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 1934

For the fiscal year ended December 31, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-35337

WebMD Health Corp.

(Exact name of registrant as specified in its charter)

Delaware	20-2783228
(State of incorporation)	(I.R.S. Employer Identification No.)
111 Eighth Avenue	10011
New York, New York (Address of principal executive office)	(Zip code)

(212) 624-3700

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	The Nasdaq Stock Market LLC (Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: Not Applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ        No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ¨        No  þ

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ        No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference into Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ	Accelerated filer  ¨	Non-accelerated filer  ¨	Smaller reporting company  ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes  ¨        No  þ

As of June 30, 2014, the aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant was approximately $1,762,535,000 (based on the closing price of the Common Stock of $48.30 per share on that date, as reported on the Nasdaq Global Select Market).

As of February 23, 2015, there were 37,210,893 shares of Common Stock outstanding (including unvested shares of restricted Common Stock).

DOCUMENTS INCORPORATED BY REFERENCE

Certain information in the registrant’s definitive proxy statement to be filed with the Commission relating to the registrant’s 2015 Annual Meeting of Stockholders is incorporated by reference into Part III.

TABLE OF CONTENTS

		Page
Forward-Looking Statements			ii
Definitions of Certain Measures			iii
References to Our Websites			iii
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		33
Item 1B.	Unresolved Staff Comments		53
Item 2.	Properties		53
Item 3.	Legal Proceedings		53
Item 4.	Mine Safety Disclosures		53
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		54
Item 6.	Selected Financial Data		57
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		59
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		78
Item 8.	Financial Statements and Supplementary Data		78
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		78
Item 9A.	Controls and Procedures		78
Item 9B.	Other Information		78
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		79
Item 11.	Executive Compensation		79
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		79
Item 13.	Certain Relationships and Related Transactions, and Director Independence		79
Item 14.	Principal Accountant Fees and Services		79
PART IV
Item 15.	Exhibits and Financial Statement Schedule		80
Signatures			81
Financial Statements			F-1
Index to Exhibits			E-1

WebMD^®, Medscape^®, CME Circle^®, Medpulse^®, eMedicine^®, MedicineNet^®, theheart.org^® and RxList^® are among the trademarks of WebMD Health Corp. or its subsidiaries.

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be, forward-looking statements. For example, statements concerning projections, predictions, expectations, estimates or forecasts and statements that describe our objectives, future performance, plans or goals are, or may be, forward-looking statements. These forward-looking statements reflect management’s current expectations concerning future results and events and can generally be identified by the use of expressions such as “may,” “will,” “should,” “could,” “would,” “likely,” “predict,” “potential,” “continue,” “future,” “estimate,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” and other similar words or phrases, as well as statements in the future tense.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. The following important risks and uncertainties could affect our future results, causing those results to differ materially from those expressed in our forward-looking statements:

• failure to achieve sufficient levels of usage of our public and private portals and mobile platforms;

• failure to attract sufficient consumers and healthcare professionals to our public portals and mobile platforms, including as a result of existing and new competitors for those audiences;

• competition for advertisers and sponsors for our public portals and mobile platforms;

• reductions in promotional and educational spending by pharmaceutical and biotechnology companies, whether resulting from the number and timing of regulatory approvals of new products or indications, from the number and timing of regulatory approvals of generic products that compete with existing brand name products or from other factors affecting the relevant markets;

• the inability to successfully deploy new or updated applications or services for our public portals, mobile platforms and private portals or, if deployed, the failure to create new or enhanced revenue streams from those applications or services;

• failure to preserve and enhance the “WebMD” and “Medscape” brands and our other brands;

• the inability to provide health coaching and condition management services that meet the needs of clients and potential clients of our private portals or the failure to do so with sufficient efficiency to make those services profitable for us;

• the inability to attract and retain qualified personnel;

• adverse economic conditions and disruptions in the capital markets;

• adverse changes in general business or regulatory conditions affecting the healthcare, information technology and Internet industries; and

• the Risk Factors described in Item 1A of this Annual Report.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors, including unknown or unpredictable ones, also could have material adverse effects on our future results.

The forward-looking statements included in this Annual Report on Form 10-K are made only as of the date of this Annual Report. Except as required by law or regulation, we do not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances.

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DEFINITIONS OF CERTAIN MEASURES

In this Annual Report, we provide information regarding usage of The WebMD Health Network that we have determined using internal technology that identifies and monitors usage by individual computers, smartphones, tablets and other electronic devices used to access the Internet (which we refer to, collectively, as electronic devices). As used in this Annual Report:

• A “unique user” or “unique visitor” during any calendar month is an individual electronic device, using a specific Web browser, that accesses a page in The WebMD Health Network during the course of such calendar month, as determined by our tracking technology. Accordingly, with respect to such calendar month, once an individual electronic device, using a specific Web browser, accesses a page in The WebMD Health Network, that electronic device will generally be included in the total number of unique users or visitors for that month. Similarly, with respect to any calendar month, an individual electronic device using a specific Web browser accessing a specific public portal, Website or mobile property in The WebMD Health Network (which we refer to as a “WebMD Destination”) may be counted only once as a single unique user or visitor regardless of the number of times it accesses that WebMD Destination or the number of individuals who may use it. However, if an electronic device using a specific Web browser accesses more than one WebMD Destination within The WebMD Health Network during a calendar month, it will be counted once for each such WebMD Destination. An electronic device that accesses a WebMD Destination using more than one Web browser will be counted as if it were a separate device for each browser used. In addition, if an electronic device blocks our tracking technology, it will be counted as a unique user or visitor in a particular month each time it visits a WebMD Destination. An electronic device that does not access any WebMD Destination during a particular calendar month is not included in the total number of unique users or visitors for that calendar month, even if such electronic device has, in the past, accessed one or more WebMD Destinations.

• A “page view” is a page that is viewed on an electronic device. The number of “page views” in The WebMD Health Network is not limited by its number of unique users or visitors. Accordingly, each unique user or visitor may generate multiple page views.

• With respect to any given time period, “aggregate page views” are the total number of “page views” during such time period on The WebMD Health Network as a whole.

Third party services that measure Internet usage apply their own methodologies to do so and, accordingly, may provide different usage statistics than those reported by our internal tracking technology.

Our WebMD Health Services private portals are provided to employers and health plans for use by their employees and members. These private portals are not part of The WebMD Health Network, do not involve advertising or sponsorship by third parties, and their users and page views are not included in measurements of The WebMD Health Network’s traffic volume.

REFERENCES TO OUR WEBSITES

The contents of the Websites in The WebMD Health Network and our other Websites referred to in this Annual Report are not incorporated into this filing. In addition, references to URLs for our Websites are intended to be inactive textual references only.

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PART I

Item 1. Business

INTRODUCTION

Overview of Our Services

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, mobile platforms and health-focused publications. We engage consumers, physicians and other healthcare professionals across a multi-screen experience, allowing us to empower and enable health decisions anytime and anywhere.

The WebMD Health Network — Our Public Portals.     Our network of public portals for consumers and healthcare professionals includes: www.WebMD.com (which we sometimes refer to as WebMD Health), our primary public portal for consumers and related mobile-optimized sites and mobile apps; www.Medscape.com, our primary public portal for physicians and other healthcare professionals and related mobile-optimized sites and mobile apps; and other sites through which we provide our branded health and wellness content, tools and services.

• Our Websites and mobile applications for consumers help them take an active role in managing their health by providing objective health and wellness information and access to decision-support tools and other services. We also provide content relating to lifestyle and healthy living, including healthy beauty, diet and food, exercise and fitness, and family and pregnancy. Our content offerings for consumers include news articles and features, special reports, interactive guides, originally produced videos, self-assessment questionnaires, expert led Q&As, community discussions, and reference resources. Our mobile applications for consumers, which include the WebMD App, the WebMD Pregnancy App, the WebMD Baby App, the WebMD Pain Coach App, the WebMD Allergy App and the WebMD Magazine App, had been downloaded over 25 million times in total through the end of 2014.

• Our Websites and mobile applications for healthcare professionals help them improve their clinical knowledge and practice of medicine. We make it easier for physicians and other healthcare professionals to access clinical reference sources, to stay abreast of the latest clinical information, to learn about new treatment options, to earn continuing medical education (or CME) and continuing education (or CE) credit, and to communicate with peers. Medscape’s original content includes daily medical news, conference coverage and expert commentary and columns by authors from widely respected clinical and academic institutions. Medscape also provides access to full-text journal articles, reference materials and other medical content. Through Medscape Education (www.medscape.org), we offer a wide selection of free online CME and CE activities designed to educate healthcare professionals about important diagnostic and therapeutic issues. Our Medscape App for physicians and other healthcare professionals provides formulary information, medical calculators, drug, disease and condition references, and a drug interaction checker. Our Medscape MedPulse App enables healthcare professionals to stay up-to-date on the latest medical news and expert perspectives. Our Medscape Business of Medicine App is a digital magazine for iPad^® and Android^® tablets covering developments relevant to the healthcare industry, including news, blogs, columns and features on topics such as practice management, medical ethics, electronic health records and healthcare reform.

In 2014, The WebMD Health Network reached an average of approximately 183 million monthly unique visitors and delivered approximately 14.25 billion page views during the year, increases of 33% and 23% over the prior year, respectively. Traffic to Medscape properties from physicians and other healthcare professionals averaged approximately 6.2 million physician sessions per month during 2014, an increase of approximately 13% over the prior year. For additional information regarding traffic to The WebMD Health Network, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Introduction — Background Information on Certain Trends and Developments Affecting Our Business — Traffic Trends” in Item 7 below.

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We do not charge any usage, membership or download fees for access to our public portals or mobile applications. Our public portals generate revenue primarily through the sale of various types of advertising and sponsorship products to its clients, which include: pharmaceutical, biotechnology and medical device companies; hospitals, clinics and other healthcare services companies; health insurance providers; consumer products companies whose products or services relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention; and various other businesses, organizations and governmental entities. Advertisers and sponsors use our services to reach, educate and inform target audiences of consumers, physicians and other healthcare professionals. We also generate revenue through the sale of advertising in WebMD Magazine, a consumer publication that we distribute free of charge to physician office waiting rooms and make available online and through an iPad app. Advertising and sponsorship revenue was approximately 81% and 78% of our total revenue for the fiscal years ended December 31, 2013 and 2014, respectively.

WebMD Health Services — Our Private Portals.    For more than a decade, we have helped employers and health plans improve the health of their employee and plan participant populations and reduce healthcare costs. We offer a cloud-based population health management platform, including an online personal health record application, to private and governmental employers and health plans for use by their employees and plan participants. We host our WebMD Health Services platform for our clients. Our flexible architecture allows us to tie in with the client’s existing programs, Websites and intranets for their employees and plan participants. Our online services can be accessed using a computer, a tablet or a smartphone and provide personalized content, tools and other resources relevant to the specific individual’s eligibility, coverage and wellness profile. Our WebMD Health Services solutions include a comprehensive set of decision-support and transparency tools that help their employees and plan participants understand the financial implications of their benefits options and make more informed benefits-related purchase decisions. Our online tools also provide access to information that can help them factor quality and cost into decisions about care and treatment options. In addition, we offer telephonic, online and onsite health coaching and targeted condition management programs that help employees and plan participants make healthier lifestyle choices and achieve their wellness goals.

We generate revenue from subscriptions to our WebMD Health Services platform by employers and health plans, either directly or through distribution relationships, including relationships with employee benefits outsourcing companies, employee benefits consultants and other companies that assist employers in purchasing or managing employee benefits. In addition, we offer our health coaching and condition management services on a per participant basis. Private portal services revenue was approximately 16% and 18% of our total revenue for the fiscal years ended December 31, 2013 and 2014, respectively. Our WebMD Health Services private portals do not display or generate revenue from advertising or sponsorship.

Information Services. We sell certain information products and services on a standalone basis using de-identified data that we license from a small number of third party data sources, of which the principal source is a license retained by HLTH Corporation, our former parent company, in connection with the sale of its Emdeon Business Services business (EBS). As the successor to HLTH, we received this license which provides us the rights to certain de-identified data from the operation of the EBS business through February 2018 for use in the development and commercialization of various information products and services. To date, these standalone information products and services do not include any data derived from the operation of our Websites. Customers include data services, informatics and consulting companies. Revenue from the sale of standalone information products and services was approximately 3% and 4% of our total revenue for the fiscal years ended December 31, 2013 and 2014, respectively. For additional information, see “Government Regulation, Industry Standards and Related Matters – HIPAA Privacy Standards and Security Standards” below.

Corporate Information

WebMD Health Corp. is a Delaware corporation that was incorporated on May 3, 2005 under the name WebMD Health Holdings, Inc. Our principal executive offices are located at 111 Eighth Avenue, New York, New York 10011 and our telephone number is (212) 624-3700. We completed the initial public offering of our Class A Common Stock on September 28, 2005. Prior to that time, WebMD was a wholly-owned subsidiary of

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HLTH Corporation (which we refer to as HLTH). Upon completion of our merger with HLTH in October 2009 and the resulting cancellation of our Class B Common Stock (all of which had been owned by HLTH), our Class A Common Stock began being referred to simply as Common Stock. Our Common Stock trades on the NASDAQ Global Select Market under the symbol “WBMD.”

Available Information

We make available free of charge at www.wbmd.com (in the “Investor Relations” section) copies of materials we file with, or furnish to, the Securities and Exchange Commission, or SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC.

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THE WebMD HEALTH NETWORK — OUR PUBLIC PORTALS

Overview

Our Multi-Screen Platform. The WebMD Health Network delivers content through a multi-screen platform that engages users regardless of whether they are on a personal computer, a smartphone or a tablet. Our consumer portals and mobile applications help consumers take an active role in managing their health by providing objective health and wellness information. Our content offerings for consumers include access to news articles and features and decision-support tools that help them make better informed decisions about treatment options, health risks and healthcare providers. Our Websites and mobile applications for physicians and other healthcare professionals help them improve their clinical knowledge and practice of medicine. Our content offerings for these professionals, which include daily medical news, conference coverage, expert commentary and columns and CME activities, are written by authors from widely respected clinical and academic institutions and edited and managed by our in-house editorial staff.

The following provides a summary of the Websites included in The WebMD Health Network:

Consumer Sites	Description
www.webmd.com	WebMD Health, our flagship consumer portal.
www.medicinenet.com	A health information site for consumers offering content that is written and edited by practicing physicians, including an online medical dictionary with thousands of medical terms.
www.rxlist.com	An online drug directory, which provides comprehensive descriptions of pharmaceutical products (including chemical names, brand names, molecular structure, clinical pharmacology, directions and dosage, side effects, drug interactions and precautions).
www.emedicinehealth.com	A health information site for consumers offering articles written and edited by physicians for consumers, including first aid and emergency information that is also accessible at firstaid.webmd.com.
Professional Sites
www.medscape.com	Medscape, our flagship portal for physicians and other healthcare professionals, is organized by medical specialty, with each supported specialty having its own customized home page. Medscape content includes: •    News Content — including coverage of breaking medical news, expert perspectives and columns, medical conference coverage, business of medicine content, slideshows, special reports and access to full-text journal articles. •    Reference Content — including comprehensive clinical overviews of diseases and conditions, procedures and drugs. In 2013, we merged our theheart.org site into our Medscape Cardiology offering.
www.medscape.org	Medscape Education, the Website through which Medscape, LLC distributes online CME and CE to physicians and other healthcare professionals.

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We also provide related mobile applications, which are included in The WebMD Health Network. Our mobile applications for consumers, which include the WebMD App, the WebMD Pregnancy App, the WebMD Baby App, the WebMD Pain Coach App, the WebMD Allergy App and the WebMD Magazine App, had been downloaded over 25 million times in total through the end of 2014. Our Medscape App for physicians and other healthcare professionals provides formulary information, medical calculators, drug, disease and condition references, and a drug interaction checker. Our Medscape MedPulse App enables healthcare professionals to stay up-to-date on the latest medical news and expert perspectives. Our Medscape Business of Medicine App is a digital magazine for iPad^® and Android^® tablets covering developments relevant to the healthcare industry, including news, blogs, columns and features on topics such as practice management, medical ethics, electronic health records and healthcare reform. We also provide access to our content through versions of our Websites tailored for viewing through mobile browsers.

The WebMD Health Network also includes our international sites: the co-branded Boots WebMD health information site for United Kingdom consumers at www.WebMD.boots.com; and Medscape France (www.medscape.fr) and Medscape Germany (www.medscape.de), our physician portals in those two countries.

Traffic to The WebMD Health Network.    In 2014, The WebMD Health Network reached an average of approximately 183 million monthly unique visitors and delivered approximately 14.25 billion page views during the year, increases of 33% and 23% over the prior year, respectively. Traffic to The WebMD Health Network was an average of approximately 190 million unique users per month and total traffic of 3.70 billion page views during the fourth quarter of 2014, increases of 22% and 17%, respectively, over the prior year period. Traffic to Medscape properties from physicians and other healthcare professionals averaged approximately 6.2 million physician sessions per month in 2014, an increase of approximately 13% over the prior year, and averaged approximately 6.7 million physician sessions per month during the fourth quarter of 2014, an increase of approximately 17% over the prior year period.

Consumers and healthcare professionals are increasingly using smartphones, tablets and other mobile devices to access the Internet, with physicians increasingly using mobile devices during treatment at the point of care. Accordingly, the portion of our page views from mobile devices has increased rapidly in the past several years as usage has increased on mobile devices, and increased utilization of our mobile offerings was the primary driver of our traffic growth in the fourth quarter of 2014, as well as for full year 2014. During the fourth quarter of 2014, approximately 27% of our page views came from a U.S. personal computer (or PC); approximately 36% came from a U.S. smartphone; approximately 8% came from a U.S. tablet device; and approximately 29% came from non-U.S. sources. For additional information regarding traffic to The WebMD Health Network and our efforts to monetize mobile traffic, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Introduction — Background Information on Certain Trends and Developments Affecting Our Business — Traffic Trends” and “— Efforts to Increase Advertising and Sponsorship Revenue from Mobile” in Item 7 below.

Our Editorial Policies.    We are dedicated to providing quality health and wellness information and to upholding the integrity of our editorial process. The goal of our Editorial Policies is to maintain WebMD as an objective, practical and relevant content source for health and medical information. Our original content is reviewed by physician reviewers and by our editors for accuracy, objectivity, appropriateness of medical language, and proper characterization of findings. We uphold traditional journalistic principles in reviewing and corroborating information from other sources. When WebMD licenses health and wellness content from third parties for publication on our site, our editors review the third party’s editorial policies and procedures for consistency with the WebMD Editorial Policies. Our physician reviewers and other editorial staff review a representative sample of the content to ensure that the third party follows the editorial policy and procedures reviewed by WebMD.

Our Policies Regarding Advertisements, Sponsorships and Promotions.    All advertisements, sponsorships and promotions that appear on our Websites are subject to our Advertising Policies and/or our Sponsor Policy. We do not accept advertising that, in our opinion, is not factually accurate or is not in good taste. WebMD makes a clear distinction between the news stories, articles and other content that we create or license and the promotional information that comes from our sponsors. While content from a sponsor is subject to our

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Advertising Policy, it is not subject to our Editorial Policy. The sponsor is responsible for the accuracy and objectivity of its content and it is not reviewed by our Editorial Department for accuracy, objectivity or balance. Sponsors may also provide funding directly to WebMD without the sponsor having any control over the content.

Consumer Services

Introduction.    The Internet has fundamentally changed the way consumers obtain information, enabling them to have immediate access to searchable information and dynamic interactive content. Healthcare consumers increasingly seek to educate themselves online about their health-related issues, motivated in part by the larger share of healthcare costs they are being asked to bear due to changes in the benefit designs being offered by health plans and employers. Our goal is to provide consumers with an objective and trusted source of information and online tools that help them play an active role in managing their health. We also provide content relating to lifestyle and healthy living, including healthy beauty, diet and food, exercise and fitness, and family and pregnancy.

In the past several years, video and multimedia applications have become an important part of what users expect from Internet sites. In addition, consumers are increasingly using the Internet to access social media as a means to communicate and exchange information, including information regarding health and wellness. Consumers are also increasingly using smartphones and tablets to access online content and tools. We have invested and intend to continue to invest in software and systems that allow us to meet the demands of our users and sponsors, including customized content management and publishing technology to deliver interactive content, multimedia programming and personalized health applications that engage our users. In addition, we continue to focus on delivering a multi-screen platform that extends the user experience onto mobile devices and tablets.

Overview of Content and Service Offerings.    WebMD Health and the other consumer portals in The WebMD Health Network provide our users with information, tools and applications in a variety of content formats. These content offerings include access to news articles and features, special reports, interactive guides, originally produced videos, self-assessment questionnaires, expert led Q&As, community discussions, and reference resources. By becoming a registered WebMD member, consumers can participate in our online communities and can opt-in to receive e-newsletters from WebMD on a variety of health-related topics or on specific conditions. There are no membership fees, usage charges or download charges for our consumer portals or mobile applications.

Our in-house staff, which includes professional writers, editors, designers, board-certified physicians and other healthcare professionals, creates content for The WebMD Health Network. Our in-house staff is supplemented by medical advisors and authors from widely respected academic and clinical institutions. The news stories and other original content and reporting presented in The WebMD Health Network are based on our editors’ selections of the most important and relevant public health events occurring on any given day, obtained from an array of credible sources, including peer-reviewed medical journals, medical conferences, federal or state government actions and materials derived from interviews with medical experts. We offer searchable access to the full content of our Websites, including licensed content and reference-based content.

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Key Features of WebMD Health.    WebMD Health includes the following key features:

Feature	Description
WebMD News Center	Health news articles that are written by journalists and reviewed by our professional staff. Content focuses on “news you can use” and the article topics reflect national news stories of interest in the popular media that day with original perspective from health and medical experts.
WebMD Editorial Features	Comprehensive content focusing on major health, wellness and lifestyle issues that are in the news or otherwise contemporary, with emphasis on health trends and national health issues.
WebMD Health and Wellness Centers	WebMD Health and Wellness Centers are centralized locations for content and services for both WebMD Health editorial offerings and sponsor offerings focusing on topics related to health, wellness and lifestyle. Each Center features expert and medically reviewed information enabling the user to easily locate the top articles, news, videos, community features and health or wellness assessments for each topic. We also provide users an alphabetical listing of all Health and Wellness Centers and other collections of articles, organized by specific health conditions and concerns, known as Health A-Z.
WebMD Health Guides and Wellness Guides	Anchored within our Health and Wellness Centers, our Health Guides and Wellness Guides are designed to guide users through their individual health journey. The most current symptom, diagnosis, treatment and care information related to a particular disease or condition topic can be found in our Health Guides. Our Wellness Guides cover a broad range of topics, including nutrition, fitness, pregnancy and parenting. These guides were created by our editorial staff of professional health writers in collaboration with our proprietary physician network.
WebMD Answers	WebMD Answers provides a trusted environment for consumers to ask health-related questions and receive information from physicians and other experts, as well as from other consumers. WebMD Answers also gives users the ability to “follow” topics, people, organizations, and trending questions. Consumers can stay informed on the latest information relevant to their interests either via email messaging or by signing into WebMD and accessing a personalized WebMD Answers experience.
WebMD Video	Originally produced multi-media content served on our custom video player. Includes health-related video of real patient stories and expert interviews, among other things, and includes narration, graphics and links to additional content on a given health topic. Sponsors are able to stream promotional messages within the video feature itself and within the surrounding viewing area. Videos are also included in our Health and Wellness Centers.

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Feature	Description
Slideshows	Our slideshows are designed to educate users on specific conditions and other health and healthy living topics in an engaging, visually rich format.
General Medical Information	Our medical library allows consumers to research information relating to diseases and common health conditions by providing searchable access and easy-to-read content, including:
	—     self-care articles
	—     drug and supplement references from leading publications, including First Data Bank®
	—     clinical trials and research study information
	—     a patient’s guide to medical tests
	—     interactive, illustrated presentations that visually explain common health conditions and diseases
	—     a medical dictionary
	—     doctors’ views on important health topics.

Decision-Support Services and Other Online Tools.    Our decision-support services and other online tools help consumers make better-informed decisions about treatment options, health risks and healthcare providers, and assist consumers in their management and monitoring, on an ongoing basis, of personal health goals, specific conditions and treatment regimens.

Feature	Description
WebMD Health Checks and Evaluators	Clinical, algorithm-based self assessments for health conditions and wellness topics, including a personalized risk score based on the user’s individual self-reported characteristics (e.g., gender, age, behavioral risks, heredity), along with customized recommendations for further education, potential treatment options and a summary report to share with the user’s physician or healthcare professional.
WebMD Symptom Checker	Our patented interactive graphic interface with advanced clinical decision-support rules that allows users to identify potential conditions associated with their physical symptoms, gender and age.
WebMD Food & Fitness Planner	Our Food & Fitness Planner is an online journaling service focusing on diet, food and fitness, designed to help users attain their personal health, weight loss and weight management goals. Our Food & Fitness Planner helps users make more informed food, beverage and nutrition choices.
WebMD Recipe Finder	Our Recipe Finder allows users to search our collection of recipes from WebMD, Eating Well and other sources to help make healthy meal choices. Recipes can be searched and filtered by nutritional criteria.
First Aid & Emergencies	Directs users to educational and treatment information that may be useful in the event of certain medical emergencies. Also included in this resource is a First Aid A-Z glossary of terms.

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Feature	Description
Health and Wellness Tests & Tools	Provides access to interactive calculators and quizzes to assess or demonstrate health topics, including a target heart rate calculator, body mass index calculator, pregnancy due date calculator and ovulation calendar.
Drugs & Treatments	Users can search for information about prescription and over-the-counter medications by brand or generic name, or by condition.
WebMD Physician Directory	Enables users to find a physician based on the physician or practice name, specialty, zip code and distance. We are in the process of adding new features that will enable consumers to check provider experience metrics, ratings and reviews and to book appointments with providers.

Mobile.    We provide access to our consumer content and tools through WebMD Mobile, a version of our WebMD.com site tailored for viewing through mobile browsers at www.m.webmd.com. In addition, we offer the following mobile applications for consumers, which had been downloaded over 25 million times in total through the end of 2014:

• Our WebMD App, which is available for Android™, iPhone^®, iPad^® and Kindle Fire^®, provides mobile access to certain WebMD content and tools, including Symptom Checker, First Aid, and Pill Identifier applications, as well as other health information. The mobile-optimized content also covers health and beauty, diet, parenting and children’s health, and sex and relationships. WebMD App users can choose from and save information tailored to their specific interests and can select topics to populate tips, fun facts, articles, videos and quizzes relevant to their healthy-living goals. In June 2014, we launched WebMD Healthy Target, an integrated health improvement program available within the WebMD App for iPhone^® and, during the third quarter of 2014, we released additional features and functionality, including integration with Apple’s HealthKit. WebMD Healthy Target provides valuable assistance to individuals looking to manage chronic conditions like Type 2 diabetes and obesity, as well as to a broader audience interested in achieving fitness goals or more generally living a healthier lifestyle. WebMD Healthy Target allows users to set their health goals and can receive data from a variety of biometric devices, including activity trackers, wireless scales, blood pressure monitors and glucose meters, to monitor progress against those health goals. Based on the user’s goals and the data, WebMD Healthy Target delivers contextually relevant content and personalized action plans and motivational tips.

• Our WebMD Magazine App, which is available for iPad^®, provides a tablet-optimized reading experience for WebMD Magazine, offering links to relevant articles, videos, blogs and slideshows on WebMD.com.

• Our WebMD Baby App, which is available for Android™ and iPhone^®, gives new parents access to content created exclusively for the app, personalized for a baby’s specific age. WebMD Baby helps keep parents informed with easily accessible baby health and wellness information that they can trust. A personal growth chart for baby/toddler is also integrated into the app, allowing information to be easily added right from the pediatrician’s office. WebMD Baby received the 2012 Medical Marketing & Media Gold Award for Best Mobile App for Consumers.

• Our WebMD Pregnancy App, which is available for iPhone^®, combines trusted medical information and fun, shareable content to help expecting mothers celebrate the milestones along their pregnancy journey and empower them to make healthy decisions. WebMD Pregnancy delivers timely physician-reviewed content based on the baby’s expected delivery date, including checklists, questions to ask the doctor, and multimedia information.

• Our WebMD Pain Coach App, which is available for Android™ and iPhone^®, is a mobile companion to coach people living with chronic pain through daily health and wellness choices so that they can better

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manage their pain while living a healthy life. It offers users a personalized experience by delivering daily physician-reviewed tips about managing their specific conditions to their mobile device, including those suffering from chronic back pain, neck pain, nerve pain, fibromyalgia, migraine, osteoarthritis, and rheumatoid arthritis. With the app, WebMD helps users take control of their lifestyle choices by enabling them to easily review their pain patterns so they can understand triggers, set goals and share progress with their physician.

• Our WebMD Allergy App, which is available for Android™ and iPhone^®, empowers users to take control of their allergies. The WebMD Allergy App provides allergy sufferers with personalized location-based allergy condition forecasts in combination with WebMD’s trusted information and insights. The WebMD Allergy App is further personalized with optional mobile push notifications that warn when allergen levels are high, enabling app users to proactively manage their allergy conditions.

Social Networking.    The WebMD Community, our social networking initiative, gives consumers the ability to connect with health experts and with other WebMD members to exchange information, experiences and support. Members are empowered to create their own communities and to exchange information with other users. Users can also access content and experts through WebMD’s social media offerings on Facebook, Twitter, Google+, and Pinterest.

International.    We plan to pursue opportunities to expand the reach of our brands outside the United States. In certain markets outside the United States, we expect to accomplish this through partnerships or joint ventures with other companies having expertise in the specific country or region, while in other such markets we expect to rely primarily on our own internal resources. However, because of restrictions on consumer advertising by pharmaceutical and medical device companies that apply in many countries, we expect to focus our efforts outside the United States primarily on expanding our offerings for physicians and other healthcare professionals, rather than consumer offerings. For additional information, see “— Professional Services — International” below.

Since October 2009, we have operated a health information Website in the United Kingdom with Boots UK, the United Kingdom’s leading pharmacy-led health and beauty retailer. The co-branded Boots WebMD site at www.WebMD.boots.com features daily health and wellness news, condition and healthy living centers, interactive health tools, WebMD’s symptom checker, specialized health search, health videos and interactive slide shows.

WebMD Magazine

WebMD Magazine is delivered free of charge to physicians in the United States for use in their office waiting rooms and reaches consumers right before they meet with their physicians. This allows sponsors to extend their advertising reach and to deliver their message when consumers are actively engaged in the healthcare process, and allows us to extend the WebMD brand into offline channels. We publish eight issues per year and had a rate base, in 2014, of over 1.4 million copies of each issue. We estimate that more than 10 million people are reading each issue of WebMD Magazine.

The editorial format of WebMD Magazine is specifically designed for the physician’s waiting room. Its editorial features and highly interactive format of assessments, quizzes and questions are designed to inform consumers about important health and wellness topics. We also publish a digital edition of WebMD Magazine online and, as described under “— Mobile” above, WebMD Magazine is available as a free interactive application for the iPad^®. We also produce certain specialized editions of WebMD Magazine, including one for college campuses and one that focuses on diabetes.

Professional Services

Introduction.    The Internet is a primary source of information for physicians and other healthcare professionals, and is growing relative to other sources, such as conferences, meetings and offline journals. Our Websites for healthcare professionals include Medscape and Medscape Education. We also provide related apps for healthcare professional described below, as well as a version of each of our professional Websites that is tailored for viewing through mobile browsers. There are no membership fees and no usage charges for our

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professional sites and apps. However, users must register to access the full array of content and features. We generate revenue from our professional services by selling advertising and sponsorship programs primarily to companies that desire to reach physicians and other healthcare professionals. We also generate revenue through educational grants.

Medscape.    Medscape (www.medscape.com), our flagship portal for physicians and other healthcare professionals, is organized by medical specialty, with each supported specialty having its own customized content. Medscape also includes areas for nurses, pharmacists, medical students, and members interested in medical policy and business of medicine topics. Registration by users enables us to deliver medical content targeted to their specialty and areas of interest, based on information they provide in their registration profiles. The registration process also enables professional members to choose a home page tailored to their medical specialty or interests. Medscape members receive e-mail newsletters, tailored to their specialty and other areas of interest, that highlight new information and resources on Medscape. Medscape content includes:

• News Content. Medscape provides timely coverage of medical news, including insightful perspectives from leading medical experts in both text and multimedia formats. Medscape news content is written by our in-house team of professional journalists and editors, faculty from widely respected academic and clinical institutions, and seasoned freelance professional writers. Medscape news content is edited and managed by our editorial staff. The content is produced in various formats, including: in-depth interviews with experts on topics related to the current and future practice of medicine; news alerts on critical clinical issues such as breaking drug information, including pharmaceutical recalls and product advisories; coverage of healthcare policy and politics, including analysis of the Affordable Care Act and its impact on clinical practice; and coverage of key professional meetings and conferences from around the world. Medscape’s news content also includes widely read Business of Medicine coverage on complex practice management, compensation, legal, and ethical issues. The Medscape editorial team also creates recurring features and columns such as clinical cases, slideshows, and special reports. Medscape also provides access to wire service news stories and to licensed full-text journal articles.

• Reference Content (Drugs and Diseases). Medscape provides original content authored and reviewed by physicians and pharmacists from leading medical centers, in the following categories:

— Disease and Condition Articles.    Evidence-based and physician-reviewed disease and condition articles are organized to answer clinical questions, as well as to provide in-depth information in support of diagnosis, treatment, and other clinical decision-making. Our over 6,000 comprehensive disease and condition monographs are illustrated with over 40,000 diagnostic images and clinical drawings.

— Drug Reference.    A proprietary drug reference database, with more than 2,300 monographs, for researching prescribing and safety information on brand-name, generic and over-the-counter (OTC) drugs, including herbals and supplements.

— Drug Interaction Checker.    A drug interaction checker that identifies interactions for drugs, herbals and/or supplements, with detailed information from minor to contraindicated interactions.

— Clinical Procedure Articles.    More than 1,000 clinical procedure articles provide detailed instructions, and include videos and images to help clinicians with new techniques or to improve their skills in procedures they have previously performed.

— Image Collections.    Image collections are visually engaging presentations of both common and uncommon diseases, case presentations, and current controversies in medicine. They are presented in a slideshow format and are designed to challenge and expand physicians’ knowledge of clinically important topics.

— Quizzes and Case Challenges.    A series of interactive assessments designed to test clinical acumen and supplement disease and condition content.

Our Medscape App is a free mobile application, available on Android™, Blackberry^®, iPhone^®, iPad^®, and Kindle Fire^®, for physicians and other healthcare professionals that provides registered users with access to

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Medscape news and reference content, including: articles and other resources; the drug reference database and drug interaction checker; clinical reference, treatment and procedure guides; and physician, pharmacy and hospital directories. Our Medscape App also provides access to CME programs from Medscape Education (described below). In addition, our Medscape App gives users offline access to reference content, treatment guides, a pill identification tool, and the drug interaction checker.

In 2014, we introduced our Medscape MedPulse App, a medical news app for iPhone^® and iPad^® that enables healthcare professionals to stay up-to-date on the latest medical news and expert perspectives and that can be personalized to an individual’s areas of interest. Medscape MedPulse features the latest medical content from Medscape’s award-winning editorial team and includes a curated Twitter feed to help users stay informed of important medical trends being shared in real time by physicians and other leading medical commentators. In 2014, we introduced our Medscape Business of Medicine App, a digital magazine for iPad^® and Android^® tablets covering developments relevant to the healthcare industry, including news, blogs, columns and features on topics such as practice management, medical ethics, electronic health records and healthcare reform.

Continuing Medical Education (CME).    Medscape Education (www.medscape.org) is the primary Website through which our ACCME-accredited CME provider, Medscape, LLC, distributes online CME and CE to physicians and other healthcare professionals. The ACCME (the Accreditation Council for Continuing Medical Education) accredits and oversees providers of CME credit, as described under “Government Regulation, Industry Standards and Related Matters — Regulation and Accreditation of Continuing Medical Education” below. Medscape is also accredited as a provider of continuing nursing education by the American Nurses Credentialing Center’s Commission on Accreditation and as a provider of continuing pharmacy education by the Accreditation Council for Pharmacy Education.

Medscape Education offers a wide selection of free online CME and CE activities designed to educate healthcare professionals about important diagnostic and therapeutic issues, including both original CME and CE activities that Medscape, LLC develops as well as activities developed and accredited by third parties. Medscape Education also offers CME developed by our WebMD Global LLC subsidiary, which is intended for physicians and other healthcare professionals located outside of the United States. Medscape Education educational activities are supported by independent educational grants provided by pharmaceutical and medical device companies, as well as foundations and government agencies. In addition, in order to provide broad and timely coverage of areas of interest to healthcare professionals, Medscape Education offers numerous CME and CE activities for which it does not receive grants or other outside support.

International.    We are pursuing opportunities to expand the reach of the Medscape brand outside the United States. Physicians and healthcare professionals from around the world access content in English and other languages made available through Medscape. In addition, Medscape provides content in French to healthcare professionals in France (through www.medscape.fr) and in German to those in Germany (through www.medscape.de). In May 2014, Medscape began a collaboration with DXY, the largest online community for healthcare professionals in China, that enables the distribution of our educational programs to physicians and healthcare professionals in China through the DXY.cn site, bringing timely and valuable clinical information to physicians in China who are looking to improve their knowledge and skills in rapidly changing areas of medicine.

Advertising and Sponsorship

We believe that The WebMD Health Network offers an efficient means for advertisers and sponsors to reach a large audience of health-involved consumers, clinically active physicians and other healthcare professionals or to target specific groups of consumers, physicians and other healthcare professionals based on their interests or specialties with placements in relevant locations on The WebMD Health Network or in our e-newsletters. The following are some of the types of placements and programs we offer to advertisers and sponsors:

• Media Solutions.    These are traditional online advertising solutions, such as banners, used to reach health-involved consumers and physicians and other healthcare professionals. In addition, customers can select targeted media packages, including condition-specific or specialty-specific e-newsletters, keyword searches and educational programs.

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• Sponsored Solutions.    These are customized collections of articles, topics, and decision-support tools and applications, sponsored by clients and distributed within The WebMD Health Network.

The pricing for our advertising and sponsorship services varies from contract to contract based on numerous factors, including the specific services to be provided, the content areas where advertisements or sponsored content are to be displayed, the nature of any exclusivity provided, the total size of the commitment by the sponsor, and other factors. We also sell advertising on a CPM (cost per thousand impressions) basis, where an advertiser can purchase a set amount of impressions on that basis. An “impression” is a single instance of an ad appearing on a Web page. However, our services for advertisers and sponsors are generally more complex and have more complex pricing than simple cost per thousand impressions pricing. As our audience of mobile users continues to grow, we are seeing increased acceptance of and demand for mobile advertising and sponsorship programs from our customers. A majority of the programs we sold in the fourth quarter of 2014 included a mobile element. As a result, the proportion of program delivery on mobile continues to increase. Accordingly, mobile could be an important area of growth for the future and we view mobile monetization as an opportunity for incremental revenue.

We have been investing in improved data analytics capabilities to enhance our ability to demonstrate to advertisers and sponsors how promotional strategies implemented through WebMD impact physician and consumer behaviors and preferences. Enhanced analytic capabilities also support WebMD’s internal development of user engagement strategies and new messaging and education services.

