10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

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.)
395 Hudson Street	10014
New York, New York (Address of principal executive office)	(Zip code)

(212) 624-3700

(Registrant’s telephone number including area code)

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 Website, 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 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 November 1, 2016, the Registrant had 38,760,044 shares of Common Stock outstanding (including unvested shares of restricted Common Stock).

WEBMD HEALTH CORP.

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2016

TABLE OF CONTENTS

		Page Number
Forward-Looking Statements			iii
PART I	Financial Information		1
Item 1.	Financial Statements		1
	Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015		1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (unaudited)		2
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015 (unaudited)		3
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (unaudited)		4
	Notes to Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		40
Item 4.	Controls and Procedures		40
PART II	Other Information		41
Item 1.	Legal Proceedings		41
Item 1A.	Risk Factors		41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		63
Item 6.	Exhibits		63
Signatures			64
Exhibit Index			E-1

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

ii

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 the Websites and mobile applications in The WebMD Health Network or of our WebMD Health Services platform and related services;

• the inability to successfully deploy new or updated applications or services for The WebMD Health Network and our WebMD Health Services platform or, if deployed, the failure to create new or enhanced revenue streams from those applications or services;

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

• competition for advertisers and sponsors for our Websites and mobile applications and for employer and health insurer clients of our WebMD Health Services platform;

• 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;

• 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 WebMD Health Services platform 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 Part II, Item 1A of this Quarterly Report on Form 10-Q.

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 information in this Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 and our other filings with the Securities and Exchange Commission since that filing.

The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Quarterly 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.

iii

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

WEBMD HEALTH CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30, 2016			December 31, 2015
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	88,600		$	641,165
Accounts receivable, net of allowance for doubtful accounts of $1,346 at September 30, 2016 and $1,040 at December 31, 2015		153,255			174,313
Investments		949,488			—
Prepaid expenses and other current assets		17,972			18,998
Total current assets		1,209,315			834,476
Property and equipment, net		84,929			81,027
Goodwill		202,980			202,980
Intangible assets, net		8,554			10,894
Deferred tax assets, net		8,984			15,694
Other assets		8,497			10,852
TOTAL ASSETS	$	1,523,259		$	1,155,923
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	65,892		$	80,664
Deferred revenue		102,251			102,715
2.25% convertible notes due 2016, net		—			102,523
Total current liabilities		168,143			285,902
2.50% convertible notes due 2018, net		397,620			396,281
1.50% convertible notes due 2020, net		295,140			294,266
2.625% convertible notes due 2023, net		350,849			—
Other long-term liabilities		28,965			23,246
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 September 30, 2016 and December 31, 2015		574			574
Additional paid-in capital		9,283,379			9,238,444
Treasury stock, at cost; 19,300,926 shares at September 30, 2016 and 20,621,216 shares at December 31, 2015		(651,988	)		(678,069	)
Accumulated other comprehensive income		539			357
Accumulated deficit		(8,349,962	)		(8,405,078	)
Stockholders’ equity		282,542			156,228
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,523,259		$	1,155,923

See accompanying notes.

1

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue	$	171,438	$	152,607	$	497,574	$	444,270
Cost of operations		65,458		59,552		193,759		177,836
Sales and marketing		35,264		32,850		104,634		97,896
General and administrative		20,005		22,942		67,744		67,397
Depreciation and amortization		7,912		7,266		23,071		23,103
Interest income		1,034		10		1,607		36
Interest expense		7,065		5,681		17,430		18,024
Loss on convertible notes		—		2,058		—		2,058
Gain on investments		—		—		—		139
Other expense		1,712		—		1,712		4,100
Income before income tax provision		35,056		22,268		90,831		54,031
Income tax provision		13,438		9,080		35,715		17,468
Net income	$	21,618	$	13,188	$	55,116	$	36,563
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89
Weighted-average shares outstanding used in computing per share amounts:
Basic		38,103		36,721		37,804		36,606
Diluted		55,845		49,958		53,836		49,912

See accompanying notes.

2

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016		2015
Net income	$	21,618		$	13,188		$	55,116	$	36,563
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains, net of tax		(153	)		(605	)		182		(516	)
Total other comprehensive (loss) income, net of tax		(153	)		(605	)		182		(516	)
Comprehensive income	$	21,465		$	12,583		$	55,298	$	36,047

See accompanying notes.

3

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	55,116		$	36,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,071			23,103
Non-cash interest, net		2,827			3,276
Non-cash stock-based compensation		21,038			24,731
Deferred income taxes		6,632			(7,246	)
Loss on convertible notes		—			2,058
Gain on investments		—			(139	)
Changes in operating assets and liabilities:
Accounts receivable		21,058			(10,201	)
Prepaid expenses and other, net		2,747			(5,692	)
Accrued expenses and other long-term liabilities		(9,748	)		(4,555	)
Deferred revenue		(464	)		15,280
Net cash provided by operating activities		122,277			77,178
Cash flows from investing activities:
Purchases of property and equipment		(24,449	)		(25,638	)
Purchase of investments		(948,078	)		—
Partial redemption of cost-method investment		1,193			—
Proceeds from sale of investments		—			139
Net cash used in investing activities		(971,334	)		(25,499	)
Cash flows from financing activities:
Proceeds from exercise of stock options		52,702			15,185
Cash used for withholding taxes due on stock-based awards		(7,705	)		(3,836	)
Net proceeds from issuance of convertible notes		350,394			—
Maturity and repurchases of convertible notes		(102,682	)		(151,038	)
Purchases of treasury stock		(22,447	)		(28,406	)
Excess tax benefit on stock-based awards		26,230			21,972
Net cash provided by (used in) financing activities		296,492			(146,123	)
Net decrease in cash and cash equivalents		(552,565	)		(94,444	)
Cash and cash equivalents at beginning of period		641,165			706,776
Cash and cash equivalents at end of period	$	88,600		$	612,332

See accompanying notes.

4

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data, unaudited)

1.     Summary of Significant Accounting Policies

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 generates revenue from the advertising and sponsorship services of The WebMD Health Network and related operations, from the services it markets to employers and health plans under the WebMD Health Services brand and from certain information services, each of which is described below and discussed further under “Presentation of Segment Information” in this Note 1.

Advertising and Sponsorship. 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 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.

Health Services. The Company markets services under the WebMD Health Services brand that help employers and health plans improve the health of their employee and plan participant populations and, as a result, manage their healthcare costs. The Company hosts its WebMD Health Services platform for private and public sector employers and health plans and its cloud-based online services can be accessed by their employees and plan participants using a computer, a tablet or a smartphone. The WebMD Health Services platform provides an online personal health record application and personal health content, tools and other resources relevant to the specific individual’s eligibility, coverage and wellness profile, including decision-support applications that help users make informed decisions about health risks, lifestyle choices, healthcare providers, treatment options, and healthcare benefits options. The Company’s flexible architecture allows it to integrate with the client’s existing programs, Websites and intranets for their employees and plan participants. The Company also offers clients the ability to design team-based and individual wellness challenges that help foster a culture of wellness in the workplace. In addition, the Company offers telephonic, online and onsite health coaching and targeted condition management programs that help employees and plan participants make healthier lifestyle choices to achieve their health and 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.

5

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Information Services. The Company also generates revenue from the sale of certain information products and services on a stand-alone basis using de-identified data that it licenses from a small number of third party data sources, of which the principal source is a license retained by HLTH Corporation (“HLTH”), the Company’s former parent company, in connection with the sale of its Emdeon Business Services (“EBS”) business. As the successor to HLTH, the Company received this license which provides the Company the rights to certain de-identified data from the operation of the EBS business (which is now known as Change Healthcare) through early February 2018 for use in the development and commercialization of various information products and services. Customers include data services, informatics and consulting companies.

Interim Financial Statements

The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2016. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations.

The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

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.

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 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

6

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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 “Health Services” (which the Company previously referred to as “Private Portal Services”) and consists of revenue from employers and health plans for subscriptions to the Company’s WebMD Health Services platform and for related services, including health coaching and condition management services. The change in the name of this group to “Health Services” began in the Company’s reporting on the quarter ended June 30, 2016 and did not reflect any change in the source of the revenue included in this group from prior periods. 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 segment.

The following table presents the revenues recognized from the four revenue groups described above during the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Advertising and sponsorship
Biopharma and medical device	$	107,048	$	89,870	$	296,353	$	251,692
OTC, CPG and other		29,026		28,850		93,907		89,047
		136,074		118,720		390,260		340,739
Health services		28,247		27,460		85,134		83,223
Information services		7,117		6,427		22,180		20,308
	$	171,438	$	152,607	$	497,574	$	444,270

7

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods presented. Diluted income 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):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income – Basic	$	21,618	$	13,188	$	55,116	$	36,563
Interest expense on 1.50% Notes, net of tax		878		864		2,635		2,592
Interest expense on 2.50% Notes, net of tax		1,827		1,797		5,480		5,392
Interest expense on 2.25% Notes, net of tax		—		—		457		—
Interest expense on 2.625% Notes, net of tax		1,675		—		2,235		—
Net income – Diluted	$	25,998	$	15,849	$	65,923	$	44,547
Denominator:
Weighted-average shares – Basic		38,103		36,721		37,804		36,606
Stock options and restricted stock		1,709		1,338		1,824		1,407
1.50% Notes		5,694		5,694		5,694		5,694
2.50% Notes		6,205		6,205		6,205		6,205
2.25% Notes		—		—		471		—
2.625% Notes		4,134		—		1,838		—
Adjusted weighted-average shares after assumed conversions – Diluted		55,845		49,958		53,836		49,912
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89

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 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 per common share during the periods presented (shares in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Options and restricted stock		383		4,235		302		3,672
2.25% Notes		—		2,516		—		3,180
		383		6,751		302		6,852

8

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During 2016

In June 2014, the FASB issued Accounting Standards Update (“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 was effective for the Company beginning in the quarter ended March 31, 2016. The adoption of the revised guidance did not have any impact on the Company’s consolidated financial statements as it does not have any share-based awards with performance targets currently outstanding.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The revised guidance was effective for the Company, on a retrospective basis, beginning in the quarter ended March 31, 2016. The adoption of the revised guidance only affected the balance sheet classification of its debt issuance costs. The impact of this reclassification on the consolidated balance sheet as of December 31, 2015 was a decrease to other assets of $9,612, a decrease to the carrying amount of the 2.25% Convertible Notes due 2016 (the “2.25% Notes”) of $159, a decrease to the carrying amount of the 2.50% Convertible Notes due 2018 (the “2.50% Notes”) of $3,719 and a decrease to the carrying amount of the 1.50% Convertible Notes due 2020 (the “1.50% Notes”) of $5,734 (see table below).

