-4




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##### Table of Contents



Exhibit No.

Description10
.46*

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
.47*

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
.48*

Employment Agreement, dated as of
    December 4, 2003, between Envoy Corporation and Tony
    Holcombe (incorporated by reference to Exhibit 10.49 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2003)10
.49*

Letter Amendment, dated
    September 23, 2004, between the Registrant and Tony
    Holcombe (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed September 28, 2004)10
.50

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 February 16, 2006)10
.51

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
.52*

Form of Restricted Stock Agreement
    between WHC and Employees (incorporated by reference to
    Exhibit 10.48 to the WHC Registration Statement)10
.53*

Form of Restricted Stock Agreement
    between WHC and Non-Employee Directors (incorporated by
    reference to Exhibit 10.49 to the WHC Registration
    Statement)10
.54*

Form of Non-Qualified Stock Option
    Agreement between WHC and Employees (incorporated by reference
    to Exhibit 10.50 to the WHC Registration Statement)10
.55*

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
.56*

Amended and Restated WebMD Health
    Corp. 2005 Long-Term Incentive Plan (incorporated by reference
    to Exhibit 10.27 to WHCs Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005)10
.57*

Form of Restricted Stock Agreement
    between the Registrant and Employees for Grants Under the
    Registrants 2000 Long-Term Incentive Plan10
.58*

Form of Non-Qualified Stock Option
    Agreement between the Registrant and Employees for Grants Under
    the Registrants 2000 Long-Term Incentive Plan10
.59*

Form of Non-Qualified Stock Option
    Agreement between the Registrant and Employees for Grants Under
    the Registrants 1996 Stock Plan12
.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 105)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

Amended and Restated Audit
    Committee Charter (incorporated by reference to
    Exhibit 99.1 to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004) E-5




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##### Table of Contents



Exhibit No.

Description99
.2

Amended and Restated Compensation
    Committee Charter (incorporated by reference to
    Exhibit 99.2 to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004)99
.3

Amended and Restated Nominating
    Committee Charter (incorporated by reference to
    Exhibit 99.3 to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004)99
.4

Governance & Compliance
    Committee Charter (incorporated by reference to
    Exhibit 99.4 to the Registrants Current Report on
    Form 8-K
    filed November 4, 2004)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)99
.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

Business Services Agreement, dated
    as of January 31, 2006, among the Registrant, Envoy
    Corporation, Emdeon Practice Services, Inc. and WHC
    (incorporated by reference to Exhibit 10.1 to WHCs
    Current Report on
    Form 8-K
    filed February 1, 2006)99
.14

Marketing Agreement, dated as of
    January 31, 2006, among the Registrant, Envoy Corporation
    and WHC (incorporated by reference to Exhibit 10.2 to
    WHCs Current Report on
    Form 8-K
    filed February 1, 2006)99
.15

Joint Development Agreement, dated
    as of January 31, 2006, among Envoy Corporation, Emdeon
    Practice Services, Inc. and WHC (incorporated by reference to
    Exhibit 10.3 to WHCs Current Report on
    Form 8-K
    filed February 1, 2006)     *
    
    Agreement relates to executive compensation. E-6