Sales and Marketing

Our sales, marketing and account management personnel work with pharmaceutical, medical device and biotechnology companies, hospitals, health insurance companies, governmental entities and consumer products companies and their ad agencies to place their advertisements and other sponsored products on The WebMD Health Network and in WebMD Magazine. These individuals work closely with clients and potential clients and their agencies to develop innovative ways to bring their companies and their products and services to the attention of specific groups of consumers and healthcare professionals, and to create channels of communication with these audiences.

WEBMD HEALTH SERVICES — OUR PRIVATE PORTALS

Introduction

In response to increasing healthcare costs, employers and health plans have been changing benefit plan designs to increase deductibles, co-payments and other out-of-pocket costs and taking other steps to motivate employees and plan participants to live healthier lives and use healthcare in a cost-effective manner. In connection with shifting greater responsibility for healthcare costs to employees and plan participants, employers and health plans are making available more health and benefits information and decision-support applications to help their employees and plan participants make informed decisions about treatment options, health risks, lifestyle choices and healthcare providers. The goal is to encourage individuals to take a more active role in managing their health by providing relevant information, including data related to healthcare costs and quality. Since lifestyle choices, including choices regarding nutrition, exercise and tobacco use, are key drivers of health and can dramatically impact risks for acquiring chronic, costly health conditions, employers and health plans seek to reduce demand for healthcare services by focusing on health and wellness initiatives for their employees and plan participants.

For more than a decade, we have helped employers and health plans improve the health of their employee and plan participant populations and reduce healthcare costs. We offer a cloud-based population health management platform, including an online personal health record application, to private and governmental employers and health plans for use by their employees and plan participants (we generally refer to the individuals given access to our services by their employers and health plans as “participants” below). We host our WebMD Health Services platform for our clients. Our flexible architecture allows us to tie in with the client’s existing programs, Websites and intranets for participants. Our online services can be accessed by participants using a

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computer, a tablet or a smartphone and provide personalized content, tools and other resources relevant to the specific individual’s eligibility, coverage and wellness profile. As described more fully below, our WebMD Health Services solutions include a comprehensive set of decision-support and transparency tools that help participants understand the financial implications of their benefits options and make more informed benefits-related purchase decisions. Our online tools also provide access to information that can help them factor quality and cost into decisions about care and treatment options. In addition, we offer telephonic, online and onsite health coaching and targeted condition management programs that help employees and plan participants make healthier lifestyle choices and achieve their wellness goals. We also offer clients the ability to design team-based wellness challenges to help foster a culture of wellness in the workplace.

We generate revenue from subscriptions to our WebMD Health Services platform by employers and health plans, either directly or through distribution relationships, including relationships with employee benefits outsourcing companies, employee benefits consultants and other companies that assist employers in purchasing or managing employee benefits. In addition, we offer our health coaching and condition management services on a per participant basis. Our WebMD Health Services private portals do not display or generate revenue from advertising or sponsorship.

Our Online Platform

Our WebMD Health Services cloud-based platform provides a personalized user experience by integrating: individual user data (including personal health information); plan-specific data from clients; and WebMD content, decision-support technology and personal communication services. We host our WebMD Health Services platform for our clients. Our flexible architecture allows us to tie in with the client’s existing programs, Websites and intranets.

Our platform has been designed to integrate complex data from multiple sources, including health and pharmacy claims, electronic medical records and lab results, as well as biometric data from devices, monitors and apps used for health and fitness purposes through our device connection center. Once the information from any of these multiple sources has been imported into a participant’s profile on the platform, it can be used in other WebMD Health Services products, such as in connection with issuing rewards, designing wellness challenges or participating in one of our coaching programs. A health profile drives personalized messaging to the individual, including recommendations for educational resources and online tools. The health profile relies upon the integrated data, as well as our proprietary health assessment tool (sometimes referred to in the industry as a health risk assessment), completed by the participant, which identifies modifiable risk factors and health conditions. Health trackers allow individuals to graphically track health measurements over time.

Our WebMD Health Record^SM provides a secure repository for self-reported and professionally sourced health data and helps participants gather, store, manage and share that data. Medical and pharmacy claims data as well as lab and biometric results can be automatically imported. In addition, the WebMD Health Record^SM allows individual users to authorize access by healthcare providers, which can encourage better communication and coordination of care. Through the portability feature, WebMD also offers individual users the ability to access their data even if they change jobs, health plans or providers. We also provide the capability to upload, track, and share data from mobile devices and home medical devices.

We provide communications services and incentive program services to support program launches, to increase completion rates of the health assessments, and to drive ongoing utilization of our tools and services by participants. With the rewards platform, we assist clients to motivate their participants through wellness incentive programs that encourage and reward use of the services we provide and specific health behaviors. Our flexible rewards platform enables clients to design and manage custom rewards programs based on participation, activity or outcomes. Rewards fulfillment may include premium reductions, gift cards, electronic funds transfer into HSA accounts, rewards debit cards or check rewards. Our messaging platform enables targeted email and text messaging communication campaigns that inform and motivate participants to change their behaviors and improve health status. Messages can be targeted based on health profile characteristics, demographics, or site usage, and they can be designed to raise awareness of specific resources and programs or to motivate lifestyle changes. We also provide print media as an additional channel to motivate utilization by individuals and their dependents.

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Our Health Coaching and Condition Management Services

Telephonic and onsite health coaching are integrated with our online coaching platform and can be accessed by an employee or plan participant through a client’s private portal. Our health coaches work one-on-one with participants to motivate them to improve their own health status by managing modifiable risk factors that lead to health conditions, by pursuing health-conscious lifestyles, by actively seeking health and wellness knowledge and by understanding the impact of lifestyle decisions. In addition, a health coach can refer participants to employer or plan sponsored health programs or recommend appropriate online or offline health resources to help them meet their wellness goals. We offer tobacco cessation, weight management and certain condition management specialty coaching programs to address the health risks specifically associated with smoking, obesity and other chronic conditions.

We tailor WebMD Lifestyle First^SM coaching programs to the goals of our clients by offering different levels of coaching intensity and allowing targeting of various risk factor profiles for coaching eligibility. Individuals are notified about their eligibility to participate in telephonic health coaching under programs selected by their employer or health plan. Our health coaching services, together with our online services, not only can help high-risk individuals identify important risk factors and change unhealthy behaviors, but also can help moderate-risk individuals to lower their risks and those who are healthy to stay that way. In addition to telephonic coaching, we offer the following related services:

• Online Coaching.    WebMD Digital Health Assistant^SM online, self-directed health coaching programs focus on exercise, nutrition, smoking cessation, weight management, emotional health and stress management. These programs let individuals set and track wellness goals, learn more about their behaviors and risks and follow self-paced personal action plans to improve their health. Each program includes comprehensive education modules and interactive goal setting and experience tracking.

• Onsite Services.    We offer three types of onsite services to our employer clients: onsite wellness coordinators help to augment in-house staff; onsite health coaches that extend the telephonic coaching model to an onsite, in-person model (often delivered within an onsite clinic); and turnkey biometric screening and health fair solutions through a combination of third-party vendors and our own services.

WebMD Lifestyle First^SM coaching programs extend to cover condition management. These condition management programs are designed to give individuals access to a wide range of online and offline resources to provide long-term support and motivation and help them make better decisions to manage their health, including ongoing, intensive one-on-one coaching by condition specialists, along with progress tracking tools and personalized messaging and rewards programs. We offer Condition Management programs for five conditions: coronary artery disease, congestive heart failure, diabetes, chronic obstructive pulmonary disease and asthma.

We offer tools and services that enable our clients to integrate programs from third parties, including their disease management vendors, into the programs and portal solutions we offer. Participants are referred to third-party services through our proprietary Health Program Referral System, and those services can be promoted throughout the online or coaching experiences that we deliver.

Our WebMD Wellness Challenge Platform

Through our WebMD Wellness Challenge Platform, we offer clients the ability to create and configure team-based wellness challenges to help foster a culture of wellness in the workplace. These challenges may be custom challenges designed by the client for its specific employee population or one of our core supported challenges, such as the WebMD Hit Your Stride^SM Walking Program that allows participants in the challenge to compete on number of steps and the WebMD Ready! Set! Move!^SM Activity Program that allows challenge participants to compete on the most exercise minutes or exercise intensity.

Our Decision Support and Transparency Tools

We offer clients a comprehensive set of decision support and transparency tools to help their participants understand the financial implications of their benefits options, make more informed benefits-related purchase

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decisions, and to provide access to information and services that can help them factor quality and cost into decisions about care and treatment options. These tools include:

• WebMD Health Concierge^SM is a decision-support application designed to help participants make more informed healthcare decisions. Health Concierge provides access to information on conditions, treatments, and drugs. Participants are able to search for specific health-related terms and are presented with an integrated set of personalized results based on their gender, location, age, benefit plan and financial balances. Integrated results include out-of-pocket cost estimates, medication information, news and alerts from WebMD and government sources, questions to ask their doctor, treatment options to consider, and health education.

• WebMD Coverage Advisor^SM allows participants to compare costs across available health plan options based on personalized information regarding coverage alternatives, using cost-modeling and projection utilities that take into consideration the individual’s gender, geographic location, family composition, eligibility status, and projected utilization. Coverage Advisor dynamically displays benefit plan features, co-pays, pharmacy coverage, and provider coverage, and can also help participants determine appropriate contributions to flexible spending accounts (FSAs), health savings accounts (HSAs), and health reimbursement accounts (HRAs).

• WebMD Hospital Advisor^SM is a quality outcomes and cost comparison tool that allows individuals to evaluate hospitals based upon particular procedures, diagnoses, and locations. The quality 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, and average length of hospital stay.

• WebMD Medication Advisor^SM provides out-of-pocket and total medication costs for branded and generic therapies, presented alongside one another to facilitate straightforward comparisons. Using Medication Advisor, participants can determine less expensive alternatives based upon their drug benefit plan and formulary.

• WebMD Treatment Cost Advisor allows participants to search for explanations and demographically-based cost information for approximately 400 specific conditions, tests, procedures, and treatments. If the participant has uploaded his or her benefit plan information into the site manager, the cost estimates can factor in that information as well.

Sales and Marketing

We market our WebMD Health Services cloud-based platform and health coaching and condition management services to private and governmental employers and health plans through a dedicated sales, marketing and account management team. Our services are also distributed through relationships with employee benefits outsourcing companies, certain of our clients who have limited distribution rights, employee benefits consultants and other companies that assist employers in purchasing or managing employee benefits. A typical contract provides for a multi-year term. The pricing of these contracts is generally based on several factors, including the complexity involved in integrating our online platform for the client, the number of wellness and decision support tools and other services being provided, the degree of customization of the services involved and the anticipated number of participants covered by such contract.

TECHNOLOGICAL INFRASTRUCTURE

Our services are delivered through Websites and mobile platforms designed to address the healthcare information needs of our users with easy-to-use interfaces and navigation capabilities. We use customized content management and publishing technology to develop, edit, publish, manage, and organize our content. We use ad-serving technology to store, manage and serve online advertisements. We also use specialized software for delivering personalized content through our private portals and, for registered members, through our public Websites and related mobile applications.

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Continued development of our technological infrastructure is critical to our success. We have invested and intend to continue to invest in software and systems that allow us to meet the demands of our users and sponsors and the clients of our private portals. Our development teams work closely with marketing and account management employees to create content management capabilities, interactive tools and other applications. The goal of our current and planned investments is to further develop our content and technology platform serving various end-users, including consumers and physicians, and to create innovative services that provide value for our advertisers and sponsors for The WebMD Health Network and for the employer and payer customers of our private portals.

USER PRIVACY AND TRUST

We have adopted internal policies and practices relating to, among other things, content standards and user privacy, designed to foster our relationships with our users. For additional information regarding the policies and practices of our public portals, see “The WebMD Health Network — Our Public Portals — Overview — Our Editorial Policies” and “— Our Policies Regarding Advertisements, Sponsorships and Promotions” above. In addition, we participate in the following external, independent verification programs:

• URAC.    We have been awarded Health Web Site accreditation from URAC, an independent accrediting body that has reviewed and approved the WebMD.com site and our WebMD Health Services platform for compliance with its quality and ethics standards. The current term of our accreditation goes through July 1, 2016.

• TRUSTe.    WebMD.com, MedicineNet.com, RxList.com, and eMedicineHealth.com, our mobile site and our mobile Applications are licensees of the TRUSTe Privacy Seal and our WebMD Health Services platform is a recipient of the TRUSTe E.U. Safe Harbor programs. TRUSTe is an independent organization whose goal is to build users’ trust and confidence in the Internet. TRUSTe is also a Children’s Online Privacy Protection Act (COPPA) Safe Harbor organization for the Federal Trade Commission and our fit WebMD site is certified under its Children’s Privacy Seal Program.”

• Health on the Net Foundation.    Our WebMD.com, eMedicine.com, eMedicineHealth.com, MedicineNet.com and WebMD.Boots.com sites and the WebMD Health Services platform comply with the principles of the HON Code of Conduct established by the Health on the Net Foundation, an independent, non-profit organization.

• Children’s Advertising Review Unit (CARU).    Our fit WebMD site complies with the standards set forth by CARU. CARU is the children’s arm of the advertising industry’s self-regulation program and evaluates child-directed advertising and promotional material in all media to advance truthfulness, accuracy and consistency with its Self-Regulatory Guidelines for Children’s Advertising and relevant laws.

• Digital Advertising Alliance (About Ads).    WebMD.com, MedicineNet.com, RxList.com, and eMedicineHealth.com are licensees of the Digital Advertising Alliance’s Ad Choices program. The Digital Advertising Alliance is a self-regulatory body that develops industry best practices and effective self-regulatory solutions for consumer choice in online behavioral advertising.

• U.S. Department of Commerce.    Our WebMD Health Services platform is self-certified to the U.S. Department of Commerce in conjunction with the TRUSTe E.U. and Swiss Safe Harbor Certification program for compliance with the E.U. and Swiss Safe Harbor Frameworks.

• NCQA.    In 2014, our WebMD Health Services wellness programs obtained National Committee for Quality Assurance (NCQA) Wellness and Health Promotion (WHP) Accreditation. We scored 100% on all applicable NCQA standards surveyed. NCQA is a private, non-profit organization dedicated to improving healthcare quality and providing healthcare quality information for consumers, purchasers, healthcare providers and researchers.

We have won numerous awards for our Websites and for specific articles. Some of the awards we have received in the past three years include the Webby Award in the Health Category as well as the Webby People’s Voice Award in the Health Category, the prestigious Society of Professional Journalists Award for deadline

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reporting, the Weidenbaum Center Award for Evidence-Based Journalism, and a Gold Award from Medical Marketing and Media (MM&M) for Best Mobile App for Consumers (WebMD Baby App). WebMD has also been named the most trusted U.S. brand by Millward Brown.

We understand how important the privacy of personal information is to our users. Our Privacy Policies are posted on our Websites and inform users regarding the information we collect about them and about their use of our portals and our services. Our Privacy Policies also explain the choices users have about how their personal information is used and how we protect that information.

COMPETITION

The markets we participate in are intensely competitive, continually evolving and, in some cases, are subject to rapid change. Some of our competitors have greater financial, technical, marketing and other resources than we do, and some are better known than we are. We cannot provide assurance that we will be able to compete successfully against these organizations.

Public Portals

Overview.    Our public portals and mobile applications face competition from numerous other companies, both in attracting users and in generating revenue from advertisers and sponsors, and we expect that additional competitors will continue to enter the markets we participate in. Our advertisers and sponsors have numerous alternatives to choose from, including traditional media, Internet search engines, social media Internet sites, and general interest consumer sites, as well as the alternative of communicating through their own Websites or other channels that they manage in-house or through their advertising agencies. Such competition may result in smaller customer commitments or pressure to reduce prices, both of which could reduce our revenues and profit margins. Competitors for the attention of consumers and healthcare professionals also include public sector, non-profit and other Websites that provide healthcare information without advertising or sponsorships from third parties.

Consumer Portals.    Our consumer portals and mobile applications compete with online services, Websites and mobile applications that provide health, wellness and lifestyle information for consumers. These competitors include:

• general purpose consumer Websites or search engines that offer specialized health, wellness and lifestyle sub-channels or functions, such as yahoo.com, msn.com, AOL.com, Google and Bing;

• other high traffic Websites that include healthcare-related and non-healthcare-related content and services, including social media Websites, such as Facebook and Google+; and

• Websites and mobile applications that provide information and tools relating to specific diseases and conditions or other specific types of health, wellness and lifestyle content, such as Demand Media and Everyday Health as well as online communities, social media sites and blogs focused on these matters.

Competitors to our consumer portals also include advertising networks that aggregate traffic from multiple Websites, including advertising.com (which is owned by AOL), Tribal Fusion, Undertone Networks and AdBlade. Other competitors to our consumer portals include: publishers and distributors of traditional offline media, including television, radio, books, newspapers and magazines targeted to consumers; and manufacturers and distributors of activity trackers, heart rate monitors, blood pressure monitors and similar devices relating to health and wellness that can download data to a PC, tablet or smartphone, as well as numerous other companies developing applications and tools for use with those devices.

Professional Portals.    Competitors to our professional portals and mobile applications include Epocrates, Inc. (which is part of athenahealth, Inc.), Clinical Care Options, MedPage Today (which is owned by Everyday Health), QuantiaMD, Sermo (which is operated by WorldOne) and UpToDate Inc. (which is owned by Wolters Kluwer Health). Other competitors to our professional portals include:

• print journals and other specialized media targeted to healthcare professionals, many of which have established or may establish their own Websites or partner with other Websites;

• offline medical conferences, CME and CE programs and symposia;

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• vendors of e-detailing services, such as Physicians Interactive, and our clients’ own in-house detailing efforts; and

• vendors of healthcare information and related services distributed through other means, including direct sales, mail and fax messaging.

Private Portals

Our WebMD Health Services private portals and coaching services compete, directly or indirectly, with various types of services provided by many different types of companies, including:

• similar services offered by health insurance companies and their affiliates, such as Aetna, Humana, Kaiser Permanente and United Healthcare, and by employee benefits services companies and their affiliates;

• services offered by health management and disease management vendors, such as Mayo Foundation for Medical Education and Research, Wellness + Prevention, Inc. (which was formerly known as HealthMedia), Healthways, StayWell, Limeade, RedBrick Health and Optum (which is owned by United Health Group); and

• services of other providers of online platforms and applications for personal health records and decision-support and transparency tools for evaluating health insurance coverage options and healthcare provider and treatment options, such as Castlight Health, Change Healthcare (which is owned by Emdeon Inc.), Dossia, Epic Systems, HealthSparq, Microsoft, and a variety of other companies.

GOVERNMENT REGULATION, INDUSTRY STANDARDS AND RELATED MATTERS

Introduction

Healthcare Regulation.    The healthcare industry is highly regulated and is subject to changing political, regulatory and other influences. Most of our revenue is derived either directly from the healthcare industry or from other sources that are subject to healthcare laws and related regulations and could be affected by changes in those laws and regulations. This section of our Annual Report contains a description of healthcare laws and regulations applicable to us, either directly or through their effect on our healthcare industry customers, as well as healthcare industry standards that serve a self-regulatory function, and certain related matters. Changes in those laws, regulations and standards may create unexpected liabilities for us, may cause us to incur additional costs and may restrict our operations.

Many healthcare laws are complex, and their application to specific products, services, and business arrangements may not be clear. In particular, many existing healthcare laws and regulations, when enacted, did not anticipate the healthcare information services that we provide. However, these laws, regulations and industry standards may nonetheless be applied to our products, services, and business arrangements. We cannot provide assurance that we will be able to accurately anticipate the application of these laws, regulations and industry standards to our operations. Our failure to accurately anticipate the application of these laws and regulations to our operations, or other failure to comply, could create liability for us, result in adverse publicity and negatively affect our business. Even in areas where we are not subject to healthcare regulation directly, we may become involved in governmental actions or investigations through our relationships with customers that are regulated, and participation in such actions or investigations, even if we are not a party and not the subject of an investigation, may cause us to incur significant expenses.

Other Applicable Regulation.    This section of our Annual Report also contains a description of other laws and regulations, including general consumer protection laws and Internet-related laws that may affect our operations. Laws and regulations have been adopted, and may be adopted in the future, that address Internet-related issues, including online content, privacy, online marketing, unsolicited commercial email, taxation, pricing, and quality of products and services. Some of these laws and regulations, particularly those that relate specifically to the Internet, were adopted relatively recently, and their scope and application may still be subject to uncertainties. Interpretations of these laws, as well as any new or revised laws or regulations, could decrease demand for our services, increase our cost of doing business, or otherwise cause our business to suffer.

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Regulation of Drug and Medical Device Advertising and Promotion

The FDA and the Federal Trade Commission, or FTC, regulate the form, content and dissemination of labeling, advertising and promotional materials prepared by, or for, pharmaceutical or medical device companies. The FTC regulates over-the-counter (OTC) drug advertising and, in some cases, medical device advertising. Based on FDA requirements, regulated companies must limit advertising and promotional materials to discussions of FDA-approved uses and claims. In limited circumstances, regulated companies may disseminate certain non-promotional scientific information or disease-state information.

Information on our Websites that promotes the use of pharmaceutical products or medical devices is subject to FDA and FTC requirements and enforcement actions, and information regarding other products and services is subject to FTC requirements. If either agency finds that information on our Websites violates regulations or guidance, it may take regulatory or judicial action against us or the advertiser or sponsor of that information. State attorneys general may also take similar action based on their state’s consumer protection statutes. Areas of our Websites that could be the primary focus of regulators include pages and programs that discuss use of a regulated product or that the regulators believe may lack editorial independence from the control of sponsoring pharmaceutical or device companies. Television broadcast advertisements that we may provide may also be subject to FTC and FDA regulation, depending on the content. The agencies place the principal burden of compliance with advertising and promotional regulations on advertisers and sponsors to make truthful, substantiated claims.

The Federal Food, Drug, and Cosmetic Act, or FDC Act, and its implementing regulations require that prescription drugs be approved by the FDA prior to marketing. It is a violation to market, advertise or otherwise commercialize such products prior to approval. The FDA allows for preapproval exchange of scientific information, provided it is non-promotional in nature and does not draw conclusions regarding the ultimate safety or effectiveness of the unapproved drug. The FDA also refrains from regulating certain disease state materials so long as those materials do not make a representation or suggestion about a drug or device. Upon approval or clearance, the FDA’s regulatory authority extends to the labeling and advertising of prescription drugs and medical devices. Such products may be promoted and advertised only for uses reviewed and approved by the FDA. Labeling and advertising can be neither false nor misleading and must present all material information, including risk information, in a clear, conspicuous and neutral manner. There are also requirements for certain information (the “prescribing information” or “package insert” for promotional labeling and the “brief summary” for advertising) to be part of labeling and advertising. Labeling and advertising that violate these legal standards are subject to enforcement.

The FDA also regulates the safety, effectiveness, and labeling of OTC drugs either through specific product approvals or through regulations that define approved claims for specific categories of products. The FTC regulates the advertising of OTC drugs under the section of the Federal Trade Commission Act that prohibits unfair or deceptive trade practices. The FDA and FTC regulatory framework requires that OTC drugs be formulated and labeled in accordance with FDA approvals or regulations and promoted in a manner that is truthful, adequately substantiated, and consistent with the labeled uses. OTC drugs that do not meet these requirements are subject to FDA or FTC enforcement action depending on the nature of the violation. In addition, state attorneys general may bring enforcement actions for alleged unfair or deceptive advertising.

There are several administrative, civil and criminal sanctions available to the FDA for violations of the FDC Act or FDA regulations as they relate to labeling and advertising. Administrative sanctions include a written request that violative advertising or promotion cease and/or that corrective action be taken, such as requiring a company to provide to healthcare providers and/or consumers information to correct misinformation previously conveyed. More serious civil sanctions include seizures, injunctions, fines and consent decrees. Any of these enforcement measures could prevent a company from introducing or maintaining its product in the marketplace. Criminal penalties for severe violations can result in a prison term and/or substantial fines. State attorneys general have similar investigative tools and sanctions available to them.

In the last 15 years, the FDA has gradually relaxed its formerly restrictive policies on DTC advertising of prescription drugs, allowing companies to advertise prescription drugs to consumers in any medium, provided that they satisfy FDA requirements. For example, the FDA issued guidance in February 2015 regarding the “brief

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summary” requirements for prescription drug advertising, allowing those statements to focus primarily on the most clinically significant information about the most serious and the most common risks rather than including all warnings, precautions, and contraindications. If, in the future, the FDA makes changes to its DTC policies that make them more restrictive, it could become more difficult for us to obtain advertising and sponsorship revenue.

In response to a Congressional directive, the FDA has issued several guidance documents regarding the use of the Internet to promote FDA-regulated medical products. Most recently, in 2014, the FDA issued draft guidance clarifying rules regarding drug promotion through interactive social media tools, which offered recommendations on how drug and device firms can correct inaccurate information about their products posted by third parties on Internet and social media sites and clarified how these same firms can discuss their products on Internet platforms with space restrictions, including social media sites and paid search links. None of these draft guidances directly affect a core part of our current business, but, to the extent that they affect social media aspects of our Websites, they may trigger obligations for our customers. We also do not know how our customers might change their business practices in light of the 2014 guidances. We cannot predict what effect any such changes will have on our business.

There are also advertising restrictions that apply outside of the United States. Our European Websites belonging to The WebMD Health Network must comply with the national laws of the respective countries whose physicians they address. Under these European laws, there are several restrictions regarding advertising of drugs or medical devices. There are, in particular, broad prohibitions on the advertising of prescription or reimbursed drugs to the general public, the use of indirect or disguised marketing, and the offering and providing of gifts or benefits with promotional purpose that are not of minor value. If the relevant European national competent authorities find that any of our products and services, or any information on our Websites or in our mobile applications, violate applicable regulations, they may take regulatory or judicial action against us and/or the advertisers or sponsors of that information. Moreover, our competitors, or even competitors of advertisers and sponsors, may take actions against us and/or advertisers or sponsors of the information.

Regulation of Mobile Applications and other Mobile Health Technology

The FDA regulates medical devices in the U.S. Some health-related applications running on mobile platforms, as well as other health-related software products, among other types of products, are considered medical devices. Such actively regulated medical devices are subject to extensive regulation by the FDA and other federal, state, and local authorities. In order to be subject to FDA regulation, the particular application or product must meet the definition of a medical device as provided in the Federal Food Drug and Cosmetic Act. In addition, the FDA has clarified via guidance document that the agency intends to actively regulate only those mobile applications that meet the agency’s definition of “device” and that could pose a risk to patients’ safety if they fail to work as intended. The FDA is exercising enforcement discretion, meaning that they will not actively enforce regulatory requirements, with respect to certain lower risk mobile applications that meet the device definition. In addition, the FDA has recently proposed refraining from exercising active enforcement over certain products that promote health or healthy lifestyles even when promoted for patients with certain diseases or conditions.

In light of current FDA guidance, we believe that none of our existing online services and mobile applications are subject to regulation as a medical device under applicable FDA regulations. We are required to determine whether FDA regulations would apply to any of our applications and the FDA could disagree with the determination we have made. If the FDA disagrees, they may take regulatory action against us. It is also possible that products or services that we may offer in the future could subject us to such regulation or that current rules could change or be interpreted to apply to some of our existing online services or mobile applications. Complying with such regulations could be burdensome and expensive and could delay our introduction of new services or applications.

Regulation and Accreditation of Continuing Medical Education

Activities and information provided in the context of an independent medical or scientific educational program, often referred to as continuing medical education, or CME, usually are treated as non-promotional and

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fall outside the FDA’s jurisdiction. The FDA does, however, evaluate CME activities to determine whether they are independent of the promotional influence of the activities’ supporters. To determine whether a CME provider’s activities are sufficiently independent, the FDA looks at a number of factors related to the planning, content, speakers and audience selection of such activities. To the extent that the FDA concludes that such activities are not independent, such content must fully comply with the FDA’s requirements and restrictions regarding promotional activities.

Medscape, LLC distributes online CME to physicians and other healthcare professionals and is accredited by the Accreditation Council for Continuing Medical Education (ACCME), which oversees providers of CME credit. Medscape Education (www.medscape.org) is the Website through which Medscape, LLC distributes online CME. If any CME activity that Medscape, LLC certifies for CME credit is considered promotional, Medscape, LLC may face regulatory action or the loss of accreditation by the ACCME. Supporters of CME activities may also face regulatory action, potentially leading to termination of support.

Medscape, LLC’s current ACCME accreditation expires in 2016. In order for Medscape, LLC to renew its accreditation, it will be required to demonstrate to the ACCME that it continues to meet ACCME requirements. If Medscape, LLC fails to maintain its status as an accredited ACCME provider (whether at the time of such renewal or at an earlier time as a result of a failure to comply with existing or additional ACCME standards), it will not be permitted to accredit CME activities for physicians and other healthcare professionals. Instead, Medscape, LLC would be required to use third parties to provide such CME-related accreditation services. That, in turn, could discourage potential supporters from engaging Medscape, LLC to develop CME or education-related activities, which could have a material adverse effect on our business.

Medscape, LLC’s CME activities are planned and implemented in accordance with the Essential Areas and Elements and the Policies of the ACCME and other applicable accreditation standards. The ACCME’s standards for commercial support of CME are intended to ensure, among other things, that CME activities of ACCME-accredited providers, such as Medscape, LLC, are independent of “commercial interests,” which are defined as entities that produce, market, re-sell or distribute healthcare goods and services, excluding certain organizations. “Commercial interests,” and entities owned or controlled by “commercial interests,” are ineligible for accreditation by the ACCME. The standards also provide that accredited CME providers may not place their CME content on Websites owned or controlled by a “commercial interest.” In addition, accredited CME providers may not ask “commercial interests” for speaker or topic suggestions, and are also prohibited from asking “commercial interests” to review CME content prior to delivery. Further, there are limitations and requirements for CME providers using employees of a commercial interest as planners or speakers at CME events.

From time to time, the ACCME revises its standards for commercial support of CME. As a result of certain past ACCME revisions, we adjusted our corporate structure and made changes to our management and operations intended to allow Medscape, LLC to provide CME activities that are developed independently from those programs developed by its sister companies, which may not be independent of “commercial interests.” We believe that these changes allow Medscape, LLC to satisfy the applicable standards.

Over the years, the ACCME and other organizations have discussed ways to assure that commercial interests do not bias CME activities. The ACCME has published several proposals since 2008, including proposals to reduce communications between commercial interests and CME providers and to create special designations for CME activities that are not funded by commercial interests. The ACCME also suggested creating an independent CME funding entity to build a firewall between commercial interests and CME activities. The ACCME has not adopted these proposals but has revised its policies. It is possible that adoption of additional proposals could significantly affect Medscape, LLC’s business model.

Educational activities directed at physicians, including CME, have been subject to increased governmental scrutiny in recent years to ensure that sponsors do not influence or control the content of the activities. The Department of Justice continues to examine CME sponsorship by pharmaceutical companies. In addition, as part of the Affordable Care Act, pharmaceutical companies are now required to publicly report certain payments and transfers of value that they make to U.S. physicians. Beginning with payments made in 2016, this may include payments to CME authors. The federal government’s interpretation of this reporting requirement, which has been

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evolving and may continue to change, could affect pharmaceutical companies’ views of their reporting obligations with respect to payments in support of authors and presenters of CME material. In implementing internal controls and procedures that promote adherence to applicable regulations and requirements, supporters of CME may interpret the regulations and requirements differently and may implement varying procedures or requirements. These regulations and requirements, and the related internal controls and procedures:

• may discourage pharmaceutical companies from providing grants for independent educational activities;

• may slow their internal approval for such grants;

• may reduce the volume of sponsored educational programs that Medscape, LLC produces to levels that are lower than in the past, thereby reducing revenue; and

• may require Medscape, LLC to make changes to how it offers or provides educational programs, including CME.

In addition, future changes to laws, regulations or accreditation standards, or to the internal compliance programs of supporters or potential supporters, may further discourage, significantly limit, or prohibit supporters or potential supporters from engaging in educational activities with Medscape, LLC, or may require Medscape, LLC to make further changes in the way it offers or provides educational activities.

CME regulations also apply in other countries. For example, under German law, certain CME programs must be approved by the State Medical Chamber. Additionally, German CME-related services must be free of commercial/business interests and the provider of CME services must be compliant with German laws and regulations. In France, a similar new regulatory framework which restricts the organization of CME activities has been completed. These or similar restrictions in other countries may restrict our ability to carry out activities related to CME programs and/or refer to drugs or medical devices in such CME programs. Moreover, if we are not able to demonstrate compliance with these regulations, applicable approvals may not be obtained from competent authorities, which may impact our ability to provide CME-related services and which could have an adverse effect on our business.

Federal False Claims Act

The Federal False Claims Act imposes liability on any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a Federal healthcare program. The whistleblower (or “qui tam”) provisions of the Federal False Claims Act allow a private individual to bring actions on behalf of the Federal government alleging that the defendant has submitted a false claim to the federal government and to share in any monetary recovery. After the filing of a qui tam suit, the Federal government may intervene and control the case; if it does not, the private individual may pursue the claim on his or her own. In addition, various states and European countries have enacted false claim laws analogous to the Federal False Claims Act, and many of these laws apply where a claim is submitted to any third-party payor and not merely a Federal healthcare program. When an entity is determined to have violated the Federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties. Federal False Claims Act cases have been brought against drug manufacturers, and resulted in significant monetary settlements and the imposition of federally-supervised corporate integrity agreements in circumstances that include allegations that company-sponsored CME was unlawful off-label promotion. It is not clear whether there is a basis for the application of the Federal False Claims Act to the types of services that WebMD provides. However, plaintiffs have in the past, and may in the future, seek to name us as defendants in these types of cases. Any action against us for violation of these laws could cause us to incur significant legal expenses and may adversely affect our ability to operate our business.

HIPAA Privacy Standards and Security Standards

The Privacy Standards and Security Standards under the Health Insurance Portability and Accountability Act of 1996 (referred to as HIPAA), as amended by the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009, establish a set of national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses and healthcare providers (referred to as “covered entities”) and their “business associates,” which are persons or

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entities that perform certain services for or on behalf of a covered entity that involve the use or disclosure of protected health information. In connection with the sale by HLTH of its Emdeon Business Services business (or EBS), EBS agreed to license to HLTH, through February 2018, certain data, de-identified by EBS in conformity with HIPAA, for use in the development and commercialization of certain information products and services. We are currently using the data received under this license in our information services products.

As a “business associate” of covered entities we are subject to HIPAA with regard to certain aspects of our business, such as managing employee or plan member health information for employers or health plans. With respect to our WebMD Health Services private portals and coaching services, HITECH creates obligations for us to report any unauthorized use or disclosure of protected health information, known as a breach, to our covered entity customers. The 2013 final HITECH rule modifies the breach reporting standard in a manner that makes more data security incidents qualify as reportable breaches. In addition, HITECH and its implementing regulations impose similar data breach notification requirements on vendors of personal health records that require us to notify affected individuals and the FTC in the event of a data breach involving the unsecured personal information of users of our public portal services.

Violations of HIPAA may result in civil and criminal penalties. HITECH increased civil penalty amounts for violations of HIPAA and significantly strengthens enforcement by requiring the U.S. Department of Health and Human Services (HHS) to conduct periodic audits to confirm compliance and authorizing state attorneys general to bring civil actions seeking either injunctions or damages in response to violations of HIPAA Privacy Standards and Security Standards that threaten the privacy of state residents. These new Privacy and Security provisions will require us to incur additional costs and may restrict our business operations. These new provisions, as modified by the 2013 final HITECH rule, may be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our customers and strategic partners.

Genetic Information Nondiscrimination Act (GINA)

The Genetic Information Nondiscrimination Act (referred to as GINA), enacted in May 2008, does not apply directly to WebMD, although it does apply to our WebMD Health Services private portal customers, including both employers and group health plans. GINA was enacted to prevent discrimination by group health plans, health insurance issuers and employers on the basis of genetic information. Our WebMD Health Services health assessment is typically offered to employees by their employer or group health plan as a voluntary component of a wellness program. The U.S. Departments of Labor, HHS and Treasury published Interim Final Rules implementing portions of Title I of GINA in October 2009. The Interim Final Rules prohibit health plans from requesting, requiring or purchasing genetic information prior to or in connection with enrollment, or at any time for underwriting purposes, and state that “underwriting purposes” includes any incentive or disincentive (such as decreasing or increasing premiums) for completing a health assessment. “Genetic information” is defined broadly to include information about an individual’s family medical history. The agencies have not finalized the regulations to date. However, in September 2010, the Department of Labor provided additional guidance in the form of frequently asked questions stating that, while a plan may not require an individual to complete a health assessment that requests family medical history in order to receive a wellness program reward, it may use genetic information to make a determination regarding payment, or regarding the medical appropriateness of a treatment or service. HHS also issued a final rule implementing section 105 of GINA in January 2013. The final rule specifically provides that genetic information is a type of health information that is covered by HIPAA’s Privacy Standards and Security Standards, and specifically prohibits it from being used or disclosed for underwriting purposes (including any incentive or disincentive for completing a health assessment).

Title II of GINA prohibits employment discrimination based on genetic information as well as the request or purchase of genetic information of employees or their family members with limited exceptions. The Equal Employment Opportunity Commission issued final rules implementing Title II in November 2010. The final rules specify that genetic information may be collected in a health assessment that is part of a wellness program only if participation in the collection of such information is voluntary, and indicate that the agency will consider participation voluntary if the employer neither requires participation nor penalizes employees who do not participate.

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While each customer is responsible for ensuring that the wellness and benefit selections it offers are compliant with GINA, WebMD may face challenges as a result of varying interpretations of the law by our customers and by the multiple enforcing agencies and uncertainties over the final form of certain of the rules. Our customers’ interpretations of the law have required us to modify our WebMD Health Services health assessment product and we could experience increases in operational costs or decreases in demand for our products.

State legislation, such as some in California prohibiting any form of discrimination by businesses based on genetic information, including in housing, public accommodation, and the provision of emergency services, could have additional implications for service we provide in those states.

Other Restrictions Regarding Confidentiality, Privacy and Security of Health Information

In addition to HIPAA, numerous other state and federal laws, including those described in “— Consumer Protection Regulation” below, govern the collection, dissemination, use, access to, confidentiality and security of patient health and prescriber information. In addition, Congress and some states are considering new laws and regulations that further protect the privacy and security of medical records or medical information. In some cases, more protective state privacy and security laws are not preempted by the HIPAA Privacy Standards and Security Standards and may be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our customers and strategic partners.

These laws at a state or federal level, or new interpretations of these laws, could create liability for us, could impose additional operational requirements on our business, could affect the manner in which we use and transmit patient information and could increase our cost of doing business. Claims of violations of privacy rights or contractual breaches, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

Anti-Corruption Laws

The United States and other countries have adopted anti-corruption laws that generally prohibit directly or indirectly giving, offering or promising inducements to public officials to elicit an improper commercial advantage. Under applicable U.S., German, and most European law, this prohibition has been interpreted to apply to doctors and other medical professionals who work in state-run hospitals and state-run healthcare systems outside the United States. Some of these laws also prohibit directly or indirectly giving, offering or promising (and, in some cases, accepting or soliciting) inducements to (or from) private parties to elicit (or grant) an improper commercial advantage. In recent years, the U.S. government brought enforcement actions that resulted in significant monetary penalties against several companies operating in the global healthcare industry for violations of anti-corruption laws resulting from illegal payments made to non-U.S. medical professionals.