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance in determining whether a cloud computing arrangement includes a software license. If it is determined that a cloud computing arrangement does include a software license, the software element should be accounted for consistent with the acquisition of other software licenses. If the arrangement does not include a software license, it should be accounted for as a service contract. The revised guidance was effective for the Company beginning in the quarter ended March 31, 2016 and will be applied prospectively to all arrangements entered into or materially modified after the effective date. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting previously reported amounts. The revised guidance was effective for the Company, on a prospective basis, beginning in the quarter ended March 31, 2016. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent in the consolidated balance sheet instead of separating deferred taxes into current and noncurrent. The revised guidance was required to be effective for the Company beginning in the quarter ending March 31, 2017 and could be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. Early adoption was permitted and the Company elected to early adopt the guidance in the quarter ended March 31, 2016 on a retrospective basis. The adoption of the revised guidance only affected the balance sheet classification of its deferred tax assets and liabilities, and the related valuation allowance. The impact of this reclassification on the consolidated balance sheet as of December 31, 2015 was a decrease to current deferred tax assets of $16,126, an increase to noncurrent deferred tax assets of $15,694 and a decrease to other long-term liabilities of $432 (see table below).

9

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the reclassifications made to the consolidated balance sheet as of December 31, 2015 in connection with the adoption of ASU No. 2015-03 and ASU No. 2015-17:

	December 31, 2015
	As Reported		As Adjusted
Current assets:
Deferred tax assets		16,126		—
Total current assets		850,602		834,476
Deferred tax assets		—		15,694
Other assets		20,464		10,852
TOTAL ASSETS	$	1,165,967	$	1,155,923
Current liabilities:
2.25% convertible notes due 2016		102,682		102,523
Total current liabilities		286,061		285,902
2.50% convertible notes due 2018		400,000		396,281
1.50% convertible notes due 2020		300,000		294,266
Other long-term liabilities		23,678		23,246
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,165,967	$	1,155,923

Accounting Pronouncements to be Adopted in the Future

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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU No. 2014-09 by one year. As a result, the revised guidance is effective for the Company beginning in the quarter ending March 31, 2018. Early adoption is permitted, but not before the original effective date of the guidance. 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. In March, April and May 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, respectively. ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12 provide supplemental adoption guidance and clarification to ASU No. 2014-09, and must be adopted concurrently with the adoption of ASU No. 2014-09. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 also requires the change in fair value of

10

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

many equity investments to be recognized in net income. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The revised guidance must be applied on a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2019. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2017. Early adoption is permitted. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2020 and must be adopted using a modified retrospective transition approach. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018 with early adoption permitted and must be applied retrospectively to all periods presented. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

2.    Convertible Notes

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.

11

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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, 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, 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, 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.

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. 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 was 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, 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%

12

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Notes were 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, 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. The loss included the expensing of the remaining deferred issuance costs outstanding related to the repurchased notes. After these repurchases in 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, the conversion rate was adjusted to 13.9202 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This was equivalent to an adjusted 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 following the September 10, 2014 adjustment.

During the three and nine months ended September 30, 2015, the Company repurchased $149,550 principal amount of its 2.25% Notes for $151,038 in cash in privately negotiated transactions. The Company recognized a pre-tax loss of $2,058 during the three and nine months ended September 30, 2015 related to these repurchases, which is reflected within loss on convertible notes in the accompanying consolidated statements of operations. The loss included the expensing of the remaining deferred issuance costs outstanding related to the repurchased notes. After these repurchases, the remaining principal amount of the 2.25% Notes outstanding was $102,682, which, in the aggregate, was convertible into 1,429,354 shares of Common Stock. The 2.25% Notes matured on March 31, 2016 and the remaining principal amount of $102,682 was repaid to the holders of the 2.25% 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.

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, the conversion rate was adjusted to 18.9795 shares of Common Stock per thousand dollars principal amount of the 1.50% Notes. This is

13

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

2.625% Convertible Notes due 2023

On June 1, 2016, the Company issued $360,000 aggregate principal amount of its 2.625% Convertible Notes due 2023 (the “2.625% Notes”) in a private offering. Unless previously converted, the 2.625% Notes will mature on June 15, 2023. Net proceeds from the sale of the 2.625% Notes were approximately $350,394, after deducting the related offering expenses. Interest on the 2.625% Notes is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2016. Under the terms of the 2.625% Notes, holders may surrender their 2.625% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 11.4845 shares of Common Stock per thousand dollars principal amount of the 2.625% Notes. This is equivalent to an initial conversion price of approximately $87.07 per share of Common Stock. In the aggregate, the 2.625% Notes are convertible into 4,134,420 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances.

Under the terms of the 2.625% Notes, if the Company undergoes certain change of control or other fundamental change transactions prior to the maturity date of the 2.625% Notes, holders of the 2.625% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.625% Notes at a repurchase price equal to 100% of the principal amount of the 2.625% 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 2.625% Notes become convertible into the same consideration.

The balance of the Company’s convertible notes as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016							December 31, 2015
	Principal Amount		Less Unamortized Debt Issuance Costs			Net Carrying Amount		Principal Amount		Less Unamortized Debt Issuance Costs			Net Carrying Amount
2.25% Notes	$	—	$	—		$	—	$	102,682	$	(159	)	$	102,523
2.50% Notes	$	400,000	$	(2,380	)	$	397,620	$	400,000	$	(3,719	)	$	396,281
1.50% Notes	$	300,000	$	(4,860	)	$	295,140	$	300,000	$	(5,734	)	$	294,266
2.625% Notes	$	360,000	$	(9,151	)	$	350,849	$	—	$	—		$	—

14

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.    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.

Cash and Marketable Securities

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 September 30, 2016 and December 31, 2015:

			September 30, 2016						December 31, 2015
	Fair Value Estimate Using:		Amortized Cost Basis		Fair Value		Gross Unrealized Gains		Amortized Cost Basis		Fair Value		Gross Unrealized Gains
Cash and cash equivalents		Level 1	$	88,600	$	88,600	$	—	$	641,165	$	641,165	$	—
U.S. Treasury securities		Level 1	$	949,125	$	949,488	$	363	$	—	$	—	$	—
Equity security		Level 1	$	—	$	311	$	311	$	—	$	598	$	598

During the nine months ended September 30, 2016 the Company invested $948,078 in U.S. Treasury securities which have a maturity date of December 22, 2016. These securities are reflected within Investments on the accompanying consolidated balance sheet as of September 30, 2016.

The Company’s equity security consists of an equity investment in a publicly traded company that completed its initial public offering in December 2014. During the nine months ended September 30, 2015, the Company recorded a gain on investments of $139, which represents the proceeds received by the Company when it sold a portion of this security. The unrealized gain related to this investment, net of tax, is included within accumulated other comprehensive income in the accompanying consolidated balance sheets as of September 30, 2016 and December 31, 2015.

Foreign Currency Forward Contracts

The Company is exposed to fluctuations in foreign currencies related to contracts with certain of the Company’s customers that are denominated in foreign currencies, principally the British Pound and the Euro. In order to manage this risk, the Company has hedged portions of its foreign currency denominated customer contracts with foreign currency forward contracts. At September 30, 2016 and December 31, 2015, the Company had foreign currency forward contracts with U.S. dollar equivalent notional amounts of $8,757 and $0, respectively, all of which were designated as and qualified as cash flow hedges. These forward contracts are intended to fix the amount of these foreign currency obligations in terms of the Company’s functional currency, the U.S. dollar. All of the Company’s derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes.

15

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recognizes the fair value of its foreign currency forward contracts as either assets or liabilities on the consolidated balance sheets. Changes in the fair value of hedging instruments are recorded each period in accumulated other comprehensive income (loss) as unrealized gains and losses until the forecasted underlying transaction occurs. Realized gains and losses for the effective portion of such contracts are recognized in cost of operations in the consolidated statement of operations in the period when the forecasted underlying transaction occurs. The Company classifies the cash flows from hedging instruments in the same category as the cash flows from the hedged items.

The Company assesses, both at inception and on an ongoing basis, whether the foreign currency forward contracts used in hedging transactions are highly effective in offsetting the changes in cash flows of the hedged items. The Company also assesses hedge ineffectiveness quarterly and, if determined to be ineffective, records the gain or loss related to the ineffective portion in its consolidated statements of operations. Gains and losses related to hedge ineffectiveness were not material during the periods presented.

The following table sets forth the fair values of foreign currency forward contracts, which are valued using Level 2 inputs, and the balance sheet lines in which they are recorded:

	Fair Value Asset (Liability)
	September 30, 2016			December 31, 2015
Prepaid expenses and other current assets	$	579		$	—
Accrued expenses	$	(41	)	$	—
Other long-term liabilities	$	(1	)	$	—

The impact on accumulated other comprehensive income (“AOCI”) and net income from foreign currency forward contracts, for the three and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended     September 30,				Nine Months Ended     September 30,
	2016		2015		2016		2015
Gain recognized in AOCI	$	126	$	—	$	704	$	—
Gain reclassified from AOCI to cost of operations	$	175	$	—	$	521	$	—

Other

For disclosure purposes, the Company is required to measure the outstanding value of its debt on a recurring basis. The following table presents the principal amount and estimated fair value (based on Level 1 market price data) of the Company’s convertible notes as of September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Principal Amount		Fair Value		Principal Amount		Fair Value
2.25% Notes	$	—	$	—	$	102,682	$	102,618
2.50% Notes	$	400,000	$	415,716	$	400,000	$	416,000
1.50% Notes	$	300,000	$	346,326	$	300,000	$	340,566
2.625% Notes	$	360,000	$	350,402	$	—	$	—

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 total amount of the Company’s investment in this

16

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

privately held company was $5,278 and $6,471 as of September 30, 2016 and December 31, 2015, respectively. The decrease during the nine months ended September 30, 2016 was due to partial cash redemptions of this investment of $526 and $667 during the three months ended March 31, 2016 and the three months ended September 30, 2016, respectively. 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 September 30, 2016 and December 31, 2015.