As our business expands outside the United States, we (and others acting on our behalf) increasingly interact with non-U.S. doctors and other medical professionals, at least some of whom work in state-run hospitals or healthcare systems. Such interactions inherently increase the risk of violating applicable anti-corruption laws. While we believe that we have appropriate compliance policies and procedures in place to mitigate such risk, our personnel and others acting on our behalf might engage in conduct that violates such laws, for which we might be held responsible. Under such circumstances, we could be subject to civil and/or criminal penalties and other consequences that could have a material adverse effect on our business, financial condition and results of operations. In addition, our brand and reputation, our sales activities and the price of our Common Stock and other securities could be adversely affected if we were to become the target of any resulting negative publicity.

Anti-Kickback Laws

There are federal and state laws that govern patient referrals, physician financial relationships and inducements to healthcare providers and patients. For example, the federal anti-kickback law prohibits any person or entity from offering, paying, soliciting or receiving anything of value, directly or indirectly, for the referral of patients for items or services reimbursed by Medicare, Medicaid and other federal healthcare programs or the leasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item,

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good, facility or service reimbursed by these programs. Many states and European countries also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a government healthcare program. These laws are applicable to manufacturers and distributors and, therefore, may restrict how we and some of our customers market products to healthcare providers, including e-details. We carefully review our practices with regulatory experts in an effort to ensure that we comply with all applicable laws. However, the laws in this area are both broad and vague, and it is often difficult or impossible to determine precisely how the laws will be applied, particularly to new services. Penalties for violating the federal anti-kickback law include imprisonment, fines and exclusion from participating, directly or indirectly, in Medicare, Medicaid and other federal healthcare programs. Any determination by a state, federal, or foreign regulatory agency that any of our practices violate any of these laws could subject us to civil or criminal penalties and require us to change or terminate some portions of our business and could have an adverse effect on our business. Even an unsuccessful challenge by regulatory authorities of our practices could cause us adverse publicity and be costly for us to respond to.

International Regulation

We are pursuing opportunities to expand the reach of our brands outside the United States. In certain markets outside the United States, we expect to accomplish this through partnerships or joint ventures with other companies having expertise in the specific country or region, while in other such markets we expect to rely primarily on our own internal resources. We intend to structure our participation in markets outside the United States in compliance with the laws and regulations that apply to such participation. However, as in the United States, the healthcare industry is highly regulated in many other jurisdictions and we may not be able to accurately anticipate the applicability of healthcare laws and regulations to our participation in such markets.

Many European countries have adopted laws and regulations similar to the U.S. laws and regulations described elsewhere in this section of the Annual Report. These include, for example, regulations like the anti-kickback laws, false claim laws, medical professional regulations, genetic privacy and nondiscrimination regulations, restrictions regarding advertising and promotion of drugs and medical devices, sunshine regulations and CME regulations. These European laws and regulations may impose additional operational requirements or restrictions on our business, and increase our cost of doing business. For example, we have implemented certain Website access restrictions that are intended to limit the display of advertising of drugs and medical devices if required by local law, so that such advertising will be seen only by appropriate healthcare professionals. If the applicable regulatory authorities find our access restrictions to be inadequate, they may require us to establish stricter access restrictions. Moreover, such authorities and/or our competitors or even competitors of our advertisers and sponsors may take action against us and/or our advertisers or sponsors if they believe that we have violated the applicable laws.

In addition, many countries and governmental bodies have, or are developing, laws that may apply to online health information services of the types we provide, or to Internet sites generally, including laws regarding the collection, use, storage and dissemination of personal information or patient data. To the extent our operations are located within their jurisdiction or are directed at individuals within their jurisdiction, these laws may apply to us. In addition, those governments may attempt to apply such laws extraterritorially or through treaties or other arrangements with U.S. governmental entities. To the extent we fail to accurately anticipate the application or interpretation of these laws, we could be subject to liability and adverse publicity, which could negatively affect our business. In Europe, the current national implementations of the existing general data protection Directive 95/46/EC and of the e-Privacy Directive 2002/58/EC provide for criminal and administrative sanctions in case of violations, even though criminal sanctions are very rarely imposed. For example, France and Germany provide for administrative fines of up to 300,000 Euros (approximately 360,000 USD) in case of illegal collection or processing of personal identifiable information. Under draft General Data Protection Regulation under consideration by the European Commission (originally proposed in January 2012 and most recently recirculated in December 2014), fines of up to 100,000,000 Euros (approximately 120,000,000 USD) or up to 5% of the global sales of the infringer could be imposed.

Many European countries have established cost reduction measures within their health systems or are intending to do so. This is intended to reduce the spending of the mainly publicly funded health systems in Europe. For example, Germany has established a risk/benefit drug assessment that adversely affects the prices of

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newly introduced medicinal products. Thus, it is possible that our advertisers and sponsors will face cost reduction measures and reduce their expenditures or postpone expenditure decisions, including expenditures for our services, which could have material adverse effects on our business.

Consumer Protection Regulation

General.    Advertising and promotional activities presented to visitors on our Websites are subject to federal and state consumer protection laws that regulate unfair and deceptive practices. We are also subject to various other federal and state consumer protection laws, including the specific ones described later in this section.

Internet and mobile user privacy, personal data security and the use of information to track online activities are major issues in the U.S. and abroad. In the U.S., the FTC and many state attorneys general are applying federal and state consumer protection laws to advertising activities and to require that the online collection, use and dissemination of data, including personal information, and the presentation of Website content, comply with certain standards for notice, choice, security and access. Courts may also adopt these developing standards. In many cases, the specific limitations imposed by these standards are subject to interpretation by courts and other governmental authorities. We believe that we are in compliance with the consumer protection standards that apply to our Websites, but a determination by a state or federal agency or court that any of our practices do not meet these standards could result in liability and adversely affect our business. New interpretations of these standards could also require us to incur additional costs and restrict our business operations. In addition, claims that we are violating any such standards could, even if we are not found liable, be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

In February 2009, the FTC published Self Regulatory Principles for Online Behavioral Advertising to address consumer privacy issues that may arise from so-called “behavioral advertising” (i.e., the tracking of online activities) and to encourage industry self-regulation. These principles serve as guidelines to industry. In addition, there is a possibility, supported by certain public statements, that the FTC may revise or eliminate the principles in favor of a more restrictive approach for companies that utilize behavioral advertising. There is also a possibility of legislation, regulations and increased enforcement activities, relating to behavioral advertising. To the extent that our existing practices are inconsistent with any revised principles, new rules, new legislation and/or future enforcement activities, our business may become subject to restrictions that could reduce our revenues or increase our cost of doing business.

In October 2009, the FTC adopted revised Guides Concerning the Use of Endorsements and Testimonials in Advertising. These Guides, which were last updated in 1980, became effective December 1, 2009. In addition to revising certain provisions regarding disclosures relating to endorsements and testimonials, the FTC clarified the Guides’ applicability to online and social media forums. In 2013, the FTC also revised guidance applicable to online advertising known as the Dot Com Disclosures, which was originally released in 2000. The revised Guides, the revised Dot Com Disclosures, and a 2013 FTC workshop on “native advertising” (i.e., blending advertising content with other content) may be an indication that the FTC may apply increased scrutiny to the use of endorsements, testimonials, and other advertising content online and through traditional media. To the extent we rely on endorsements or testimonials, we will review any relevant relationships for compliance with the Guides and we will otherwise endeavor to follow legal standards applicable to advertising.

The FTC periodically holds workshops on issues relevant to online consumer privacy issues and consumer protection generally and uses the information it collects to help guide its policy and enforcement agenda. In 2014, the FTC held a seminar regarding privacy issues associated with “consumer generated and controlled health data,” which is relevant to services we offer. Previously, following a series of workshops, the FTC issued a preliminary staff report in December 2010 containing a proposed framework for businesses and policymakers for online consumer privacy issues and, in March 2012, the FTC issued a final report setting forth its current views on best practices, to protect the privacy of consumers, to be implemented by companies that collect and use consumer data. Also in March 2012, the White House released a Privacy White Paper that outlined the Obama Administration’s proposal for a new American privacy framework based on a Consumer Bill of Privacy Rights and which called for the development of industry-specific voluntary, enforceable privacy codes of conduct through a collaborative multi-stakeholder process. Both the FTC and the White House have called for Congress

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to develop baseline privacy legislation and the FTC also called on industry to accelerate the pace of self-regulation; in January 2015, the White House renewed its call for enactment of baseline privacy legislation. The FTC’s staff report and the White House’s Privacy White Paper, and the FTC’s workshop on consumer generated and controlled health data, reflect a continuing governmental interest in, and assessment of, online privacy issues. How these issues are ultimately resolved, whether through self-regulatory programs, legislation and regulation or some combination and the specifics of any such regimes, may significantly impact our operations.

In Europe, Directive 2009/136/EC of the European Parliament and of the Council requires the user’s full information and consent prior to the installation and use of any so-called “cookie” on a user’s computer. This Directive has been implemented differently, in various member states of the European Union, and national requirements to remain compliant with the respective laws may vary. Nevertheless, the provisions of this directive, whether effectively implemented in national laws, are now applicable in all the member states of the European Union and enforcement actions are now being considered by local data protection authorities. In addition, the new draft General Data Protection Regulation mentioned above revises the currently applicable data protection framework. The potential resulting new framework sets out additional requirements for users’ consent for offline and online marketing. If enacted, this instrument will further strengthen the already very densely regulated area of Internet privacy in Europe. In addition, this revised European legislation, if adopted, would increase the likelihood of the applicability of European law to entities established outside the European Union but processing data of European data subjects. Countries outside of Europe are also increasingly focusing on data privacy legislation and regulation. Certain such legislative activity, such as data localization laws, could have an impact on our operations and how we do business.

European healthcare advertising laws stipulate several restrictions on advertising of drugs and medical devices to the public. In particular, in several countries, the advertising of prescription drugs to the general public is not allowed. Thus, these European countries require access restrictions for Websites that contain such advertisements, which are only allowed to be addressed to healthcare professionals. Accordingly, Websites in The WebMD Health Network that are addressed to physicians in specific European countries (such as the Medscape Germany or France Websites) must be accessible only to healthcare professionals by an appropriate access check. If the applicable European competent authority does not acknowledge the respective Website to have appropriate access controls, the authority may require us to establish stricter access controls or ultimately may take action against us.

Data Protection Regulation.    With the recent increase in publicity regarding data breaches resulting in improper dissemination of consumer information, many states have passed laws regulating the actions that a business must take if it experiences a data breach, such as prompt disclosure to affected customers. Generally, these laws are limited to electronic data and make some exemptions for smaller breaches. Congress has also been considering similar federal legislation relating to data breaches. The FTC and states’ Attorneys General have also brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the FTC Act. In addition to data breach notification laws, some states have enacted statutes and rules requiring businesses to reasonably protect certain types of personal information they hold or to otherwise comply with certain specified data security requirements for personal information. These laws may apply directly to our business or indirectly by contract when we provide services to other companies. We intend to continue to comprehensively protect all consumer data and to comply with all applicable laws regarding the protection of this data.

CAN-SPAM Act.    On January 1, 2004, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act, became effective. The CAN-SPAM Act regulates commercial emails, provides a right on the part of the recipient to request the sender to stop sending messages, and establishes penalties for the sending of email messages that are intended to deceive the recipient as to source or content. Under the CAN-SPAM Act, senders of commercial emails (and other persons who initiate those emails) are required to make sure that those emails do not contain false or misleading transmission information. Commercial emails are required to include a valid return email address and other subject heading information so that the sender and the Internet location from which the message has been sent are accurately identified. Recipients must be furnished with an electronic method of informing the sender of the recipient’s decision to not receive further commercial emails. In addition, the email must include a postal address of the sender and notice

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that the email is an advertisement. We are following the CAN-SPAM requirements in the e-newsletters that WebMD’s public portals distribute to members and some of our other email communications, and believe that our email practices comply with the requirements of the CAN-SPAM Act, even though we believe that FTC regulations issued in May 2008 confirmed our existing understanding that these email newsletter communications are not generally commercial emails. Many states have also enacted anti-spam laws. The CAN-SPAM Act preempts many of these statutes. To the extent that these laws are not preempted, we believe that our email practices are designed to comply with these laws.

COPPA.    The Children’s Online Privacy Protection Act, or COPPA, applies to operators of commercial Websites and online services directed to U.S. children under the age of 13 that collect personal information from children, and to operators of general audience sites with actual knowledge that they are collecting information from U.S. children under the age of 13. Except for our fit.WebMD.com site, our sites are not directed at children and our general audience site, WebMD Health, states that no one under the applicable age is entitled to use the site. In addition, WebMD Health employs a kick-out procedure whereby users identifying themselves as being under the age of 13 during the registration process are not allowed to register for the site’s member only services, such as message boards and live chat events. The FTC issued a revised COPPA rule in late 2012 to broaden its scope in certain respects. Our fit.WebMD.com site is designed to comply with the provisions of COPPA and we believe that that site and our other sites comply, where applicable, with the revised COPPA rule.

FACTA.    In an effort to reduce the risk of identity theft from the improper disposal of consumer information, Congress passed the Fair and Accurate Credit Transactions Act (or FACTA), which requires businesses to take reasonable measures to prevent unauthorized access to such information. FACTA’s disposal standards are flexible and allow businesses discretion in determining what measures are reasonable based upon the sensitivity of the information, the costs and benefits of different disposal methods and relevant changes in technology. We believe that we are in compliance with FACTA.

Telemarketing.    The Telemarketing and Consumer Fraud Abuse Prevention Act (TCFAPA) and the Telephone Consumer Protection Act (TCPA) are laws that govern telemarketing and other calling activities. Both the FTC (via the Telephone Sales Rule) and the FCC have enacted rules under these statutes that implement the national do-not-call registry and which also apply to a broad range of other telephone calling activities, including as relevant to text message marketing and autodialed calls to cell phones. States also have their own telemarketing laws governing an array of telephone calling activities. We believe that we are in compliance with the TCFAPA, the TCPA, and state telemarketing laws.

Regulation of Wellness Incentive Programs

Certain provisions of HIPAA (commonly referred to as the HIPAA nondiscrimination provisions) generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, co-payment, or other cost-sharing requirements based on a “health factor.” Such differentials are, however, acceptable under the HIPAA nondiscrimination provisions if the differentials are applied through “wellness programs.” The Department of Labor, in coordination with the Departments of the Treasury and HHS, has issued regulations (finalized in 2013) that define “wellness programs” for purposes of the HIPAA nondiscrimination provisions, establishing specific requirements for wellness programs that reward participants who satisfy a standard related to a health factor (referred to as “health-contingent wellness programs”) and for other types of wellness programs. These requirements for health-contingent wellness programs include (1) limiting the amount of the wellness program’s rewards, which the Affordable Care Act generally increased to 30% (50% for programs designed to prevent or reduce tobacco use) of the cost of coverage, (2) the wellness program being reasonably designed to promote good health and prevent disease, (3) giving those eligible to participate in the wellness program the opportunity to qualify for the reward at least once a year, (4) providing a reward that is available to all similarly situated individuals, and (5) requiring disclosure of reasonable alternative standards that must be available under the wellness program.

Although HIPAA and its regulations state that certain excepted benefits, including supplemental benefits, are not subject to the wellness program rules, it does not define the term “similar supplemental coverage.” On December 7, 2007, the Department of Labor, in coordination with the Departments of the Treasury and HHS, released Field Assistance Bulletin No. 2007-04 (FAB 2007-04) in response to the development of questionable

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health and wellness programs that were marketed as “similar supplemental coverage.” FAB 2007-04 clarifies the rules for supplemental programs and provides that supplemental benefits under a wellness program cannot discriminate on the basis of a health factor. With these new requirements in place, wellness programs that require individuals to meet certain health factors can no longer be considered supplemental and thus have to comply with HIPAA wellness program regulations described in the immediately preceding paragraph. According to FAB 2007- 04, programs that do not meet these requirements may be subject to enforcement actions. HHS provided parallel guidance in Program Memorandum 08-01 (May 2008).

The Americans with Disabilities Act (ADA) prohibits discrimination on the basis of an employee’s disability or perceived disability. Among other things, it limits employers from inquiring about the disabilities of employees unless the questions are job-related and consistent with business necessity. The ADA also limits the circumstances in which an employer may require physical examinations or answers to medical inquiries. However, the ADA allows employers to conduct voluntary medical examinations and activities, including voluntary medical histories, as part of a voluntary wellness program. A wellness program is “voluntary” if the employer neither requires participation nor penalizes employees who do not participate. Records acquired as part of a wellness program must be kept confidential and may not be used for a discriminatory purpose. Many states and localities provide similar protections to employees.

The Genetic Information Nondiscrimination Act restricts the collection or use of genetic information for underwriting purposes, and treats the offering of incentives or disincentives for completing an HRA or participating in a wellness program as underwriting. See “— Genetic Information Nondiscrimination Act (GINA)” above.

We provide services related to wellness programs in connection with our WebMD Health Services private portals and coaching services. See “WebMD Health Services — Our Private Portals” above. We believe that we are in compliance with the laws and regulations applicable to these services, to the extent they apply to us.

Medical Professional Regulation

The practice of most healthcare professions requires licensing under applicable state law, as well as under applicable national law of most European countries. In addition, the laws in some states and European countries prohibit business entities from practicing medicine, which is generally referred to as the prohibition against the corporate practice of medicine. We do not believe that we engage in the practice of medicine, and we have attempted to structure our Websites, strategic relationships and other operations to avoid violating these state licensing and professional practice laws. We do not believe that we provide professional medical advice, diagnosis or treatment. We employ and contract with physicians who provide only health information to consumers, and we have no intention to provide medical care or advice. A state or other enforcement authority, however, may determine that some portion of our business violates these laws and may seek to have us discontinue those portions or subject us to penalties or licensure requirements. Any determination that we are a healthcare provider and acted improperly as a healthcare provider may result in liability to us.

Healthcare Reform

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (which we refer to as the Affordable Care Act), was signed into law in March 2010. The Affordable Care Act made extensive changes to the system of healthcare insurance and benefits in the U.S. In general, the Affordable Care Act seeks to reduce healthcare costs and decrease the number of uninsured legal U.S. residents by, among other things, requiring individuals to carry, and certain employers to offer, health insurance or be subject to penalties. The Affordable Care Act also imposed new regulations on health insurers, including guaranteed coverage requirements, prohibitions on certain annual and all lifetime limits on amounts paid on behalf of or to plan members, increased restrictions on rescinding coverage, establishment of minimum medical loss ratio requirements, a requirement to cover certain preventive services on a first dollar basis, the establishment of state insurance exchanges and essential benefit packages, and greater limitations on how health insurers price certain of their products. The Affordable Care Act also contains provisions that will affect the revenues and profits of pharmaceutical and medical device companies, including new taxes on certain sales of their products.

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Many of the provisions of the Affordable Care Act that expand insurance coverage did not become effective until 2014, and some will not become effective until later, and many provisions will require additional regulations and interpretive guidance to be issued before they will be fully implemented. Some provisions do not apply to health plans that were in place when the Affordable Care Act was enacted and have not been substantially changed since. It is difficult to foresee how individuals and businesses will respond to the choices available to them under the Affordable Care Act. Furthermore, the Affordable Care Act will result in future state legislative and regulatory changes, which we are unable to predict at this time, in order for states to comply with certain provisions of the Affordable Care Act and to participate in grants and other incentive opportunities. In addition, Congress has considered various proposals to repeal some or all of the Affordable Care Act, and multiple lawsuits challenging various provisions of the Affordable Care Act are pending in U.S. courts.

While we do not currently anticipate any significant adverse effects on WebMD as a direct result of application of the Affordable Care Act to our business or on our company in its capacity as an employer, we are unable to predict what the indirect impacts of the Affordable Care Act will be on WebMD’s business through its effects on other healthcare industry participants, including pharmaceutical and medical device companies that are advertisers and sponsors of our public portals and employers and health plans that are clients of our private portals. Healthcare industry participants may respond to the Affordable Care Act or to uncertainties created by the Affordable Care Act by reducing their expenditures or postponing expenditure decisions, including expenditures for our services, which could have a material adverse effect on our business.

However, we believe that certain aspects of the Affordable Care Act and future implementing regulations that seek to reduce healthcare costs may create opportunities for WebMD, including with respect to our personal health record applications and health and benefits decision-support tools and, more generally, with respect to our capabilities in providing health and wellness information and education. For example, the Affordable Care Act encourages use of wellness programs through grants to small employers to establish such programs, permission for employers to offer larger rewards than under prior law in the form of waivers of cost-sharing, premium discounts, or additional benefits to employees for participating in these programs and meeting certain standards, and the inclusion of wellness services and chronic disease management among the essential health benefits that certain plans are required to provide. However, we cannot yet determine the scope of the opportunities that the Affordable Care Act may create or what competition we may face in our efforts to pursue such opportunities.

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OTHER INFORMATION

Employees

As of December 31, 2014, we had approximately 1,700 employees.

Intellectual Property

We use trademarks, trade names and service marks for our products and services, including those listed below the Table of Contents of this Annual Report. We also use other registered and unregistered trademarks and service marks for our products and services. In addition, we have registered domain names, including “webmd.com” and “medscape.com” and the other domain names listed in this Annual Report. If we are unable to protect our marks and domain names adequately, that could have a material adverse effect on our business and hurt us in establishing and maintaining our brands.

We rely upon a combination of patent, trade secret, copyright and trademark laws, license agreements, confidentiality procedures, employee and client nondisclosure agreements and technical measures to protect intellectual property used in our businesses. We also rely on a variety of intellectual property rights licensed from third parties, including Internet server software, databases and healthcare content used on our Websites. These third-party licenses may not continue to be available to us on commercially reasonable terms. Our loss of or inability to maintain or obtain upgrades to any of these licenses could significantly harm us. In addition, because we license content from third parties, we may be exposed to copyright infringement actions if those parties are subject to claims regarding the origin and ownership of that content.

Seasonality

For a discussion of seasonality affecting our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Seasonality” in Item 7 below.

Other

To the extent required by Item 1 of Form 10-K, the information contained in Item 7 of this Annual Report is hereby incorporated by reference in this Item 1.

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Item 1A. Risk Factors

This section describes circumstances or events that could have a negative effect on our financial results or operations or that could change, for the worse, existing trends in some or all of our businesses. The occurrence of one or more of the circumstances or events described below could have a material adverse effect on our financial condition, results of operations and cash flows or on the trading prices of our Common Stock and Convertible Notes or of securities that we may issue in the future. The risks and uncertainties described in this Annual Report are not the only ones facing us. Additional risks and uncertainties that are not currently known to us, or that we currently believe are immaterial, may also adversely affect our business and operations.

Risks Related to Our Operations and the Healthcare Content We Provide

If we are unable to provide content and services that attract users to The WebMD Health Network on a consistent basis, our advertising and sponsorship revenue could be reduced

Users of The WebMD Health Network have numerous other online and offline sources of healthcare information and related services. Our ability to compete for user traffic on our public portals depends upon our ability to make available a variety of health, wellness and medical content, decision-support applications and other services that meet the needs of a variety of types of users, including consumers, physicians and other healthcare professionals, with a variety of reasons for seeking information. Our ability to do so depends, in turn, on:

• our ability to hire and retain qualified authors, journalists and independent writers;

• our ability to license quality content from third parties; and

• our ability to monitor and respond to increases and decreases in user interest in specific topics.

If consumers and healthcare professionals do not perceive our content, applications and tools to be useful, reliable and trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement with our health information services. We cannot assure you that we will be able to continue to develop or acquire needed content, applications and tools at a reasonable cost. In addition, since consumer users of our public portals may be attracted to The WebMD Health Network as a result of a specific condition or for a specific purpose, it is difficult for us to predict the rate at which they will return to our public portals. Because we generate revenue by, among other things, selling sponsorships of specific pages, sections or events on The WebMD Health Network, a decline in user traffic levels or a reduction in the number of pages viewed by users could cause our revenue to decrease and could have a material adverse effect on our results of operations.

A significant portion of the traffic to The WebMD Health Network is directed to us through algorithmic search results on Internet search engines and, if we are listed less prominently in search result listings, our business and operating results could be harmed

A significant portion of the traffic to The WebMD Health Network is directed to us through the algorithmic search results on Internet search engines such as Google. Algorithms are developed and used by search engine providers to determine the listings, and the order of such listings, displayed in response to specific searches. Accordingly, in addition to providing quality content and tools, we seek to design our Websites to deliver the content and tools in ways that will cause them to rank well in algorithmic search engine results, which makes it more likely that search engine users will visit our Websites. This is commonly referred to as search engine optimization, or SEO. However, there can be no assurance that our SEO efforts will succeed in improving the ranking of our content or, even if they do result in such improvement, that the improved ranking will result in increased numbers of users and page views for our Websites. In addition, search engines frequently change the criteria that determine site rankings in their search results and our SEO efforts will not be successful if we do not respond to those changes appropriately and on a timely basis. One factor that we believe significantly reduced traffic, in the first half of 2013, to some of the consumer sites in The WebMD Health Network (other than

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WebMD.com, our flagship site) was changes in Google’s algorithms and other processes that lowered the ranking of those sites in Google search results during that period. Although we saw a reversal of this trend beginning in the third quarter of 2013, we cannot be certain whether the improvement will continue or, if it does, how long it can be maintained. Search engine providers may also prioritize search results generated by certain types of queries, including health-related queries, based on criteria they select or may otherwise intermediate in the search results generated, which could, in some circumstances, reduce the ranking that would otherwise be provided to our Websites and increase the ranking of other sites. If we are unable to respond effectively to changes made by search engine providers in their algorithms and other processes, a substantial decrease in traffic to The WebMD Health Network could occur, which could cause our revenue to decrease and could have a material adverse effect on our results of operations.

Search engine providers also typically display, together with algorithmic search results, content and links that may divert traffic from the pages referenced in the algorithmic search results, including: advertisements that are presented with the algorithmic search results for which the search engine provider receives compensation (sometimes referred to as paid search results); and content and links that the search engine provider selects and displays in response to the specific search queries in a format determined by the search engine provider. Accordingly, even if we rank highly in algorithmic search results, traffic to our Websites may be reduced as a result of the paid search results and other content included on the search results page generated by a search query. We cannot control the amount, quality or presentation of such paid search results and other content and, accordingly, we cannot predict any reductions in our traffic that may occur from time to time as search engine providers make changes in their policies and procedures regarding paid search results or regarding content they provide. Any resulting reduction in our traffic, if significant, could cause our revenue to decrease and could have a material adverse effect on our results of operations.

If we fail to implement and maintain successful monetization strategies for smartphone traffic, our financial results could be adversely affected

The number of people who access online content and services through smartphones, tablets and other mobile devices has increased dramatically in the past few years, including the number of physicians and other healthcare professionals who do so. Accordingly, the portion of our page views from mobile devices has increased rapidly and is expected to continue to increase. Although monetization of tablet page views is generally similar to monetization of PC page views, the monetization of smartphone page views is more challenging because of the smaller screen size. If, in the future, users access our services through smartphones as a substitute for access through personal computers and tablets (or if our page views from personal computers and tablets decline significantly for other reasons) and we are unable to implement and maintain successful monetization strategies for smartphone traffic, our financial results could be negatively affected. In addition, it is difficult to predict the problems we may encounter in developing and maintaining competitive mobile services and related mobile monetization strategies and we may need to devote significant resources to their creation, maintenance and support.

We face significant competition for our healthcare information products and services

The markets for healthcare information products and services are intensely competitive, continually evolving and, in some cases, subject to rapid change.

• The WebMD Health Network faces competition from numerous other companies, both in attracting users and in generating revenue from advertisers and sponsors. We compete for users with Websites and mobile applications that provide health-related information, including both commercial ones and not-for-profit ones. We compete for advertisers and sponsors with: health-related Websites and mobile applications; general interest consumer Websites that offer specialized health sub-channels or functions; other high-traffic Websites that include both healthcare-related and non-healthcare-related content and services, including social media Websites; search engines that provide specialized health search capabilities; and advertising networks that aggregate traffic from multiple sites. The WebMD Health Network also faces competition from: traditional media and offline publications and information services; and manufacturers

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and distributors of activity trackers, heart rate monitors, blood pressure monitors and similar devices relating to health and wellness that can download data to a PC, tablet or smartphone, as well as numerous other companies developing applications and tools for use with those devices.

• Our WebMD Health Services private portals and coaching services compete with: providers of decision-support and transparency tools that assist in evaluating health insurance coverage options and healthcare provider and treatment options; and online health management applications, including personal health records; wellness and disease management vendors; and competing services provided by health insurance companies, employee benefits services companies, and their affiliates.

Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations may be better known than we are and have more customers or users than we do. We cannot provide assurance that we will be able to compete successfully against these organizations. In addition, we expect that competitors will continue to enter these markets. The competition we face for our services may result in fewer or smaller customer commitments or pressure to reduce prices, which could reduce our profit margins.

Developing and implementing new and updated features and services for our public and private portals and our mobile applications may be more difficult than expected, may take longer and cost more than expected, and may not result in sufficient increases in revenue to justify the costs

Attracting and retaining users of our public portals and our mobile applications and clients for our private portals requires us to continue to improve the technology underlying those portals and applications and to continue to develop new and updated features and services for those portals and applications. If we are unable to do so on a timely basis or if we are unable to implement new features and services without disruption to our existing ones, we may lose potential users and clients.

We rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our portals, mobile applications and related features and services. Our development and/or implementation of new technologies, features and services may cost more than expected, may take longer than originally expected, may require more testing than originally anticipated and may require the acquisition of additional personnel and other resources. There can be no assurance that the revenue opportunities from any new or updated technologies, applications, features or services will justify the amounts spent.

Failure to effectively identify, assess and pursue new business initiatives could adversely affect our company and its prospects

We are working to broaden our portfolio of services and taking steps to diversify our client base and revenue streams. The development of new products and services in response to evolving trends in healthcare and evolving technologies for Internet-based and mobile services, as well as the identification of new business opportunities in this dynamic environment, requires significant time and resources. We may not be able to respond quickly enough or in a cost-effective manner, appropriately time the introduction of new products and services to the market or identify new business opportunities in a timely manner. In addition, while evolving technologies may offer new opportunities, they may also present additional challenges relating to security and privacy.

Some of the business initiatives we are working on have challenges that are different than those associated with our existing products and services and could strain our financial, operational and management resources. Furthermore, there can be no assurance that the potential revenue streams from any investments that we may make in pursuing new business opportunities will justify the amounts spent. Failure to effectively identify, assess and pursue new business initiatives may adversely affect our company and its prospects.

Failure to enhance the analytic capabilities we use to demonstrate the value of our services to advertisers and sponsors could adversely affect our ability to market our services

We are working to enhance the analytic capabilities we use to demonstrate to advertisers and sponsors how promotional strategies implemented through The WebMD Health Network impact physician and consumer

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behaviors and preferences. Our ability to demonstrate the value of advertising and sponsorship on The WebMD Health Network will depend, in part, on the accuracy of our analytics and measurement capabilities, on our ability to develop reporting tools using the capabilities and our ability to further improve such capabilities and tools. If we are unable to enhance our analytic capabilities, it could adversely affect our ability to market our services and we may lose business to competitors even if our advertising and sponsorship services are superior to theirs.

Restrictions on our ability to access or use various forms and sources of data could adversely impact our business

We are increasingly using data analytics based on information that we collect regarding usage of our public portals, as well as other third party sources of data. Our use of data regarding users of our public portals is governed by the privacy policies posted on those sites and is designed to comply with applicable laws and regulations as is our use of any third-party data. In addition, we sell certain information products and services on a standalone basis using de-identified data that we license from a small number of third party data sources, of which the principal source is a license retained by HLTH in connection with the sale of its Emdeon Business Services business (EBS). As the successor to HLTH, we received this license which provides us the rights to certain de-identified data from the operation of the EBS business through February 2018 for use in the development and commercialization of various information products and services as to which we pay EBS a royalty. To date, these standalone information products and services do not include any data derived from the operation of our Websites. We are seeking to acquire additional third party data sources and to develop data generated from our Website operations in order to strengthen and diversify our data product offerings. Revenue from the standalone products and services that utilize data under the current EBS license is highly profitable and is recorded net of royalties and commissions paid by us to EBS or others. We do not expect that the current license agreement with EBS will continue after February 2018, and expect if such agreement is renewed or is replaced with new third party data sources, the terms of any such renewal or replacement license would not be as favorable to us as those in the current agreement. Accordingly, we cannot provide any assurance that the sales of, or the profits generated by, our standalone information products would not be materially adversely affected by the expiration of our license agreement with EBS. To date, we have not used data we license from EBS to support our current advertising business.

Changes to our ability to access or use data could adversely affect our ability to implement improved analytics or to offer information products on a standalone basis. Accordingly, our business could be adversely impacted if, for any reason (including, but not limited to, changes in applicable laws and regulations) the data we use becomes unavailable or the conditions on its availability are not commercially reasonable or are inconsistent with our planned usage. In addition, the quality of our data analytics depends on the reliability of the information that we are able to obtain. If the information we use contains errors or is otherwise unreliable, analyses we create and actions we take based on those analyses could be wrong, which could hurt our reputation and business.

Failure to maintain and enhance the “WebMD” and “Medscape” brands could have a material adverse effect on our business

We believe that the “WebMD” and “Medscape” brand identities that we have developed have contributed to the success of our business and have helped us achieve recognition as a trusted source of health and wellness information and tools for consumers and of online content for physicians and other healthcare professionals. We also believe that maintaining and enhancing those brands is important to expanding the user base for our public portals and to our relationships with sponsors and advertisers. The “WebMD” brand is also important to our ability to gain additional employer and healthcare payer clients for our private portals. We have expended considerable resources on establishing and enhancing the “WebMD” and “Medscape” brands and our other brands, and we have developed policies and procedures designed to preserve and enhance our brands, including editorial procedures designed to provide quality control of the information we publish. We expect to continue to devote resources and efforts to maintain and enhance our brands. However, we may not be able to successfully maintain or enhance our brands, and events outside of our control may have a negative effect on our brands. If we are unable to maintain or enhance our brands, and do so in a cost-effective manner, our business could be adversely affected.

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The markets we participate in are relatively new and continue to change

We participate in relatively new markets. These markets, and our business, have undergone significant changes during their short history and can be expected to continue to change. Many companies with business plans based on providing healthcare information and related services online and through mobile platforms have failed to be profitable and some have filed for bankruptcy or ceased operations. Even if demand from users exists, we cannot assure you that our business will be profitable.

Our failure to attract and retain qualified executives and employees may have a material adverse effect on our business

Our business depends largely on the skills, experience and performance of key members of our management team and other key employees. We also depend, in part, on our ability to attract and retain qualified writers and editors, software developers and other technical personnel and sales and marketing personnel. Competition for qualified personnel in the healthcare information services and Internet industries is intense. We cannot assure you that we will be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or that we will be able to do so at costs that are acceptable to us. Failure to do so may have an adverse effect on our business.

Our advertising and sponsorship revenue may vary significantly from quarter to quarter and its amount and timing may be subject to factors beyond our control, including regulatory changes

Our advertising and sponsorship revenue may vary significantly from quarter to quarter due to a number of factors, many of which are not within our control, and some of which may be difficult to forecast accurately, including potential effects on demand for our services as a result of regulatory changes affecting advertising and promotion of drugs and medical devices and general economic conditions. The majority of our advertising and sponsorship programs are for terms of approximately four to twelve months. We have relatively few longer term advertising and sponsorship programs. We cannot assure you that our current advertisers and sponsors will continue to use our services beyond the terms of their existing contracts or that they will enter into any additional contracts.

The time between the date of initial contact with a potential advertiser or sponsor regarding a specific program and the execution of a contract with the advertiser or sponsor for that program, as well as the additional time period before our services are delivered, may be longer than expected, especially for medium-sized and larger contracts, and may be subject to delays over which we have little or no control, including as a result of budgetary constraints of the advertiser or sponsor or their need for internal approvals, including internal approvals relating to compliance with the laws and regulations applicable to the marketing of healthcare products. We have experienced, from time to time, a lengthening of this internal review process by pharmaceutical and biotechnology companies, which has resulted in delays in contracting as well as delays in recognizing expected revenue under executed contracts and which may continue to cause such delays. Other factors that could affect the timing of contracting for specific programs with advertisers and sponsors, or receipt of revenue under such contracts, include the timing of:

• Food and Drug Administration (FDA) approval for new products or for new approved uses for existing products;

• any adverse determinations by the FDA affecting products previously approved or expected to be approved or the permitted uses of such products or their marketing;

• FDA approval of generic products that compete with existing brand name products and any increase in the number or significance of such approvals;

• withdrawals of products from the market;

• consolidation of companies in the pharmaceutical and biotechnology industries;

• rollouts of new or enhanced services on our public portals;

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• 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.

Some of our pharmaceutical company customers have experienced patent expirations for certain of their products in the past several years and some are expected to experience patent expirations over the next several years. In the pharmaceutical industry, patent expirations allow for competition from lower-priced generic versions of the patented drugs and generally result in the termination of marketing efforts for the drug. In 2012, we believe that patent expirations led to, and could in the future lead to, overall reductions in marketing, selling and educational expenditures by some of these pharmaceutical companies across their entire product portfolios.

Mergers and acquisitions among pharmaceutical, biotechnology and medical device companies may reduce the volume of our services purchased by the consolidated company following such a transaction, which could harm our operating results

Mergers and acquisitions among our pharmaceutical, biotechnology and medical device company clients have in the past and could in the future reduce the number of our clients and potential clients. In addition, when companies consolidate, the number of vendors used for services, or the amount spent, by the separate companies may be reduced by the consolidated entity and some vendors and services may no longer be used at all. Any such event could have a negative effect on our revenue and profitability and we cannot provide assurance that we would be able to mitigate any such negative effect.

We may be unsuccessful in our efforts to generate advertising and sponsorship revenue from consumer products companies

Much of our advertising and sponsorship revenue has, in the past, come from pharmaceutical, biotechnology and medical device companies. We also seek to generate advertising and sponsorship revenue from consumer products companies that are interested in communicating health-related or safety-related information about their products to our audience. However, while many consumer products companies are increasing the portion of their promotional spending used on the Internet, we cannot assure you that these advertisers and sponsors will find our consumer Websites to be as effective for promoting their products and services as competing channels, which include traditional media, Internet search engines, social media Internet sites, general interest consumer sites, and numerous other alternatives. Competition for this business may also result in smaller customer commitments or pressure to reduce prices, both of which could reduce our profit margins even if we are able to generate revenue.

In addition, revenues from consumer products companies are more likely to reflect general economic conditions, and to be reduced to a greater extent during economic downturns, than revenues from pharmaceutical, biotechnology and medical device companies. Accordingly, revenues from this portion of our business may be subject to significant quarter-to-quarter variations and we may be unsuccessful in our efforts to develop it further.

Lengthy sales and implementation cycles for our WebMD Health Services private online portals make it difficult to forecast our revenues from these applications and may have an adverse impact on our business

The period from our initial contact with a potential client for a private online portal and entry into a contract for a subscription to our solution by the client is difficult to predict. In the past, this period has generally ranged from six to twelve months, but in some cases has been longer. Potential contracts may be subject to delays or cancellations due to a client’s internal procedures for approving large expenditures and other factors beyond our control, including the effect of general economic conditions on the willingness of potential clients to subscribe to our WebMD Health Services solution. The time it takes to implement a private online portal is also difficult to predict and has lasted as long as six months from contract execution to the commencement of live operation. Implementation may be subject to delays based on the availability of the internal resources of the client that are needed and other factors outside of our control. As a result, we have limited ability to forecast the timing of revenue from new clients. This, in turn, makes it more difficult to forecast our financial performance for future periods. In addition, some of our client contracts may permit termination, by the client, prior to the end of the stated contract term, which can also make it more difficult to forecast our future financial performance.

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During the contracting cycle and the implementation period, we may expend substantial time, effort and money preparing contract proposals, negotiating contracts and implementing our population health management platform without receiving any related revenue. In addition, many of the expenses related to providing our platform are relatively fixed in the short term, including personnel costs and technology and infrastructure costs. If our private portal services revenue is lower than expected, we may not be able to reduce related short-term spending in response. Any shortfall in such revenue would have a direct impact on our results of operations.

Our ability to renew existing agreements with employers and health plans will depend, in part, on our ability to continue to increase usage of our private portal services by their employees and plan members

In a healthcare market where a greater share of the responsibility for healthcare costs and decision-making has been shifting to consumers, use of information technology (including personal health records) to assist consumers in making informed decisions about healthcare has also increased. We believe that through our WebMD Health Services private online portals and our telephonic and onsite health and wellness coaching programs, we are well positioned to play a role in this environment. However, our strategy depends, in part, on increasing usage of our services by our employer and health plan clients’ employees and plan participants and being able to demonstrate a sufficient return on investment and other benefits for our clients from those services. Increasing usage of our private portal services requires us to continue to develop new and updated applications, features and services. In addition, there are numerous competitors for the services we provide, many of which have greater financial, technical, product development, marketing and other resources than we do, and may be better known than we are. We cannot provide assurance that we will be able to meet our development and implementation goals or that we will be able to compete successfully against other vendors offering competitive services and, if we are unable to do so, we may experience static or diminished usage for our private portal services and possible non-renewals of our customer agreements.

The condition management programs that we provide to clients of our WebMD Health Services private portals involve risk and challenges with which we have limited experience and may not be profitable

We provide condition management services to clients of our WebMD Health Services private portals and plan to continue to expand that portion of our business. Our current offerings include programs targeting individuals struggling with coronary artery disease, congestive heart failure, diabetes, chronic obstructive pulmonary disease and asthma. Our condition management programs include ongoing, intensive one-on-one coaching by condition specialists, along with targeted online resources and progress tracking tools. Providing condition management services involves new risks and challenges for us, including: potential requirements to obtain and retain licenses, permits and regulatory clearances and approvals related to these services; difficulty in quantifying the costs savings and other benefits for our clients from these services; and difficulty in differentiating our condition management services from those of competitors, some of whom may be able to provide such services at a lower cost. We cannot predict the demand among our existing private portals clients and other potential clients for our condition management services and cannot provide assurance that the revenue opportunities from providing our current offerings or ones for additional conditions will justify the costs involved in maintaining or developing the required capabilities and delivering the services to clients.

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

A portion of our revenues come from customers that are governmental agencies or vendors to such agencies. Government contracts and subcontracts may be subject to some or all of the following:

• termination when appropriated funding for the current fiscal year is exhausted or becomes unavailable;

• 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;

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• “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 or failure to meet service level commitments, 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.

In addition, certain violations of federal law may subject government contractors to having their contracts terminated and, under certain circumstances, suspension and/or debarment from future government contracts.

Expansion to markets outside the United States subjects us to additional risks

One element of our growth strategy is to seek to expand our online services to markets outside the United States. In certain markets outside the United States, we expect to accomplish this through partnerships or joint ventures with other companies having expertise in the specific country or region, while in other such markets we expect to rely primarily on our own internal resources. In certain markets outside of the United States, we are providing some of our online services in the local language directly to healthcare professionals. We also provide our online services in English to healthcare professionals outside the United States. Our participation in international markets is subject to certain risks beyond those applicable to our operations in the United States, such as:

• challenges caused by cultural differences;

• difficulties in staffing and managing operations from a distance;

• uncertainty regarding liability for services and content;

• potential burdens of complying with a wide variety of legal, regulatory and market requirements, as well as uncertainty as to the applicability of non-U.S. laws to operations based in the United States and regarding the interpretation of such laws by local authorities;

• potential regulation or interpretation of existing regulation that could limit or eliminate our ability to distribute one or more of our products in one or more countries;

• variability of economic and political conditions, including the extent of the impact of adverse economic conditions in markets outside the United States;

• tariffs or other trade barriers;

• fluctuations in currency exchange rates; and

• potentially adverse tax consequences, including restrictions on repatriation of earnings; and difficulties in protecting intellectual property.

Furthermore, outside the United States, we face competition from locally-based companies that have experience doing business in their home countries or regions and familiarity with local business practices, customs and laws and, as a result, generally do not face, or are better positioned to face, the risks described above.

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Risks Related to the Internet and Our Technological Infrastructure

Any service interruption or failure in the systems that we use to provide online services could harm our business

Our online services are designed to operate 24 hours a day, seven days a week, without interruption. However, we have experienced and expect that we will in the future experience interruptions and delays in services and availability from time to time. We rely on internal systems as well as third-party vendors, including data center providers, bandwidth providers and mobile carriers, to provide our online services. We may not maintain redundant systems or facilities for some of these services. In the event of a catastrophic event with respect to one or more of these systems or facilities, we may experience an extended period of system unavailability, which could negatively impact our relationship with users. In addition, system failures may result in loss of data, including user registration data, business intelligence data, content, and other data critical to the operation of our online services, which could cause significant harm to our business and our reputation.

To operate without interruption or loss of data, both we and our service providers must guard against:

• damage from fire, power loss and other natural disasters;

• communications failures;

• software and hardware errors, failures and crashes;

• security breaches, computer viruses, distributed denial-of-service (DDOS) attacks and similar disruptive problems; and

• other potential service interruptions.

Any disruption in the network access or co-location services provided by third-party providers to us or any failure by these third-party providers or our own systems to handle current or higher volume of use could significantly harm our business. We exercise little control over these third-party vendors, which increases our vulnerability to problems with services they provide. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services or our own systems could negatively impact our relationships with users and adversely affect our brand and our business and could expose us to liabilities to third parties. Although we maintain insurance for our business, the coverage under our policies may not be adequate to compensate us for all losses that may occur. In addition, we cannot provide assurance that we will continue to be able to obtain adequate insurance coverage at an acceptable cost.

Failure to update our technology infrastructure could adversely affect our business

Evolving technologies could require us to modify our technology infrastructure and any failure to do so on a timely basis may limit the types of services we can provide or the quality of those services, and may put us in a weaker position relative to our competitors. Competitors with newer technology infrastructure may also have greater flexibility and be in a position to respond more quickly than us to new opportunities, which may impact our competitive position in certain markets and adversely affect our business.

Implementation of updates to our technology infrastructure may result in performance problems and may not provide the additional functionality that was expected

From time to time, we implement additions to or changes in the hardware and software platforms we use for providing our online services. During and after the implementation of additions or changes, a platform may not perform as expected, which could result in interruptions in operations, an increase in response time or an inability to track performance metrics. In addition, in connection with integrating acquired businesses, we may move their operations to our hardware and software platforms or make other changes, any of which could result in interruptions in those operations. Any significant interruption in our ability to operate any of our online services could have an adverse effect on our relationships with users and clients and, as a result, on our financial results. We rely on a combination of purchasing, licensing, internal development, and acquisitions to develop our hardware and software platforms. Our implementation of additions to or changes in these platforms may cost

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more than originally expected, may take longer than originally expected, and may require more testing than originally anticipated. In addition, we cannot provide assurance that additions to or changes in these platforms will provide the additional functionality and other benefits that were originally expected.

If the systems we use to provide online portals experience security breaches or are otherwise perceived to be insecure, our business could suffer

We retain and transmit confidential information, including personal health records, in the processing centers and other facilities we use to provide online services. It is critical that these facilities and infrastructure remain secure and be perceived by the marketplace as secure. A security breach could damage our reputation or result in liability. We may be required to expend significant capital and other resources to protect against security breaches and hackers or to alleviate problems caused by breaches. Despite the implementation of security measures, this infrastructure or other systems that we interface with, including the Internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks or other attacks by third parties or similar disruptive problems. Because the techniques used by hackers to sabotage or to obtain unauthorized access to computer systems change frequently, we may be unable to anticipate specific types of attacks or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose users, customers, advertisers or publishers. Any compromise of our security, whether as a result of breaches or failures of our own systems or the systems with which they interface, could reduce demand for our services and could subject us to legal claims from our clients and users, including for breach of contract or breach of warranty.

Our online services are dependent on the development and maintenance of the Internet infrastructure

Our ability to deliver our online services is dependent on the development and maintenance of the infrastructure of the Internet by third parties. The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. The Internet has also experienced, and is likely to continue to experience, significant growth in the number of users and the amount of traffic. If the Internet continues to experience increased usage, the Internet infrastructure may be unable to support the demands placed on it. In addition, the reliability and performance of the Internet may be harmed by increased usage or by denial-of-service attacks. Any resulting interruptions in our services or increases in response time could, if significant, result in a loss of potential or existing users of and advertisers and sponsors on our Websites and, if sustained or repeated, could reduce the attractiveness of our services.

Customers who utilize our online services depend on Internet service providers and other Website operators for access to our Websites. All of these providers have experienced significant outages in the past and could experience outages, delays and other difficulties in the future due to system failures unrelated to our systems. Any such outages or other failures on their part could reduce traffic to our Websites.

Third parties may challenge the enforceability of our online agreements

The law governing the validity and enforceability of online agreements and other electronic transactions is evolving. We could be subject to claims by third parties that the online terms and conditions for use of our Websites, including disclaimers or limitations of liability, are unenforceable. A finding by a court that these terms and conditions or other online agreements are invalid could harm our business.

We could be subject to breach of warranty or other claims by clients of our online portals if the software and systems we use to provide them contain errors or experience failures

Errors in the software and systems we use could cause serious problems for clients of our online portals. We may fail to meet contractual performance standards or client expectations. Clients of our online portals may seek compensation from us or may seek to terminate their agreements with us, withhold payments due to us, seek refunds from us of part or all of the fees charged under those agreements or initiate litigation or other dispute resolution procedures. In addition, we could face breach of warranty or other claims by clients, or additional development costs. Our software and systems are inherently complex and, despite testing and quality control, we cannot be certain that they will perform as planned.

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We attempt to limit, by contract, our liability to our clients for damages arising from our negligence, errors or mistakes. However, contractual limitations on liability may not be enforceable in certain circumstances or may otherwise not provide sufficient protection to us from liability for damages. We maintain liability insurance coverage, including coverage for errors and omissions. However, it is possible that claims could exceed the amount of our applicable insurance coverage, if any, or that this coverage may not continue to be available on acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them would be expensive and time consuming and could divert management’s attention away from our operations. In addition, negative publicity caused by these events may delay or hinder market acceptance of our services, including unrelated services.

Risks Related to the Healthcare Industry, Healthcare Regulation and Internet Regulation

Developments in the healthcare industry could adversely affect our business

Our business could be adversely impacted by changes in the structure of the healthcare industry and other changes that reduce healthcare spending. We are particularly dependent on pharmaceutical, biotechnology and medical device companies for our advertising and sponsorship revenue. General reductions in expenditures by healthcare industry participants could result from, among other things:

• government regulation or private initiatives that affect the manner in which healthcare providers interact with patients, payers or other healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services;

• consolidation of healthcare industry participants;

• reductions in governmental funding for healthcare; and

• adverse changes in business or economic conditions affecting healthcare payers or providers, pharmaceutical, biotechnology or medical device companies or other healthcare industry participants.

Federal and state legislatures and agencies periodically consider reforming aspects of the United States healthcare system. Significant federal healthcare reform legislation was enacted in March 2010, as discussed in the next risk factor. Additionally, in Europe, the national healthcare systems may be reformed from time to time.

Even if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result in reduced spending in some or all of the specific market segments that we serve or are planning to serve. For example, use of our products and services could be affected by:

• changes in the design of health insurance plans;

• the timing of FDA, or European or other national regulatory authority, approvals of generic products that compete with existing brand name products and any increase in the number or significance of such approvals or of withdrawals of brand name products from the market;

• the timing of FDA, or European or other national regulatory authority, approvals for new products or for new approved uses for existing products and any decrease in the number or significance of new drugs or medical devices coming to market or new approved uses for existing such products; and

• decreases in marketing expenditures by pharmaceutical or medical device companies, including as a result of governmental regulation or private initiatives that discourage or prohibit advertising, sponsorship or educational activities by pharmaceutical or medical device companies or that discourage or prohibit their use of online services for some or all such activities.

In addition, our customers’ expectations regarding pending or potential industry developments may also affect their budgeting processes and spending plans with respect to products and services of the types we provide.

The healthcare industry has changed significantly in recent years, and we expect that significant changes will continue to occur. However, the timing and impact of developments in the healthcare industry are difficult to predict. We cannot assure you that the markets for our products and services will continue to exist at current levels or that we will have adequate technical, financial and marketing resources to react to changes in those markets.

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The Affordable Care Act could adversely affect some of our healthcare industry customers and clients

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (which we refer to as the Affordable Care Act), was signed into law in March 2010. The Affordable Care Act made extensive changes to the system of healthcare insurance and benefits in the U.S. While we do not currently anticipate any significant adverse effects on WebMD as a direct result of application of the Affordable Care Act to our business or on our company in its capacity as an employer, we are unable to predict what the future indirect impacts of the Affordable Care Act will be on WebMD’s business through its effects on other healthcare industry participants, including pharmaceutical and medical device companies that are advertisers and sponsors of our public portals, and employers and health plans that are clients of our WebMD Health Services private portals.

Government regulation of healthcare creates risks and challenges with respect to our compliance efforts and our business strategies

The healthcare industry is highly regulated and is subject to changing political, legislative, regulatory and other influences. Existing and new laws and regulations affecting the healthcare industry could create unexpected liabilities for us, could cause us to incur additional costs and could restrict our operations. Many healthcare laws are complex, and their application to specific products, services, and business arrangements may not be clear. In particular, many existing healthcare laws and regulations, when enacted, did not anticipate the healthcare information services that we provide. However, these laws and regulations may nonetheless be applied to our products, services, and business arrangements. Our failure to accurately anticipate the application of these laws and regulations, or other failure to comply, could create liability for us, result in adverse publicity and negatively affect our business. Even in areas where we are not subject to healthcare regulation directly, we may become involved in governmental actions or investigations through our relationships with customers that are regulated, and participation in such actions or investigations, even if we are not a party and not the subject of an investigation, may cause us to incur significant expenses. Some of the risks we face from healthcare regulation are as follows:

• U.S. Regulation of Drug and Medical Device Advertising and Promotion.    The WebMD Health Network provides services involving advertising and promotion of prescription and over-the-counter drugs and medical devices and claims of nutritional supplements. If the FDA or the Federal Trade Commission (FTC) finds that any of our products and services or any information on The WebMD Health Network, in our mobile applications, or in WebMD Magazine violates applicable regulations and guidance documents, they may take regulatory or judicial action against us and/or the advertiser or sponsor of that information. State attorneys general may take similar action based on their respective states’ consumer protection statutes. Any increase or change in regulation of drug or medical device advertising and promotion could make it more difficult for us to contract for sponsorships and advertising. In 2014, the FDA issued several draft guidance documents clarifying the application of its promotional regulations to certain content on social media Websites. We cannot predict how our customers or others in the industry might implement the FDA’s guidance in the future or how its implementation might affect our business. Recent private industry initiatives have resulted in voluntary restrictions, which advertisers and sponsors have agreed to follow.

• European Regulation of Drug and Medical Device Advertising and Promotion.    Our European Websites must comply with the national laws of the respective countries whose physicians they address. In most European countries, the advertising of prescription drugs to the general public is not allowed and, accordingly, these countries generally require access restrictions for Websites that contain such advertisements, which are only allowed to be addressed to healthcare professionals. In addition, there are laws and regulations regarding the use of indirect or disguised marketing, and regarding the offering and providing of gifts or benefits with promotional purpose that are not of minor value.

• Anti-Kickback Laws.    There are federal and state laws that govern patient referrals, physician financial relationships and inducements to healthcare providers and patients. The federal anti-kickback law prohibits any person or entity from offering, paying, soliciting or receiving anything of value, directly or indirectly, for the referral of patients for items or services reimbursed by Medicare, Medicaid and other

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federal healthcare programs or the leasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good, facility or service reimbursed by these programs. Many states and European countries also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a government healthcare program. These laws are applicable to manufacturers and distributors and, therefore, may restrict how we and some of our customers market products to healthcare providers.

• False Claims Laws.    The Federal False Claims Act imposes liability on any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a Federal healthcare program. In addition, various states and European countries have enacted false claim laws analogous to the Federal False Claims Act, and many of these laws apply where a claim is submitted to any third-party payor and not merely a federal healthcare program. When an entity is determined to have violated the Federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government plus civil penalties. In recent years an increasing number of Federal False Claims Act cases have been brought against drug manufacturers and resulted in significant monetary settlements and imposition of federally supervised corporate integrity agreements in circumstances that include allegations that company-sponsored CME was unlawful off-label promotion. Any action against us for violation of these laws could cause us to incur significant legal expenses and may adversely affect our ability to operate our business. Similarly, False Claims Act actions and resulting corporate integrity agreements involving our customers may influence their willingness to continue to use our services.

• Regulation of Mobile Medical Applications and Other Mobile Health Technology.    Over the last several years, the FDA has issued guidance regarding mobile medical applications and other mobile health technology, clarifying the agency’s intent to regulate only those applications that meet the agency’s definition of “device” and could pose a risk to patients’ safety if they fail to work as intended. The FDA is exercising enforcement discretion with respect to certain lower risk mobile applications that meet the device definition. Mobile applications that do not meet the device definition are beyond the FDA’s jurisdiction, and therefore, not subject to the agency’s oversight. In addition, the FDA has recently proposed refraining from exercising active enforcement over certain products that promote health or healthy lifestyles even when promoted for patients with certain diseases or conditions. In light of FDA guidance, we believe that none of our existing online services and mobile applications are subject to regulation as a medical device under applicable FDA regulations. We are required to determine whether FDA regulations would apply to any of our applications and the FDA could disagree with the determination we have made. It is also possible that products or services that we may offer in the future could subject us to such regulation or that current rules could change or be interpreted to apply to some of our existing online services or mobile applications. Complying with such regulations could be burdensome and expensive and could delay our introduction of new services or applications.

We may be subject to claims brought against us as a result of content we provide

Consumers access health-related information through our online services, including information regarding particular medical conditions and possible adverse reactions or side effects from medications. Physicians and other healthcare professionals use our services to access clinical reference sources, commentary from leading medical experts, medical news, and coverage of professional meetings and conferences. If our content, or content we obtain from third parties, contains inaccuracies, it is possible that physicians, consumers, employees, health plan members or others may sue us for various causes of action. Although our Websites and mobile applications contain terms and conditions, including disclaimers of liability, that are intended to reduce or eliminate our liability, the law governing the validity and enforceability of online agreements and other electronic transactions is evolving. We could be subject to claims by third parties that our online agreements with consumers and physicians that provide the terms and conditions for use of our public or private portals or mobile applications are unenforceable. A finding by a court that these agreements are invalid and that we are subject to liability could harm our business and require costly changes to our business.

We have editorial procedures in place to provide quality control of the information that we publish or provide. However, we cannot assure you that our editorial and other quality control procedures will be sufficient

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to ensure that there are no errors or omissions in particular content. Even if potential claims do not result in liability to us, investigating and defending against these claims could be expensive and time-consuming and could divert management’s attention away from our operations. In addition, our business is based on establishing the reputation of our portals as trustworthy and dependable sources of healthcare information. Allegations of impropriety or inaccuracy, even if unfounded, could harm our reputation and business.

Government regulation of the Internet could adversely affect our business

The Internet and its associated technologies are subject to government regulation. However, whether and how existing laws and regulations in various jurisdictions, including privacy and consumer protection laws, apply to the Internet is still uncertain. Our failure, or the failure of our business partners or third-party service providers, to accurately anticipate the application of these laws and regulations to our products and services and the manner in which we deliver them, or any other failure to comply with such laws and regulations, could create liability for us, result in adverse publicity and negatively affect our business. In addition, new laws and regulations, or new interpretations of existing laws and regulations, may be adopted with respect to the Internet and online services, including in areas such as user privacy, confidentiality, consumer protection, marketing, pricing, content, copyrights and patents, and characteristics and quality of products and services. We cannot predict how these laws or regulations will affect our business.

Internet and mobile user privacy, personal data security and the use of consumer information to track online activities are major issues both in the United States and abroad. The FTC and state attorneys general continue to pay close attention to Internet privacy issues and the FTC in May 2014 held a seminar focusing on privacy issues associated with “consumer generated and controlled health data,” which may be relevant to services we offer. The FTC and state attorneys general have otherwise been active in investigating and entering into consent decrees under their current unfair or deceptive trade practices authority with companies because of their online privacy and data security practices. In the U.S., the President has called for enactment of baseline privacy legislation and there is a possibility of new legislation and regulation and increased enforcement activities relating to privacy and behavioral advertising. In addition, changes in industry practice (whether on their own or when combined with regulatory changes) could adversely impact our ability to deliver advertisements based on online behavior. For example, it is possible that at some point in the future, it will be a common Internet practice for Websites to honor “Do Not Track” settings in Internet browsers that are turned on by default. Whether through industry practice or in combination with government regulation, such a development could limit our ability to serve advertisements to consumers based on online behavior on third party sites or on our sites, which could adversely affect our revenue.

In Europe, Directive 2009/136/EC of the European Parliament and of the Council requires the user’s full information and consent prior to the installation and use of any so-called “cookie” on a user’s computer. This Directive has been implemented differently, if at all, in member states of the European Union and national requirements to remain compliant with the respective law may vary. Nevertheless, the provisions of this directive, whether effectively implemented in national laws, are now applicable in all the member states of the European Union and enforcement actions are now being considered by local data protection authorities. In addition, under draft General Data Protection Regulation under consideration by the European Commission (originally proposed in January 2012 and most recently recirculated in December 2014), additional requirements for users’ consent for offline and online marketing would be imposed. If enacted, this instrument will further strengthen the already very densely regulated area of Internet privacy in Europe. In addition, this revised European legislation, if adopted, would increase the likelihood of applicability of European law to entities established outside the European Union but processing data of European data subjects.

We have privacy policies posted on our Websites that we believe comply with existing applicable laws requiring notice to users about our information collection, use and disclosure practices. We also notify users about our information collection, use and disclosure practices relating to data we receive through offline means such as paper health risk assessments. Moreover, we take steps to reasonably protect certain sensitive personal information we hold. We cannot assure you that the privacy policies and other statements we provide to users of our products and services, or our practices, will sufficiently protect us from liability or adverse publicity in this

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area. A determination by a state or federal agency or court, or European data protection authority or competent court, that any of our practices do not meet applicable standards, or the implementation of new standards or requirements, could adversely affect our business.

Failure to comply with laws relating to privacy and security of personal information, including personal health information, could result in liability to us and concerns about privacy-related issues could damage our reputation and our business

Privacy and security of personal information stored or transmitted electronically, including personal health information, are a major issue in the United States and abroad. While we strive to comply with all applicable privacy and security laws and regulations, as well as our own posted privacy policies, legal standards for privacy including, but not limited to, “unfairness” and “deception” as enforced by the FTC and state attorneys general continue to evolve and any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, or could cause us to lose users and customers, which could have a material adverse effect on our business. There has been an increase in the number of private privacy-related lawsuits filed against companies recently. In addition, we are unable to predict what additional legislation or regulation in the area of privacy of personal information, including personal health information, could be enacted and what effect that could have on our operations and business. Concerns about our practices with regard to the collection, use, disclosure, or security of personal information or other privacy-related matters, even if unfounded and even if we are in compliance with applicable laws, could damage our reputation and harm our business.

The Privacy Standards and Security Standards under the Health Insurance Portability and Accountability Act of 1996 (or HIPAA), as amended by the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009, establish a set of national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses and healthcare providers (referred to as “covered entities”) and their “business associates,” which are persons or entities that perform certain services for, or on behalf of, a covered entity that involve the use or disclosure of protected health information. Certain portions of our business, such as those managing employee or plan member health information for employers or health plans, are subject to HIPAA as business associates of covered entities. In addition to imposing privacy and security requirements, HIPAA also creates obligations for us to report any unauthorized use or disclosure of protected health information, known as a breach, to our covered entity customers. The 2013 final HITECH rule modifies the breach reporting standard in a manner that makes more data security incidents qualify as reportable breaches. In addition, HITECH and its implementing regulations impose similar data breach notification requirements on vendors of personal health records that require us to notify affected individuals and the FTC in the event of a data breach involving the unsecured personal information of users of our public portal services. Violations of HIPAA may result in civil and criminal penalties and could damage our reputation and harm our business. HITECH increased civil penalty amounts for violations of HIPAA and significantly strengthened enforcement by requiring the HHS to conduct periodic audits to confirm compliance and authorizing state attorneys general to bring civil actions seeking either injunctions or damages in response to violations of HIPAA Privacy Standards and Security Standards that threaten the privacy of state residents. We cannot assure you that we will adequately address the risks created by these amended HIPAA Privacy Standards and Security Standards. In addition, we are unable to predict what changes to these Standards might be made in the future or how those changes, or other changes in applicable laws and regulations, could affect our business.

In Europe, the current national implementations of the existing general data protection Directive 95/46/EC and of the e-Privacy Directive 2002/58/EC provide for criminal and administrative sanctions in case of violations, even though criminal sanctions are very rarely imposed. For example, France and Germany provide for administrative fines of up to 300,000 Euros (approximately 360,000 USD) in case of illegal collection or processing of personal identifiable information. Under draft General Data Protection Regulation under consideration by the European Commission (originally proposed in January 2012 and most recently recirculated in December 2014), fines of up to 100,000,000 Euros (approximately 120,000,000 USD) or up to 5% of the global sales of the infringer could be imposed.

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Failure to maintain CME accreditation could adversely affect Medscape, LLC’s ability to provide online CME offerings

Medscape, LLC’s continuing medical education (or CME) activities are planned and implemented in accordance with the current Essential Areas and Elements and the Policies of the Accreditation Council for Continuing Medical Education (or ACCME), which oversees providers of CME credit, and other applicable accreditation standards. ACCME’s standards for commercial support of CME are intended to assure, among other things, that CME activities of ACCME-accredited providers, such as Medscape, LLC, are independent of “commercial interests,” which are defined as entities that produce, market, re-sell or distribute healthcare goods and services, excluding certain organizations. “Commercial interests,” and entities owned or controlled by “commercial interests,” are ineligible for accreditation by the ACCME. From time to time, the ACCME revises its standards for commercial support of CME. As a result of certain past ACCME revisions, we adjusted our corporate structure and made changes to our management and operations intended to allow Medscape, LLC to provide CME activities that are developed independently from programs developed by its sister companies, which may not be independent of “commercial interests.” We believe that these changes allow Medscape, LLC to satisfy the applicable standards.

Medscape, LLC’s current ACCME accreditation expires in 2016. In order for Medscape, LLC to renew its accreditation, it will be required to demonstrate to the ACCME that it continues to meet ACCME requirements. If Medscape, LLC fails to maintain its status as an accredited ACCME provider (whether at the time of such renewal or at an earlier time as a result of a failure to comply with existing or additional ACCME standards), it will not be permitted to accredit CME activities for physicians and other healthcare professionals. Instead, Medscape, LLC would be required to use third parties to provide such CME-related services. That, in turn, could discourage potential supporters from engaging Medscape, LLC to develop CME or education-related activities, which could have a material adverse effect on our business.

CME regulations also apply in other countries. For example, under German law, certain CME programs must be approved by the State Medical Chamber. Additionally, German CME-related services must be free of commercial/business interests and the provider of CME services must be compliant with German laws and regulations. In France, a similar new regulatory framework that restricts the organization of CME activities has been completed. These or similar restrictions in other countries may restrict our ability to carry out activities related to CME programs and/or refer to drugs or medical devices in such CME programs. Moreover, if we are not able to demonstrate compliance with these regulations, applicable approvals may not be obtained from governmental authorities, which may impact our ability to provide CME-related services and which could have an adverse effect on our business.

Government regulation and industry initiatives could adversely affect the volume of sponsored online CME programs implemented through our Websites or require changes to how Medscape, LLC offers CME

CME activities may be subject to government oversight or regulation by Congress, the FDA, HHS, and state regulatory agencies. Medscape, LLC and/or the sponsors of the CME activities that Medscape, LLC accredits may be subject to enforcement actions if any of these CME activities are deemed improperly promotional, potentially leading to the termination of sponsorships. Medscape, LLC and/or the sponsors of the CME activities that Medscape, LLC accredits also could be affected by industry initiatives regarding funding for CME.

Educational activities directed at physicians, including CME, have been subject to increased governmental scrutiny in recent years to ensure that sponsors do not influence or control the content of the activities. The Department of Justice continues to examine CME sponsorship by pharmaceutical companies. In addition, as part of the Affordable Care Act, pharmaceutical companies are now required to publicly report certain payments and transfers of value that they make to U.S. physicians, including payments related to CME. The federal government’s interpretation of this reporting requirement, which has been evolving and may continue to change, could affect pharmaceutical companies’ views of their reporting obligations with respect to payments in support of authors and presenters of CME material. In implementing internal controls and procedures that promote adherence to applicable regulations and requirements, supporters of CME may interpret the regulations and

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requirements differently and may implement varying procedures or requirements. These regulations and requirements, and the related internal controls and procedures:

• may discourage pharmaceutical and medical device companies from providing grants for independent educational activities;

• may slow their internal approval for such grants;

• may reduce the volume of sponsored educational programs that Medscape, LLC produces to levels that are lower than in the past, thereby reducing revenue; and

• may require Medscape, LLC to make changes to how it offers or provides educational programs, including CME.

In addition, future changes to laws, regulations or accreditation standards, or to the internal compliance programs of supporters or potential supporters, may further discourage, significantly limit, or prohibit supporters or potential supporters from engaging in educational activities with Medscape, LLC, or may require Medscape, LLC to make further changes in the way it offers or provides educational activities.

Failure to comply with applicable anti-corruption laws could subject us to penalties and other adverse consequences

The United States and other countries have adopted anti-corruption laws that generally prohibit directly or indirectly giving, offering or promising inducements to public officials to elicit an improper commercial advantage. Under applicable U.S., German, and most European law, this prohibition has been interpreted to apply to doctors and other medical professionals who work in state-run hospitals and state-run healthcare systems. Some of these laws also prohibit directly or indirectly giving, offering or promising (and, in some cases, accepting or soliciting) inducements to (or from) private parties to elicit (or grant) an improper commercial advantage. In recent years, the U.S. Government has brought enforcement actions that led to significant monetary penalties against several companies operating in the global healthcare industry for violations of anti-corruption laws resulting from illegal payments made to non-U.S. medical professionals.

As our business expands outside the United States, we (and others acting on our behalf) increasingly interact with non-U.S. doctors and other medical professionals, at least some of whom work in state-run hospitals or healthcare systems. Such interactions inherently increase the risk of violating applicable anti-corruption laws. While we believe that we have appropriate compliance policies and procedures in place to mitigate such risk, our personnel and others acting on our behalf could engage in conduct that violates such laws, for which we could be held responsible. Under such circumstances, we could be subject to civil and/or criminal penalties and other consequences that could have a material adverse effect on our business, financial condition and results of operations. In addition, our brand and reputation, our sales activities and the price of our Common Stock and other securities could be adversely affected if we were to become the target of any resulting negative publicity.

Other Risks Applicable to Our Company and to Ownership of Our Securities

Provisions in our organizational documents and Delaware law may inhibit a takeover, which could adversely affect the value of our Common Stock

Our Restated Certificate of Incorporation and Bylaws, as well as Delaware corporate law, contain provisions that could delay or prevent a change of control or changes in our management and board of directors that holders of our Common Stock might consider favorable and may prevent them from receiving a takeover premium for their shares. These provisions include, for example, our classified board structure and the authorization of our board of directors to issue up to 50 million shares of preferred stock without a stockholder vote. In addition, our Restated Certificate of Incorporation provides that stockholders may not act by written consent and may not call special meetings. These provisions apply even if an offer to purchase our company may be considered beneficial by some of our stockholders. If a change of control or change in management is delayed or prevented, the market price of our Common Stock could decline.

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If certain transactions occur with respect to our capital stock, limitations may be imposed on our ability to utilize net operating loss carryforwards and tax credits to reduce our income taxes

WebMD has substantial accumulated net operating loss (NOL) carryforwards and tax credits available to offset taxable income in future tax periods. If certain transactions occur with respect to WebMD’s capital stock (including issuances, redemptions, recapitalizations, exercises of options, conversions of convertible debt, purchases or sales by 5%-or-greater shareholders and similar transactions) that result in a cumulative change of more than 50% of the ownership of capital stock over a three-year period (as determined under rules prescribed by Section 382 of the U.S. Internal Revenue Code and applicable Treasury regulations), an annual limitation would be imposed with respect to the ability to utilize WebMD’s NOL carryforwards and federal tax credits that existed at the time of the ownership change.

In November 2008, HLTH repurchased shares of its Common Stock in a tender offer. The tender offer resulted in a cumulative change of more than 50% of the ownership of HLTH’s capital, as determined under rules prescribed by Section 382 of the Code and applicable Treasury regulations. As a result of this ownership change, there is an annual limitation imposed on the amount of the NOL carryforwards and federal tax credits existing at the time of the ownership change that we may use to offset income in each tax year following the ownership change.

In April 2012, September 2013 and September 2014, WebMD repurchased shares of its Common Stock in tender offers (collectively, the “Tender Offers”). Completion of the Tender Offers may increase the possibility of another ownership change, which could decrease the existing annual limitation and would apply to all NOL carryforwards and tax credits generated prior to this potential new ownership change.

We may not be successful in protecting our intellectual property and proprietary rights

Our intellectual property and proprietary rights are important to our businesses. The steps that we take to protect our intellectual property, proprietary information and trade secrets may prove to be inadequate and, whether or not adequate, may be expensive. We rely on a combination of trade secret, patent and other intellectual property laws and confidentiality procedures and non-disclosure contractual provisions to protect our intellectual property. We cannot assure you that we will be able to detect potential or actual misappropriation or infringement of our intellectual property, proprietary information or trade secrets. Even if we detect misappropriation or infringement by a third party, we cannot assure you that we will be able to enforce our rights at a reasonable cost, or at all. In addition, our rights to intellectual property, proprietary information and trade secrets may not prevent independent third-party development and commercialization of competing products or services.

Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from providing certain services, which may harm our business

We have been, and may continue to be, subject to claims that we are misappropriating or infringing intellectual property or other proprietary rights of others. These claims, even if not meritorious, may be expensive to defend and divert management’s attention from our operations. If we become liable to third parties for infringing these rights, we could be required to pay a substantial damage award and to develop non-infringing technology, obtain a license or cease selling the products or services that use or contain the infringing intellectual property. We may be unable to develop non-infringing products or services or obtain a license on commercially reasonable terms, or at all. We may also be required to indemnify our customers if they become subject to third-party claims relating to intellectual property that we license or otherwise provide to them, which could be costly.

Acquisitions, business combinations and other transactions may be difficult to complete and, if completed, may have negative consequences for our business and our security holders

We may seek to acquire or to engage in business combinations with companies engaged in complementary businesses. In addition, we may enter into joint ventures, strategic alliances or similar arrangements with third parties. These transactions may result in changes in the nature and scope of our operations and changes in our

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financial condition. Our success in completing these types of transactions will depend on, among other things, our ability to locate suitable candidates and negotiate mutually acceptable terms with them, and to obtain adequate financing. Significant competition for these opportunities exists, which may increase the cost of and decrease the opportunities for these types of transactions. Financing for these transactions may come from several sources, including:

• cash and cash equivalents on hand and marketable securities;

• proceeds from the incurrence of indebtedness; and

• proceeds from the issuance of common stock, preferred stock, convertible debt or of other securities.

The issuance of additional equity or debt securities could:

• 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.

We do not intend to seek security holder approval for any such acquisition or security issuance unless required by applicable law, regulation or the terms of then-existing securities.

Our business will suffer if we fail to successfully integrate acquired businesses and technologies or to assess the risks in particular transactions

We have in the past acquired, and may in the future acquire, businesses, technologies, services, product lines and other assets. The successful integration of the acquired businesses and assets into our operations, on a cost-effective basis, can be critical to our future performance. The amount and timing of the expected benefits of any acquisition, including potential synergies between our company and the acquired business, are subject to significant risks and uncertainties. These risks and uncertainties include, but are not limited to, those relating to:

• our ability to maintain relationships with the customers of the acquired business;

• our ability to retain or replace key personnel of the acquired business;

• potential conflicts in sponsor or advertising relationships or in relationships with strategic partners;

• our ability to coordinate organizations that are geographically diverse and may have different business cultures; and

• compliance with regulatory requirements.

We cannot guarantee that any acquired businesses will be successfully integrated with our operations in a timely or cost-effective manner, or at all. Failure to successfully integrate acquired businesses or to achieve anticipated operating synergies, revenue enhancements or cost savings could have a material adverse effect on our business, financial condition and results of operations.

Although our management attempts to evaluate the risks inherent in each transaction and to value acquisition candidates appropriately, we cannot assure you that we will properly ascertain all such risks or that acquired businesses and assets will perform as we expect or enhance the value of our company as a whole. In addition, acquired companies or businesses may have larger than expected liabilities that are not covered by the indemnification, if any, that we are able to obtain from the sellers.

We may not be able to raise additional funds when needed for our business or to exploit opportunities

Our future liquidity and capital requirements will depend upon numerous factors, including the success of our service offerings, market developments, and repurchases of our Common Stock. We may need to raise

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additional funds to support expansion, develop new or enhanced applications and services, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. If required, we may raise such additional funds through public or private debt or equity financing, strategic relationships or other arrangements. There can be no assurance that such financing will be available on acceptable terms, if at all, or that such financing will not be dilutive to our stockholders.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We believe that our company’s offices and other facilities are, in general, in good operating condition and adequate for our current operations and that additional leased space in appropriate locations can be obtained on acceptable terms if needed.

We lease approximately 100,000 square feet of office space in New York City for our corporate headquarters and certain of our operations under a lease for which the term expires in December 2016, but we have the right to vacate the space prior to December 2016. Our company has executed a new sublease for approximately 148,000 square feet of office space in New York City for the relocation of our corporate headquarters and certain of our operations, which will be available on or about July 1, 2015, and which has a term expiring April 2024, and at our option can be extended for an additional five years. We also lease additional office space in New York City and lease office space and operational facilities in: Elmwood Park, New Jersey; Atlanta, Georgia; Montreal, Canada; Chicago, Illinois; Ashburn, Virginia; Indianapolis, Indiana; Portland, Oregon; San Clemente and San Diego, California; Redmond, Washington; Durham, North Carolina; and Paris, France.