4.    Equity

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, November 2014 and September 2015, the Company’s Board of Directors authorized increases to the Program of $75,000, $50,000, $40,000, $30,000, $23,895 and $27,451, respectively. Additionally, on September 16, 2016, the Company’s Board of Directors authorized an increase to the Program of $35,198, bringing the total then available under the Program to $50,000. During both the three and nine months ended September 30, 2016, the Company repurchased 432,072 of its Common Stock shares at an aggregate cost of $22,447 under the Program. During the three and nine months ended September 30, 2015, the Company repurchased 557,776 shares and 688,467 shares, respectively, at an aggregate cost of $23,055 and $28,406, respectively, under the Program. As of September 30, 2016, $46,807 remained available for repurchases under the Program.

Accumulated Other Comprehensive Income

The following table summarizes the Company’s changes in AOCI:

	Unrealized Gains on Marketable Securities, net of tax			Unrealized Gains on Foreign Currency Forward Contracts, net of tax			Total
Balance at December 31, 2015	$	357		$	—		$	357
Unrealized gain before reclassifications		69			436			505
Amounts reclassified from AOCI to cost of operations		—			(323	)		(323	)
Net current period other comprehensive income		69			113			182
Balance at September 30, 2016	$	426		$	113		$	539
Balance at December 31, 2014	$	976		$	—		$	976
Unrealized loss before reclassifications		(433	)		—			(433	)
Amounts reclassified from AOCI to cost of operations		(83	)		—			(83	)
Net current period other comprehensive loss		(516	)		—			(516	)
Balance at September 30, 2015	$	460		$	—		$	460

17

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.    Intangible Assets

Intangible assets consist of the following:

	September 30, 2016									December 31, 2015
	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		(30,763	)		3,294		2.1		34,057		(29,218	)		4,839		2.7
Technology and patents		17,882		(17,086	)		796		0.8		17,882		(16,291	)		1,591		1.5
Trade names-definite lives		2,530		(2,530	)		—		—		2,530		(2,530	)		—		—
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	74,887	$	(66,333	)	$	8,554			$	74,887	$	(63,993	)	$	10,894

(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.

Amortization expense was $780 and $2,340 during the three and nine months ended September 30, 2016, respectively, and $833 and $2,499 during the three and nine months ended September 30, 2015, respectively. Aggregate amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2016 (October 1st to December 31st)	$	780
2017	$	2,044
2018	$	1,266

6.    Commitments and Contingencies

Legal Proceedings

Dual Diagnosis Treatment Center, et al. v. Blue Cross of California, et al.

On May 8, 2015, six providers of substance abuse and/or mental health treatment services located in the States of California, Arizona and Florida filed an action in the United States District Court for the Central District of California (the “Action”) initially against twenty-eight (28) Blue Cross and Blue Shield companies (collectively “Blue Cross”), as well as at least forty-one (41) health and benefit plans, including the WebMD Health and Welfare Plan (the “Health Plan”). Additional defendants have since been added. Horizon Blue Cross Blue Shield of New Jersey, one of the Blue Cross companies named as a defendant, serves as third-party claims administrator for the Health Plan, a welfare plan sponsored by the Company under the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Company self-insures (up to the deductible amount under the Company’s stop loss insurance policy) the group health plan component of the Health Plan. The Company serves as “plan administrator” for the Health Plan under ERISA. The plaintiffs, “out-of-network” providers to Blue Cross, claim that Blue Cross improperly ignored assignments of benefits received by the plaintiffs from the individual plan participants and sent payments directly to such individual participants who then failed to remit those payments to the providers. Plaintiffs claim that defendants’ failures to honor the assignments violate ERISA and state law and they seek recovery for benefit claims in unspecified amounts that they claim have been paid to the wrong party together with attorney fees, as well as removal of all fiduciaries who are found to have breached ERISA-imposed duties under the relevant health and benefit plans on account of such conduct, and injunctive relief to enjoin Blue Cross from alleged unlawful practices regarding assignments of benefits. The Company has not yet

18

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

filed an answer to the complaint. On September 14, 2015, most of the named defendants, including the Company, filed an omnibus motion to dismiss the complaint for failure to state a claim. Thereafter, the plaintiffs amended the complaint and added new parties. Defendants received an extension of time to respond to the amended complaint and on January 25, 2016, 184 defendants, including the Company, renewed the omnibus motion to dismiss after all new parties were served and appeared in the Action. Opposition papers were filed on the motion on March 21, 2016, and reply papers were filed by the moving defendants on April 4, 2016. Oral argument on the motion was held on May 31, 2016, after which the parties filed additional submissions at the Court’s direction. The motion is currently pending. 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.

Other Legal Proceedings

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.

7.    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 24,975,000 as of September 30, 2016, subject to adjustment in accordance with the terms of the 2005 Plan. The Company had an aggregate of 2,633,642 shares of Common Stock available for future grants under the 2005 Plan at September 30, 2016, of which 1,501,500 shares are available for grant only to individuals who are not executive officers of the Company (other than in the case of a new hire who joins the Company as an executive officer) or members of the Company’s Board of Directors.

Stock Options

Generally, options under the Plans vest and become exercisable ratably over periods ranging from three to four 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 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, 2016		7,870,435		$	35.81
Granted		304,300			54.83
Exercised		(1,952,129	)		34.74
Cancelled		(537,902	)		40.11
Outstanding at September 30, 2016		5,684,704		$	36.79		6.2	$	75,374
Vested and exercisable at the end of the period		3,046,256		$	31.90		4.6	$	54,451

(a) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on September 30, 2016, which was $49.70, 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 September 30, 2016.

19

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 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.

	Nine Months Ended September 30,
	2016			2015
Expected dividend yield		0.0	%		0.0	%
Expected volatility		0.38 -  0.44			0.44 - 0.48
Risk-free interest rate		0.86% - 1.71	%		1.01% - 1.56	%
Expected term (years)		4.0 - 4.8			4.1 - 4.7
Weighted-average fair value of options granted during the period	$	18.92		$	16.31

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:

	Shares			Weighted Average Grant Date Fair Value
Balance at January 1, 2016		854,845		$	39.17
Granted		52,000			57.49
Vested		(201,969	)		33.19
Forfeited		(131,702	)		42.90
Balance at September 30, 2016		573,174		$	42.60

Proceeds received from the exercise of options to purchase shares of the Company’s Common Stock were $3,290 and $52,702 during the three and nine months ended September 30, 2016, respectively, and $3,532 and $15,185 during the three and nine months ended September 30, 2015, respectively. Additionally, in connection with the exercise of certain stock options and the vesting of restricted stock, the Company made payments of $3,895 and $7,705 during the three and nine months ended September 30, 2016, respectively, and $876 and $3,836 during the three and nine months ended September 30, 2015, 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 $14,245 and $53,539 for the three and nine months ended September 30, 2016, respectively, and $5,641 and $24,423 for the three and nine months ended September 30, 2015, respectively.

20

WEBMD HEALTH CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $117 and $350 of stock-based compensation expense for the three and nine months ended September 30, 2016, respectively, and $117 and $350 of stock-based compensation expense for the three and nine months ended September 30, 2015, 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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	3,176	$	5,771	$	13,366	$	15,704
Restricted stock		1,345		3,254		7,322		8,677
Other		117		117		350		350
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731
Included in:
Cost of operations	$	1,277	$	1,370	$	3,707	$	3,791
Sales and marketing		1,351		1,968		4,295		5,099
General and administrative		2,010		5,804		13,036		15,841
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731

In the table above, stock-based compensation expense included in general and administrative expense for the three and nine months ended September 30, 2016 includes the net reversal of $2,394 of stock-based compensation expense recorded in prior periods for stock-based awards that were forfeited by the Company’s former Chief Executive Officer and former Chief Financial Officer upon their termination of employment in September 2016.

As of September 30, 2016, approximately $37,621 of unrecognized stock-based compensation expense related to unvested awards (net of estimated forfeitures) is expected to be recognized over a weighted-average period of approximately 1.9 years, related to the Plans.

Tax benefits attributable to stock-based compensation represented 38% of stock-based compensation expense for the three and nine months ended September 30, 2016 and 2015.

8.    Other Expense

Other expense for the three and nine months ended September 30, 2016 represents cash severance and related expenses due to the September 2016 departure of the Chief Executive Officer and the Chief Financial Officer of the Company. Other expense for the nine months ended September 30, 2015 represents a charge related to the resolution of a patent infringement claim made by International Business Machines Corporation against the Company.

21

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

This Item 2 contains forward-looking statements with respect to possible events, outcomes or results that are, and are expected to continue to be, subject to risks, uncertainties and contingencies. See “Forward-Looking Statements” on page iii above. The results of operations for the periods reflected in this Quarterly Report 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 Part II, Item 1A of this Quarterly Report, those discussed in this Item 2 and those included elsewhere in this Quarterly Report. In this Item 2, 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 Quarterly 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 our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (which we refer to as the SEC).

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

• Liquidity and Capital Resources.    This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of September 30, 2016.

• 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 generate revenue from the advertising and sponsorship services of The WebMD Health Network and related operations, from the services we market to employers and health plans under the WebMD Health Services brand and from certain information services, each of which is described below and discussed further under “Supplemental Financial and Operating Information” below.

Advertising and Sponsorship.    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

22

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 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.

Health Services.    We market services under the WebMD Health Services brand that help employers and health plans improve the health of their employee and plan participant populations and, as a result, manage their healthcare costs. We host our WebMD Health Services platform for private and public sector employers and health plans and our cloud-based online services can be accessed by their employees and plan participants using a computer, a tablet or a smartphone. The WebMD Health Services platform provides an online personal health record application and personalized content, tools and other resources relevant to the specific individual’s eligibility, coverage and wellness profile, including decision-support applications that help users make informed decisions about health risks, lifestyle choices, healthcare providers, treatment options, and healthcare benefits options. Our flexible architecture allows us to integrate with the client’s existing programs, Websites and intranets for their employees and plan participants. We also offer clients the ability to design team-based and individual wellness challenges that help foster a culture of wellness in the workplace. 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 to achieve their health and 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.