Item 3. Legal Proceedings

The information relating to legal proceedings contained in Note 7 to the Consolidated Financial Statements included in this Annual Report is incorporated herein by this reference.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

We completed the initial public offering of our Class A Common Stock on September 28, 2005. Our Class A Common Stock began trading on the Nasdaq National Market under the symbol “WBMD” on September 29, 2005. Upon completion of our merger with HLTH Corporation in October 2009 and the resulting cancellation of our Class B Common Stock (all of which had been owned by HLTH), our Class A Common Stock began being referred to simply as Common Stock. Our Common Stock now trades on the Nasdaq Global Select Market. The high and low prices of our Common Stock for each quarterly period during the last two fiscal years are as follows:

	High		Low
2013
First quarter	$	24.85	$	14.74
Second quarter		31.63		22.23
Third quarter		35.28		26.07
Fourth quarter		40.86		28.14
2014
First quarter	$	51.41	$	38.54
Second quarter		49.99		37.43
Third quarter		53.30		41.27
Fourth quarter		43.59		34.48

The market price of our Common Stock has fluctuated in the past and is likely to fluctuate in the future. Changes in the market price of our Common Stock may result from, among other things:

• quarter-to-quarter variations in operating results;

• operating results being different from our previously announced guidance or from analysts’ estimates or opinions;

• changes in analysts’ or financial commentators’ earnings estimates, ratings or opinions;

• changes in financial guidance or other forward-looking information;

• new products, services or pricing policies introduced by us or our competitors;

• acquisitions by us or our competitors;

• developments in existing customer 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 general business or regulatory conditions affecting the healthcare, information technology or Internet industries;

• changes in general economic conditions; and

• fluctuations in the securities markets in general.

In addition, the market prices of our Common Stock and of the stock of other Internet-related companies have experienced large fluctuations, sometimes quite rapidly. These fluctuations often may be unrelated to or disproportionate to operating performance.

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Holders

On February 23, 2015, there were approximately 1,150 holders of record of our Common Stock. Because many of these shares are held by brokers and other institutions on behalf of stockholders, we are unable to determine the total number of stockholders represented by these record holders, but we believe there are more than 20,000 holders of our Common Stock.

Dividends

We have never declared or paid any cash dividends on our Common Stock, and we do not anticipate paying cash dividends in the foreseeable future.

Repurchases of Equity Securities During the Fourth Quarter of 2014

The following table provides information about purchases by WebMD during the three months ended December 31, 2014 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased(1)		Average Price Paid per  Share		Total Number of Shares  Purchased as Part of Publicly Announced Plans or Programs(2)		Approximate Dollar Value  of Shares that May Yet Be Purchased Under the Plans or Programs(2)
10/01/14 – 10/31/14		280,845	$	36.87		275,475	$	26,104,560
11/01/14 – 11/30/14		284,972	$	37.73		283,729	$	39,299,063
12/01/14 – 12/31/14		116,908	$	36.72		116,779	$	35,011,224
Total		682,725	$	37.20		675,983

(1) Includes the following number of shares withheld from WebMD Restricted Common Stock that vested during the respective periods in order to satisfy withholding tax requirements related to the vesting of the awards: 5,370 in October; 1,243 in November; and 129 in December. The value of these shares was determined based on the closing price of WebMD Common Stock on the date of vesting.

(2) In August 2011, a stock repurchase program (the “Program”) was established through which WebMD was authorized to use up to $75,000,000 to purchase shares of its Common Stock. Increases to the Program of $75,000,000, $50,000,000, $40,000,000 and $30,000,000 were authorized in October 2011, February 2014, March 2014 and April 2014, respectively. In November 2014 (during the period covered in this table), an additional increase to the Program of approximately $23,895,000 was authorized. For additional information, see Note 10 to the Consolidated Financial Statements included in this Annual Report.

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Performance Graph

The following graph compares the cumulative total stockholder return on WebMD Common Stock with the comparable cumulative return of the NASDAQ Composite Index and the Research Data Group (RDG) Internet Composite Index over the period of time covered in the graph. The graph assumes that $100 was invested in WebMD Common Stock and in each index on December 31, 2009. The stock price performance on the following graph is not necessarily indicative of future stock price performance.

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Item 6. Selected Financial Data

The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the Consolidated Financial Statements and notes thereto, which are included elsewhere in this Annual Report.

	Years Ended December 31,
	2014		2013		2012			2011		2010
	(In thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue	$	580,449	$	515,293	$	469,866		$	558,775	$	534,519
Cost of operations		224,094		209,740		216,361			201,677		187,831
Sales and marketing		136,160		127,997		127,659			124,326		120,874
General and administrative		94,119		93,220		97,618			91,271		85,496
Depreciation and amortization		29,811		26,606		28,399			26,801		27,578
Interest income		69		76		86			112		3,949
Interest expense		24,686		22,826		23,334			20,645		11,453
Loss on convertible notes		—		4,871		—			—		23,332
Gain (loss) on investments		—		—		8,074			18,516		(9,517	)
Restructuring		—		—		7,579			—		—
Transaction, severance and other expense		—		1,353		2,297			2,328		72
Income (loss) from continuing operations before income tax provision (benefit)		71,648		28,756		(25,221	)		110,355		72,315
Income tax provision (benefit)		30,707		13,640		(2,134	)		46,167		20,043
Income (loss) from continuing operations		40,941		15,116		(23,087	)		64,188		52,272
Income from discontinued operations, net of tax		1,122		—		2,743			10,388		1,800
Net income (loss)	$	42,063	$	15,116	$	(20,344	)	$	74,576	$	54,072
Basic income (loss) per common share:
Income (loss) from continuing operations	$	1.08	$	0.32	$	(0.45	)	$	1.11	$	0.93
Income from discontinued operations		0.03		—		0.05			0.18		0.04
Net income (loss)	$	1.11	$	0.32	$	(0.40	)	$	1.29	$	0.97
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.97	$	0.31	$	(0.45	)	$	1.08	$	0.85
Income from discontinued operations		0.03		—		0.05			0.17		0.03
Net income (loss)	$	1.00	$	0.31	$	(0.40	)	$	1.25	$	0.88
Weighted-average shares outstanding used in computing per share amounts:
Basic		37,869		46,830		50,862			57,356		55,328
Diluted		45,614		48,398		50,862			59,124		62,228

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	As of December 31,
	2014		2013		2012		2011		2010
	(In thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and investments	$	706,776	$	824,880	$	991,835	$	1,121,217	$	400,501
Working capital (excluding assets and liabilities of discontinued operations)		713,163		817,088		966,235		1,132,431		420,353
Total assets		1,197,557		1,325,628		1,490,625		1,641,025		942,202
Convertible notes, net of discount		952,232		952,232		800,000		800,000		—
Stockholders’ equity		61,589		190,900		509,989		674,436		752,895

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

This Item 7 contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” on page ii of this Annual Report for a discussion of the uncertainties, risks and assumptions associated with these statements. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in our forward-looking statements as a result of various factors, including but not limited to those listed under “Risk Factors” in Item 1A of this Annual Report and those included elsewhere in this Annual Report. In this Item 7, dollar amounts (other than per share amounts) are stated in thousands, unless otherwise noted.

Overview

Management’s discussion and analysis of financial condition and results of operations, or MD&A, is provided as a supplement to the Consolidated Financial Statements and notes thereto included elsewhere in this Annual Report and is intended to provide an understanding of our results of operations, financial condition and changes in our results of operations and financial condition. Our MD&A is organized as follows:

• Introduction.    This section provides: a general description of our company and its business; background information on certain trends, transactions and other developments affecting our company; and a discussion of how seasonal factors may impact the timing of our revenue.

• Critical Accounting Estimates and Policies.    This section discusses those accounting policies that are considered important to the evaluation and reporting of our financial condition and results of operations, and whose application requires us to exercise subjective and often complex judgments in making estimates and assumptions. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 2 to the Consolidated Financial Statements included in this Annual Report.

• Results of Operations and Supplemental Financial and Operating Information.    These sections provide our analysis and outlook for the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis.

• Liquidity and Capital Resources.    This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of December 31, 2014.

• Recent Accounting Pronouncements.    This section provides a summary of the most recent authoritative accounting standards and guidance that have either been recently adopted by our company or may be adopted in the future.

Introduction

Our Company.    WebMD Health Corp. is a Delaware corporation that was incorporated on May 3, 2005. We completed an initial public offering on September 28, 2005. Our Common Stock trades under the symbol “WBMD” on the Nasdaq Global Select Market.

Our Business.    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, mobile platforms and health-focused publications. The WebMD Health Network includes: www.WebMD.com, our primary public portal for consumers and related mobile-optimized sites and mobile apps; www.Medscape.com, our primary public portal for physicians and other healthcare professionals and related mobile services; and other sites and apps through which we provide our branded health and wellness content, tools and services. Our services for consumers enable them to obtain information on health and wellness topics or on a particular disease or condition, to assess their personal health status, to use online trackers, tools and quizzes, to locate physicians, to receive periodic e-mailed newsletters and alerts on topics of individual interest, and to participate in online communities with peers and experts. Our services for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (which we refer to as CME) credit and communicate with peers. We

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do not charge any usage, membership or download fees for access to our public portals or mobile platforms. We generate revenue from our public portals and mobile platforms primarily through the sale of various types of advertising and sponsorship programs to our clients, which include: pharmaceutical, biotechnology and medical device companies; hospitals, clinics and other healthcare services companies; health insurance providers; consumer products companies whose products or services relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention; and various other businesses, organizations and governmental entities. Advertisers and sponsors use our services to reach, educate and inform target audiences of consumers, physicians and other healthcare professionals. We also generate revenue from advertising sold in WebMD Magazine, a consumer magazine distributed to physician office waiting rooms.

Our private portals are a cloud-based population health management platform, hosted by WebMD and provided to private and governmental employers and health plans for use by their employees and plan participants. We market these private portals and related services under the WebMD Health Services brand. The WebMD Health Services platform enables employers and health plans to provide their employees and plan participants with access to personalized health and benefit information, including an online personal health record application. Our WebMD Health Services solutions include a comprehensive set of decision support and transparency tools that help their employees and plan participants understand the financial implications of their benefits options and make more informed benefits-related purchase decisions and also provide access to information and services that can help them factor quality and cost into decisions about care and treatment options. We also provide telephonic, online and onsite health coaching and targeted condition management programs for use by our private portals clients’ employees and plan participants to help them make healthier lifestyle choices and achieve their wellness goals. We generate revenue from subscriptions to our WebMD Health Services platform by employers and health plans, either directly or through distributors. In addition, we offer our health coaching services and our condition management programs on a per participant basis.

We generate revenue from the sale of certain information products and services on a standalone basis using de-identified data that we license from a small number of third party data sources, of which the principal source is a license retained by HLTH Corporation, our former parent company, in connection with the sale of its Emdeon Business Services business (EBS). As the successor to HLTH, we received this license which provides us the rights to certain de-identified data from the operation of the EBS business through February 2018 for use in the development and commercialization of various information products and services. Customers include data services, informatics and consulting companies.

Background Information on Certain Trends and Developments Affecting Our Business.    Key trends and developments affecting the use of healthcare information services of the types we provide or are developing and our ability to generate revenue from those services include the following:

• Use of the Internet by Consumers and Physicians.    The Internet has emerged as a major communications medium and has fundamentally changed many sectors of the economy, including the marketing and sales of financial services, travel, and entertainment, among others. The Internet is also changing the healthcare industry and has transformed how consumers and physicians find and utilize healthcare information.

— Healthcare consumers increasingly seek to educate themselves online about their healthcare-related issues, motivated by the desire to become better informed patients and to become more engaged healthcare consumers because of the larger share of healthcare costs they are being asked to bear due to changes in the benefit designs being offered by health plans and employers. The Internet has fundamentally changed the way consumers obtain health and wellness information, enabling them to have immediate access to searchable information and dynamic interactive content to check symptoms, understand diseases, find providers and evaluate treatment options.

— The Internet has become a primary source of information for physicians and other healthcare professionals seeking to improve clinical practice and to interact with their peers. The Internet has also become one of the primary means for physicians and other healthcare professionals to obtain CME and CE.

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• Online Marketing and Education Spending for Healthcare Products.    Pharmaceutical, biotechnology and medical device companies spend large amounts each year marketing their products and educating consumers and physicians about them; however, only a small portion is currently spent on online services. We believe that these companies, which represented approximately 73% of our advertising and sponsorship revenue in 2014, are aware of the effectiveness of the Internet relative to traditional media in providing health, clinical and product-related information to consumers and physicians. In addition, in an effort to improve operating efficiencies, some pharmaceutical companies have been reducing their field sales forces in the past several years. In addition, we expect that the pipeline of new pharmaceutical products will be strong in the next year and that a significant portion of those products will be ones for which our digital platforms are particularly effective in providing communications to the target audiences that pharmaceutical companies want to reach about specific therapies. However, notwithstanding our general expectation for increased future demand, we cannot predict the extent or the pace of any shift by pharmaceutical, biotechnology and medical device companies of their marketing expenditures to online services or to what extent they will choose WebMD to provide such services. Furthermore, our advertising and sponsorship revenue may vary significantly from quarter to quarter due to a number of other factors, many of which are outside our control, including general economic and regulatory conditions and the following:

— The majority of our advertising and sponsorship contracts are for terms of approximately four to twelve months. We have relatively few longer term advertising and sponsorship contracts.

— The time between the date of initial contact with a potential advertiser or sponsor regarding a specific program and the execution of a contract with the advertiser or sponsor for that program, as well as the additional time period before our services are delivered, may be longer than expected, especially for medium-sized and larger contracts, and may be subject to delays over which we have little or no control, including as a result of budgetary constraints of the advertiser or sponsor or their need for internal approvals, including internal approvals relating to compliance with the laws and regulations applicable to the marketing of healthcare products. We have experienced, from time to time in the past, a lengthening of this internal review process by pharmaceutical and biotechnology companies, which has resulted in delays in contracting, as well as delays in recognizing expected revenue under executed contracts, and we cannot predict whether similar delays may occur in future periods.

Additional factors that may affect the timing of contracting for specific programs with advertisers and sponsors, or receipt of revenue under such contracts, include: the timing of Food and Drug Administration (“FDA”) approval for new products or for new approved uses for existing products; the timing of FDA approval of generic products that compete with existing brand name products and any increase in the number or significance of such approvals or of withdrawals of products from the market; consolidation of companies in the pharmaceutical and biotechnology industries; the timing of roll-outs of new or enhanced services on our public portals; seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that may affect the timing of promotional campaigns for specific products; and the scheduling of conferences for physicians and other healthcare professionals.

• Other Factors Affecting the Demand for Our Advertising and Sponsorship Services.    Some of our pharmaceutical company customers have experienced patent expirations for certain of their products in the past several years and some are expected to experience patent expirations over the next several years. In the pharmaceutical industry, patent expirations allow for competition from lower-priced generic versions of the patented drugs and generally result in the termination of marketing efforts for the drug. We believe that patent expirations led to significant overall reductions in marketing, selling and educational expenditures by some pharmaceutical companies in 2012 across their entire product portfolios. Amounts budgeted for online advertising increased for some of our biopharmaceutical customers in 2013 and 2014, although we cannot predict if that will continue. In addition to pharmaceutical, biotechnology and medical device companies, our public portals advertisers and sponsors include companies that provide over-the-counter drugs and other healthcare products, food and beverages, beauty products and other consumer products, particularly for products and services that relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention, as well as clients such as retailers, pharmacies, hospitals, health insurance

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companies and government agencies. Revenues from these clients are more likely to reflect general economic conditions, and to be reduced to a greater extent during economic downturns, than revenues from pharmaceutical, biotechnology and medical device companies. Accordingly, revenues from these clients may be subject to significant quarter-to-quarter variations. Our advertising and sponsorship services are subject to competition from numerous alternatives, including other Internet sites that focus on health-related content, Internet search engines, social media Internet sites, general interest consumer sites and traditional media. Such competition may result in smaller customer commitments or pressure to reduce prices, both of which could reduce our revenues and profit margins. In response to changes in the preferences of our advertisers and sponsors, particularly our pharmaceutical company clients, we modified our sales and product approach to offer services that can be executed more quickly and we have simplified our products and pricing. We believe this has allowed our clients to better compare our services, and the value they provide, to other digital alternatives. We have also been investing in more robust data and analytics capabilities to provide our customers with new value measurements and insights through proprietary analytics tools.

• Traffic Trends.    In 2014, The WebMD Health Network reached an average of approximately 183 million monthly unique visitors and delivered approximately 14.25 billion page views during the year, increases of 33% and 23% over the prior year, respectively. Traffic to The WebMD Health Network was an average of approximately 190 million unique users per month and total traffic of 3.70 billion page views during the fourth quarter of 2014, increases of 22% and 17%, respectively, over the prior year period. Traffic to Medscape properties from physicians and other healthcare professionals averaged approximately 6.2 million physician sessions per month in 2014, an increase of approximately 13% over the prior year, and averaged approximately 6.7 million physician sessions per month during the fourth quarter of 2014, an increase of approximately 17% over the prior year period. One factor that had significantly reduced traffic, in the first half of 2013, to some of the consumer sites in The WebMD Health Network (other than WebMD.com, our flagship site) was changes in Google’s algorithms and other processes that lowered the ranking of those sites in Google search results. Starting in July 2013, we began to see a reversal of that trend. We intend to continue our efforts to increase our page views by providing quality content and tools, as well as by designing our Websites to deliver that content and tools in ways that will cause them to rank well in algorithmic search engine results (which is commonly referred to as search engine optimization or SEO). However, we cannot be certain that our SEO efforts will result in continued improvement or, if they do, how long that will be maintained.

Consumers and healthcare professionals are increasingly using smartphones, tablets and other mobile devices to access the Internet, with physicians increasingly using mobile devices during treatment at the point of care. Accordingly, the portion of our page views from mobile devices has increased rapidly in the past several years as usage has increased on mobile devices, and increased utilization of our mobile offerings was the primary driver of our traffic growth in the fourth quarter of 2014, as well as for the full year. During the fourth quarter of 2014, approximately 27% of our page views came from a U.S. personal computer (or PC); approximately 36% came from a U.S. smartphone; approximately 8% came from a U.S. tablet device; and approximately 29% came from non-U.S. sources.

• Efforts to Increase Advertising and Sponsorship Revenue from Mobile.    We remain focused on delivering a multi-screen platform that engages users on their personal computers, tablet devices and smartphones. As we broaden our mobile offerings for consumers and physicians, we are also expanding our mobile advertising and sponsorship products. We have been seeing increasing customer demand for mobile advertising and sponsorship and have been including mobile components in many of the multi-platform program configurations that we are selling to advertisers and sponsors. While we offer mobile as a stand-alone purchase, our advertising and sponsorship clients are generally interesting in reaching a targeted audience, regardless of what device the user is engaging on, and choose multi-platform advertising and sponsorship programs. In 2014, the percentage of our advertising and sponsorship revenue delivered on a mobile device grew approximately 28% to $156 million, or 34% of our total advertising and sponsorship revenue. This includes stand-alone mobile advertising and sponsorship revenue as well as the allocation of multi-platform advertising and sponsorship revenue for the portion delivered on smartphone or tablet.

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However, we are unable to predict to what extent such demand will continue to increase because advertisements for biopharmaceutical products are subject to various regulatory requirements, including requirements to include certain specified information, that are more challenging to meet on the smaller smartphone screen size. Nevertheless, because of the smaller size of our Medscape audience and the importance to our pharmaceutical company clients of reaching the members of that audience on whatever device they use to access Medscape content, those clients are more advanced in their ability to utilize our mobile platform to reach healthcare professionals, and we have seen a more significant demand from them for these programs than for utilizing mobile to reach consumers.

• Use of Population Health Management Services.    In a healthcare market where a greater share of the responsibility for healthcare costs and decision-making has been shifting to consumers, use of information technology to assist consumers in making informed decisions about healthcare has also increased. We believe that, through our WebMD Health Services private portals and related coaching services, we are well positioned to play a role in this environment. For more than a decade, our cloud-based population health management services have helped employers and health plans improve the health of their employee and plan participant populations and reduce healthcare costs. Our services help employees and plan participants make more informed health and benefit decisions, positively change health behaviors, manage health conditions and lead healthier lives. At the beginning of 2014, we launched our WebMD Health Services platform for the Blue Cross Blue Shield Association Federal Employee Program (or FEP). With this program, over 5 million FEP members now have access to a broad range of our WebMD Health Services solutions, including our online personal health record application, as well as to our health coaching services, and to around-the-clock access to nurses by phone, secure message, or chat. Our strategy depends, in part, on increasing usage of our services by our employer and health plan clients’ employees and plan participants and being able to demonstrate a sufficient return on investment and other benefits for our clients from those services. Increasing such usage requires us to continue to develop new and updated applications, features and services. In addition, we face competition for our online population health management applications and related coaching services. Many of our competitors have greater financial, technical, product development, marketing and other resources than we do, and may be better known than we are.

• International.    The WebMD Health Network includes the following international sites: the co-branded Boots WebMD health information site for United Kingdom consumers at www.WebMD.boots.com; and Medscape France (www.medscape.fr) and Medscape Germany (www.medscape.de), our physician portals in those two countries. We also seek to monetize traffic to Medscape from physicians outside the United States. We plan to continue to pursue opportunities to expand the reach of our brands outside the United States, particularly with respect to our healthcare professionals audience. In certain markets outside the United States, we expect to accomplish this through partnerships or joint ventures with other companies having expertise in the specific country or region, while in other such markets we expect to rely primarily on our own internal resources. In May 2014, we began a collaboration with DXY, the largest online community for healthcare professionals in China, that will enable Medscape to distribute educational programs to physicians and healthcare professionals in China through the DXY.cn site.

• Healthcare Reform Legislation.    The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (which we refer to as the Affordable Care Act), was signed into law in March 2010. The Affordable Care Act has made extensive changes to the system of healthcare insurance and benefits in the United States. While we do not currently anticipate any significant adverse effects on WebMD as a direct result of the application of the Affordable Care Act to our business or on our company in its capacity as an employer, we are unable to predict what the future indirect impacts of the Affordable Care Act will be on WebMD’s business through its effects on other healthcare industry participants, including pharmaceutical and medical device companies that are advertisers and sponsors of our public portals and employers and health plans that are clients of our private portals. However, the Affordable Care Act has also created certain opportunities for WebMD’s consumer portals

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as health insurers seek to market their services directly to consumers in connection with the insurance exchanges set up pursuant to the Affordable Care Act. In addition, we believe that certain aspects of the Affordable Care Act and related regulations that seek to reduce healthcare costs may create opportunities for WebMD, including with respect to our personal health record applications and health and benefits decision-support tools and, more generally, with respect to our capabilities in providing health and wellness information and education. For example, the Affordable Care Act encourages use of wellness programs through grants to small employers to establish such programs, permission for employers to offer larger rewards than under prior law, in the form of waivers of cost-sharing, premium discounts, or additional benefits, to employees for participating in these programs and meeting certain standards, and the inclusion of wellness services and chronic disease management among the essential health benefits that certain plans are required to provide. However, we cannot yet determine the scope of the opportunities that the Affordable Care Act may create or what competition we may face in our efforts to pursue such opportunities.

• Other Initiatives.    We are pursuing, and intend to continue to identify, new business opportunities where our consumer and physician audiences and our resources can be leveraged to develop additional products and services. We may pursue initiatives to create new or enhanced revenue streams or, alternatively, to increase audience engagement even when we have not identified any potential related revenue stream. New business initiatives present risks and challenges that may be different than the ones we have faced in the past. In addition, later events may alter the risks that were evaluated at the time decisions are made on specific initiatives. Failure to effectively identify and assess new business initiatives and to successfully implement them may adversely affect our company and its prospects.

The healthcare industry in the United States and relationships among healthcare payers, providers and consumers are very complicated. In addition, the Internet and the market for online and mobile services are relatively new and still evolving. Accordingly, there can be no assurance that the trends identified above will continue or that the expected benefits to our business from our responses to those trends will be achieved. In addition, the market for healthcare information services is highly competitive and not only are our existing competitors seeking to benefit from these same trends, but the trends may also attract additional competitors.

Background Information on Certain Significant Developments and Transactions

Tender Offers.    On April 3, 2012, we completed a tender offer (which we refer to as the 2012 Tender Offer) for our Common Stock and repurchased 5,769,230 shares at a price of $26.00 per share for a total cost of $150,759, which includes $759 of costs directly attributable to the purchase. On September 10, 2013, we completed a tender offer (which we refer to as the 2013 Tender Offer) for our Common Stock and repurchased 5,000,000 shares at a price of $34.00 per share for a total cost of $170,516, which includes $516 of costs directly attributable to the purchase. On September 9, 2014, we completed a tender offer (which we refer to as the 2014 Tender Offer and, collectively with the 2012 Tender Offer and the 2013 Tender Offer, we refer to as the Tender Offers) for our Common Stock and repurchased 2,000,000 shares at a price of $48.50 per share for a total cost of $97,588, which includes $588 of costs directly attributable to the purchase. Each of the Tender Offers represented an opportunity for WebMD to return capital to stockholders who elected to tender their shares of WebMD Common Stock, while stockholders who chose not to participate in the Tender Offers automatically increased their relative percentage interest in our company at no additional cost to them.

Stock Repurchases.    During 2012, we repurchased 1,320,846 shares of our Common Stock at an aggregate cost of $26,900 through our stock repurchase program.

During 2013, we repurchased 1,266,962 shares of our Common Stock at an aggregate cost of $42,309 through our stock repurchase program. On October 18, 2013, we entered into an agreement to repurchase 5,527,433 shares of our Common Stock from Carl C. Icahn and certain of his affiliates, at a purchase price of $32.08 per share (the NASDAQ Official Closing Price of our Common Stock on October 18, 2013) at an aggregate cost of $177,420, which includes $100 of costs directly attributable to the purchase. The repurchase was completed on October 21, 2013. This repurchase was made outside of our stock repurchase program.

During 2014, we repurchased 3,160,070 shares of our Common Stock at an aggregate cost of $128,748 through our stock repurchase program. Our Board of Directors authorized increases to our stock repurchase

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program of $50,000, $40,000, $30,000 and $23,895 in February 2014, March 2014, April 2014 and November 2014, respectively. As of December 31, 2014, $35,011 remained available for repurchases under our stock repurchase program.

Convertible Notes.    On January 11, 2011, we issued $400,000 aggregate principal amount of 2.50% Convertible Notes due 2018 (which we refer to as the 2.50% Notes) in a private offering. Unless previously converted, the 2.50% Notes will mature on January 31, 2018. Net proceeds from the sale of the 2.50% Notes were approximately $387,345, after deducting the related offering expenses, of which approximately $100,000 was used by us to repurchase 1,920,490 shares of WebMD Common Stock at a price of $52.07 per share, the last reported sale price of WebMD Common Stock on January 5, 2011, which repurchase settled on January 11, 2011. Interest on the 2.50% Notes is payable semi-annually on January 31 and July 31 of each year, commencing July 31, 2011. Under the terms of the 2.50% Notes, as adjusted in April 2012 following completion of the 2012 Tender Offer, in September 2013 following completion of the 2013 Tender Offer and in September 2014 following completion of the 2014 Tender Offer, holders may surrender their 2.50% Notes for conversion into WebMD Common Stock at a conversion rate of 15.5118 shares of WebMD Common Stock per thousand dollars principal amount of the 2.50% Notes. This is equivalent to a conversion price of approximately $64.47 per share of Common Stock. In the aggregate, the 2.50% Notes were convertible into 6,204,720 shares of Common Stock as of December 31, 2014.

On March 14, 2011, we issued $400,000 aggregate principal amount of 2.25% Convertible Notes due 2016 (which we refer to as the 2.25% Notes) in a private offering. Unless previously converted, the 2.25% Notes will mature on March 31, 2016. Net proceeds from the sale of the 2.25% Notes were approximately $387,400, after deducting the related offering expenses, of which approximately $50,000 was used to repurchase 868,507 shares of WebMD Common Stock at a price of $57.57 per share, the last reported sale price of WebMD Common Stock on March 8, 2011, which repurchase settled on March 14, 2011. Interest on the 2.25% Notes is payable semi-annually on March 31 and September 30 of each year, commencing September 30, 2011. Under the terms of the 2.25% Notes, as adjusted in April 2012 following completion of the 2012 Tender Offer, in September 2013 following completion of the 2013 Tender Offer and in September 2014 following completion of the 2014 Tender Offer, holders may surrender their 2.25% Notes for conversion into WebMD Common Stock at a conversion rate of 13.9202 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This is equivalent to a conversion price of approximately $71.84 per share of Common Stock. In the aggregate, the 2.25% Notes were convertible into 3,511,120 shares of Common Stock as of December 31, 2014, at which time the remaining outstanding principal amount was $252,232. During 2013, we repurchased a total of $147,768 principal amount of our 2.25% Notes for $150,354 in cash and we recognized a pre-tax loss of $4,871 related to these repurchases which included the expensing of the remaining deferred issuance costs outstanding related to the repurchased 2.25% Notes.

On November 26, 2013, we issued $300,000 aggregate principal amount of 1.50% Convertible Notes due 2020 (which we refer to as the 1.50% Notes) in a private offering. Unless previously converted, the 1.50% Notes will mature on December 1, 2020. Net proceeds from the sale of the 1.50% Notes were approximately $291,823, after deducting the related offering expenses. Interest on the 1.50% Notes is payable semi-annually on June 1 and December 1 of each year, commencing June 1, 2014. Under the terms of the 1.50% Notes, as adjusted in September 2014 following completion of the 2014 Tender Offer, holders may surrender their 1.50% Notes for conversion into WebMD Common Stock at a conversion rate of 18.9795 shares of Common Stock per thousand dollars principal amount of the 1.50% Notes. This is equivalent to a conversion price of approximately $52.69 per share of Common Stock. In the aggregate, the 1.50% Notes were convertible into 5,693,850 shares of Common Stock as of December 31, 2014.

Restructuring.    On December 11, 2012, we announced a plan to streamline our operations, simplify our organizational structure, reduce costs and better focus our resources. These actions included a workforce reduction of approximately 250 positions, or roughly 14% of our employees at that time, and have resulted in a reduction in our operating expenditures. We recorded a restructuring charge of $7,579 during the three months ended December 31, 2012 related to severance and other employee benefits that were provided to terminated employees.

Voluntary Surrender of Certain Option Grants.    On February 23, 2012, our directors and certain officers voluntarily surrendered certain grants of non-qualified options to purchase WebMD Common Stock made to

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them, one of which was made in 2007, some in 2010 and some in 2011 and all of which were out-of-the-money at the time of surrender. None of these individuals received any consideration or promise of consideration in exchange for the surrender of these stock options. These options were originally granted under our 2005 Long-Term Incentive Plan (which we refer to as the 2005 Plan), and therefore, upon their surrender, the shares underlying these options were returned to the 2005 Plan and became available for grant under such plan. These surrenders of stock options were intended to allow WebMD to use the shares that became available under the 2005 Plan to attract new employees and to motivate and retain current key employees. During the three months ended March 31, 2012, we recorded pre-tax stock-based compensation expense of $8,076 related to the voluntary surrender of these options, which represented the remaining unrecognized stock-based compensation amounts for such grants.

Auction Rate Securities.    Effective April 20, 2010, we entered into an agreement pursuant to which we sold our holdings of auction rate securities (which we refer to as ARS), for an aggregate of $286,399. Under the terms of the agreement, we retained an option (which we refer to as the ARS Option), for a period of two years from the date of the agreement: (a) to repurchase from the purchaser the same principal amount of any or all of the various series of ARS sold, at the agreed upon purchase prices received on April 20, 2010; and (b) to receive from the purchaser additional proceeds upon certain redemptions of the various series of ARS sold. We received cash proceeds of $9,269 and recorded a pre-tax gain of $8,074 related to the ARS Option during the three months ended March 31, 2012. As of March 31, 2012, we no longer had any remaining positions related to the ARS Option and will receive no further cash proceeds.

Seasonality

The timing of our revenue is affected by seasonal factors. Our public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of our public portals. This portion of our revenue is usually the lowest in the first quarter of each calendar year, and generally increases during each consecutive quarter throughout the year. The timing of revenue in relation to our expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing, and general and administrative expenses as a percentage of revenue in each calendar quarter.

Critical Accounting Estimates and Policies

Critical Accounting Estimates

Our MD&A is based upon our Consolidated Financial Statements and Notes to Consolidated Financial Statements, which were prepared in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of the Consolidated Financial Statements requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and the disclosure of contingent assets and liabilities. We are subject to uncertainties such as the impact of future events, economic and political factors, and changes in our business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of our financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the Notes to our Consolidated Financial Statements.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and indefinite-lived intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite-lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued expenses, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards.

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Critical Accounting Policies

We believe the following reflects our critical accounting policies and our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements:

• Revenue Recognition.    Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and distribution arrangements and subscriptions to our healthcare management tools and private portals as well as related health coaching services is recognized ratably over the term of the applicable agreement. Revenue from information services is recognized as the underlying data is delivered. Revenue from the sponsorship of CME is recognized over the period that we substantially complete our contractual deliverables as determined by the applicable agreements.

Contracts that contain multiple deliverables are subject to Accounting Standards Update (“ASU”) No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also defines the level of evidence of selling price required to separate deliverables and allows a company to make its best estimate of the selling price of deliverables when more objective evidence of selling price is not available.

Pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, we allocate revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. We then recognize revenue on each deliverable in accordance with our revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, GAAP requires that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. We are generally not able to determine TPE of selling price as we are unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that our services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgmental process that considers multiple factors including, but not limited to, recent selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

• Long-Lived Assets.    Our long-lived assets consist of property and equipment, goodwill and other intangible assets. Goodwill and other intangible assets arise from the acquisitions we have made. The amount assigned to intangible assets is subjective and based on fair value using exit price and market participant view, such as discounted cash flow and replacement cost models. Our long-lived assets, excluding goodwill and indefinite-lived intangible assets, are amortized over their estimated useful lives, which we determine based on the consideration of several factors including the period of time the asset is expected to remain in service. We evaluate the carrying value and remaining useful lives of long-lived assets, excluding goodwill and indefinite-lived intangible assets, whenever indicators of impairment are present. We evaluate the carrying value of goodwill and indefinite-lived intangible assets annually, or whenever indicators of impairment are present. We test goodwill for impairment at the reporting unit level only when, after completing a qualitative analysis, it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying value. Long-lived assets held for sale are reported at the lower of cost or fair value less cost to sell. There was no impairment of goodwill or indefinite-lived intangible assets in 2014, 2013 or 2012.

• Stock-Based Compensation.    Stock-based compensation expense for all share-based payment awards granted is determined based on the grant-date fair value. The grant date fair value for stock options is estimated using the Black-Scholes Option Pricing Model. We recognize these compensation costs net of an estimated forfeiture rate on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the share-based payment awards. As of December 31, 2014, there was

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approximately $54,600 of unrecognized stock-based compensation expense (net of estimated forfeitures) related to unvested stock options and restricted stock held by employees, which is expected to be recognized over a weighted-average period of approximately 2.7 years, related to our stock-based compensation plans.

• Deferred Taxes.    Our deferred tax assets are comprised primarily of net operating loss carryforwards and federal tax credits. These net operating loss carryforwards and federal tax credits may be used to offset taxable income in future periods, reducing the amount of taxes we might otherwise be required to pay. A significant portion of our net deferred tax assets, including the portion related to excess tax benefits of stock-based awards, are reserved for by a valuation allowance as required by relevant accounting literature. Management determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration factors including historical operating results, expectations of future earnings and taxable income. Management will continue to evaluate the need for a valuation allowance in the future.

• Tax Contingencies.    Our tax contingencies are recorded to address potential exposures involving tax positions we have taken that could be challenged by tax authorities. These potential exposures result from applications of various statutes, rules, regulations and interpretations. Our estimates of tax contingencies reflect assumptions and judgments about potential actions by taxing jurisdictions. We believe that these assumptions and judgments are reasonable. However, our accruals may change in the future due to new developments in each matter and the ultimate resolution of these matters may be greater or less than the amount that we have accrued. Consistent with our historical financial reporting, we have elected to reflect interest and penalties related to uncertain tax positions as part of the income tax provision (benefit).

Results of Operations

The following table sets forth our consolidated statements of operations data and expresses that data as a percentage of revenue for the periods presented:

	Years Ended December 31,
	2014				2013				2012
	$		% (a)		$		% (a)		$			% (a)
Revenue	$	580,449		100.0	$	515,293		100.0	$	469,866			100.0
Cost of operations		224,094		38.6		209,740		40.7		216,361			46.0
Sales and marketing		136,160		23.5		127,997		24.8		127,659			27.2
General and administrative		94,119		16.2		93,220		18.1		97,618			20.8
Depreciation and amortization		29,811		5.1		26,606		5.2		28,399			6.0
Interest income		69		—		76		—		86			—
Interest expense		24,686		4.3		22,826		4.4		23,334			5.0
Loss on convertible notes		—		—		4,871		0.9		—			—
Gain on investments		—		—		—		—		8,074			1.7
Restructuring		—		—		—		—		7,579			1.6
Other expense		—		—		1,353		0.3		2,297			0.5
Income (loss) from continuing operations before income tax provision (benefit)		71,648		12.3		28,756		5.6		(25,221	)		(5.4	)
Income tax provision (benefit)		30,707		5.3		13,640		2.6		(2,134	)		(0.5	)
Income (loss) from continuing operations		40,941		7.1		15,116		2.9		(23,087	)		(4.9	)
Income from discontinued operations, net of tax		1,122		0.2		—		—		2,743			0.6
Net income (loss)	$	42,063		7.2	$	15,116		2.9	$	(20,344	)		(4.3	)

(a) Amounts may not add due to rounding.

Revenue is derived from four groups. The first group is “Advertising and Sponsorship – Biopharma and Medical Device” and consists of advertising and sponsorship revenue from pharmaceutical, biotechnology and medical device

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clients relating to ethical pharmaceutical products or other regulated devices or products or for sponsoring educational programs. The second category is “Advertising and Sponsorship – OTC, CPG and Other” and consists of advertising and sponsorship revenue relating to non-Rx or over-the-counter medications and other healthcare products, food and beverages, beauty products and other consumer products, as well as revenue from clients such as retailers, pharmacies, hospitals, health insurance companies and government agencies. The combined revenue of the first two groups is sometimes referred to as “Advertising and Sponsorship” revenue. The third group is “Private Portal Services” and consists of revenue from employers and health plans for subscriptions to our private portals solution and related services, including health coaching and condition management services. The fourth group is “Information Services” and consists of revenue from the sale of stand-alone information and data products.

Cost of operations consists of salaries and related expenses, and non-cash stock-based compensation expense related to providing and distributing services and products we provide to customers and costs associated with the operation and maintenance of our public and private portals. Cost of operations also consists of editorial and production costs, Website operations costs, non-capitalized Website development costs, costs we pay to our distribution partners, costs associated with our health and condition management programs and personalized health coaching services, and costs related to the production and distribution of our publications, including costs related to creating and licensing content, telecommunications, leased properties and printing and distribution.

Sales and marketing expense consists primarily of salaries and related expenses, and non-cash stock-based compensation for account executives, account management and marketing personnel, as well as costs and expenses for marketing programs, and fees for professional marketing and advertising services.

General and administrative expense consists primarily of salaries and related expenses and non-cash stock-based compensation expense for administrative, finance, legal, information technology, human resources and executive personnel. Also included in general and administrative expense are costs of general insurance and professional services expenses.

Our discussions throughout this MD&A make references to certain non-cash expenses. Our principal non-cash expenses are related to the awards of all share-based payments to employees and non-employee directors, such as grants of employee stock options and restricted stock. Non-cash stock-based compensation expense is reflected in the same expense captions as the related salary cost of the respective employee.

The following table is a summary of our non-cash expenses included in the respective statements of operations captions.

	Years Ended December 31,
	2014		2013		2012
Stock-based compensation expense included in:
Cost of operations	$	5,940	$	6,762	$	8,160
Sales and marketing		7,221		8,395		8,201
General and administrative		19,385		23,393		28,560
Total stock-based compensation expense	$	32,546	$	38,550	$	44,921

2014 and 2013

The following discussion is a comparison of our results of operations for the year ended December 31, 2014 to the year ended December 31, 2013.

Revenue.    Our total revenue increased 12.6% to $580,449 in 2014 from $515,293 in 2013. The increase was primarily due to an increase of $36,938 of advertising and sponsorship revenue, an increase of $21,071 of revenue from our private portals and an increase of $7,147 from information services. The increase in advertising and sponsorship revenue related primarily to an increase in advertising of certain of our customers, particularly our biopharmaceutical and medical device customers. For a more detailed discussion, see “— Introduction — Background Information on Certain Trends and Developments Affecting Our Business — Other Factors Affecting the Demand for Our Advertising and Sponsorship Services.” The increase in revenue of our private portals was attributable to the January 1, 2014 launch of our contract with the Blue Cross Blue Shield Association Federal Employee Program. A more detailed discussion regarding changes in revenue is included below under “— Supplemental Financial and Operating Information.”

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Cost of Operations.    Cost of operations was $224,094 in 2014, compared to $209,740 in 2013. Our cost of operations represented 38.6% of revenue in 2014, compared to 40.7% of revenue in 2013. Included in cost of operations were non-cash expenses related to stock-based compensation of $5,940 in 2014, compared to $6,762 in 2013.

Cost of operations, excluding the non-cash stock-based compensation expense discussed above, was $218,154, or 37.6% of revenue in 2014, compared to $202,978, or 39.4% of revenue in 2013. The increase in absolute dollars in 2014, compared to 2013, was primarily attributable to the increased expense associated with the delivery of our advertising and sponsorship programs and the increased traffic to our Websites and expenses related to the delivery of services under our contract with the Blue Cross Blue Shield Association Federal Employee Program that launched on January 1, 2014. The decrease as a percentage of revenue in 2014, compared to 2013, was due to the increase in revenue of 12.6% without a commensurate increase in our cost of operations expense as certain of these expenses are fixed in nature.

Sales and Marketing.    Sales and marketing expense was $136,160 in 2014, compared to $127,997 in 2013. Our sales and marketing expense represented 23.5% of revenue in 2014, compared to 24.8% in 2013. Included in sales and marketing expense were non-cash expenses related to stock-based compensation of $7,221 in 2014, compared to $8,395 in 2013.

Sales and marketing expense, excluding the non-cash expenses discussed above, was $128,939, or 22.2% of revenue, in 2014, compared to $119,602, or 23.2% of revenue, in 2013. The increase in absolute dollars was primarily attributable to an increase in certain compensation and other personnel related costs due to increased staffing and sales commissions related to the higher revenue in 2014 compared to 2013. The decrease as a percentage of revenue, excluding the non-cash expenses discussed above, for 2014 compared to 2013, was primarily due to the increase in our revenue of 12.6% without a commensurate increase in our sales and marketing expenses as certain of these expenses are fixed in nature.

General and Administrative.    General and administrative expense was $94,119 in 2014, compared to $93,220 in 2013. Our general and administrative expenses represented 16.2% of revenue in 2014, compared to 18.1% of revenue in 2013. Included in general and administrative expense was non-cash stock-based compensation expense of $19,385 in 2014, compared to $23,393 in 2013. The decrease in non-cash stock-based compensation expense for 2014, compared to 2013, was primarily due to the acceleration of stock-based compensation expense in 2013, related to certain equity awards held by our former Chief Executive Officer in connection with his severance agreement.

General and administrative expense, excluding the non-cash stock-based compensation expense discussed above, was $74,734, or 12.9% of revenue, in 2014, compared to $69,827, or 13.6% of revenue in 2013. The decrease in general and administrative expense as a percentage of revenue, excluding the non-cash expenses discussed above, for 2014 compared to 2013, was primarily due to the increase in our revenue of 12.6% without a commensurate increase in our general and administrative expenses as many of these expenses are fixed in nature.

Depreciation and Amortization.    Depreciation and amortization expense was $29,811, or 5.1% of revenue in 2014, compared to $26,606, or 5.2% of revenue in 2013.

Interest Income.    Interest income was $69 in 2014, which was relatively consistent when compared to $76 in 2013.

Interest Expense.    Interest expense was $24,686 in 2014 compared to $22,826 in 2013. Interest expense increased during 2014 compared to 2013, primarily as a result of our 1.50% Notes that were issued on November 26, 2013, as well as the impact of the repurchase of $147,768 principal amount of our 2.25% Notes during 2013. Interest expense in 2014 and 2013 included non-cash interest expense of $4,511 and $4,192, respectively, related to the amortization of the debt issuance costs for the convertible debt outstanding during those periods.

Loss on Convertible Notes.    During 2013, we recorded a loss on convertible notes of $4,871 related to the repurchase of $147,768 principal amount of our 2.25% Notes. See “— Introduction — Background Information on Certain Significant Developments and Transactions — Convertible Notes” for additional information.

Other Expense.    Other expense of $1,353 during 2013 includes cash severance and related expenses due to the May 2013 departure of a Chief Executive Officer of the Company.

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Income Tax Provision.    The income tax provision of $30,707 in 2014 related to pre-tax income of $71,648, compared to the income tax provision of $13,640 in 2013 which related to pre-tax income of $28,756. During 2014, the income tax provision represented 42.9% of pre-tax income. The effective tax rate exceeded our statutory tax rate as a result of certain expenses that are non-deductible for income tax purposes.

Income from Discontinued Operations, Net of Tax.    Income from discontinued operations, net of tax, was $1,122 in 2014. During 2014, we paid $384 in connection with the completion of the remaining tax audits for all periods covered under a tax indemnification agreement related to our Porex business which was sold in 2009. The remaining balance in the indemnity liability of $1,122 was adjusted through income from discontinued operations during 2014.

2013 and 2012

The following discussion is a comparison of our results of operations for the year ended December 31, 2013 to the year ended December 31, 2012.

Revenue.    Our total revenue increased 9.7% to $515,293 in 2013 from $469,866 in 2012. The increase was primarily due to an increase of $38,274 of advertising and sponsorship revenue and, to a lesser extent, an increase of $3,584 of revenue from our private portals and an increase of $3,569 from information services. The increase in advertising and sponsorship revenue related primarily to an increase in advertising of certain of our customers, particularly our biopharmaceutical and medical device customers. For a more detailed discussion, see “— Introduction — Background Information on Certain Trends and Developments Affecting Our Business — Other Factors Affecting the Demand for Our Advertising and Sponsorship Services.” A more detailed discussion regarding changes in revenue is included below under “— Supplemental Financial and Operating Information.”

Cost of Operations.    Cost of operations was $209,740 in 2013, compared to $216,361 in 2012. Our cost of operations represented 40.7% of revenue in 2013, compared to 46.0% of revenue in 2012. Included in cost of operations were non-cash expenses related to stock-based compensation of $6,762 in 2013, compared to $8,160 in 2012.

Cost of operations, excluding the non-cash stock-based compensation expense discussed above, was $202,978, or 39.4% of revenue in 2013, compared to $208,201, or 44.3% of revenue in 2012. The decrease in absolute dollars and as a percentage of revenue in 2013, compared to 2012, was due to our ability to deliver the 9.7% revenue increase with a reduced cost structure resulting from the restructuring actions taken in December 2012.

Sales and Marketing.    Sales and marketing expense was $127,997 in 2013, compared to $127,659 in 2012. Our sales and marketing expense represented 24.8% of revenue in 2013, compared to 27.2% in 2012. Included in sales and marketing expense were non-cash expenses related to stock-based compensation of $8,395 in 2013, compared to $8,201 in 2012.

Sales and marketing expense, excluding the non-cash expenses discussed above, was $119,602, or 23.2% of revenue, in 2013, compared to $119,458, or 25.4% of revenue, in 2012. The decrease as a percentage of revenue, excluding the non-cash expenses discussed above, for 2013 compared to 2012, was primarily due to the increase in our revenue of 9.7% without a commensurate increase in our sales and marketing expenses as certain of these expenses are fixed in nature and as a result of the reduced cost structure resulting from the restructuring actions taken in December 2012.

General and Administrative.    General and administrative expense was $93,220 in 2013, compared to $97,618 in 2012. Our general and administrative expenses represented 18.1% of revenue in 2013, compared to 20.8% of revenue in 2012. Included in general and administrative expense was non-cash stock-based compensation expense of $23,393 in 2013, compared to $28,560 in 2012. The decrease in non-cash stock-based compensation expense for 2013, compared to 2012, was primarily due to the voluntary surrender of stock options by certain of our officers and directors and the related acceleration of the unrecognized stock-based compensation expense associated with those options during 2012 of $8,076 and the lack of a comparable expense in 2013.

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General and administrative expense, excluding the non-cash stock-based compensation expense discussed above, was $69,827, or 13.6% of revenue, in 2013, compared to $69,058, or 14.7% of revenue in 2012. The decrease in general and administrative expense as a percentage of revenue, excluding the non-cash expenses discussed above, for 2013 compared to 2012, was primarily due to the increase in our revenue of 9.7% without a commensurate increase in our general and administrative expenses as many of these expenses are fixed in nature and as a result of the reduced cost structure resulting from the restructuring actions taken in December 2012.

Depreciation and Amortization.    Depreciation and amortization expense was $26,606, or 5.2% of revenue in 2013, compared to $28,399, or 6.0% of revenue in 2012. This decrease was primarily due to the acceleration, in 2012, of the remaining amortization expense of $1,267 associated with certain trade names that had been retired from use.

Interest Income.    Interest income was $76 in 2013, which was relatively consistent when compared to $86 in 2012.

Interest Expense.    Interest expense was $22,826 in 2013 compared to $23,334 in 2012. This decrease was primarily due to the repurchase of $147,768 principal amount of our 2.25% Notes during 2013. Interest expense in 2013 and 2012 included non-cash interest expense of $4,192 and $4,326, respectively, related to the amortization of the debt issuance costs for the convertible debt outstanding during those periods.

Loss on Convertible Notes.    During 2013, we recorded a loss on convertible notes of $4,871 related to the repurchase of $147,768 principal amount of our 2.25% Notes. See “— Introduction — Background Information on Certain Significant Developments and Transactions — Convertible Notes” for additional information.

Gain on Investments.    During 2012, our gain on investments of $8,074 consisted of amounts we received through our ARS Option.

Restructuring.    During 2012, we recorded a restructuring charge of $7,579 related to severance and other employee benefits that were provided to the terminated employees due to the reduction in our workforce as a result of the plan we announced, on December 11, 2012, to streamline our operations, simplify our organizational structure, reduce costs and better focus our resources.

Other Expense.    Other expense of $1,353 during 2013 includes cash severance and related expenses due to the May 2013 departure of a Chief Executive Officer of the Company. Other expense of $2,297 during 2012 includes cash severance and related expenses due to the January 2012 departure of a Chief Executive Officer of the Company, and the related search and recruitment of his replacement during that period.

Income Tax Provision (Benefit).    The income tax provision of $13,640 in 2013 related to pre-tax income of $28,756, compared to the income tax benefit of $2,134 in 2012 which related to a pre-tax loss of $25,221. The income tax benefit during 2012 included a non-cash income tax expense of $4,724 related to an increase in our valuation allowance for certain research and development tax credits for which scheduled expiration prior to utilization is more likely than not.

Income from Discontinued Operations, Net of Tax.    Income from discontinued operations, net of tax, was $2,743 in 2012. During 2012, we recognized an after-tax gain of $2,235 related to the receipt of approximately $3,600 from the United States Department of Justice in relation to the investigation by the United States Attorney for the District of South Carolina (which we refer to as the Investigation). These funds represented the reimbursement to us related to recoveries by the United States Department of Justice from former employees of a subsidiary who pleaded guilty to the matters involved in the Investigation. None of the former employees who pleaded guilty were employees to whom we provided indemnification in connection with the Investigation. Additionally, during 2012, income from discontinued operations includes a net state tax refund of $508 that we received in connection with the finalization of a state tax appeal related to the September 2006 sale of Emdeon Practice Services, Inc. to Sage Software, Inc. The income tax provision included within discontinued operations was $555 during 2012.

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Supplemental Financial and Operating Information

The following table and the discussion that follows presents information for groups of revenue based on similar services we provide, as well as information related to a non-GAAP performance measure that we use to monitor the performance of our business and which we refer to as “Earnings before interest, taxes, non-cash and other items” or “Adjusted EBITDA.” Due to the fact that Adjusted EBITDA is a non-GAAP measure, we have also included a reconciliation from Adjusted EBITDA to net income (loss).

	Years Ended December 31,
	2014			2013			2012
Revenue
Advertising and sponsorship
Biopharma and medical device	$	329,329		$	304,018		$	280,261
OTC, CPG and other		124,636			113,009			98,492
		453,965			417,027			378,753
Private portal services		103,182			82,111			78,527
Information services		23,302			16,155			12,586
	$	580,449		$	515,293		$	469,866
Earnings before interest, taxes, non-cash and other items (Adjusted EBITDA)	$	158,622		$	122,886		$	73,149
Interest, taxes, non-cash and other items
Interest income		69			76			86
Interest expense		(24,686	)		(22,826	)		(23,334	)
Income tax (provision) benefit		(30,707	)		(13,640	)		2,134
Depreciation and amortization		(29,811	)		(26,606	)		(28,399	)
Non-cash stock-based compensation		(32,546	)		(38,550	)		(44,921	)
Loss on convertible notes		—			(4,871	)		—
Gain on investments		—			—			8,074
Restructuring		—			—			(7,579	)
Other expense		—			(1,353	)		(2,297	)
Income (loss) from continuing operations		40,941			15,116			(23,087	)
Income from discontinued operations, net of tax		1,122			—			2,743
Net income (loss)	$	42,063		$	15,116		$	(20,344	)

2014 and 2013

The following discussion is a comparison of the results of operations for our groups of revenue and our Adjusted EBITDA for the year ended December 31, 2014 to the year ended December 31, 2013.

Advertising and Sponsorship.    Advertising and sponsorship revenue was $453,965 in 2014, an increase of $36,938, or 8.9%, from 2013. The increase in revenue was primarily attributable to an increased usage of our advertising and sponsorship offerings by our biopharma and medical device customers as well as our OTC, CPG and other customers, which represented increases of $25,311 and $11,627, respectively. In general, pricing remained relatively stable for our public portal advertising and sponsorship offerings and was not a significant source of the revenue increase. For a more detailed discussion, see “— Introduction — Background Information on Certain Trends and Developments Affecting Our Business — Other Factors Affecting the Demand for Our Advertising and Sponsorship Services.”

Private Portal Services.    Private portal services revenue was $103,182 in 2014, an increase of $21,071, or 25.7%, from 2013. This increase was primarily attributable to the January 1, 2014 launch of our contract with the Blue Cross Blue Shield Association Federal Employee Program. In general, the pricing of our private portal

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services remained relatively stable and was not a significant source of the revenue increase. The number of customers using our private portal platform at December 31, 2014 was 102, compared to 110 customers using our private portal platform at December 31, 2013.

Information Services.    Information services revenue was $23,302 in 2014, an increase of $7,147, or 44.2%, from 2013. This increase was primarily attributable to an increase in the number of customers licensing our information services and an increase in the volume of data received by our customers, and to a lesser extent an increase in the rates charged to these customers.

Adjusted EBITDA.    Adjusted EBITDA increased to $158,622 in 2014 compared to $122,886 in 2013. As a percentage of revenue, Adjusted EBITDA was 27.3% of revenue in 2014, compared to 23.8% in 2013. This increase as a percentage of revenue was primarily due to higher revenue in 2014. Many of our expenses are fixed in nature and do not vary directly with revenue, and accordingly, our Adjusted EBITDA as a percentage of revenue will fluctuate primarily as a result of changes in our revenue.

2013 and 2012

The following discussion is a comparison of the results of operations for our groups of revenue and our Adjusted EBITDA for the year ended December 31, 2013 to the year ended December 31, 2012.

Advertising and Sponsorship.    Advertising and sponsorship revenue was $417,027 in 2013, an increase of $38,274, or 10.1%, from 2012. The increase in revenue was primarily attributable to an increased usage of our advertising and sponsorship offerings by our biopharma and medical device customers as well as our OTC, CPG and other customers, which represented increases of $23,757 and $14,517, respectively. For a more detailed discussion, see “— Introduction — Background Information on Certain Trends and Developments Affecting Our Business — Other Factors Affecting the Demand for Our Advertising and Sponsorship Services.” Although there were changes made to simplify our pricing structure in early 2013, any actual changes to prices did not have a significant impact on the increase in revenue during 2013.

Private Portal Services.    Private portal services revenue was $82,111 in 2013, an increase of $3,584, or 4.6%, from 2012. In general, the pricing of our private portal services was not a significant source of the revenue increase. The number of customers using our private portal platform at December 31, 2013 was 110, compared to 118 customers using our private portal platform at December 31, 2012.

Information Services.    Information services revenue was $16,155 in 2013, an increase of $3,569, or 28.4%, from 2012. This increase was primarily attributable to an increase in the number of customers licensing our information services and an increase in the volume of data received by our customers, and to a lesser extent an increase in the rates charged to these customers.

Adjusted EBITDA.    Adjusted EBITDA increased to $122,886 in 2013 compared to $73,149 in 2012. As a percentage of revenue, Adjusted EBITDA was 23.8% of revenue in 2013, compared to 15.6% in 2012. This increase as a percentage of revenue was primarily due to higher revenue in 2013. Many of our expenses are fixed in nature and do not vary directly with revenue, and accordingly, our Adjusted EBITDA as a percentage of revenue will fluctuate primarily as a result of changes in our revenue. Additionally, the increase in Adjusted EBITDA in 2013 compared to 2012 was partially attributable to the restructuring that took place in December 2012 which reduced our operating expenses in 2013 compared to 2012. See “— Introduction — Background Information on Certain Significant Developments and Transactions — Restructuring” for additional information.

* * * *

Explanatory Note Regarding Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure and should be viewed as supplemental to, and not as an alternative for, “income (loss) from continuing operations” or “net income (loss)” calculated in accordance with GAAP. Our management uses Adjusted EBITDA as an additional measure of performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in financial results that may not be shown solely by period-to-period comparisons of income (loss) from continuing operations or net income (loss). We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons

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similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by our management in light of the performance metrics used in making those decisions. In addition, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to income (loss) from continuing operations or to net income (loss), helps investors make comparisons between us and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. Please see the “Explanation of Non-GAAP Financial Information” filed as Exhibit 99.1 to this Annual Report for additional background information regarding our use of Adjusted EBITDA. Exhibit 99.1 is incorporated in this MD&A by reference.

Liquidity and Capital Resources

Cash Flows

As of December 31, 2014, we had $706,776 of cash and cash equivalents and working capital of $713,163. Our cash and cash equivalents and working capital are affected by the timing of each period end in relation to items such as payments received from customers, payments made to vendors, the timing of interest payments related to our convertible debt, and internal payroll and billing cycles, as well as the seasonality within our business. Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.

Cash provided by operating activities from continuing operations in 2014 was $113,536, which related to net income of $42,063, adjusted for income from discontinued operations of $1,122, a non-cash income tax provision of $14,717 related to deferred income taxes, and other non-cash expenses of $66,868, which include depreciation and amortization expense, non-cash interest expense and non-cash stock-based compensation expense. Additionally, changes in operating assets and liabilities decreased operating cash flow by $8,990, primarily due to an increase in accounts receivable of $12,574, an increase in prepaid expenses and other assets of $673, and a decrease in accrued expenses and other long-term liabilities of $380, which was offset by an increase in deferred revenue of $4,637.

Cash provided by operating activities in 2013 was $86,094, which related to net income of $15,116, adjusted for a loss on convertible notes of $4,871, a non-cash income tax provision of $13,070 related to deferred income taxes, and other non-cash expenses of $69,348, which include depreciation and amortization expense, non-cash interest expense and non-cash stock-based compensation expense. Additionally, changes in operating assets and liabilities decreased operating cash flow by $16,311, primarily due to an increase in accounts receivable of $17,610 and a decrease in deferred revenue of $7,028, which was offset by an increase in accrued expenses and other long-term liabilities of $8,061 and a decrease in prepaid expenses and other assets of $266.

Cash used in investing activities was $26,376 in 2014, compared $20,960 in 2013. We used $23,194 in connection with purchases of property and equipment in 2014, compared to $22,341 of property and equipment purchases in 2013. We also used cash of $3,182 during 2014 to acquire the assets of TheraSim, Inc. Therasim’s technology provides the content and programming for certain of our sponsorship services. Additionally, during 2013 we received $1,381 from the sale of property and equipment.

Cash used in financing activities was $204,880 in 2014, compared to $232,089 in 2013. We used cash of $226,336 in 2014 and $390,814 in 2013 to repurchase shares of our Common Stock through tender offers, our authorized repurchase program and other repurchases. We also used cash of $150,354 in 2013 to repurchase a portion of our 2.25% Notes. During 2013, these uses of cash were offset by net cash proceeds of $291,823 from the issuance of our 1.50% Notes. During 2014 and 2013, we received cash proceeds of $40,602 and $29,724, respectively, related to the exercise of stock options, and used cash of $33,385 and $12,526, respectively, for withholding taxes due on stock-based awards. Also included in cash flows from financing activities in 2014 and 2013, were excess tax benefits on stock-based awards of $14,239 and $58, respectively.

Included in our consolidated statements of cash flows for 2014, is cash used in discontinued operations of $384 which represents a payment made in connection with the completion of the remaining tax audits for all periods covered under a tax indemnification agreement related to our Porex business which was sold in 2009.

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Contractual Obligations and Commitments

The following table summarizes our principal commitments as of December 31, 2014 for future specified contractual obligations, as well as the estimated timing of the cash payments associated with these obligations. Management’s estimates of the timing of future cash flows are largely based on historical experience, and accordingly, actual timing of cash flows may vary from these estimates.

	Total		Less Than 1 Year		2-3 Years		4-5 Years		More Than 5 Years
Leases (a)	$	54,750	$	11,559	$	15,134	$	14,074	$	13,983
2.25% Notes (b)	$	259,326	$	5,675	$	253,651	$	—	$	—
2.50% Notes (b)	$	430,833	$	10,000	$	20,000	$	400,833	$	—
1.50% Notes (b)	$	326,625	$	4,500	$	9,000	$	9,000	$	304,125

(a) The lease amounts are net of sublease income

(b) Amounts include contractual interest payments

The above table excludes $13,553 of uncertain tax positions, including interest and penalties, as we are unable to reasonably estimate the timing of the settlement of these items. See Note 11, “Income Taxes” located in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

Outlook on Future Liquidity

As of December 31, 2014, we had $707 million of cash and cash equivalents.

Potential future uses of cash include repurchases of our Common Stock and our anticipated 2015 capital expenditure requirements. Our capital expenditure requirements during 2015, which we estimate to be approximately $45 million to $55 million, primarily relate to the relocation and expansion of our corporate office facilities as well as improvements that will be deployed across our public and private portal Websites in order to enable us to service future growth in unique users and page views, as well as to create new sponsorship areas for our customers, and to improve the systems used to provide our private portal applications.

Based on our plans and expectations, we believe that our available cash resources and future cash flow from operations will provide sufficient cash resources to meet the cash commitments of our convertible notes and to fund our currently anticipated working capital and capital expenditure requirements, for at least the next twenty-four months. Our future liquidity and capital requirements will depend upon numerous factors, including retention of customers at current volume and revenue levels, implementation of new or updated application and service offerings, competing technological and market developments and potential future acquisitions. In addition, our ability to generate cash flow is subject to numerous factors beyond our control, including general economic, regulatory and other matters affecting us and our customers. We plan to continue to enhance our online services and to continue to invest in acquisitions, strategic relationships, facilities and technological infrastructure and product development. We intend to grow each of our existing businesses and enter into complementary ones through both internal investments and acquisitions. We may need to raise additional funds to support expansion, develop new or enhanced applications and services, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. If required, we may raise such additional funds through public or private debt or equity financing, strategic relationships or other arrangements. We cannot assure that such financing will be available on acceptable terms, if at all, or that such financing will not be dilutive to our stockholders. Future indebtedness may impose various restrictions and covenants on us that could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements.

76

Recent Accounting Pronouncements

Accounting Pronouncement Adopted During 2014

In July 2013, the FASB issued an update to existing guidance on the financial presentation of unrecognized tax benefits. The update provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. This update was effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for us was the first quarter of 2014. The adoption of this update did not have an impact on our financial condition, results of operations or cash flows.

Accounting Pronouncements to be Adopted in the Future

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the revised guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The revised guidance is effective for us beginning in the quarter ending March 31, 2015; early adoption is permitted. We have not yet determined the impact that the revised guidance will have on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the revised guidance requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The revised guidance is effective for us beginning in the quarter ending March 31, 2017; early adoption is prohibited. The revised guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet determined the impact that the revised guidance will have on our consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The revised guidance is effective for us beginning in the quarter ending March 31, 2016; early adoption is permitted. We have not yet determined the impact that the revised guidance will have on our consolidated financial statements.

77

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Sensitivity

The primary objective of our investment activities is to preserve principal and maintain adequate liquidity.

The value of our cash and money market investments, which were approximately $707 million at December 31, 2014, is not subject to changes in interest rates.

The 2.50% Notes, 2.25% Notes and 1.50% Notes have fixed interest rates; therefore, changes in interest rates will not impact our results of operations or financial position.

Exchange Rate Sensitivity

Currently, substantially all of our sales and expenses are denominated in United States dollars; therefore, changes in exchange rates will not have a material impact on our results of operations or financial position.

Item 8. Financial Statements and Supplementary Data

Financial Statements

Our financial statements required by this item are contained on pages F-1 through F-39 of this Annual Report on Form 10-K. See Item 15(a)(1) for a listing of financial statements provided.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As required by Exchange Act Rule 13a-15(b), WebMD management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of WebMD’s disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of December 31, 2014. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that WebMD’s disclosure controls and procedures were effective as of December 31, 2014.

In connection with the evaluation required by Exchange Act Rule 13a-15(d), WebMD management, including the Chief Executive Officer and Chief Financial Officer, concluded that there were no changes in WebMD’s internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), during the fourth quarter of 2014 that have materially affected, or are reasonably likely to materially affect, WebMD’s internal control over financial reporting.

Item 9B. Other Information

None.

78

PART III

Information required by Items 10, 11, 12, 13 and 14 of Part III is omitted from this Annual Report and will be filed in a definitive proxy statement or by an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report.

Item 10. Directors, Executive Officers and Corporate Governance

We will provide information that is responsive to this Item 10 in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the captions “Directors and Executive Officers” and “Corporate Governance” and possibly elsewhere therein. That information is incorporated in this Item 10 by reference.

Item 11. Executive Compensation

We will provide information that is responsive to this Item 11 in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Executive Compensation,” and possibly elsewhere therein. That information is incorporated in this Item 11 by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We will provide information that is responsive to this Item 12 in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” and possibly elsewhere therein. That information is incorporated in this Item 12 by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

We will provide information that is responsive to this Item 13 in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Certain Relationships and Related Transactions,” and possibly elsewhere therein. That information is incorporated in this Item 13 by reference.

Item 14. Principal Accountant Fees and Services

We will provide information that is responsive to this Item 14 in our definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case under the caption “Services and Fees of Ernst & Young,” and possibly elsewhere therein. That information is incorporated in this Item 14 by reference.

79

PART IV

Item 15. Exhibits and Financial Statement Schedule

(a)(1)-(2) Financial Statements and Schedule

The financial statements and schedule listed in the accompanying Index to Consolidated Financial Statements and Supplemental Data on page F-1 are filed as part of this Report.

(a)(3) Exhibits

See “Index to Exhibits” beginning on page E-1, which is incorporated by reference herein. The Index to Exhibits lists all exhibits filed with this Report and identifies which of those exhibits are management contracts and compensation plans.

80

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 27th day of February, 2015.

WEBMD HEALTH CORP.
By:	/S/    PETER ANEVSKI
	Peter Anevski
	Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity	Date
/S/ DAVID J. SCHLANGER David J. Schlanger	Chief Executive Officer (principal executive officer)	February 27, 2015
/S/ PETER ANEVSKI Peter Anevski	Chief Financial Officer (principal financial and accounting officer)	February 27, 2015
/S/ MARK J. ADLER, M.D. Mark J. Adler, M.D.	Director	February 27, 2015
/S/ KEVIN M. CAMERON Kevin M. Cameron	Director	February 27, 2015
/S/ NEIL F. DIMICK Neil F. Dimick	Director	February 27, 2015
/S/ JEROME C. KELLER Jerome C. Keller	Director	February 27, 2015
/S/ JAMES V. MANNING James V. Manning	Director	February 27, 2015
/S/ WILLIAM J. MARINO William J. Marino	Director	February 27, 2015
/S/ JOSEPH E. SMITH Joseph E. Smith	Director	February 27, 2015
/S/ STANLEY S. TROTMAN, JR. Stanley S. Trotman, Jr.	Director	February 27, 2015
/S/ KRISTIINA VUORI, M.D. Kristiina Vuori, M.D.	Director	February 27, 2015
/S/ MARTIN J. WYGOD Martin J. Wygod	Director	February 27, 2015

81

WEBMD HEALTH CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

	Page
Historical Financial Statements:
Report of Management on Internal Control Over Financial Reporting		F-2
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		F-3
Report of Independent Registered Public Accounting Firm		F-4
Consolidated Balance Sheets as of December 31, 2014 and 2013		F-5
Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013 and 2012		F-6
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December  31, 2014, 2013 and 2012		F-7
Consolidated Statements of Equity for the Years Ended December 31, 2014, 2013 and 2012		F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012		F-9
Notes to Consolidated Financial Statements		F-10
Supplemental Financial Data:
The following supplemental financial data of the Registrant and its subsidiaries required to be included in Item 15(a)(2) on Form 10-K are listed below:
Schedule II — Valuation and Qualifying Accounts		S-1

All other schedules not listed above have been omitted as not applicable or because the required information is included in the Consolidated Financial Statements or in the notes thereto. Columns omitted from the schedule filed have been omitted because the information is not applicable.

F-1

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of WebMD Health Corp. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 (the Exchange Act) as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by its board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

• 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 over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

WebMD management assessed the effectiveness of WebMD’s internal control over financial reporting as of December 31, 2014. In making this assessment, WebMD management used the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that assessment and those criteria, WebMD management concluded that WebMD maintained effective internal control over financial reporting as of December 31, 2014.

Ernst & Young LLP, the independent registered public accounting firm that audited and reported on the Company’s consolidated financial statements as of December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014, has audited the Company’s internal control over financial reporting as of December 31, 2014, as stated in their report which appears on page F-3.

February 27, 2015

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of WebMD Health Corp.

We have audited WebMD Health Corp.’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). WebMD Health Corp.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, WebMD Health Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of WebMD Health Corp. as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2014 of WebMD Health Corp. and our report dated February 27, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

New York, New York

February 27, 2015

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of WebMD Health Corp.

We have audited the accompanying consolidated balance sheets of WebMD Health Corp. as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of WebMD Health Corp. at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), WebMD Health Corp.’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

New York, New York

February 27, 2015

F-4

WEBMD HEALTH CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	706,776		$	824,880
Accounts receivable, net of allowance for doubtful accounts of $631 at December 31, 2014 and $793 at December 31, 2013		136,806			124,232
Prepaid expenses and other current assets		13,877			13,243
Deferred tax assets		18,147			13,620
Total current assets		875,606			975,975
Property and equipment, net		59,573			64,884
Goodwill		202,980			202,980
Intangible assets, net		14,215			13,834
Deferred tax assets		18,947			38,802
Other assets		26,236			29,153
TOTAL ASSETS	$	1,197,557		$	1,325,628
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	72,658		$	73,739
Deferred revenue		89,785			85,148
Liabilities of discontinued operations		—			1,506
Total current liabilities		162,443			160,393
2.25% convertible notes due 2016		252,232			252,232
2.50% convertible notes due 2018		400,000			400,000
1.50% convertible notes due 2020		300,000			300,000
Other long-term liabilities		21,293			22,103
Commitments and contingencies
Stockholders’ equity:
Preferred stock, 50,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.01 par value per share, 650,000,000 shares authorized; 57,437,992 shares issued at December 31, 2014 and December 31, 2013		574			574
Additional paid-in capital		9,214,800			9,273,712
Treasury stock, at cost; 21,084,995 shares at December 31, 2014 and 18,281,498 shares at December 31, 2013		(685,659	)		(572,221	)
Accumulated other comprehensive income		976			—
Accumulated deficit		(8,469,102	)		(8,511,165	)
Stockholders’ equity		61,589			190,900
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,197,557		$	1,325,628

See accompanying notes.

F-5

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Years Ended December 31,
	2014		2013		2012
Revenue	$	580,449	$	515,293	$	469,866
Cost of operations		224,094		209,740		216,361
Sales and marketing		136,160		127,997		127,659
General and administrative		94,119		93,220		97,618
Depreciation and amortization		29,811		26,606		28,399
Interest income		69		76		86
Interest expense		24,686		22,826		23,334
Loss on convertible notes		—		4,871		—
Gain on investments		—		—		8,074
Restructuring		—		—		7,579
Other expense		—		1,353		2,297
Income (loss) from continuing operations before income tax provision (benefit)		71,648		28,756		(25,221	)
Income tax provision (benefit)		30,707		13,640		(2,134	)
Income (loss) from continuing operations		40,941		15,116		(23,087	)
Income from discontinued operations, net of a tax provision of $0 and $555 in 2014 and 2012		1,122		—		2,743
Net income (loss)	$	42,063	$	15,116	$	(20,344	)
Basic income (loss) per common share:
Income (loss) from continuing operations	$	1.08	$	0.32	$	(0.45	)
Income from discontinued operations		0.03		—		0.05
Net income (loss)	$	1.11	$	0.32	$	(0.40	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.97	$	0.31	$	(0.45	)
Income from discontinued operations		0.03		—		0.05
Net income (loss)	$	1.00	$	0.31	$	(0.40	)
Weighted-average shares outstanding used in computing per share amounts:
Basic		37,869		46,830		50,862
Diluted		45,614		48,398		50,862

See accompanying notes.

F-6

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Years Ended December 31,
	2014		2013		2012
Net income (loss)	$	42,063	$	15,116	$	(20,344	)
Other comprehensive income, net of tax:
Net change in unrealized gains on available-for sale securities		976		—		—
Total other comprehensive income, net of tax		976		—		—
Comprehensive income (loss)	$	43,039	$	15,116	$	(20,344	)

See accompanying notes.

F-7

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

	Stockholders’ Equity
																			Accumulated Other Comprehensive Income
							Additional Paid-In Capital														Total Stockholders’ Equity
	Common Stock									Treasury Stock						Accumulated Deficit
	Shares			Amount						Shares			Amount
Balances at December 31, 2011		62,410,255		$	624		$	9,473,811			6,685,439		$	(294,062	)	$	(8,505,937	)	$	—	$	674,436
Net loss		—			—			—			—			—			(20,344	)		—		(20,344	)
Issuance of stock for option exercises and other issuances		27,737			—			(19,807	)		(350,371	)		18,268			—			—		(1,539	)
Tax benefit realized from issuances of common stock		—			—			377			—			—			—			—		377
Stock-based compensation expense		—			—			44,571			—			—			—			—		44,571
Repurchase of shares through tender offers		—			—			—			5,769,230			(150,759	)		—			—		(150,759	)
Purchases of treasury stock		—			—			—			1,320,846			(26,900	)		—			—		(26,900	)
Tax deficiency from issuances of common stock		—			—			(9,853	)		—			—			—			—		(9,853	)
Balances at December 31, 2012		62,437,992			624			9,489,099			13,425,144			(453,453	)		(8,526,281	)		—		509,989
Net income		—			—			—			—			—			15,116			—		15,116
Issuance of stock for option exercises and other issuances		—			—			(83,165	)		(1,938,041	)		100,961			—			—		17,796
Tax benefit realized from issuances of common stock		—			—			58			—			—			—			—		58
Stock-based compensation expense		—			—			38,186			—			—			—			—		38,186
Repurchase of shares through tender offers		(5,000,000	)		(50	)		(170,466	)		—			—			—			—		(170,516	)
Purchases of treasury stock		—			—			—			6,794,395			(219,729	)		—			—		(219,729	)
Balances at December 31, 2013		57,437,992			574			9,273,712			18,281,498			(572,221	)		(8,511,165	)		—		190,900
Net income		—			—			—			—			—			42,063			—		42,063
Other comprehensive income, net of tax		—			—			—			—			—			—			976		976
Issuance of stock for option exercises and other issuances		—			—			(105,382	)		(2,356,573	)		112,898			—			—		7,516
Tax benefit realized from issuances of common stock		—			—			14,239			—			—			—			—		14,239
Stock-based compensation expense		—			—			32,231			—			—			—			—		32,231
Repurchase of shares through tender offers		—			—			—			2,000,000			(97,588	)		—			—		(97,588	)
Purchases of treasury stock		—			—			—			3,160,070			(128,748	)		—			—		(128,748	)
Balances at December 31, 2014		57,437,992		$	574		$	9,214,800			21,084,995		$	(685,659	)	$	(8,469,102	)	$	976	$	61,589

See accompanying notes.

F-8

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31,
	2014			2013			2012
Cash flows from operating activities:
Net income (loss)	$	42,063		$	15,116		$	(20,344	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Income from discontinued operations, net of tax		(1,122	)		—			(2,743	)
Depreciation and amortization		29,811			26,606			28,399
Non-cash interest, net		4,511			4,192			4,326
Non-cash stock-based compensation		32,546			38,550			44,921
Deferred income taxes		14,717			13,070			(2,337	)
Loss on convertible notes		—			4,871			—
Gain on investments		—			—			(8,074	)
Changes in operating assets and liabilities:
Accounts receivable		(12,574	)		(17,610	)		14,713
Prepaid expenses and other, net		(673	)		266			(1,589	)
Accrued expenses and other long-term liabilities		(380	)		8,061			9,429
Deferred revenue		4,637			(7,028	)		4,121
Net cash provided by continuing operations		113,536			86,094			70,822
Net cash (used in) provided by discontinued operations		(384	)		—			4,324
Net cash provided by operating activities		113,152			86,094			75,146
Cash flows from investing activities:
Cash paid in business combination		(3,182	)		—			—
Proceeds received from ARS option		—			—			9,269
Purchases of property and equipment		(23,194	)		(22,341	)		(35,171	)
Proceeds from sale of property and equipment		—			1,381			—
Net cash used in investing activities		(26,376	)		(20,960	)		(25,902	)
Cash flows from financing activities:
Proceeds from exercise of stock options		40,602			29,724			827
Cash used for withholding taxes due on stock-based awards		(33,385	)		(12,526	)		(2,740	)
Net proceeds from issuance of convertible notes		—			291,823			—
Repurchase of convertible notes		—			(150,354	)		—
Repurchase of shares through tender offers		(97,588	)		(170,516	)		(150,759	)
Purchases of treasury stock		(128,748	)		(220,298	)		(26,331	)
Excess tax benefit on stock-based awards		14,239			58			377
Net cash used in financing activities		(204,880	)		(232,089	)		(178,626	)
Net decrease in cash and cash equivalents		(118,104	)		(166,955	)		(129,382	)
Cash and cash equivalents at beginning of period		824,880			991,835			1,121,217
Cash and cash equivalents at end of period	$	706,776		$	824,880		$	991,835

See accompanying notes.