Information Services.    We generate revenue from the sale of certain information products and services on a stand-alone 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 (or HLTH), our former parent company, in connection with the sale of its Emdeon Business Services (or EBS) business. 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 (now known as Change Healthcare) through early February 2018 for use in the development and commercialization of various information products and services. Customers include data services, informatics and consulting companies. We do not expect that the current license agreement with Change Healthcare will continue after February 2018, and expect that 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. Change Healthcare is in the process of merging with McKesson Corporation and, as a result, discussions around extending our agreement with Change Healthcare have stalled. We are exploring other sources of third-party data and uses of our first party data to generate additional revenue streams, but we are early in that process. Accordingly, we cannot provide any assurance that the sales of, or the profits generated by, our stand-alone information products would not be materially adversely affected by the expiration, in early February 2018, of our license agreement with Change Healthcare. This will not impact our 2016 or 2017 revenue or earnings, but would have an impact in 2018.

23

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.

— 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. Healthcare consumers 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.

— 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 to obtain CME and other healthcare professionals to obtain continuing education.

• 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 74% of our advertising and sponsorship revenue in 2015, 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. We believe that we are well-positioned to provide advertising solutions for pharmaceutical products that are currently being marketed as well as those in the pipeline for Food and Drug Administration (FDA) approval. Many of these pharmaceutical products are expensive therapies that treat complex conditions affecting relatively small patient populations, for which we believe that our online services provide an efficient way to reach target audiences. 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. In 2016, there has been increasing scrutiny regarding pricing increases for pharmaceutical products, which could lead to additional regulation of pharmaceutical pricing or other changes in how those products are distributed and the roles played by various industry participants in that distribution. We cannot predict the effect that such scrutiny or any resulting changes may have on the marketing plans of our customers in future periods or their future use of our 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 economic and regulatory conditions generally and those specifically affecting healthcare industry participants, as well as 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

24

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 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 and, in certain instances, have resulted in reductions in the overall online advertising budgets for some of our customers. Our public portals advertisers and sponsors also 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 companies and government agencies. Revenues from these clients are more likely to reflect trends in general economic conditions than revenues from pharmaceutical, biotechnology and medical device companies. Accordingly, revenues from these clients may be subject to significant quarter-to-quarter variations and we may not be able to forecast those variations accurately. 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.

• Traffic Trends.    The WebMD Health Network reached an average of approximately 184.1 million unique users per month in the third quarter of 2016 and delivered approximately 3.84 billion page views during the quarter, representing an 11% decrease in unique users and a 4% decrease in page views, when compared to the prior year period. Traffic to Medscape properties from physicians and other healthcare professionals averaged approximately 7.7 million physician sessions per month in the third quarter of 2016, an increase of approximately 14% 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. During the third quarter of 2016: approximately 41% of our page views came from a U.S. smartphone; approximately 20% came from a U.S. personal computer (or PC); approximately 6% came from a U.S. tablet device; and approximately 33% came from non-U.S. sources. See “–Efforts to Increase Advertising and Sponsorship Revenue from Mobile” below for discussion of trends in our advertising and sponsorship revenue from mobile.

— Starting in the third quarter of 2015, we began to experience slower growth in the overall traffic to The WebMD Health Network than in the prior several years and, in the third quarter of 2016, the traffic was lower than in the prior year period. We have seen declines in the number of referrals that we receive from Google and this has impacted our overall traffic. In

25

the third quarter of 2016, approximately 57% of our traffic came from search engines, as compared to approximately 69% in the prior year period. We have offset much of the decline with growth in direct sources of traffic. In the third quarter of 2016, our non-search-related traffic increased by approximately 40% over the prior year period.

— In the third quarter of 2016, our advertising and sponsorship revenue grew 15% over the prior year period, even though the aggregate number of page views delivered by The WebMD Health Network declined by 4%. Overall traffic to The WebMD Health Network does not have a direct correlation to our advertising and sponsorship revenue, which can continue to grow even when overall traffic is reduced. We create content on specific topics and program various parts of The WebMD Health Network to build and maintain traffic in areas most important to both our audience and our advertising and sponsorship clients. For example, the total Medscape audience is small compared to the total audience of The WebMD Health Network, but Medscape Websites and mobile apps contributed approximately 60% of our advertising and sponsorship revenue in 2015 because of the high value our clients place on being able to reach the Medscape audience of physicians and other healthcare professionals or to reach targeted portions of that Medscape audience. In the nine months ended September 30, 2016, approximately 75% of our advertising and sponsorship revenue was generated from less than 20% of the page views delivered by The WebMD Health Network.

• 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 interested in reaching a targeted audience, regardless of what device the user is engaging on, and choose multi-platform advertising and sponsorship programs. In 2015, our advertising and sponsorship revenue delivered on a mobile device grew to approximately $189 million, or 38% of our total advertising and sponsorship revenue, from approximately $156 million in 2014 (which was 34% of our total advertising and sponsorship revenue in that year). 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. With our significant scale in both desktop and mobile audience engagement and our ability to reach targeted portions of our audience, we believe that The WebMD Health Network is well-positioned to meet the needs of our advertising and sponsorship clients.

• Social Media and Video Initiatives.    Given the increasing prominence of social networks as important platforms for finding and consuming content, WebMD is working to enable users to more easily discover, share and interact with content from WebMD, not just on our own Websites, but also in other online locations. Some of our initiatives are directed toward the creation of new content offerings that are tailored for specific social networks and platforms. Our strategy to extend our content and brand beyond The WebMD Health Network will, in some cases, allow us to drive people back to WebMD’s sites, where we can monetize that traffic as we do today; in other cases, we are exploring new monetization opportunities as we engage with users outside of WebMD’s sites. Another key aspect of these initiatives is to create new video content that is both highly engaging and easily sharable across social networks. To continue to build our video content into a scalable library, we are growing our team of video producers and editors, as well as building additional in-house expertise to create video content. We are also continuing to develop longer-form video offerings. We believe that by taking WebMD into new online environments and onto new platforms, we will strengthen our connection to existing users, reach new audiences and diversify our traffic sources. We expect that these efforts will, over time, allow us to create additional monetization opportunities.

• Trends Affecting Our Services for Employers and Health Plans.    In response to increasing healthcare costs, public and private sector employers and health plans have been changing benefit plan designs to

26

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. 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. We believe that, through our WebMD Health Services platform and related coaching and condition management services, we are well positioned to play a role in this environment. 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. 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.

• International.    Physicians and healthcare professionals from around the world access our content in English through Medscape. In addition, we publish Spanish, French, Portuguese and German language editions of Medscape through which healthcare professionals can access our content in those languages. We have also entered into collaborations with companies having expertise in a specific country or region to extend our reach. 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.

• 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 from 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

Stock Repurchases.    On September 16, 2016, our Board of Directors authorized an increase of $35,198 to our stock repurchase program (which we refer to as the Program), bringing the total then available under the Program to $50,000. During both the three and nine months ended September 30, 2016, we repurchased 432,072 shares of our Common Stock at an aggregate cost of $22,447 under the Program. During 2015, we repurchased 688,467 shares of our Common Stock at an aggregate cost of $28,406 under the Program, of which the entire 688,467 shares were purchased in the nine months ended September 30, 2015. As of September 30, 2016, $46,807 remained available for repurchases under the Program.

27

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 following completion of tender offers by WebMD for its Common Stock in 2012, 2013 and 2014, 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 September 30, 2016.

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. The 2.25% Notes matured on March 31, 2016 and the remaining outstanding principal amount of $102,682 was repaid.

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 a tender offer by WebMD for its Common Stock, 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 September 30, 2016.

On June 1, 2016, we issued $360,000 aggregate principal amount of 2.625% Convertible Notes due 2023 (which we refer to as the 2.625% Notes) in a private offering. Unless previously converted, the 2.625% Notes will mature on June 15, 2023. Net proceeds from the sale of the 2.625% Notes were approximately $350,394, after deducting the related offering expenses. Interest on the 2.625% Notes is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2016. Under the terms of the 2.625% Notes, holders may surrender their 2.625% Notes for conversion into WebMD Common Stock at a conversion rate of 11.4845 shares of Common Stock per thousand dollars principal amount of the 2.625% Notes. This is equivalent to an initial conversion price of approximately $87.07 per share of Common Stock. In the aggregate, the 2.625% Notes were convertible into 4,134,420 shares of Common Stock as of September 30, 2016. The conversion rate may be adjusted under certain circumstances.

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.

28

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 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.

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 WebMD Health Services platform as well as related health coaching and condition management 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

29

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 2015 or during the nine months ended September 30, 2016.

• 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 September 30, 2016, there was approximately $37,621 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 1.9 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.

30

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:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2016				2015				2016				2015
	$		% (a)		$		% (a)		$		% (a)		$		% (a)
Revenue	$	171,438		100.0	$	152,607		100.0	$	497,574		100.0	$	444,270		100.0
Cost of operations		65,458		38.2		59,552		39.0		193,759		38.9		177,836		40.0
Sales and marketing		35,264		20.6		32,850		21.5		104,634		21.0		97,896		22.0
General and administrative		20,005		11.7		22,942		15.0		67,744		13.6		67,397		15.2
Depreciation and amortization		7,912		4.6		7,266		4.8		23,071		4.6		23,103		5.2
Interest income		1,034		0.6		10		—		1,607		0.3		36		—
Interest expense		7,065		4.1		5,681		3.7		17,430		3.5		18,024		4.1
Loss on convertible notes		—		—		2,058		1.3		—		—		2,058		0.5
Gain on investments		—		—		—		—		—		—		139		—
Other expense		1,712		1.0		—		—		1,712		0.3		4,100		0.9
Income before income tax provision		35,056		20.4		22,268		14.6		90,831		18.3		54,031		12.2
Income tax provision		13,438		7.8		9,080		5.9		35,715		7.2		17,468		3.9
Net income	$	21,618		12.6	$	13,188		8.6	$	55,116		11.1	$	36,563		8.2

(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 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 “Health Services” (which we previously referred to as “Private Portal Services”) and consists of revenue from employers and health plans for subscriptions to our WebMD Health Services platform and related services, including health coaching and condition management services. The change in the name of this group to “Health Services” does not reflect any change in the source of the revenue included in this group from prior periods. 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 Websites, mobile applications and WebMD Health Services platform. 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.