F-9

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1.    Background and Basis of Presentation

Background

WebMD Health Corp. (the “Company” or “WebMD”) is a Delaware corporation that was incorporated on May 3, 2005. The Company completed an initial public offering on September 28, 2005. The Company’s Common Stock trades under the symbol “WBMD” on the Nasdaq Global Select Market.

The Company provides health information services to consumers, physicians and other healthcare professionals, private and governmental employers and health plans through its public and private online portals, mobile platforms and health-focused publications. The WebMD Health Network includes: www.WebMD.com, the Company’s primary public portal for consumers and related mobile-optimized sites and mobile apps; www.Medscape.com, the Company’s primary public portal for physicians and other healthcare professionals and related mobile services; and other sites and apps through which the Company provides branded health and wellness content, tools and services. The Company’s services for consumers enable them to obtain information on health and wellness topics or on a particular disease or condition, to assess their personal health status, to use online trackers, tools and quizzes, to locate physicians, to receive periodic e-mailed newsletters and alerts on topics of individual interest, and to participate in online communities with peers and experts. The Company’s services for physicians and healthcare professionals make it easier for them to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education (“CME”) credit and communicate with peers. The Company does not charge any usage, membership or download fees for access to its public portals or mobile platforms. The Company generates revenue from its public portals and mobile platforms primarily through the sale of various types of advertising and sponsorship programs to its clients, which include: pharmaceutical, biotechnology and medical device companies; hospitals, clinics and other healthcare services companies; health insurance providers; consumer products companies whose products or services relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention; and various other businesses, organizations and governmental entities. Advertisers and sponsors use the Company’s services to reach, educate and inform target audiences of consumers, physicians and other healthcare professionals. The Company also generates revenue from advertising sold in WebMD Magazine, a consumer magazine distributed to physician office waiting rooms. In addition, the Company generates revenue from the sale of certain information products. The Company’s private portals are a cloud-based population health management platform, hosted by the Company and provided to private and governmental employers and health plans for use by their employees and plan participants. The Company markets these private portals and related services under the WebMD Health Services brand. The WebMD Health Services platform enables employers and health plans to provide their employees and plan participants with access to personalized health and benefit information, including an online personal health record application. The Company’s WebMD Health Services solutions include a comprehensive set of decision support and transparency tools that help their employees and plan participants understand the financial implications of their benefits options and make more informed benefits-related purchase decisions, and also provide access to information and services that can help them factor quality and cost into decisions about care and treatment options. The Company also provides telephonic, online and onsite health coaching and targeted condition management programs for use by its private portals clients’ employees and plan participants to help them make healthier lifestyle choices and achieve their wellness goals. The Company generates revenue from subscriptions to its WebMD Health Services platform by employers and health plans, either directly or through its distributors. WebMD offers its health coaching services and its condition management programs on a per-participant basis.

Basis of Presentation

The accompanying Consolidated Financial Statements include the consolidated accounts of the Company and its majority-owned subsidiaries and have been prepared in United States dollars, and in accordance with

F-10

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

U.S. generally accepted accounting principles (“GAAP”). The results of operations for companies acquired or disposed of are included in the Consolidated Financial Statements from the effective date of acquisition or up to the date of disposal. All material intercompany balances and transactions have been eliminated in consolidation.

2.    Summary of Significant Accounting Policies

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the Consolidated Financial Statements. Significant estimates and assumptions by management affect the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the amortization period of long-lived assets (excluding goodwill and indefinite-lived intangible assets), the carrying value, capitalization and amortization of software and Website development costs, the carrying value of investments, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards.

Seasonality

The timing of the Company’s revenue is affected by seasonal factors. The Company’s public portal advertising and sponsorship revenue is seasonal, primarily due to the annual spending patterns of the advertising and sponsorship clients of the Company’s public portals. This portion of the Company’s revenue is usually the lowest in the first quarter of each calendar year, and generally increases during each consecutive quarter throughout the year. The timing of revenue in relation to the Company’s expenses, many of which do not vary directly with revenue, has an impact on cost of operations, sales and marketing, and general and administrative expenses as a percentage of revenue in each calendar quarter.

Cash and Cash Equivalents

All highly liquid investments with an original maturity from the date of purchase of three months or less are considered to be cash equivalents. These investments are stated at cost, which approximates market. The Company’s cash and cash equivalents are generally invested in various money market accounts.

Fair Value

The carrying amount of cash and cash equivalents, accounts receivable, accrued expenses and deferred revenue is deemed to approximate fair value due to the immediate or short-term maturity of these financial instruments. See Note 12 for further information on the fair value of the Company’s investments.

F-11

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company’s best estimate of losses inherent in the Company’s receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence.

Long-Lived Assets

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The useful lives are generally as follows:

Computer equipment	3 to 5 years
Office equipment, furniture and fixtures	4 to 7 years
Software	3 years
Building and improvements	Up to 40 years
Website development costs	3 years
Leasehold improvements	Shorter of useful life or lease term

Expenditures for maintenance, repair and renewals of minor items are charged to expense as incurred. Major improvements are capitalized.

Goodwill and Intangible Assets

Goodwill and intangible assets result from business combinations accounted for under the acquisition method. Goodwill and other intangible assets with indefinite lives are not amortized and are subjected to impairment review by applying fair value based tests. Intangible assets with definite lives are amortized on a straight-line basis over the individually estimated useful lives of the related assets as follows:

Content	3 to 5 years
Customer relationships	5 to 12 years
Acquired technology and patents	3 years
Trade names	Up to 10 years

Recoverability

The Company reviews the carrying value of goodwill and indefinite-lived intangible assets annually and whenever indicators of impairment are present. The Company tests goodwill for impairment at the reporting unit level only when, after completing a qualitative analysis, it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying value. Fair value is determined using an income approach valuation. A reporting unit is defined as an operating segment or one level below an operating segment.

Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and the fair value. Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell.

F-12

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Based on the Company’s analysis, there was no impairment of goodwill or indefinite-lived intangible assets during the years ended December 31, 2014, 2013 and 2012.

Internal Use Software

Software development costs that are incurred in the preliminary project stage are expensed as incurred. Once certain criteria have been met, direct costs incurred in developing or obtaining computer software are capitalized. The Company capitalized $5,369 and $9,085 during the years ended December 31, 2014 and 2013, respectively. Capitalized internal use software development costs are included in property and equipment in the accompanying consolidated balance sheets. Training and data conversion costs are expensed as incurred. Capitalized software costs are depreciated over a three-year period. Depreciation expense related to internal use software was $6,449, $5,070 and $6,223 for the years ended December 31, 2014, 2013 and 2012, respectively. The remaining balance of internal use software, net of accumulated depreciation, was $11,597 and $12,677 as of December 31, 2014 and 2013, respectively.

Website Development Costs

Costs related to the planning and post implementation phases of WebMD’s Website development efforts, as well as minor enhancements and maintenance, are expensed as incurred. Direct costs incurred in the development phase are capitalized. The Company capitalized $5,539 and $7,428 during the years ended December 31, 2014 and 2013, respectively. These capitalized costs are included in property and equipment in the accompanying consolidated balance sheets and are depreciated over a three-year period. Depreciation expense related to Website development costs was $6,421, $5,696 and $4,998 during the years ended December 31, 2014, 2013 and 2012, respectively. The remaining balance of Website development costs, net of accumulated depreciation, was $11,343 and $12,225 as of December 31, 2014 and 2013, respectively.

Restricted Cash

The Company’s restricted cash primarily relates to collateral for letters of credit obtained to support the Company’s operations. Total restricted cash was $1,765 and $1,730 as of December 31, 2014 and 2013, respectively, and is included in other assets in the accompanying consolidated balance sheets.

Deferred Charges

Other assets includes costs associated with the issuance of the Company’s convertible notes that are amortized to interest expense in the accompanying consolidated statements of operations, using the effective interest method over the period from issuance through the earliest date on which holders can demand redemption. During the year ended December 31, 2011, the Company capitalized issuance costs of $12,655 and $12,595, related to the issuance of its 2.50% Convertible Notes due 2018 (the “2.50% Notes”) and its 2.25% Convertible Notes due 2016 (the “2.25% Notes”), respectively. Additionally, during the year ended December 31, 2013, the Company capitalized $8,177 of issuance costs in connection with the 2013 issuance of its 1.50% Convertible Notes due 2020 (the “1.50% Notes”). The aggregate amortization of these issuance costs, which is included within interest expense in the accompanying consolidated statements of operations, was $4,511, $4,192 and $4,326 for the years ended December 31, 2014, 2013 and 2012, respectively. During the year ended December 31, 2013, the Company wrote off issuance costs of $2,285 in connection with the repurchase of a portion of its 2.25% Notes. As of December 31, 2014 and 2013, there were $14,355 and $18,866, respectively, of unamortized issuance costs included in other assets within the accompanying consolidated balance sheets.

Deferred Revenue

Deferred revenue consists of invoices sent to customers or payments received from customers, in advance of revenue recognition and is recognized as the revenue recognition criteria are met. Deferred revenue is influenced

F-13

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

by several factors, including the timing of invoices to our customers and the timing of payments received from our customers in relation to the timing of the revenue recognition for the related customer contract. Deferred revenue at each balance sheet date is expected to be recognized during the succeeding twelve month period and is therefore classified as a current liability within the accompanying consolidated balance sheets.

Leases

The Company recognizes rent expense on a straight-line basis, including predetermined fixed escalations, over the initial lease term including reasonably assured renewal periods, net of lease incentives, from the time that the Company controls the leased property. Leasehold improvements made at the inception of the lease are amortized over the shorter of the useful life of the asset or the lease term. Lease incentives are recorded as a deferred credit and recognized as a reduction to rent expense on a straight-line basis over the lease term as described above.

Presentation of Segment Information

The Company generates revenue in four groups, as set forth in the table below. The first group is “Advertising and Sponsorship – Biopharma and Medical Device” and consists of advertising and sponsorship revenue from pharmaceutical, biotechnology and medical device clients relating to ethical pharmaceutical products or other regulated devices or products or for sponsoring educational programs. The second category is “Advertising and Sponsorship – OTC, CPG and Other” and consists of advertising and sponsorship revenue relating to non-Rx or over-the-counter medications and other healthcare products, food and beverages, beauty products and other consumer products, as well as revenue from clients such as retailers, pharmacies, hospitals, health insurance companies and government agencies. The combined revenue of the first two groups is sometimes referred to as “Advertising and Sponsorship” revenue. The third group is “Private Portal Services” and consists of revenue from employers and health plans for subscriptions to the Company’s private portals solution and related services, including health coaching and condition management services. The fourth group is “Information Services” and consists of revenue from the sale of stand-alone information and data products. Discrete financial information related to a measure of profit or loss for these four revenue groups is not available as they leverage many common expenses, and the Company does not separately allocate these common expenses in assessing the performance of its business. Accordingly, the Company views its business as one reportable operating segment.

The following table presents the revenues recognized from the four revenue groups described above:

	Years Ended December 31,
	2014		2013		2012
Advertising and sponsorship
Biopharma and medical device	$	329,329	$	304,018	$	280,261
OTC, CPG and other		124,636		113,009		98,492
		453,965		417,027		378,753
Private portal services		103,182		82,111		78,527
Information services		23,302		16,155		12,586
	$	580,449	$	515,293	$	469,866

The Company’s revenue is principally generated in the United States. An adverse change in economic conditions in the United States could negatively affect the Company’s revenue and results of operations. The Company recorded revenue from foreign customers of $46,095, $31,340 and $24,206 during the years ended December 31, 2014, 2013 and 2012, respectively.

F-14

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Sales, Use and Value Added Tax

The Company excludes sales, use and value added tax from revenue in the accompanying consolidated statements of operations.

Advertising Costs

Advertising costs are generally expensed as incurred and totaled $4,196, $5,174 and $2,798 in 2014, 2013 and 2012, respectively.

Foreign Currency

The functional currency of the Company’s foreign operations is the U.S. dollar. Fluctuations in foreign dollar monetary assets and liabilities result in gains or losses which are credited or charged to income. Foreign currency transactional gains or losses are also credited or charged to income.

Concentration of Credit Risk

None of the Company’s customers individually accounted for more than 10% of the Company’s revenue in 2014, 2013 or 2012 or more than 10% of the Company’s accounts receivable as of December 31, 2014 or 2013.

Loss Contingencies

The Company accounts for loss contingencies in accordance with Financial Accounting Standards Board (“FASB”) ASC No. 450, “Contingencies.” Under ASC No. 450, accruals for loss contingencies are recorded when both (i) the information available indicates that it is probable that a liability has been incurred and (ii) the amount of the loss can be reasonably estimated. The Company records adjustments to these accruals to reflect the status of negotiations, settlements, advice of counsel and other information and events related to an individual matter.

Income Taxes

Deferred income taxes are recognized for the future tax consequence of differences between the tax and financial reporting basis of assets and liabilities at each reporting period. A valuation allowance is established to reduce deferred tax assets to the amount expected to be realized.

Tax contingencies are recorded to address potential exposure involving tax positions the Company has taken that could be challenged by tax authorities. These potential exposures result from applications of various statutes, rules, regulations and interpretations. The Company’s estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. The Company reflects interest and penalties related to uncertain tax positions as part of the income tax provision (benefit) in the accompanying consolidated statements of operations.

Accounting for Stock-Based Compensation

Stock-based compensation expense for all share-based payment awards granted is determined based on the grant-date fair value. The grant-date fair value for stock options is estimated using the Black-Scholes Option Pricing Model. The Company recognizes these compensation costs net of an estimated forfeiture rate on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the share-based payment award.

F-15

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Revenue Recognition

Revenue from advertising is recognized as advertisements are delivered or as publications are distributed. Revenue from sponsorship arrangements, content syndication and distribution arrangements and subscriptions to healthcare management tools and private portals as well as related health coaching services is recognized ratably over the term of the applicable agreement. Revenue from information services is recognized as the underlying data is delivered. Revenue from the sponsorship of CME is recognized over the period the Company substantially completes its contractual deliverables as determined by the applicable agreements.

Contracts that contain multiple deliverables are subject to Accounting Standards Update (“ASU”) No. 2009-13 Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 requires the allocation of revenue to each deliverable of multiple-deliverable revenue arrangements, based on the relative selling price of each deliverable. It also defines the level of evidence of selling price required to separate deliverables and allows a company to make its best estimate of the selling price of deliverables when more objective evidence of selling price is not available.

Pursuant to the guidance of ASU 2009-13, when a sales arrangement contains multiple deliverables, the Company allocates revenue to each deliverable based on relative selling price. The selling price for a deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its revenue recognition policies over the period that delivery occurs. VSOE of selling price is based on the price charged when the deliverable is sold separately. In determining VSOE, GAAP requires that a substantial majority of the selling prices fall within a reasonable range based on historical pricing trends for specific products and services. TPE is based on competitor prices of similar deliverables when sold separately. The Company is not able to determine TPE of selling price as it is unable to reliably determine what competitors’ selling prices are for comparable services, combined with the fact that its services often contain unique features and customizations such that comparable services do not exist. The determination of best estimate of selling price is a judgmental process that considers multiple factors including, but not limited to, recent selling prices and related discounting practices for each service, market conditions, customer classes, sales channels and other factors.

F-16

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Net Income (Loss) Per Common Share

Basic income (loss) per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods presented. Diluted income (loss) per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods, increased to give effect to potentially dilutive securities and assumes that any dilutive convertible notes were converted, only in the periods in which such effect is dilutive (shares in thousands):

	Years Ended December 31,
	2014		2013		2012
Numerator:
Income (loss) from continuing operations — Basic	$	40,941	$	15,116	$	(23,087	)
Interest expense on 1.50% Notes, net of tax		3,456		—		—
Income (loss) from continuing operations — Diluted	$	44,397	$	15,116	$	(23,087	)
Income from discontinued operations, net of tax — Basic and Diluted	$	1,122	$	—	$	2,743
Denominator:
Weighted-average shares — Basic		37,869		46,830		50,862
Stock options and restricted stock		2,060		1,568		—
1.50% Notes		5,685		—		—
Adjusted weighted-average shares after assumed conversions — Diluted		45,614		48,398		50,862
Basic income (loss) per common share:
Income (loss) from continuing operations	$	1.08	$	0.32	$	(0.45	)
Income from discontinued operations		0.03		—		0.05
Net income (loss)	$	1.11	$	0.32	$	(0.40	)
Diluted income (loss) per common share:
Income (loss) from continuing operations	$	0.97	$	0.31	$	(0.45	)
Income from discontinued operations		0.03		—		0.05
Net income (loss)	$	1.00	$	0.31	$	(0.40	)

The Company has excluded certain of its convertible notes, as well as certain outstanding stock options and restricted stock, from the calculation of diluted income (loss) per common share during the periods in which such securities were anti-dilutive. The following table presents the total weighted-average number of potentially dilutive common shares that were excluded from the computation of diluted income (loss) per common share during the periods presented (shares in thousands):

	Years Ended December 31,
	2014		2013		2012
Options and restricted stock		2,594		5,744		12,291
1.50% Notes		—		556		—
2.50% Notes		6,195		6,148		6,108
2.25% Notes		3,506		5,020		5,482
		12,295		17,468		23,881

F-17

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Discontinued Operations

The operating results of a business unit are reported as discontinued if its operations and cash flows can be clearly distinguished from the rest of the business, the operations have been sold or will be sold within a year, there will be no continuing involvement in the operation after the disposal date and certain other criteria are met. Significant judgments are involved in determining whether a business component meets the criteria for discontinued operation reporting and the period in which these criteria are met.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.

Recent Accounting Pronouncements

Accounting Pronouncement Adopted During 2014

In July 2013, the FASB issued an update to existing guidance on the financial presentation of unrecognized tax benefits. The update provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company was the first quarter of 2014. The adoption of this update did not have an impact on the Company’s financial condition, results of operations or cash flows.

Accounting Pronouncements to be Adopted in the Future

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the revised guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2015; early adoption is permitted. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the revised guidance requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2017; early adoption is prohibited. The revised guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which

F-18

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2016; early adoption is permitted. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

3.    Discontinued Operations

EPS

On September 14, 2006, the Company completed the sale of Emdeon Practice Services, Inc. (together with its subsidiaries, “EPS”) to Sage Software, Inc., an indirect wholly owned subsidiary of The Sage Group plc (the “EPS Sale”). The Company had certain indemnity obligations to advance amounts for reasonable defense costs for initially ten, and later four, former officers and directors of EPS who were indicted in connection with an investigation by the United States Attorney for the District of South Carolina (the “Investigation”) that began in 2003 and was completed in 2011.

During the year ended December 31, 2012, the Company recognized an after-tax gain of $2,235 related to the receipt of approximately $3,600 which represented a reimbursement to the Company related to recoveries by the United States Department of Justice from former employees of a predecessor of EPS who pleaded guilty to certain matters that were part of the Investigation. None of the former employees who pleaded guilty were employees to whom the Company provided indemnification in connection with the Investigation.

Also included in income from discontinued operations during the year ended December 31, 2012 is a gain of $508 related to a state tax refund that the Company received in connection with the finalization of a state tax appeal related to the EPS Sale.

Porex

On October 19, 2009, the Company completed the sale of its Porex business. In connection with the sale of Porex, the Company agreed to indemnify Porex for certain tax matters. The remaining estimate of the Company’s tax indemnification liability related to Porex was $1,506 and was included within liabilities of discontinued operations within the accompanying consolidated balance sheet as of December 31, 2013. During the year ended December 31, 2014, the Company paid $384 in connection with the completion of the remaining tax audits for all periods covered under the indemnity agreement. The remaining indemnity liability of $1,122 was adjusted through income from discontinued operations during the year ended December 31, 2014. The Company has no further obligations related to this matter.

4.    Convertible Notes

1.50% Convertible Notes due 2020

On November 26, 2013, the Company issued $300,000 aggregate principal amount of its 1.50% Notes in a private offering. Unless previously converted, the 1.50% Notes will mature on December 1, 2020. Net proceeds from the sale of the 1.50% Notes were approximately $291,823, after deducting the related offering expenses. Interest on the 1.50% Notes is payable semi-annually on June 1 and December 1 of each year, commencing June 1, 2014. Under the terms of the 1.50% Notes, holders were able to surrender their 1.50% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 18.9362 shares of Common Stock per thousand dollars principal amount of the 1.50% Notes. This was equivalent to an initial conversion price of approximately $52.81 per share of Common Stock. In the aggregate, the 1.50% Notes were convertible into 5,680,860 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances.

F-19

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Effective September 10, 2014, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on September 9, 2014 (see Note 10 for additional discussion), the conversion rate was adjusted to 18.9795 shares of Common Stock per thousand dollars principal amount of the 1.50% Notes. This is equivalent to an adjusted conversion price of approximately $52.69 per share of Common Stock. In the aggregate, the 1.50% Notes are convertible into 5,693,850 shares of Common Stock following the September 10, 2014 adjustment.

Under the terms of the 1.50% Notes, if the Company undergoes certain change of control or other fundamental change transactions prior to the maturity date of the 1.50% Notes, holders of the 1.50% Notes will have the right, at their option, to require the Company to repurchase some or all of their 1.50% Notes at a repurchase price equal to 100% of the principal amount of the 1.50% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. However, the repurchase option will not apply in the case of certain change of control or other fundamental change transactions in which the Company is acquired by a public company, and (a) not less than 90% of the consideration received or to be received by holders of WebMD Common Stock, excluding cash payments for fractional shares, consists of acquirer common stock and (b) as a result of the transaction, the 1.50% Notes become convertible into the same consideration.

2.50% Convertible Notes due 2018

On January 11, 2011, the Company issued $400,000 aggregate principal amount of its 2.50% Notes in a private offering. Unless previously converted, the 2.50% Notes will mature on January 31, 2018. Net proceeds from the sale of the 2.50% Notes were approximately $387,345, after deducting the related offering expenses, of which approximately $100,000 was used to repurchase 1,920,490 shares of the Company’s Common Stock at a price of $52.07 per share, the last reported sale price of the Company’s Common Stock on January 5, 2011, which repurchase settled on January 11, 2011. Interest on the 2.50% Notes is payable semi-annually on January 31 and July 31 of each year, commencing July 31, 2011. Under the terms of the 2.50% Notes, holders were able to surrender their 2.50% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 15.1220 shares of Common Stock per thousand dollars principal amount of the 2.50% Notes. This was equivalent to an initial conversion price of approximately $66.13 per share of Common Stock. In the aggregate, the 2.50% Notes were convertible into 6,048,800 shares of the Company’s Common Stock.

Effective April 4, 2012, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on April 3, 2012 (see Note 10 for additional discussion), the conversion rate was adjusted to 15.3223 shares of Common Stock per thousand dollars principal amount of the 2.50% Notes. This was equivalent to an adjusted conversion price of approximately $65.26 per share of Common Stock. In the aggregate, the 2.50% Notes were convertible into 6,128,920 shares of Common Stock following the April 4, 2012 adjustment. Effective September 11, 2013, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on September 10, 2013 (see Note 10 for additional discussion), the conversion rate was adjusted to 15.4764 shares of Common Stock per thousand dollars principal amount of the 2.50% Notes. This was equivalent to an adjusted conversion price of approximately $64.61 per share of Common Stock. In the aggregate, the 2.50% Notes were convertible into 6,190,560 shares of Common Stock following the September 11, 2013 adjustment.

Effective September 10, 2014, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on September 9, 2014 (see Note 10 for additional discussion), the conversion rate was adjusted to 15.5118 shares of Common Stock per thousand dollars principal amount of the 2.50% Notes. This is equivalent to an adjusted conversion price of approximately $64.47 per share of Common Stock. In the aggregate, the 2.50% Notes are convertible into 6,204,720 shares of Common Stock following the September 10, 2014 adjustment.

F-20

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Under the terms of the 2.50% Notes, if the Company undergoes certain change of control transactions prior to the maturity date of the 2.50% Notes, holders of the 2.50% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.50% Notes at a repurchase price equal to 100% of the principal amount of the 2.50% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. At the Company’s option, and to the extent permitted by the applicable rules of the Nasdaq Global Select Market (or the applicable rules of such other exchange on which the Company’s Common Stock may be listed), instead of paying the repurchase price in cash, the Company may pay the repurchase price in shares of its Common Stock or a combination of cash and shares of its Common Stock. However, in the case of certain change of control transactions in which the Company is acquired by a public company, the Company may elect to provide for conversion of the 2.50% Notes into acquirer common stock, in which case the repurchase option would not apply.

2.25% Convertible Notes due 2016

On March 14, 2011, the Company issued $400,000 aggregate principal amount of its 2.25% Notes in a private offering. Unless previously converted, the 2.25% Notes will mature on March 31, 2016. Net proceeds from the sale of the 2.25% Notes were approximately $387,400, after deducting the related offering expenses, of which approximately $50,000 was used to repurchase 868,507 shares of the Company’s Common Stock at a price of $57.57 per share, the last reported sale price of the Company’s Common Stock on March 8, 2011, which repurchase settled on March 14, 2011. Interest on the 2.25% Notes is payable semi-annually on March 31 and September 30 of each year, commencing September 30, 2011. Under the terms of the 2.25% Notes, holders were able to surrender their 2.25% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 13.5704 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This was equivalent to an initial conversion price of approximately $73.69 per share of Common Stock. In the aggregate, the 2.25% Notes were convertible into 5,428,160 shares of the Company’s Common Stock.

Effective April 4, 2012, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on April 3, 2012 (see Note 10 for additional discussion), the conversion rate was adjusted to 13.7502 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This was equivalent to an adjusted conversion price of approximately $72.73 per share of Common Stock. In the aggregate, the 2.25% Notes are convertible into 5,500,080 shares of Common Stock following the April 4, 2012 adjustment. Effective September 11, 2013, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on September 10, 2013 (see Note 10 for additional discussion), the conversion rate was adjusted to 13.8884 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This was equivalent to an adjusted conversion price of approximately $72.00 per share of Common Stock. In the aggregate, the 2.25% Notes were convertible into 5,555,360 shares of Common Stock following the September 11, 2013 adjustment.

During the year ended December 31, 2013, the Company repurchased $100,000 principal amount of its 2.25% Notes for $101,750 in cash in a privately negotiated transaction. Also during the year ended December 31, 2013, the Company repurchased $47,768 principal amount of its 2.25% Notes for $48,604 in cash in the open market. The Company recognized a pre-tax loss of $4,871 in 2013 related to these repurchases, which is reflected within loss on convertible notes in the accompanying consolidated statement of operations. The loss includes the expensing of the remaining deferred issuance costs outstanding related to the repurchased notes. As of December 31, 2013, the remaining principal amount of the 2.25% Notes outstanding was $252,232, which, in the aggregate, was convertible into 3,503,099 shares of Common Stock.

Effective September 10, 2014, after giving effect to an adjustment resulting from a tender offer for the Company’s Common Stock that the Company completed on September 9, 2014 (see Note 10 for additional discussion), the conversion rate was adjusted to 13.9202 shares of Common Stock per thousand dollars principal

F-21

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

amount of the 2.25% Notes. This is equivalent to an adjusted conversion price of approximately $71.84 per share of Common Stock. In the aggregate, the 2.25% Notes are convertible into 3,511,120 shares of Common Stock following the September 10, 2014 adjustment.

Under the terms of the 2.25% Notes, if the Company undergoes certain change of control transactions prior to the maturity date of the 2.25% Notes, holders of the 2.25% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.25% Notes at a repurchase price equal to 100% of the principal amount of the 2.25% Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. At the Company’s option, and to the extent permitted by the applicable rules of the Nasdaq Global Select Market (or the applicable rules of such other exchange on which the Company’s Common Stock may be listed), instead of paying the repurchase price in cash, the Company may pay the repurchase price in shares of its Common Stock or a combination of cash and shares of its Common Stock. However, in the case of certain change of control transactions in which the Company is acquired by a public company, the Company may elect to provide for conversion of the 2.25% Notes into acquirer common stock, in which case the repurchase option would not apply.

5.    Long-Lived Assets

Property and Equipment

Property and equipment consist of the following:

	December 31,
	2014			2013
Software	$	60,341		$	54,972
Computer equipment		63,541			56,399
Web site development costs		57,922			52,383
Leasehold improvements		44,000			40,828
Office equipment, furniture and fixtures		15,154			14,677
Land and buildings		291			291
		241,249			219,550
Less: accumulated depreciation		(181,676	)		(154,666	)
Property and equipment, net	$	59,573		$	64,884

Depreciation expense was $27,010, $24,335 and $24,505 in 2014, 2013 and 2012, respectively.

F-22

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

Goodwill and Intangible Assets

The balance of goodwill was $202,980 as of December 31, 2014 and 2013. Intangible assets consist of the following:

	December 31, 2014									December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Remaining Useful Life(a)		Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Remaining Useful Life(a)
Content	$	15,954	$	(15,954	)	$	—		—	$	15,954	$	(15,954	)	$	—		—
Customer relationships		34,057		(27,126	)		6,931		3.6		34,057		(25,035	)		9,022		4.5
Technology and patents		17,882		(15,231	)		2,651		2.5		14,700		(14,700	)		—		—
Trade names-definite lives		2,530		(2,361	)		169		1.0		2,530		(2,182	)		348		2.0
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	74,887	$	(60,672	)	$	14,215			$	71,705	$	(57,871	)	$	13,834

(a) The calculation of the weighted average remaining useful life is based on the net book value and the remaining amortization period of each respective intangible asset.

In July 2014, the Company acquired the assets of TheraSim, Inc. for $3,182 in cash. TheraSim’s technology provides the content and programming for certain of the Company’s sponsorship services. The purchase price was allocated to an intangible asset, “Technology,” is being amortized over a 3-year term and is included within “Technology and Patents” in the above table.

Amortization expense was $2,801, $2,271 and $3,894 in 2014, 2013 and 2012, respectively. Future amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2015	$	3,321
2016	$	3,120
2017	$	2,044
2018	$	1,266

6.    Accrued Expenses

Accrued expenses consist of the following:

	December 31,
	2014		2013
Accrued compensation	$	38,856	$	39,346
Accrued outside services		11,089		7,805
Accrued marketing and distribution		4,442		5,638
Accrued interest		5,960		6,010
Other accrued liabilities		12,311		14,940
	$	72,658	$	73,739

F-23

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.    Commitments and Contingencies

Legal Proceedings and Claims

National Jewish Health v. WebMD Health Services Group, Inc. and WebMD Health Corp.

On October 25, 2012, National Jewish Health, a Colorado non-profit corporation, filed a complaint against the Company in United States District Court for the District of Colorado alleging copyright infringement, misappropriation of trade secrets, tortious interference with prospective business relations, and breach of contract. The allegations related to a condition management program of the Company’s private portals. The complaint sought injunctive relief, as well as damages of $8,000 to $10,000. On January 28, 2015, the parties entered into a Settlement Agreement pursuant to which the parties have filed with the Court a Joint Motion to Dismiss all claims with prejudice. Neither party has admitted any liability to the other and the Company’s private portals business is not required to modify, suspend or terminate the sale of any of its products.

MyMedicalRecords, Inc. v. WebMD Health Corp. and WebMD Health Services Corp.

On February 13, 2013, MyMedicalRecords, Inc. filed an action against the Company in the United States District Court in the Central District of California. The complaint alleged that the personal health record tool sold by WebMD Health Services Group, Inc. infringes U.S. Patent No. 8,301,466 issued on October 30, 2012. The complaint sought injunctive relief, as well as damages in unspecified amounts. Pursuant to an agreement between the parties, MyMedicalRecords dismissed the complaint without prejudice in order to enable the parties to try to resolve the matter without the timing constraints of the litigation. The parties were unable to resolve the matter and, on October 2, 2013, MyMedicalRecords filed a new complaint against the Company alleging infringement of U.S. Patent No. 8,301,466 as well as U.S. Patent No. 8,498,883 issued on July 30, 2013. The Plaintiff sought unspecified damages and an injunction with respect to certain products offered by the Company. The Court had consolidated the Plaintiff’s claim against the Company with its claims against several other companies. On December 22, 2014, the Court granted summary judgment in favor of the Company and its co-defendants finding that the ‘883 patent is invalid. On December 23, 2014, the Court granted summary judgment in favor of the Company and its co-defendants finding that the ‘466 patent is invalid. On January 6, 2015, the Court entered a final order dismissing the case. On January 15, 2015, MyMedicalRecords filed a Notice of Appeal of the Court’s order with the Circuit Court for the Federal Circuit. If the Court’s order is appealed, the Company plans to defend the Order of the District Court. The Company is unable to predict the outcome of any appeal or to reasonably estimate the possible loss or range of loss, if any, arising from the claims that may be asserted therein.

Coverage Dispute with Stop Loss Carrier for Health Benefit Plan

The Company sponsors and maintains a self-insured group health and prescription benefit plan (the “Health Plan”) for its eligible employees and their dependents. The Company purchases stop loss insurance coverage on an annual basis to reimburse the Company for claims that exceed certain individual and/or aggregate claim amounts under the Health Plan. On May 7, 2013, the Company was advised that the former stop loss carrier for the Health Plan, Everest Reinsurance Company (“Everest”), was attempting to deny payment for certain medical claims under the Health Plan that were pending under the 2012 stop loss policy, and to recover certain payments that had already been made under the 2011 and 2012 stop loss policies. These claims were incurred in 2011 and 2012 and had previously been approved by Horizon Blue Cross and Blue Shield of New Jersey, the third party claims administrator for the Health Plan appointed by the Company. The maximum amount of claims in dispute by Everest is approximately $4,900, of which approximately $1,965 remains unpaid by Everest. On June 27, 2013, the Company filed an action in the Supreme Court, State of New York (“New York Action”), seeking payment from Everest of the $1,965 in outstanding claims. On August 14, 2013, Everest filed an action in the

F-24

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Superior Court, State of New Jersey (“New Jersey Action”), against the Company, the claims administrator and the Company’s insurance broker seeking recovery of approximately $2,935 paid by Everest under the stop loss policies and seeking a declaration that the remaining $1,965 is not payable by Everest. On August 15, 2013, Everest filed a motion in the New York Action seeking to dismiss the complaint filed by the Company on forum non conveniens grounds. On October 3, 2013, the New York Action court granted the Company’s motion for a temporary restraining order and stayed the New Jersey Action pending adjudication of Everest’s motion to dismiss the New York Action and the Company’s cross motion to dismiss the New Jersey Action. A preliminary injunction hearing was held on November 7, 2013 in the New York Action, following which, the New York Action court issued orders: (i) denying Everest’s motion to dismiss (or, in the alternative, for a stay of) the New York Action; and (ii) granting the Company’s motion enjoining Everest from prosecuting the New Jersey Action pending a stipulation of the parties or further order of the court. Everest answered the New York Action complaint on or about December 9, 2013, including the assertion of counterclaims similar in content and substance to its allegations in the New Jersey Action. Everest then voluntarily dismissed the New Jersey Action on or about December 10, 2013. The parties to the New York Action are currently proceeding with discovery. The Company believes the $1,965 outstanding from Everest will be recoverable. This amount is reflected within other assets in the accompanying consolidated balance sheet as of December 31, 2014. Additionally, the Company believes that the $2,935 previously paid by Everest will not be repayable by the Company. Accordingly, no provision has been recorded in the accompanying financial statements related to this matter.

Traffic Information, LLC v. WebMD LLC

On June 25, 2014, Traffic Information, LLC filed an action against the Company in the United States District Court in the Eastern District of Texas. The complaint alleges that the Company directly infringes and has induced infringement of U.S. Patent No. 6,785,606 issued on August 31, 2004. The complaint seeks injunctive relief, as well as damages in unspecified amounts. The Company believes that the Plaintiff’s claims are without merit. The Company is unable to predict the outcome of this action or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein.

Patent Claim by International Business Machines Corporation

International Business Machines Corporation (“IBM”) has notified the Company that IBM believes that the Company’s Websites infringe U.S. Patents 7,072,849, 5,796,967 and 6,374,359. The Company has had discussions with IBM and is evaluating information recently provided by IBM. The Company has not arrived at a conclusion with respect to IBM’s allegations of infringement. Accordingly, the Company is not yet able to reasonably estimate a range for possible costs relating to IBM’s allegations.

Other Legal Proceedings and Claims

In the normal course of business, the Company and its subsidiaries are involved in various claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

Leases

The Company leases its offices and other facilities under operating lease agreements that expire at various dates through 2023. Total rent expense for all operating leases was approximately $9,194, $8,805 and $8,573 in 2014, 2013 and 2012, respectively. Included in other long-term liabilities as of December 31, 2014 and 2013 were $10,605 and $12,279, respectively, related to lease incentives and the difference between rent expense and the rental amount payable for leases with fixed escalations.

F-25

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Future minimum lease commitments under non-cancelable lease agreements at December 31, 2014 were as follows:

Years Ending December 31,
2015	$	11,559
2016		7,524
2017		7,610
2018		7,435
2019		6,639
Thereafter		13,983
Total minimum lease payments	$	54,750

Other Contingencies

The Company provides certain indemnification provisions within its customer agreements to protect the other party from any liabilities or damages resulting from a claim of misappropriation or infringement by third parties relating to its products and services. The Company has not incurred a liability relating to any of these indemnification provisions in the past and management believes that the likelihood of any future payment relating to these provisions is unlikely. Therefore, the Company has not recorded a liability during any period for these indemnification provisions.

8.    Stock-Based Compensation

The Company has various stock-based compensation plans (collectively, the “Plans”) that provide for the grant of stock options, restricted stock, and other awards based on WebMD Common Stock.

The 2005 Long-Term Incentive Plan (as amended, the “2005 Plan”) is the only existing plan under which future grants can be made. The maximum number of shares of the Company’s Common Stock that may be subject to awards under the 2005 Plan was 23,275,000 as of December 31, 2014, subject to adjustment in accordance with the terms of the 2005 Plan. The Company had an aggregate of 2,226,394 shares of Common Stock available for future grants under the 2005 Plan at December 31, 2014.

Equity awards granted to a former Chief Executive Officer of the Company in 2012 were made outside of the 2005 Plan and were approved by the Compensation Committee of the Company’s Board of Directors, in reliance on the NASDAQ Global Select Market exception to shareholder approval for equity grants to new hires.

Stock Options

Generally, options under the Plans vest and become exercisable ratably over periods ranging from two to five years based on their individual grant dates, subject to continued employment on the applicable vesting dates, and generally expire within ten years from the date of grant. Options are granted at prices not less than the fair

F-26

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

market value of the Company’s Common Stock on the date of grant. The following table summarizes stock option activity for the Plans:

	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (In Years)		Aggregate Intrinsic  Value(a)
Outstanding at January 1, 2012		11,054,381		$	32.46
Granted		4,888,600			18.42
Exercised		(195,377	)		22.80
Cancelled		(2,446,916	)		38.96
Outstanding at December 31, 2012		13,300,688			26.24
Granted		2,844,500			33.64
Exercised		(2,695,600	)		20.90
Cancelled		(2,020,309	)		27.50
Outstanding at December 31, 2013		11,429,279			29.12
Granted		899,200			43.03
Exercised		(3,875,410	)		24.40
Cancelled		(905,543	)		33.42
Outstanding at December 31, 2014		7,547,526		$	32.69		7.0	$	62,618
Vested and exercisable at the end of the period		3,766,975		$	30.09		5.4	$	42,361

(a) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on December 31, 2014, which was $39.55, less the applicable exercise price of the underlying option. This aggregate intrinsic value represents the amount that would have been realized if all the option holders had exercised their options on December 31, 2014.

The following table summarizes information with respect to options outstanding and options exercisable at December 31, 2014:

	Outstanding						Exercisable
Exercise Prices	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (In Years)		Shares		Weighted Average Exercise Price Per Share
$13.15		709,500	$	13.15		7.8		709,500	$	13.15
$13.37-$22.99		733,984		19.99		6.7		259,384		19.96
$23.03-$27.94		869,919		25.43		3.8		749,519		25.25
$28.00-$30.00		827,220		29.60		6.8		484,770		29.67
$30.15-$33.40		870,173		32.82		8.1		290,548		32.36
$33.55-$37.97		783,775		36.34		7.8		263,287		36.50
$38.01-$39.35		669,705		38.62		7.9		142,980		38.53
$39.50-$39.78		643,600		39.51		8.8		17,400		39.51
$40.02-$46.95		775,125		44.35		6.3		446,612		44.19
$47.02-$58.96		664,525		50.20		6.3		402,975		51.13
		7,547,526	$	32.69		7.0		3,766,975	$	30.09

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model considering the weighted-average assumptions noted in the following table. Expected volatility is

F-27

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

based on implied volatility from traded options of the Company’s Common Stock combined with historical volatility of the Company’s Common Stock. The expected term represents the period of time that options are expected to be outstanding following their grant date, and was determined using historical exercise data combined with assumptions for future exercise activity. The risk-free rate is based on the U.S. Treasury yield curve for periods equal to the expected term of the options on the grant date.

	Years Ended December 31,
	2014			2013			2012
Expected dividend yield		0.0	%		0.0	%		0.0	%
Expected volatility		0.47-0.49			0.43-0.48			0.42-0.46
Risk-free interest rate		1.16%-1.72	%		0.55%-1.62	%		0.52%-1.04	%
Expected term (years)		4.2-5.0			4.5-5.1			4.4-5.1
Weighted-average fair value of options granted during the period	$	17.58		$	13.95		$	6.96

On February 23, 2012, the Company’s directors and certain officers voluntarily surrendered a total of 960,600 non-qualified stock options with a weighted-average exercise price of $46.85 per share. None of these individuals received any consideration or promise of consideration in exchange for the surrender of these stock options. These options were originally granted under the 2005 Plan, and therefore, upon their surrender, the shares underlying these options were returned to the 2005 Plan and became available for grant under such plan. During the year ended December 31, 2012, the Company expensed the remaining unrecognized stock-based compensation expense of $8,076 related to these stock options.

Restricted Stock

The Company’s Restricted Stock consists of shares of the Company’s Common Stock which have been awarded to employees with restrictions that cause them to be subject to substantial risk of forfeiture and restrict their sale or other transfer by the employee until they vest. Generally, the Company’s Restricted Stock grants vest ratably over periods ranging from three to four years from their individual award dates subject to continued employment on the applicable vesting dates. The following table summarizes the activity of the Company’s Restricted Stock:

	Years Ended December 31,
	2014					2013					2012
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Balance at beginning of the year		1,184,961		$	33.07		932,386		$	31.69		1,205,333		$	36.18
Granted		177,200			43.84		812,000			32.65		339,800			20.64
Vested		(324,453	)		32.70		(401,825	)		32.57		(413,372	)		33.92
Forfeited		(133,625	)		31.29		(157,600	)		24.02		(199,375	)		35.53
Balance at the end of the year		904,083		$	35.58		1,184,961		$	33.07		932,386		$	31.69

Proceeds received from the exercise of options to purchase shares of the Company’s Common Stock were $40,602, $29,724 and $827 for the years ended December 31, 2014, 2013 and 2012, respectively. Additionally, in connection with the exercise of certain stock options and the vesting of restricted stock, the Company made payments of $33,385, $12,526 and $2,740 during the years ended December 31, 2014, 2013 and 2012,

F-28

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

respectively, related to employee statutory withholding taxes that were satisfied by withholding shares of Common Stock of equal value from the respective employees. The proceeds and payments described above are reflected within cash flows from financing activities within the accompanying consolidated statements of cash flows.

The intrinsic value related to stock options that were exercised, combined with the fair value of shares of restricted stock that vested, aggregated $100,232, $45,882 and $9,076 for the years ended December 31, 2014, 2013 and 2012, respectively.

Other

Each year the Company issues shares of its Common Stock to WebMD non-employee directors with a value equal to their annual board and committee retainers. The Company recorded $315, $364 and $350 of stock-based compensation expense for the years ended December 31, 2014, 2013 and 2012, respectively, in connection with these issuances.

Summary of Stock-Based Compensation Expense

The following table summarizes the components and classification of stock-based compensation expense:

	Years Ended December 31,
	2014		2013		2012
Stock options	$	21,117	$	24,483	$	31,593
Restricted stock		11,114		13,703		12,978
Other		315		364		350
Total stock-based compensation expense	$	32,546	$	38,550	$	44,921
Included in:
Cost of operations	$	5,940	$	6,762	$	8,160
Sales and marketing		7,221		8,395		8,201
General and administrative		19,385		23,393		28,560
Total stock-based compensation expense	$	32,546	$	38,550	$	44,921

As of December 31, 2014, approximately $54,600 of unrecognized stock-based compensation expense related to unvested awards (net of estimated forfeitures) is expected to be recognized over a weighted-average period of approximately 2.7 years, related to the Plans.

Tax benefits attributable to stock-based compensation represented approximately 39% of stock-based compensation expense during each of the years ended December 31, 2014, 2013 and 2012.

9.    Retirement Plans

The Company maintains certain defined contribution retirement plans covering substantially all of its employees, which provide for matching and discretionary contributions. The Company has recorded expenses related to these plans of $3,971, $3,903 and $4,205 for 2014, 2013 and 2012, respectively, related to these matching and discretionary contributions.

F-29

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.    Equity

Treasury Stock

Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying consolidated balance sheets, unless the shares are cancelled and retired.

Tender Offers

On September 9, 2014, the Company completed a tender offer (the “2014 Tender Offer”) through which it repurchased 2,000,000 shares of its Common Stock at a price of $48.50 per share for total consideration of $97,588, which includes $588 of costs directly attributable to the purchase. The shares repurchased through the 2014 Tender Offer are reflected as treasury stock in the accompanying consolidated balance sheets.

On September 10, 2013, the Company completed a tender offer (the “2013 Tender Offer”) through which it repurchased 5,000,000 shares of its Common Stock at a price of $34.00 per share for total consideration of $170,516, which includes $516 of costs directly attributable to the purchase. The shares repurchased through the 2013 Tender Offer were cancelled and retired.

On April 3, 2012, the Company completed a tender offer (the “2012 Tender Offer”) through which it repurchased 5,769,230 shares of its Common Stock at a price of $26.00 per share for total consideration of $150,759, which includes $759 of costs directly attributable to the purchase. The shares repurchased through the 2012 Tender Offer are reflected as treasury stock in the accompanying consolidated balance sheets.

Stock Repurchase Program

In August 2011, the Board of Directors established a stock repurchase program (the “Program”) through which the Company was authorized to use up to $75,000 to purchase shares of WebMD Common Stock, from time to time, in the open market, through block trades or in private transactions, depending on market conditions and other factors. In October 2011, February 2014, March 2014, April 2014 and November 2014, the Company’s Board of Directors authorized increases to the Program of $75,000, $50,000, $40,000, $30,000 and $23,895, respectively. During 2012, the Company repurchased 1,320,846 shares at an aggregate cost of $26,900 under the Program. During 2013, the Company repurchased 1,266,962 shares at an aggregate cost of $42,309 under the Program. During 2014, the Company repurchased 3,160,070 shares at an aggregate cost of $128,748 under the Program. The Company paid cash of $569 in 2013 related to the repurchase of 39,857 shares in 2012, that settled in 2013. As of December 31, 2014, $35,011 remained available for repurchases under the Program.

Other Repurchase Activity

On October 21, 2013, the Company repurchased 5,527,433 shares of its Common Stock that were beneficially owned by Carl C. Icahn and certain of his affiliates, at a purchase price of $32.08 per share, the NASDAQ official closing price of WebMD Common Stock on October 18, 2013. The total purchase price was $177,420, which includes $100 of costs directly attributable to the purchase. This share repurchase was not made under the Program.

Shareholder Rights Agreement

The Board of Directors of the Company adopted, and the Company entered into, a Stockholder Rights Agreement, dated as of November 2, 2011 (the “Rights Agreement”), by and between the Company and

F-30

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

American Stock Transfer & Trust Company, LLC, as Rights Agent. Pursuant to the terms of the Rights Agreement, which had a one-year term until amended (as described below), one preferred stock purchase right (a “Right”) was attached to each outstanding share of the Company’s Common Stock held by holders of record as of the close of business on November 14, 2011. The Company issued one Right with each new share of Common Stock issued after that date until the Rights expired. The Rights initially traded with and were inseparable from the Company’s Common Stock and were not evidenced by separate certificates unless they became exercisable. The Rights would, if they had become exercisable, have caused substantial dilution to a person or group that attempted to acquire the Company on terms not approved by the Company’s Board of Directors. However, the Rights would not have interfered with a merger or other business combination approved by the Company’s Board of Directors. Until amended (as described below), each Right entitled its holder to purchase from the Company one one-thousandth of a share (a “Unit”) of Series A Junior Preferred Stock, par value $0.01 per share (the “Preferred Stock”), at an exercise price of $153.00 per Unit, subject to adjustment in accordance with the terms of the Rights Agreement, once the Rights become exercisable. On October 18, 2012, the Board of Directors of the Company adopted, and the Company entered into, an Amendment to Rights Agreement (the “First Amendment”). The First Amendment: extended the expiration date of the Rights Agreement from October 31, 2012 to October 31, 2014; provided that equity compensation awards to directors would not be included in determining whether a stockholder became an “Acquiring Person” under the Rights Agreement; and decreased the purchase price payable by holders of Rights upon exercise of such Rights from $153.00 per Unit to $66.29 per Unit. On August 1, 2013 the Company entered into a Second Amendment to the Rights Agreement (the “Second Amendment”). Pursuant to the Second Amendment, the final expiration date of the Rights Agreement occurred on August 1, 2013, which terminated the Rights Agreement and caused the Rights issued to WebMD stockholders pursuant to the Rights Agreement to expire at the close of business on that date.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income in the accompanying consolidated balance sheet as of December 31, 2014 represents the unrealized gain on available-for-sale securities, net of taxes, that was recorded during 2014 (see Note 12 for additional discussion).

F-31

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.    Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets (liabilities) were as follows:

	December 31,
	2014			2013
Deferred tax assets:
Federal net operating loss carryforwards	$	91,000		$	105,323
State net operating loss carryforwards		35,488			39,098
Capital losses		458			6,016
Federal tax credits		56,096			55,976
Accrued expenses		17,919			16,748
Stock-based compensation		21,031			26,946
Intangible assets		3,570			4,596
Other		3,841			3,932
Total deferred tax assets		229,403			258,635
Valuation allowance		(157,644	)		(174,592	)
Net deferred tax assets		71,759			84,043
Deferred tax liabilities:
Property and equipment		(3,063	)		(3,976	)
Goodwill and indefinite-lived intangible asset		(30,975	)		(27,645	)
Other		(627	)		—
Total deferred tax liabilities		(34,665	)		(31,621	)
Net deferred tax assets	$	37,094		$	52,422
	December 31,
	2014			2013
Current deferred tax assets, net:
Current deferred tax assets, net of deferred tax liabilities	$	59,371		$	41,921
Valuation allowance		(41,224	)		(28,301	)
Current deferred tax assets, net		18,147			13,620
Non-current deferred tax assets, net:
Non-current deferred tax assets, net of deferred tax liabilities		135,367			185,093
Valuation allowance		(116,420	)		(146,291	)
Non-current deferred tax assets, net		18,947			38,802
Net deferred tax assets	$	37,094		$	52,422

F-32

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The income tax provision (benefit) was as follows:

	Years Ended December 31,
	2014			2013			2012
Current:
Federal	$	(622	)	$	(73	)	$	(583	)
State		3,047			502			295
Foreign		369			141			190
Current income tax provision (benefit)		2,794			570			(98	)
Deferred:
Federal		12,570			10,683			(325	)
State		2,147			2,387			(2,012	)
Deferred income tax provision (benefit)		14,717			13,070			(2,337	)
Reversal of valuation allowance applied to additional paid-in capital		13,196			—			301
Total income tax provision (benefit)	$	30,707		$	13,640		$	(2,134	)

The reconciliation between the federal statutory rate and the effective income tax rate is as follows:

	Years Ended December 31,
	2014			2013			2012
United States federal statutory rate		35.0	%		35.0	%		(35.0	)%
State income taxes (net of federal benefit)		7.4			12.5			(0.3	)
Valuation allowance		(3.3	)		(6.4	)		18.4
Non-deductible officer compensation		2.2			3.6			8.7
Other		1.6			2.7			(0.3	)
Effective income tax rate		42.9	%		47.4	%		(8.5	)%

During 2014 and 2012, the Company reversed $13,196 and $301, respectively, of its valuation allowance through additional paid-in capital as a result of the utilization of net operating loss carryforwards generated by excess tax benefits of stock-based awards. In 2014 and 2013, the Company reversed $1,311 and $1,351, respectively, of its deferred tax asset and related valuation allowance through the tax provision as a result of the expiration of state net operating loss carryforwards. During 2014 and 2012, the Company reversed $1,359 and $801, respectively, of its deferred tax asset and related valuation allowance through additional paid-in capital as a result of the expiration of state net operating loss carryforwards generated by excess tax benefits of stock-based awards. In 2012, the Company also increased its valuation allowance by $4,724 through the tax provision for certain research and development tax credits for which scheduled expiration prior to utilization is more likely than not. The valuation allowance for deferred tax assets decreased by $16,948 and $1,811 in 2014 and 2013, respectively.

At December 31, 2014, the Company had net operating loss carryforwards for federal income tax purposes of approximately $700,000, which expire in 2017 through 2034, and federal tax credits of $64,809, which excludes the impact of any unrecognized tax benefits, of which $44,085 expire in 2017 through 2031 and $20,724 can be carried forward indefinitely.

F-33

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company uses the “with-and-without” approach in determining the order in which tax attributes are utilized. Using the “with-and-without” approach, the Company will only recognize a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other net operating loss carryforwards currently available to the Company have been utilized, but prior to the utilization of other tax attributes.

The net operating loss carryforwards for federal income tax purposes of approximately $700,000 include approximately $250,000 of excess tax benefits related to share-based payments that are presented on a tax effected basis within the deferred tax assets. Since this amount was recorded through additional paid-in capital, the related valuation allowance on these net operating loss carryforwards will be reversed through additional paid-in capital when these excess tax benefits are realized. Also included in these net operating loss carryforwards are excess tax benefits related to share-based payments of approximately $450,000 that are not recognized as a deferred tax asset as the amounts would not have resulted in a reduction in current taxes payable if all other net operating loss carryforwards currently available to the Company were utilized. The benefit of these deductions will be recognized through additional paid-in capital at the time the tax deduction results in a reduction of current taxes payable.

The tender offer completed on November 25, 2008 resulted in a cumulative change of more than 50% of the ownership of the Company’s capital, as determined under rules prescribed by the U.S. Internal Revenue Code and applicable Treasury regulations. As a result of the ownership change, there is an annual limitation imposed on the Company’s net operating loss carryforwards and federal tax credits. The Company experienced another cumulative change on February 25, 2011. Despite this second ownership change, the Company’s net operating loss carryforwards and federal tax credits continue to be limited by the November 25, 2008 annual limitation.

As of December 31, 2014 and 2013, the Company had unrecognized income tax benefits of $13,553 and $13,889, respectively, which if recognized, would result in $8,828 and $9,164, respectively, being reflected as a component of the income tax provision (benefit). Included in the unrecognized income tax benefits as of December 31, 2014 and 2013 are accrued interest and penalties of $581 and $497, respectively. If recognized, these benefits would be reflected as a component of the income tax provision (benefit).

The following table summarizes the activity of unrecognized tax benefits, excluding accrued interest and penalties, for the years ended December 31, 2014, 2013 and 2012:

	Years Ended December 31,
	2014			2013			2012
Balance at the beginning of the year	$	13,392		$	13,949		$	12,069
Increases related to prior year tax positions		15			—			757
Increases related to current year tax positions		—			—			1,707
Decreases related to prior year tax positions		(379	)		(532	)		—
Expiration of the statute of limitations for the assessment of taxes		(56	)		(25	)		(584	)
Balance at the end of the year	$	12,972		$	13,392		$	13,949

Although the Company files U.S. federal and various state and other tax returns, the major taxing jurisdiction is the U.S. The Company is currently under audit in a number of state and local taxing jurisdictions and will have statutes of limitations with respect to certain tax returns expiring within the next twelve months. As a result, it is reasonably possible that there may be a reduction in the unrecognized income tax benefits, prior to any annual increase, in the range of $100 to $200 within the next twelve months. With the exception of adjusting

F-34

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

net operating loss carryforwards that may be utilized, the Company is no longer subject to federal income tax examinations for tax years before 2011 and for state and local income tax examinations for tax years before 2010.

12.    Fair Value of Financial Instruments

The Company accounts for certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company did not have any Level 2 assets during the years ended December 31, 2014, 2013 and 2012, and only had one Level 3 asset which is discussed in more detail below. The following table sets forth the Company’s Level 1 financial assets that were measured and recorded at fair value on a recurring basis as of December 31, 2014 and 2013:

	Fair Value Estimate Using:		December 31, 2014						December 31, 2013
			Amortized Cost Basis		Fair Value		Gross Unrealized Gains		Amortized Cost Basis		Fair Value		Gross Unrealized Gains
Cash and cash equivalents		Level 1	$	706,776	$	706,776	$	—	$	824,880	$	824,880	$	—
Available-for-sale security		Level 1		—		1,603		1,603		—		—		—

The Company’s available-for-sale security consists of an equity investment in a publicly traded company that completed its initial public offering in December 2014. The unrealized gain related to this investment, net of tax, is included within accumulated other comprehensive income in the accompanying consolidated balance sheet as of December 31, 2014.

Through April 20, 2010, the Company held investments in student loan backed auction rate securities (“ARS”). Effective April 20, 2010, the Company entered into an agreement pursuant to which the Company sold all of its holdings of ARS. Under the terms of the agreement, the Company retained an option (the “ARS Option”), for a period of two years from the date of the agreement: (a) to repurchase from the purchaser the same principal amount of any or all of the various series of ARS sold, at the agreed upon purchase prices received on April 20, 2010; and (b) to receive additional proceeds from the purchaser upon certain redemptions of the various series of ARS sold. The ARS Option was classified as a Level 3 asset as its valuation required substantial judgment. The historical redemption activity of the specific ARS underlying the ARS Option was the most significant assumption used to determine an estimated value of the ARS Option. The Company was required to reassess the value of the ARS Option at each reporting period and changes in value were recorded within the statement of operations. As of March 31, 2012, the Company no longer had any remaining positions related to

F-35

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)

the ARS Option. The following table reconciles the beginning and ending balances of the ARS Option during the year ended December 31, 2012:

	Year Ended December 31, 2012
Fair value as of the beginning of the period	$	1,195
Cash proceeds received		(9,269	)
Gain included in earnings		8,074
Fair value as of the end of the period	$	—

The Company also holds an investment in a privately held company which is carried at cost, and not subject to fair value measurements. However, if events or circumstances indicate that its carrying amount may not be recoverable, it would be reviewed for impairment. The Company made this investment in November 2008 by acquiring preferred stock. During November 2014, this investment was converted into a combination of preferred stock and debt securities of another privately held company through an acquisition. The total amount of the Company’s investment in this privately held company is $6,471, which includes $470 of acquisition costs. Since the Company does not have the ability to exercise significant influence over this company, the investment is accounted for under the cost method and it is included in other assets on the accompanying consolidated balance sheets as of December 31, 2014 and 2013.

For disclosure purposes, the Company is required to measure the outstanding value of its debt on a recurring basis. The following table presents the carrying value and estimated fair value (based on Level 1 market price data) of the Company’s convertible notes that were carried at historical cost as of December 31, 2014 and 2013:

	December 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2.25% Notes	$	252,232	$	254,754	$	252,232	$	252,863
2.50% Notes	$	400,000	$	399,000	$	400,000	$	394,400
1.50% Notes	$	300,000	$	299,250	$	300,000	$	294,852

13.    Restructuring

In December 2012, the Company announced a plan to streamline its operations, simplify its organizational structure, reduce costs and better focus its resources, which resulted in a reduction of the Company’s workforce. In connection with this reduction in workforce, the Company recorded a restructuring charge of $7,579 during the three months ended December 31, 2012 related to severance and other employee benefits that were provided to the terminated employees. The remaining accrual related to this charge was $0 and $146 as of December 31, 2014 and 2013, respectively, and is reflected within accrued expenses in the accompanying consolidated balance sheets. The reduction in this accrual during 2014 and 2013 was the result of payments of the severance and related employee benefits.

14.    Other expense

For 2013, other expense consisted of cash severance and related expenses due to the May 2013 departure of a Chief Executive Officer of the Company. For 2012, other expense consisted of severance and related expenses due to the January 2012 departure of a Chief Executive Officer of the Company, and the related search and recruitment of his replacement during that period.

F-36

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15.    Supplemental Disclosures of Cash Flow Information

Supplemental information related to the consolidated statements of cash flows is summarized below:

	Years Ended December 31,
	2014		2013		2012
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	20,225	$	19,038	$	19,000
Taxes paid, net(a)	$	277	$	274	$	785

(a) As the Company generally files its tax returns on a consolidated basis, taxes paid, net of refunds, includes all taxes paid by the Company, including those of the Company’s discontinued operations.

16.    Quarterly Financial Data (Unaudited)

The following table summarizes the quarterly financial data for 2014 and 2013. The per common share calculations for each of the quarters are based on the weighted-average number of common shares for each period; therefore, the sum of the quarters may not necessarily be equal to the full year per common share amount.

	2014
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenue	$	133,832	$	140,400	$	143,490	$	162,727
Cost of operations		52,564		54,456		56,398		60,676
Sales and marketing		32,911		33,321		32,950		36,978
General and administrative		23,781		22,339		23,243		24,756
Depreciation and amortization		7,328		7,042		7,667		7,774
Interest income		15		17		19		18
Interest expense		6,172		6,172		6,171		6,171
Income from continuing operations before income tax provision		11,091		17,087		17,080		26,390
Income tax provision		4,825		7,371		7,275		11,236
Income from continuing operations		6,266		9,716		9,805		15,154
Income from discontinued operations, net of tax		—		—		—		1,122
Net income	$	6,266	$	9,716	$	9,805	$	16,276
Basic income per common share:
Income from continuing operations	$	0.16	$	0.26	$	0.26	$	0.42
Income from discontinued operations		—		—		—		0.03
Net income	$	0.16	$	0.26	$	0.26	$	0.45
Diluted income per common share:
Income from continuing operations	$	0.15	$	0.23	$	0.23	$	0.36
Income from discontinued operations		—		—		—		0.02
Net income	$	0.15	$	0.23	$	0.23	$	0.38

F-37

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2014
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net Income per Common Share:
Numerator:
Income from continuing operations — Basic	$	6,266	$	9,716	$	9,805	$	15,154
Interest expense on 1.50% Notes, net of tax		—		864		864		864
Interest expense on 2.50% Notes, net of tax		—		—		—		1,797
Interest expense on 2.25% Notes, net of tax		—		—		—		1,103
Income from continuing operations — Diluted	$	6,266	$	10,580	$	10,669	$	18,918
Income from discontinued operations, net of tax — Basic and Diluted	$	—	$	—	$	—	$	1,122
Denominator:
Weighted-average shares — Basic		39,268		37,819		37,960		36,427
Stock options and restricted stock		2,584		2,301		2,113		1,245
1.50% Notes		—		5,681		5,684		5,694
2.50% Notes		—		—		—		6,205
2.25% Notes		—		—		—		3,511
Adjusted weighted-average shares after assumed conversions — Diluted		41,852		45,801		45,757		53,082

F-38

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2013
	First Quarter			Second Quarter		Third Quarter		Fourth Quarter
Revenue	$	112,762		$	125,317	$	130,937	$	146,277
Cost of operations		46,943			51,596		53,438		57,763
Sales and marketing		30,933			31,422		32,561		33,081
General and administrative		23,534			24,282		22,689		22,715
Depreciation and amortization		6,853			6,635		6,552		6,566
Interest income		21			17		16		22
Interest expense		5,832			5,832		5,833		5,329
Loss on convertible notes		—			—		3,296		1,575
Other expense		—			1,353		—		—
(Loss) income before income tax provision		(1,312	)		4,214		6,584		19,270
Income tax provision		226			1,603		3,353		8,458
Net (loss) income	$	(1,538	)	$	2,611	$	3,231	$	10,812
Net (loss) income per common share — Basic	$	(0.03	)	$	0.05	$	0.07	$	0.27
Net (loss) income per common share — Diluted	$	(0.03	)	$	0.05	$	0.06	$	0.25
Net (Loss) Income per Common Share:
Numerator:
Net (loss) income — Basic	$	(1,538	)	$	2,611	$	3,231	$	10,812
Interest expense on 1.50% Notes, net of tax		—			—		—		326
Net (loss) income — Diluted	$	(1,538	)	$	2,611	$	3,231	$	11,138
Denominator:
Weighted-average shares — Basic		49,007			49,315		48,540		40,457
Stock options and restricted stock		—			1,610		2,054		2,192
1.50% Notes		—			—		—		2,223
Adjusted weighted-average shares after assumed conversions — Diluted		49,007			50,925		50,594		44,872

F-39

Schedule II. Valuation and Qualifying Accounts

	Years Ended December 31, 2014, 2013 and 2012
	Balance at Beginning of Year		Charged to Costs and Expenses			Write-offs			Other			Balance at End of Year
	(in thousands)
December 31, 2014
Allowance for Doubtful Accounts	$	793	$	577		$	(739	)	$	—		$	631
Valuation Allowance for Deferred Tax Assets		174,592		(2,350	)		—			(14,598	)(a)		157,644
December 31, 2013
Allowance for Doubtful Accounts		1,304		283			(794	)		—			793
Valuation Allowance for Deferred Tax Assets		176,403		(1,831	)		—			20			174,592
December 31, 2012
Allowance for Doubtful Accounts		1,129		511			(336	)		—			1,304
Valuation Allowance for Deferred Tax Assets		172,832		4,650			—			(1,079	)(a)		176,403

(a) Primarily represents the valuation allowance released as a result of the utilization and expiration of net operating loss carryforwards generated by excess tax benefits of stock-based awards.

S-1

INDEX TO EXHIBITS

Exhibit No.	Description
2.1*	Stock Purchase Agreement, dated as of September 17, 2009, among SNTC Holding, Inc., Aurora Equity Partners III L.P. and Aurora Overseas Equity Partners III, L.P. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by HLTH Corporation (“HLTH”) on September 22, 2009)(1)
2.2*	Purchase and Release Agreement, dated as of April 20, 2010, between WebMD Health Corp. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on April 26, 2010)
3.1	Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162651))
3.2	Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162651))
4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 in Amendment No. 1, filed on August 11, 2009, to the Registrant’s Registration Statement on Form S-4 (Reg. No. 333-160530))
4.2	Indenture, dated as of January 11, 2011, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Amendment No. 1, filed on January 14, 2011, to the Registrant’s Current Report on Form 8-K filed on January 11, 2011)
4.3	Form of 2.50% Convertible Note Due 2018 (included in Exhibit 4.2)
4.4	Indenture, dated as of March 14, 2011, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Amendment No. 1, filed on March 15, 2011, to the Registrant’s Current Report on Form 8-K filed on March 14, 2011)
4.5	Form of 2.25% Convertible Note Due 2016 (included in Exhibit 4.4)
4.6	Indenture, dated as of November 26, 2013, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Amendment No. 1, filed on November 27, 2013, to the Registrant’s Current Report on Form 8-K filed on November 26, 2013)
4.7	Form of 1.50% Convertible Note Due 2020 (included in Exhibit 4.6)
4.8	Rights Agreement, dated as of November 2, 2011, between the Registrant and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A filed on November 3, 2011)
4.9	Amendment to Rights Agreement, dated as of October 18, 2012, between the Registrant and American Stock Transfer & Trust Company, LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 19, 2012)
4.10	Second Amendment to Rights Agreement, dated as of August 1, 2013 (incorporated by reference to Exhibit 4.3 to Amendment No. 2, filed on August 2, 2013, to the Registrant’s Registration Statement on Form 8-A)
4.11**	WebMD Health Corp. Long-Term Incentive Plan for Employees of Subimo, LLC (incorporated by reference to Exhibit 10.2 to HLTH’s Annual Report on Form 10-K for the year ended December 31, 2006)(1)

E-1

Exhibit No.	Description
4.12**	Form of Amendment to HLTH’s Equity Compensation Plans and Stock Option Agreements (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by HLTH on November 9, 2006)(1)
4.13**	2001 Employee Non-Qualified Stock Option Plan of HLTH, as amended (incorporated by reference to Exhibit 10.46 to HLTH’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)(1)
4.14**	Amended and Restated 1996 Stock Plan of HLTH (incorporated by reference to Exhibit 10.8 to HLTH’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006)(1)
4.15**	Amended and Restated 2000 Long-Term Incentive Plan of HLTH (incorporated by reference to Annex E to HLTH’s Proxy Statement for its 2006 Annual Meeting filed on August 14, 2006)(1)
4.16**	WebMD Health Corp. Amended and Restated 2005 Long-Term Incentive Plan, as amended effective October 1, 2014 (the “2005 LTIP”) (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 2, 2014)
4.17**	Form of Restricted Stock Agreement with Employees (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162653))
4.18**	Form of Restricted Stock Agreement with Non-Employee Directors (incorporated by reference to Exhibit 10.49 to the Registrant’s Registration Statement on Form S-1 (No. 333-124832) (which we refer to as the “IPO Registration Statement”)
4.19**	Form of Non-Qualified Stock Option Agreement with Employees (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162653))
4.20**	Form of Non-Qualified Stock Option Agreement with Non-Employee Directors (incorporated by reference to Exhibit 10.51 to the IPO Registration Statement)
4.21**	Form of Non-Qualified Stock Option Agreement between HLTH and Employees for Grants Under HLTH’s 2000 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.58 to HLTH’s Annual Report on Form 10-K for the year ended December 31, 2005)(1)
4.22**	Form of Non-Qualified Stock Option Agreement between HLTH and Employees for Grants Under HLTH’s 1996 Stock Plan (incorporated by reference to Exhibit 10.59 to HLTH’s Annual Report on Form 10-K for the year ended December 31, 2005)(1)
10.1	Form of Indemnification Agreement between HLTH and each of its directors and executive officers (incorporated by reference to Exhibit 10.1 to HLTH’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002)(1)
10.2	Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.9 to the IPO Registration Statement)
10.3	Form of Letter Agreement between the Registrant and Certain Non-Employee Directors (incorporated by reference to Exhibit 10.3 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”)
10.4**	Amended and Restated Employment Agreement, dated as of August 3, 2005 between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.1 to HLTH’s Current Report on Form 8-K filed on August 5, 2005)(1)
10.5**	Letter Agreement, dated as of February 1, 2006, between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.3 to HLTH’s Current Report on Form 8-K filed on February 2, 2006)(1)

E-2

Exhibit No.	Description
10.6**	Employment Agreement, dated September 23, 2004, between HLTH and Kevin Cameron (incorporated by reference to Exhibit 10.1 to HLTH’s Current Report on Form 8-K filed September 28, 2004)(1)
10.7**	Letter Agreement, dated as of February 1, 2006, between HLTH and Kevin M. Cameron (incorporated by reference to Exhibit 10.2 to HLTH’s Current Report on Form 8-K filed on February 2, 2006)(1)
10.8**	Amended and Restated Employment Agreement, dated as of July 14, 2005, between WebMD Health Corp. and Anthony Vuolo (incorporated by reference to Exhibit 99.2 to HLTH’s Current Report on Form 8-K, as amended, filed on July 19, 2005)(1)
10.9**	Employment Agreement between WebMD Health Holdings, Inc. and Douglas W. Wamsley (incorporated by reference to Exhibit 10.15 to the IPO Registration Statement)
10.10**	Employment Agreement between WebMD Health Holdings, Inc. and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.17 to the IPO Registration Statement)
10.11**	Amendment No. 2, dated as of December 1, 2008, between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.1 to HLTH’s Current Report on Form 8-K filed on December 5, 2008)(1)
10.12**	Letter Agreement, dated December 29, 2008, between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.52 to HLTH’s Annual Report on Form 10-K for the year ended December 31, 2008)(1)
10.13**	Amendment to Employment Agreement, dated as of December 16, 2008, between HLTH and Kevin M. Cameron (incorporated by reference to Exhibit 10.53 to HLTH’s Annual Report on Form 10-K for the year ended December 31, 2008)(1)
10.14**	Letter Amendment, dated as of July 9, 2009, among HLTH Corporation, WebMD Health Corp. and Martin J. Wygod (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on July 14, 2009)
10.15**	WebMD, LLC Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.48 to Amendment No. 1, filed on April 29, 2008, to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007)(2)
10.16**	Amendment No. 1, dated as of March 30, 2009, to the WebMD Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.58 to Amendment No. 1, filed on April 30, 2009, to the 2008 Form 10-K)
10.17**	Letter Agreement, dated as of October 1, 2007, between the Registrant and William Pence (incorporated by reference to Exhibit 10.59 to Amendment No. 1, filed on April 30, 2009, to the 2008 Form 10-K)
10.18**	Letter Amendment, dated as of December 10, 2008, between the Registrant and William Pence (incorporated by reference to Exhibit 10.60 to Amendment No. 1, filed on April 30, 2009, to the 2008 Form 10-K)
10.19**	Amendment, dated as of December 10, 2008 to Amended and Restated Employment Agreement between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.55 to the 2008 Form 10-K)
10.20**	Letter Agreement, dated as of February 19, 2009, between HLTH and Anthony Vuolo (incorporated by reference to Exhibit 10.57 to the 2008 Form 10-K)

E-3

Exhibit No.	Description
10.21**	Restricted Stock Agreement, dated November 3, 2009, between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.71 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Form 10-K”))
10.22**	Letter Amendment, dated as of November 3, 2009, between the Registrant and Kevin M. Cameron (incorporated by reference to Exhibit 10.72 to the 2009 Form 10-K)
10.23**	Letter Amendment, dated as of December 14, 2008, between the Registrant and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.74 to Amendment No. 1, filed April 30, 2010, to the 2009 Form 10-K)
10.24**	Letter Agreement, dated as of June 28, 2010, between the Registrant and Kevin Cameron (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2010)
10.25**	Letter Agreement, dated as of June 28, 2010, between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2010)
10.26**	Letter Amendment, dated as of February 11, 2011, between the Registrant and William Pence (incorporated by reference to Exhibit 10.56 to Amendment No. 1, filed May 2, 2011, to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010)
10.27**	Letter Amendment, dated as of July 23, 2011, between the Registrant and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2011)
10.28**	Letter Amendment, dated as of July 23, 2011, between the Registrant and William Pence (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2011)
10.29**	Letter Agreement, dated as of September 25, 2011, between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2011)
10.30**	Letter Agreement, dated as of September 25, 2011, between the Registrant and Kevin Cameron (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2011)
10.31**	Letter Agreement, dated as of September 25, 2011, between the Registrant and Martin J. Wygod (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2011)
10.32**	Letter Amendment, dated as of September 21, 2011, between the Registrant and Martin J. Wygod (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2011)
10.33**	Letter Agreement, dated April 6, 2014, between the Registrant and William Pence (incorporated by reference to Exhibit 10.1 to Amendment No. 1, filed April 7, 2014, to the Registrant’s Current Report on Form 8-K filed on April 4, 2014)
10.34**	Form of Agreement to Forfeit Non-Qualified Options, dated as of February 23, 2012, between the Registrant and Each of its Non-Employee Directors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 29, 2012)
10.35**	Form of Agreement to Forfeit Non-Qualified Options, dated as of February 23, 2012, between the Registrant and Certain Employees (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 29, 2012)

E-4

Exhibit No.	Description
10.36**	Employment Agreement, dated as of May 29, 2012, between the Registrant and Cavan M. Redmond (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 1, 2012, as amended on June 6, 2012)
10.37**	Form of Non-Qualified Stock Option Agreement between the Registrant and Cavan M. Redmond (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 1, 2012, as amended on June 6, 2012)
10.38**	Form of Restricted Stock Agreement between the Registrant and Cavan M. Redmond (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 1, 2012, as amended on June 6, 2012)
10.39**	Amended and Restated Employment Agreement, dated as of May 16, 2012, between the Registrant and William Pence (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012)
10.40**	Amendment No. 2, dated as of January 9, 2012, to the WebMD Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.80 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”)
10.41**	Amendment No. 3, dated as of February 25, 2013, to the WebMD Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.81 to the 2013 Form 10-K)
10.42**	Amendment No. 4, dated as of February 25, 2014, to the WebMD Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.82 to Amendment No. 1, filed April 29, 2014, to the 2013 Form 10-K)
10.43**	Letter Agreement, dated as of November 14, 2012, between the Registrant and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.70 to the 2012 Form 10-K)
10.44**	Letter Agreement, dated as of November 14, 2012, between the Registrant and Douglas Wamsley (incorporated by reference to Exhibit 10.71 to the 2012 Form 10-K)
10.45**	Letter Agreement, dated as of November 14, 2012, between the Registrant and William Pence (incorporated by reference to Exhibit 10.72 to the 2012 Form 10-K)
10.46**	Letter Amendment, dated as of March 5, 2013, between the Registrant and William Pence (incorporated by reference to Exhibit 10.73 to Amendment No. 1, filed April 30, 2013, to the 2012 Form 10-K)
10.47**	Letter Amendment, dated as of March 5, 2013, between the Registrant and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.74 to Amendment No. 1, filed April 30, 2013, to the 2012 Form 10-K)
10.48**	Letter Amendment, dated as of May 7, 2013, between the Registrant and David Schlanger (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2013)
10.49**	Letter Amendment, dated as of May 7, 2013, between the Registrant and Peter Anevski (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2013)
10.50**	Letter Amendment, dated as of May 7, 2013, between the Registrant and Cavan M. Redmond (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2013)
10.51**	Letter Amendment, dated as of May 8, 2013, between the Registrant and Martin J. Wygod (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2013)

E-5

Exhibit No.	Description
10.52**	Letter Amendment, dated as of May 7, 2013, between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2013)
10.53**	Amendment, dated as of August 11, 2013, to the Employment Agreement between the Registrant and David J. Schlanger (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 15, 2013)
10.54**	Amendment, dated as of August 11, 2013, to the Employment Agreement between the Registrant and Steven L. Zatz, M.D. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on August 15, 2013)
14.1	Code of Business Conduct
21.1	Subsidiaries of the Registrant
23.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Registrant
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Registrant
32.1	Section 1350 Certification of Chief Executive Officer of the Registrant
32.2	Section 1350 Certification of Chief Financial Officer of the Registrant
99.1	Explanation of Non-GAAP Measures
99.2	Audit Committee Charter
99.3	Compensation Committee Charter (incorporated by reference to Exhibit 99.3 to the 2013 Form 10-K)
99.4	Nominating & Governance Committee Charter
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* With respect to the agreements filed as Exhibits 2.1 and 2.2, certain of the exhibits and the schedules to that agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish copies of any of the exhibits and schedules to the Securities and Exchange Commission upon request.

** Agreement relates to executive compensation.

⁽¹⁾  This Exhibit is filed under Commission File No. 000-24975.

⁽²⁾  This Exhibit is filed under Commission File No. 000-51547.

E-6