31

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock-based compensation expense included in:
Cost of operations	$	1,277	$	1,370	$	3,707	$	3,791
Sales and marketing		1,351		1,968		4,295		5,099
General and administrative		2,010		5,804		13,036		15,841
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731

Three and Nine Months Ended September 30, 2016 and 2015

The following discussion is a comparison of our results of operations for the three and nine months ended September 30, 2016 and 2015.

Revenue

Our total revenue increased 12.3% and 12.0% to $171,438 and $497,574 for the three and nine months ended September 30, 2016, respectively, from $152,607 and $444,270 in the prior year periods. The increases were due to increases in advertising and sponsorship revenue of $17,354 and $49,521, increases in health services revenue of $787 and $1,911 and increases in information services revenue of $690 and $1,872, for the three and nine months ended September 30, 2016, respectively, over the prior year periods. A more detailed discussion regarding changes in these revenue groupings is included below under “–Supplemental Financial and Operating Information.”

Costs and Expenses

Cost of Operations.    Cost of operations was $65,458 and $193,759 for the three and nine months ended September 30, 2016, respectively, compared to $59,552 and $177,836 in the prior year periods. As a percentage of revenue, cost of operations was 38.2% and 38.9% for the three and nine months ended September 30, 2016, respectively, compared to 39.0% and 40.0% for the prior year periods. Included in cost of operations were non-cash expenses related to stock-based compensation of $1,277 and $3,707 for the three and nine months ended September 30, 2016, respectively, compared to $1,370 and $3,791 in the prior year periods. Cost of operations, excluding such non-cash expenses, was $64,181 and $190,052 for the three and nine months ended September 30, 2016, respectively, or 37.4% and 38.2% of revenue, compared to $58,182 and $174,045, or 38.1% and 39.2% of revenue, for the prior year periods. The increase in absolute dollars for the three and nine months ended September 30, 2016 compared to the prior year periods was primarily attributable to the increased expense associated with the delivery of our advertising and sponsorship programs and the operations of our Websites. The decrease in cost of operations expense as a percentage of revenue, excluding such non-cash expenses discussed

32

above, for the three and nine months ended September 30, 2016 compared to the prior year periods was primarily due to the increase in our revenue of 12.3% and 12.0%, respectively, without a commensurate increase in cost of operations expenses as many of our expenses are fixed in nature.

Sales and Marketing.    Sales and marketing expense was $35,264 and $104,634 for the three and nine months ended September 30, 2016, respectively, compared to $32,850 and $97,896 in the prior year periods. As a percentage of revenue, sales and marketing expense was 20.6% and 21.0% for the three and nine months ended September 30, 2016, compared to 21.5% and 22.0% for the prior year periods. Included in sales and marketing expense were non-cash expenses related to stock-based compensation of $1,351 and $4,295 for the three and nine months ended September 30, 2016, respectively, compared to $1,968 and $5,099 in the prior year periods. Sales and marketing expense, excluding such non-cash expenses, was $33,913 and $100,339 for the three and nine months ended September 30, 2016, respectively, or 19.8% and 20.2% of revenue, compared to $30,882 and $92,797, or 20.2% and 20.9% of revenue, for the prior year periods. The decrease in sales and marketing expense as a percentage of revenue, excluding such non-cash expenses discussed above, for the three and nine months ended September 30, 2016 compared to the prior year periods was primarily due to the increase in our revenue of 12.3% and 12.0%, respectively, without a commensurate increase in sales in marketing expenses as many of our expenses are fixed in nature.

General and Administrative.    General and administrative expense was $20,005 and $67,744 for the three and nine months ended September 30, 2016, respectively, compared to $22,942 and $67,397 in the prior year periods. As a percentage of revenue, general and administrative expense was 11.7% and 13.6% for the three and nine months ended September 30, 2016, respectively, compared to 15.0% and 15.2% for the prior year periods. Included in general and administrative expense were non-cash expenses related to stock-based compensation of $2,010 and $13,036 for the three and nine months ended September 30, 2016, respectively, compared to $5,804 and $15,841 in the prior year periods. The decrease in non-cash stock-based compensation expense for the three and nine months ended September 30, 2016, compared to the prior year periods, was primarily due to the net reversal of $2,394 of stock-based compensation expense recorded in prior periods for stock-based awards that were forfeited by our former Chief Executive Officer and our former Chief Financial Officer upon their termination of employment in September 2016. General and administrative expense, excluding such non-cash expenses, was $17,995 and $54,708 for the three and nine months ended September 30, 2016, respectively, or 10.5% and 11.0% of revenue, compared to $17,138 and $51,556, or 11.2% and 11.6% of revenue, for the prior year periods. The decrease in general and administrative expense as a percentage of revenue, excluding the non-cash expenses discussed above, for the three and nine months ended September 30, 2016 compared to the prior year periods, was primarily due to the increase in our revenue of 12.3% and 12.0%, respectively, without a commensurate increase in sales in marketing expenses as many of our expenses are fixed in nature.

Depreciation and Amortization.    Depreciation and amortization expense was $7,912 and $23,071 for the three and nine months ended September 30, 2016, respectively, compared to $7,266 and $23,103 in the prior year periods.

Interest Income.    Interest income was $1,034 and $1,607 for the three and nine months ended September 30, 2016, respectively, compared to $10 and $36 in the prior year periods. The increases in interest income during the three and nine months ended September 30, 2016 resulted from higher average rates of return on our investments as well as higher average investment balances during these periods due to the net proceeds from the issuance of the 2.625% Notes on June 1, 2016.

Interest Expense.    Interest expense was $7,065 and $17,430 for the three and nine months ended September 30, 2016, respectively, compared to $5,681 and $18,024 in the prior year periods. These amounts included non-cash interest expense, related to the amortization of debt issuance costs for convertible debt, of $1,077 and $2,827 for the three and nine months ended September 30, 2016, respectively, compared to $1,020 and $3,276 in the prior year periods. The increase in interest expense for the three months ended September 30, 2016, compared to the prior year period, was primarily due to the issuance of $360,000 principal amount of our

33

2.625% Notes on June 1, 2016. During the nine months ended September 30, 2016, our interest expense decreased, compared to the prior year period, due to a lower weighted average outstanding balance of convertible notes during the period.

Loss on Convertible Notes.    During the three and nine months ended September 30, 2015, we recorded a loss on convertible notes of $2,058 related to the repurchase of $149,550 principal amount of our 2.25% Notes.

Gain on Investments.    Gain on investments of $139 for the nine months ended September 30, 2015 represents the gain from the sale of a portion of our investment in an equity security.

Other Expense.    Other expense of $1,712 for the three and nine months ended September 30, 2016 represents cash severance and related expenses due to the termination of employment of our former Chief Executive Officer and our former Chief Financial Officer in September 2016. Other expense of $4,100 for the nine months ended September 30, 2015 represents a charge related to the resolution of a patent infringement claim made against us by International Business Machines Corporation.

Income Tax Provision.    The income tax provision was $13,438 and $35,715 for the three and nine months ended September 30, 2016, respectively, compared to $9,080 and $17,468 in the prior year periods. During the three and nine months ended September 30, 2016, the income tax provision represented 38.3% and 39.3% of pre-tax income, respectively. During the three and nine months ended September 30, 2015, the income tax provision represented 40.8% and 32.3% of pre-tax income, respectively. The effective tax rate was lower than our statutory tax rate for the nine months ended September 30, 2015 as the income tax provision included a non-cash income tax benefit of $4,724 due to the reversal of an income tax valuation allowance. This benefit reflects a correcting adjustment, made in the quarter ended June 30, 2015, to the income tax valuation allowance originally recorded during the year ended December 31, 2012, which increased our net loss in that year.

Net Income.    Net income increased to $21,618 and $55,116 during the three and nine months ended September 30, 2016, respectively, compared to $13,188 and $36,563 in the prior year periods. As a percentage of revenue, net income was 12.6% and 11.1% of revenue in the three and nine months ended September 30, 2016, respectively, compared to 8.6% and 8.2% of revenue in the prior year periods. These increases as a percentage of revenue were primarily due to the higher revenue in 2016. Many of our expenses are fixed in nature and do not vary directly with revenue and, accordingly, our net income as a percentage of revenue will fluctuate primarily as a result of changes in our revenue.

34

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 net income to Adjusted EBITDA.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue
Advertising and sponsorship
Biopharma and medical device	$	107,048		$	89,870		$	296,353		$	251,692
OTC, CPG and other		29,026			28,850			93,907			89,047
		136,074			118,720			390,260			340,739
Health services		28,247			27,460			85,134			83,223
Information services		7,117			6,427			22,180			20,308
	$	171,438		$	152,607		$	497,574		$	444,270
Net income	$	21,618		$	13,188		$	55,116		$	36,563
Interest, taxes, non-cash and other items
Interest income		(1,034	)		(10	)		(1,607	)		(36	)
Interest expense		7,065			5,681			17,430			18,024
Income tax provision		13,438			9,080			35,715			17,468
Depreciation and amortization		7,912			7,266			23,071			23,103
Non-cash stock-based compensation		4,638			9,142			21,038			24,731
Loss on convertible notes		—			2,058			—			2,058
Gain on investments		—			—			—			(139	)
Other expense		1,712			—			1,712			4,100
Earnings before interest, taxes, non-cash and other items (Adjusted EBITDA)	$	55,349		$	46,405		$	152,475		$	125,872

The following discussion is a comparison of the results of operations for our groups of revenue, our net income and our Adjusted EBITDA for the three and nine months ended September 30, 2016 and 2015.

Advertising and Sponsorship.    Advertising and sponsorship revenue was $136,074 and $390,260 in the three and nine months ended September 30, 2016, respectively, increases of $17,354 and $49,521, or 14.6% and 14.5%, from the prior year periods. The increases in revenue for the three and nine months ended September 30, 2016 over the prior year periods were primarily attributable to the increased adoption of our advertising and sponsorship offerings by biopharma and medical device companies, which represented increases of $17,178 and $44,661, respectively, and by our OTC, CPG and other customers, which represented increases of $176 and $4,860, 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.

Health Services.    Health services revenue was $28,247 and $85,134 in the three and nine months ended September 30, 2016, respectively, increases of $787 and $1,911, or 2.9% and 2.3%, from the prior year periods. The slight increases in revenue for the three and nine months ended September 30, 2016 was primarily attributable to an increase in services provided. In general, pricing remained relatively stable for our WebMD Health Services platform and related services and was not a significant source of the revenue increase. The number of customers using our WebMD Health Services platform at September 30, 2016 was 87 compared to 91 customers using our WebMD Health Services platform at September 30, 2015.

35

Information Services.    Information services revenue was $7,117 and $22,180 in the three and nine months ended September 30, 2016, respectively, increases of $690 and $1,872, or 10.7% and 9.2%, from the prior year periods. The increases were attributable to an increase in the number of customers licensing our information services and an increase in the rates charged for our information services.

Adjusted EBITDA.    Adjusted EBITDA increased to $55,349 and $152,475 during the three and nine months ended September 30, 2016, respectively, compared to $46,405 and $125,872 in the prior year periods. As a percentage of revenue, Adjusted EBITDA was 32.3% and 30.6% of revenue in the three and nine months ended September 30, 2016, respectively, compared to 30.4% and 28.3% of revenue in the prior year periods. These increases as a percentage of revenue were primarily due to the higher revenue in 2016. 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.

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

Liquidity and Capital Resources

As of September 30, 2016, we had $88,600 of cash and cash equivalents, and working capital of $1,041,172. Our operating cash flows 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 during the nine months ended September 30, 2016 was $122,277, which related to net income of $55,116, adjusted for a non-cash income tax provision of $6,632 related to deferred income taxes, and other non-cash expenses of $46,936, which include depreciation and amortization expense, non-cash interest expense and non-cash stock-based compensation expense. Additionally, changes in operating assets and liabilities resulted in an increase in cash of $13,593, primarily due to cash provided as a result of a decrease in accounts receivable of $21,058 and a decrease in prepaid and other assets of $2,747, which was offset by cash used as a result of a decrease in accrued liabilities of $9,748 and a decrease in deferred revenue of $464.

Cash provided by operating activities during the nine months ended September 30, 2015 was $77,178, which related to net income of $36,563, adjusted for a non-cash income tax benefit of $7,246 related to deferred income taxes, a loss on convertible notes of $2,058, a gain on investments of $139, and other non-cash expenses of $51,110, which include depreciation and amortization expense, non-cash interest expense and non-cash stock-based compensation expense. Additionally, changes in operating assets and liabilities resulted in a decrease in cash of $5,168, primarily due to cash used as a result of an increase in accounts receivable of $10,201, an

36

increase in prepaid and other assets of $5,692, and a decrease in accrued liabilities of $4,555, which was offset by cash provided by an increase in deferred revenue of $15,280.

Cash used in investing activities was $971,334 and $25,499 during the nine months ended September 30, 2016 and 2015, respectively. During the nine months ended September 30, 2016, we used $948,078 in cash to purchase short-term investments. Cash used in investing activities included purchases of property and equipment of $24,449 and $25,638 in the nine months ended September 30, 2016 and 2015, respectively. Also included in investing activities in the nine months ended September 30, 2016 was the receipt of $1,193 related to the partial redemption of a cost-method investment. During the nine months ended September 30, 2015, we also received $139 in cash proceeds from the sale of a portion of our investment in an equity security.

Cash provided by financing activities was $296,492 during the nine months ended September 30, 2016. Cash used in financing activities was $146,123 during the nine months ended September 30, 2015. Cash provided by financing activities in the nine months ended September 30, 2016 primarily related to the issuance of $360,000 principal amount of our 2.625% Notes for which we received $350,394 in net proceeds, after deducting the related issuance costs. During the nine months ended September 30, 2016, we used cash of $102,682 to repay our 2.25% Notes which matured on March 31, 2016. During the nine months ended September 30, 2015, we used cash of $151,038 to repurchase a portion of our 2.25% Notes. During the nine months ended September 30, 2016 and 2015, we received cash proceeds of $52,702 and $15,185, respectively, related to the exercise of stock options, and used cash of $7,705 and $3,836, respectively, for withholding taxes on stock-based awards. Cash flows from financing activities for the nine months ended September 30, 2016 and 2015 also include excess tax benefits on stock-based awards of $26,230 and $21,972, respectively. Additionally, we used cash of $22,447 and $28,406 in the nine months ended September 30, 2016 and 2015, respectively, to repurchase shares of our Common Stock through our authorized repurchase program.

Potential future uses of cash include repurchases of our Common Stock and our anticipated capital expenditure requirements for 2016, which we currently estimate to be approximately $30 million (of which, approximately $6 million will be in the quarter ending December 31, 2016) and which primarily relate to improvements that will be deployed across our 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 WebMD Health Services platform.

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 24 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.

37

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During 2016

In June 2014, the Financial Accounting Standards Board (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 was effective for us beginning in the quarter ended March 31, 2016. The adoption of the revised guidance did not have any impact on our consolidated financial statements as we do not have any share-based awards with performance targets currently outstanding.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The revised guidance was effective for us, on a retrospective basis, beginning in the quarter ended March 31, 2016. The adoption of the revised guidance only affected the balance sheet classification of our debt issuance costs.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance in determining whether a cloud computing arrangement includes a software license. If it is determined that a cloud computing arrangement does include a software license, the software element should be accounted for consistent with the acquisition of other software licenses. If the arrangement does not include a software license, it should be accounted for as a service contract. The revised guidance was effective for us beginning in the quarter ended March 31, 2016 and will be applied prospectively to all arrangements entered into or materially modified after the effective date. The adoption of this guidance did not have an impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting previously reported amounts. The revised guidance was effective for us beginning in the quarter ended March 31, 2016. The adoption of this guidance did not have an impact on our consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent in the consolidated balance sheet instead of separating deferred taxes into current and noncurrent. The revised guidance was required to be effective for us beginning in the quarter ending March 31, 2017 and could be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. Early adoption was permitted and we elected to early adopt the guidance in the quarter ended March 31, 2016 on a retrospective basis. The adoption of the revised guidance only affected the balance sheet classification of our deferred tax assets and liabilities, and the related valuation allowance.

Accounting Pronouncements to be Adopted in the Future

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

38

that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU No. 2014-09 by one year. As a result, the revised guidance is effective for us beginning in the quarter ending March 31, 2018. Early adoption is permitted, but not before the original effective date of the guidance. 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. In March, April and May 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, respectively. ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12 provide supplemental adoption guidance and clarification to ASU No. 2014-09, and must be adopted concurrently with the adoption of ASU No. 2014-09. We have not yet determined the impact that the revised guidance will have on our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 also requires the change in fair value of many equity investments to be recognized in net income. The revised guidance is effective for us beginning in the quarter ending March 31, 2018. We have not yet determined the impact that the revised guidance will have on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The revised guidance must be applied on a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The revised guidance is effective for us beginning in the quarter ending March 31, 2019. We have not yet determined the impact the revised guidance will have on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The revised guidance is effective for us beginning in the quarter ending March 31, 2017. Early adoption is permitted. We have not yet determined the impact the revised guidance will have on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The revised guidance is effective for us beginning in the quarter ending March 31, 2020 and must be adopted using a modified retrospective transition approach. We have not yet determined the impact the revised guidance will have on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The revised guidance is effective for us beginning in the quarter ending March 31, 2018 with early adoption permitted and must be applied retrospectively to all periods presented. We have not yet determined the impact the revised guidance will have on our consolidated financial statements.

39

ITEM 3. 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 cash equivalents, which was $88.6 million at September 30, 2016, is not subject to changes in interest rates. The value of our investments, which was $949.5 million at September 30, 2016, is subject to changes in interest rates; however, due to the short term nature of these investments, any changes are not expected to be material.

The 2.50% Notes, the 1.50% Notes and the 2.625% Notes have fixed interest rates; therefore, changes in interest rates will not impact our results of operations or financial position.

Exchange Rate Sensitivity

Substantially all of our revenues and expenses are denominated in United States dollars; however, a portion of the revenue from our international operations was contracted in foreign currencies. The impact of changes in exchange rates for the three and nine months ended September 30, 2016 and 2015 has been reflected in our results of operations and was not material, and future changes in exchange rates are not expected to have a material impact on our results of operations or financial position.

ITEM 4. Controls and Procedures

As required by Exchange Act Rule 13a-15(b), WebMD management, including the Chief Executive Officer and the 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 September 30, 2016. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that WebMD’s disclosure controls and procedures were effective as of September 30, 2016.

In connection with the evaluation required by Exchange Act Rule 13a-15(d), WebMD management, including the Chief Executive Officer and the 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 third quarter of 2016 that have materially affected, or are reasonably likely to materially affect, WebMD’s internal control over financial reporting.

40

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings

The information relating to legal proceedings contained in Note 6 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report is incorporated herein by this reference.

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 Quarterly 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 and healthcare professionals;

• 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 advertising and sponsorship revenue to decrease and could have a material adverse effect on our results of operations. However, overall traffic to The WebMD Health Network does not have a direct correlation to our advertising and sponsorship revenue, which can continue to grow even if overall traffic were to remain constant or go down. Our ability to generate advertising and sponsorship revenue depends primarily on our ability to create content on specific topics and to program various parts of The WebMD Health Network to build and maintain traffic in areas most important to both our audience and our advertising and sponsorship clients. If we are unable to do that, our advertising and sponsorship revenue could decrease even if our overall traffic remains the same or increases.

41

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 or our traffic from search is otherwise reduced, 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. In addition to providing quality content and tools, we seek to produce and deliver our 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 or make other changes and our SEO efforts may not be successful if we do not respond to those changes appropriately and on a timely basis. Search engine providers may also prioritize search results generated by certain types of queries, including health-related queries, based on criteria they select, 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 or to respond effectively to other factors and challenges that may impair our ability to attract traffic through search, 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. We cannot predict if, or how long, efforts to improve SEO or otherwise increase traffic may take to mitigate any such declines.

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 health-related or other 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. In addition, to the extent that there is a reduction in the total volume of health-related searches on Internet search engines, traffic to The WebMD Health Network could also be reduced and we may have little or no ability to take steps to mitigate the effect on our traffic. In addition, we have experienced in the past, and may experience in the future, declines in traffic to The WebMD Health Network from search for reasons that we are unable to identify. Any resulting reduction in our traffic for any of the reasons described above, if significant, could cause our revenue to decrease and could have a material adverse effect on our results of operations.

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

The number of people, including the number of physicians and other healthcare professionals, who access online content and services through smartphones has increased rapidly and is expected to continue to increase. Accordingly, the portion of our page views from smartphones has increased rapidly and is expected to continue to increase. The monetization of smartphone page views can be challenging because of the smaller screen size. If we are unable to maintain successful monetization strategies for smartphone traffic, our financial results could be negatively affected.

42

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 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 platform and related services, including health coaching and condition management services compete with: providers of decision-support and transparency tools that assist in evaluating health insurance coverage options and healthcare provider and treatment options; 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. Employers may also decide to develop similar solutions for their own populations rather than obtaining solutions from WebMD Health Services or its competitors.

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 may 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 services may be more difficult than expected and may not result in sufficient increases in revenue to justify the costs

In order to attract and retain users of our Websites and mobile applications and clients for our WebMD Health Services platform and related services, we must continue to improve the technology underlying our services and continue to develop new and updated offerings. If we are unable to do so on a timely basis or if we are unable to implement new offerings without disruption to our existing ones, we may lose potential users and clients. For example, we are in the process of working to enable users to more easily discover, share and interact with content from WebMD not just on our Websites but also in other online locations and, in support of this initiative, we are creating new content offerings tailored for specific social networks and platforms and building our capabilities to create video content. If we are not successful in creating content offerings that support this initiative, our ability to compete for advertising and sponsorship revenue may be reduced. Even if we are successful in creating such content offerings and users respond favorably, there can be no assurance that we will be able to adequately monetize audience usage of such content or to drive sufficient traffic to our own Websites to make this initiative profitable.

We rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our Websites, 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.

43

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, including challenges relating to security and privacy.

Some of the business initiatives we are working on have challenges that are different from 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 continue 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 continue to work 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 behaviors and preferences. Our ability to demonstrate the value of advertising and sponsorship on The WebMD Health Network depends, in part, on our ability to provide accurate and reliable analytics and measurement capabilities and to continue to improve such capabilities. If we are unable to demonstrate such analytic capabilities, it could adversely affect our ability to market our services or to satisfy client expectations and commitments that rely on analytics to measure performance and, as a result, 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 stand-alone 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 (HLTH) in connection with the sale of its Emdeon Business Services (EBS) business. 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 (which is now known as Change Healthcare) through early February 2018 for use in the development and commercialization of various information products and services as to which we pay Change Healthcare a royalty. To date, these stand-alone 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 stand-alone products and services that utilize data under the current Change Healthcare license is highly profitable and is recorded net of royalties and commissions paid by us to Change Healthcare or others. To date, we have not used data we license from Change Healthcare to support our current advertising business.

We do not expect that the current license agreement with Change Healthcare will continue after February 2018, and expect that 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.

44

Change Healthcare is in the process of merging with McKesson Corporation and, as a result, discussions around extending our agreement with Change Healthcare have stalled. We are exploring other sources of third-party data and uses of our first party data to generate additional revenue streams, but we are early in that process. Accordingly, we cannot provide any assurance that the sales of, or the profits generated by, our stand-alone information products would not be materially adversely affected by the expiration, in early February 2018, of our license agreement with Change Healthcare. This will not impact our 2016 or 2017 revenue or earnings, but would have an impact in 2018.

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 stand-alone 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 and our other 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 The WebMD Health Network 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 WebMD Health Services platform and related services. 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.

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.

The standards that our advertising and sponsorship clients apply to our services continue to evolve, including standards for ad delivery, placement and frequency and for measuring the effectiveness of our services as compared to other alternatives available to our clients. Our ability to meet such standards as they change in the future will be important to our ability to compete for business, and we cannot provide assurance that we will be able to do so or estimate what the costs for doing so may be. For example, standards are continuing to evolve in the online advertising marketplace regarding the viewability of online advertising, or the length of time an advertisement is visible to a user as determined by a third party verification source. We cannot predict how the requirements of advertisers will continue to evolve. If we fail to meet the standards that our advertisers require, our advertising revenues could be reduced.

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

45

editors, software developers and other technical personnel, healthcare professionals, 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:

• U.S. Food and Drug Administration (FDA) approval for new products or for new indications or uses for approved 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;

• recalls, withdrawals or shortages of products from the market;

• consolidation of companies in the pharmaceutical and biotechnology industries;

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

• seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that may affect the timing of promotional campaigns for specific products; and

• the scheduling of conferences for physicians and other healthcare professionals.

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 (unless the FDA awards regulatory exclusivities beyond the patent term). In addition, expirations of patents that result in a significant reduction in revenue for a pharmaceutical company can lead to reductions in their advertising and sponsorship expenditures for other drugs in their product portfolios or for their entire product portfolio.

46

Applications and other software that can block advertisements could reduce demand for our advertising and sponsorship products and decrease our revenue

We derive a significant portion of our revenue from advertising and sponsorship on The WebMD Health Network. Applications and software are available that can block or obscure the display of advertisements or block the cookies used to deliver such advertisements, or shift the location in which advertising appears on pages. While the use of ad-blocking programs by visitors to The WebMD Health Network has been limited to date and our audience consists primarily of individuals who have not typically adopted ad-blocking programs so far, if these programs gain acceptance among our users in the future, they could reduce our ability to deliver advertisements to our audience which, in turn, could reduce demand for our advertising and sponsorship products and cause our revenue from those products to decrease.

Mergers and acquisitions among our clients 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. Similarly, mergers and acquisitions among health insurance company clients of our WebMD Health Services platform could reduce the number of those 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 platform and certain contractual rights of our clients make it difficult to forecast our revenues and may have an adverse impact on our results of operations

The period from our initial contact with a potential client for our WebMD Health Services platform 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 our WebMD Health Services platform 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

47

limited ability to forecast the timing of revenue from clients. This, in turn, makes it more difficult to forecast our financial performance for future periods and may have an adverse impact on our results of operations.

During the contracting cycle and the implementation period, we may expend substantial time, effort and money preparing contract proposals, negotiating contracts and implementing our WebMD Health Services 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 health 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.

In addition, some of our client contracts permit termination, by the client, prior to the end of the stated contract term for some or all of the services to be provided, which can make it more difficult to forecast our future financial performance and may have an adverse 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 develop and update our offerings and to increase usage of our 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 platform as well as our health coaching programs and our targeted condition management 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 platform and related 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 of our platform and related services, possible non-renewals of our customer agreements and, since some customers have the right to terminate or modify existing agreements before the end of the full contract term, possible terminations for some or all of the services to be provided.

The condition management programs that we provide to clients of our WebMD Health Services platform 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 platform 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 WebMD Health Services 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.

48

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;

• “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;

49

• potentially adverse tax consequences, including restrictions on repatriation of earnings; and

• difficulties in protecting intellectual property.

In addition, 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.

Risks Related to the Internet and Our Technological Infrastructure

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

Our online portals and other 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 portals and other 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 portals and other 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 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.

50

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 portals and other 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 portals and other 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 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 and other services 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 portals and other 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. Many of these providers have experienced significant outages in the past and they 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.

51

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 and other services 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 and other services. We may fail to meet contractual performance standards or client expectations. Clients of our online portals and other services 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.

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 that reduce spending by healthcare industry participants generally 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:

• changes in government regulation or private initiatives that affect the manner in which healthcare industry participants interact with patients, payers (including governmental payers) or other healthcare industry participants, including any such regulations or initiatives that seek to control the pricing or means of delivery of healthcare products and services or that create restrictions on the advertising or promotion 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.

52

Developments in the healthcare industry that reduce spending in the specific market segments that we participate in could adversely affect our business

Even if overall 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 or governmental programs that pay for healthcare products and services;

• the timing of FDA (or European or other national regulatory authority) approvals for new products or for new approved indications or 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 products;

• 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 of biosimilars to approved biological products and any increase in the number or significance of such approvals or of withdrawals of biological products from the market; and

• decreases in marketing expenditures by pharmaceutical or medical device companies, including as a result of governmental regulation or private initiatives that discourage, restrict or prohibit advertising, sponsorship or educational activities by pharmaceutical or medical device companies or that discourage, restrict 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. In 2016, there has been increasing scrutiny regarding pricing increases for pharmaceutical products, which could lead to additional regulation of pharmaceutical pricing or other changes in how those products are distributed and the roles played by various industry participants in that distribution. We cannot predict the effect that such scrutiny or any resulting changes may have on the marketing plans of our customers in future periods or their future use of our services.

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.

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

53

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, especially if it relates to promotional activities involving the Internet or social media, could make it more difficult for us to contract for sponsorships and advertising and could have a material adverse effect on our revenues and results of operations. In 2014, the FDA issued multiple draft guidance documents clarifying the application of its promotional regulations to certain content on social media Websites. In 2015, the FTC issued guidance concerning native advertising (the placement of sponsored content with the same look and feel as the publisher’s independent content), which provides recommendations for integrating sponsored content on publisher Websites while maintaining a clear distinction between the publisher’s editorial content and the sponsored content. We cannot predict how our customers or others in the industry might implement the FTC’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.

• Non-U.S. Regulation of Drug and Medical Device Advertising and Promotion.    To the extent that The WebMD Health Network reaches users outside of the United States, our Websites may be required to comply with the national laws of the respective countries whose users they address. In many 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, in exchange for the referral of patients for items or services reimbursed by Medicare, Medicaid and other federal healthcare programs, or to induce or reward 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 any person or entity, including manufacturers and distributors and, therefore, may restrict how we and some of our customers market products to healthcare providers. 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 to incur significant costs or cause adverse publicity. In addition, enforcement or the potential for enforcement of these laws against some of our customers may influence the services we are able to offer and/or our customers’ willingness to continue to use our services.

54

• 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. 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. 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 continuing medical education (or 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. Similarly, False Claims Act actions and resulting corporate integrity agreements involving our customers may reduce the use of our services by our advertising and sponsorship clients.

• Medical Professional Regulation.    The practice of most healthcare professions requires licensing under applicable state law. In addition, the laws in some states prohibit business entities from practicing medicine. If a state determines that some portion of our business violates these laws, it may seek to have us discontinue those portions or subject us to penalties or licensure requirements.

• Regulation of Mobile Medical Applications and Other Mobile Health Technology.    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, accordingly, are not subject to the agency’s oversight. In February 2015, the FDA issued guidance stating it would refrain from exercising 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 our determination. 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.

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

55

Health Services platform and related services. In addition, we are unable to predict the impact from any future changes to the Affordable Care Act or its implementation.

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 Websites and 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 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 various laws and government regulation. 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 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. For example, in 2015 the Federal Communications Commission (FCC) altered a long-standing regulatory regime by classifying broadband Internet access services as common carrier telecommunications services. While this decision appears to most directly impact broadband Internet service providers, FCC rulemakings are ongoing and we cannot predict how this decision or other 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, under their current unfair or deceptive trade practices authority, have been active in investigating and entering into consent decrees with companies because of the online privacy and data security practices of those companies. In May 2014, the FTC held a seminar focusing on privacy issues associated with “consumer generated and controlled health data.” The FTC’s evolving privacy enforcement activities, as reflected in its workshops, reports and enforcement actions, may be relevant to services we offer. In the U.S., 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

56

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 laws may vary. Nevertheless, the provisions of this directive, whether or not 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. Under the General Data Protection Regulation (GDPR) that was granted final approval by the European Parliament in April 2016, additional requirements for users’ consent for offline and online marketing will apply. The GDPR, a European-wide regulation that will be fully enforceable by May 25, 2018, will replace and further strengthen the already very densely regulated area of Internet privacy in Europe. In addition, the GDPR and recent case law in some European countries will 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 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 private party litigation against us or proceedings or actions against us by government entities, or could cause us to lose users and customers, which could have a material adverse effect on our business. There has recently been an increase in the number of privacy-related lawsuits filed against companies. 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 handling of protected 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 functions or activities on behalf of, a covered entity that involve the creation, receipt, maintenance, or transmission 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

57

us to report any unauthorized acquisition, access, use or disclosure of protected health information, known as a breach, to our covered entity customers. The 2013 final HITECH rule modified the breach reporting standard in a manner that made more data security incidents qualify as reportable breaches. In addition, HITECH and its implementing regulations imposed similar data breach notification requirements on vendors of personal health records that require us to notify affected individuals, the FTC, and, in some cases, the media 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 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. 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, transfers of EU individuals’ personal data from EU member states to countries not recognized as having adequate protections for personal data, which includes the U.S., are regulated by the Directive 95/46/EC and its national implementations. On October 6, 2015, the Court of Justice of the European Union (CJEU), the European Union’s highest court, declared the U.S.-EU Safe Harbor Framework invalid as a mechanism to legitimize transfers of personal data from the EU to the U.S. On February 3, 2016, the European Commission and the U.S. Department of Commerce announced a newly agreed EU-U.S. Privacy Shield, which is designed to replace the Safe Harbor Framework. On July 12, 2016, the European Commission adopted the EU-U.S. Privacy Shield. This new framework aims at protecting the fundamental rights of anyone in the EU whose personal data is transferred to the U.S. to a Privacy-Shield certified organization. U.S. companies will be able to self-certify that they meet the requirements of the new framework, will be required to post a privacy policy on their Websites, and will be required to reply promptly to any complaints. We are continuing to assess the need for, and form of any transfer mechanism we may use.

Criminal sanctions in Europe for violations of national implementations of the data protection Directive 95/46/EC and of the e-Privacy Directive 2002/58/EC are rarely imposed, though national implementations provide for both criminal and administrative sanctions. For example, France provides for administrative fines of up to 3,000,000 Euros in case of illegal collection or processing of personally identifiable information. Under the General Data Protection Regulation, there will be fines of up to 10,000,000 Euros or up to 2% of the global sales for certain comparatively minor offenses, or up to 20,000,000 Euros or up to 4% of the global sales for more serious offenses.

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

Medscape Education’s continuing education activities for physicians and other healthcare professionals 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. The 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 Education, 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. Medscape Education’s accreditation is a Joint Accreditation from the ACCME, the Accreditation Council for Pharmacy Education (as a provider of continuing education for pharmacy) and the American Nurses Credentialing Center (as a provider of continuing education for nurses).

58

Medscape Education’s current ACCME accreditation expires in August 2022. In order for Medscape Education to renew its accreditation, it will be required to demonstrate to the ACCME that it continues to meet ACCME requirements. If Medscape Education 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 Education would be required to use third parties to provide such CME-related services. That, in turn, could discourage potential supporters from engaging Medscape Education 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 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. 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.

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. Legislation has been introduced to roll back this requirement, but such legislation has not yet been and may never be enacted. 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 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.

59

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., U.K., German, and most European laws, 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 broadly prohibit bribery in both the private and public sectors. In recent years, several global anti-corruption enforcement actions led to significant monetary penalties against several companies operating in the global healthcare industry for providing illegal inducements to medical professionals.

As our business expands globally, we (and others acting on our behalf) increasingly interact with public officials, including with 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 have implemented compliance policies and procedures 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, reputation, brand, financial condition and results of operations.

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 By-laws, 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.

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.

60

In 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

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 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;

61

• 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 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.

62

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table provides information about purchases by WebMD during the three months ended September 30, 2016 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)
7/1/16 - 7/31/16		3,543	$	59.30		—	$	34,056,192
8/1/16 - 8/31/16		379,507	$	52.63		366,082	$	14,802,153
9/1/16 - 9/30/16		73,899	$	48.71		65,990	$	46,807,503
Total		456,949	$	52.05		432,072

(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: 3,543 in July; 13,425 in August; and 7,909 in September. 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, $30,000,000, $23,895,000, $27,450,843 and $35,197,847 were authorized in October 2011, February 2014, March 2014, April 2014, November 2014, September 2015 and September 2016, respectively. For additional information, see Note 4 to the Consolidated Financial Statements included in this Quarterly Report.

ITEM 6. Exhibits

The exhibits listed in the accompanying Exhibit Index on page E-1 are filed or furnished as part of this Quarterly Report.

63

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WEBMD HEALTH CORP.
By:	/s/    BLAKE DESIMONE
	Blake DeSimone
	Executive Vice President and
	Chief Financial Officer

Date: November 9, 2016

64

EXHIBIT INDEX

Exhibit No.	Description
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 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2016)
10.1	Letter Agreement, dated as of September 16, 2016, between David Schlanger and the Registrant*
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Registrant
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Registrant
32.1	Section 1350 Certification of Chief Executive Officer of Registrant
32.2	Section 1350 Certification of Chief Financial Officer of Registrant
99.1	Explanation of Non-GAAP Financial Measures
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

* Agreement relates to executive compensation.

E-1

EX-10.1

Exhibit 10.1

CONFORMED COPY

WEBMD HEALTH CORP.

395 Hudson Street

New York, New York 10014

September 16, 2016

Mr. David Schlanger

c/o WebMD Health Corp.

395 Hudson Street

New York, New York 10014

Dear David:

As discussed, this letter agreement (this “Agreement”) sets forth our mutual agreement regarding the terms of your departure from WebMD Health Corp., a Delaware corporation (the “Company”).

1. Termination. Your employment with the Company and its subsidiaries and affiliates is terminated in all capacities as of September 16, 2016 (the “Departure Date”). You hereby acknowledge that you no longer serve as Chief Executive Officer of the Company, or in any other officer positions, directorships and positions that you currently hold with the Company or its subsidiaries or affiliates as of the Departure Date. Except as otherwise provided under this Agreement, from and after the Departure Date, you are relieved and shall have no further obligation to either perform any duties or responsibilities or render any services for or on behalf of the Company or its subsidiaries or affiliates whether under your employment agreement with the Company, dated as of May 7, 2013, as amended (the “Employment Agreement”) or otherwise; provided that you will reasonably assist the Company in transitioning your responsibilities, which assistance may include your participation in telephone calls or meetings with clients and customers.

2. Severance Benefits. Subject to your execution of this Agreement, including your delivery and non-revocation of the Release set forth on Exhibit A (the effective date of the release is hereinafter referred to as the “Effective Date”), the Company will provide you with the following severance payments and benefits:

(a) Severance. The Company will pay you as severance your base salary at the current annual rate of $525,000.00 (the “Base Salary”) for a period of one year commencing on the Departure Date (the “Applicable Period”). Subject to your continued compliance with the

1

Release Agreement and Sections 6, 7, 8 and 9 of this Agreement, the Base Salary will continue to be paid during the Applicable Period pursuant to the Company’s normal payroll practices. Subject to Section 11(f) below, payment of the severance shall commence on the first payroll date that occurs in the first month that begins at least 60 days after the Departure Date (but which may be accelerated by no more than 30 days) and such first payment shall include those amounts that would have been paid if the payments had begun on the Departure Date.

(b) 2016 Bonus. Subject to your continued compliance with the Release Agreement and Sections 6, 7, 8 and 9 of this Agreement, you will receive your annual bonus in respect of 2016 as determined by the Compensation Committee of the Company’s Board of Directors, in its final, binding and conclusive discretion, in accordance with the terms of the Company’s 2016 annual bonus plan at the time that annual bonuses are regularly paid to other executive officers of the Company, but in no event later than March 15, 2017.

(c) Reimbursement for Certain Benefits. You may elect to continue your health, dental or vision benefits after the Departure Date pursuant to the requirements of the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”), whether or not you execute this Agreement. You will be notified of the right to continue coverage under COBRA by the Company by separate letter. Should you timely elect to participate in COBRA coverage, subject to your execution of this Agreement and continued compliance with the Release Agreement and Sections 6, 7, 8 and 9 of this Agreement, the Company will reimburse you (which reimbursement will be treated as a taxable bonus) for that portion of the cost of your COBRA premium for the same type of coverage as you had with the Company for the Applicable Period that it would have paid if you were an active employee, or, if earlier, until such time as you are no longer eligible for COBRA or are otherwise eligible for comparable coverage with a subsequent employer, which reimbursement shall be made within 30 days after you provide evidence of your payment of such premiums, which evidence shall be provided no later than 30 days after payment. You shall promptly notify the Company if you become eligible for comparable coverage with another employer. The Company will also pay you an additional tax “gross up” payment to cover all estimated applicable local, state and federal income and payroll taxes imposed on you with respect to the reimbursement described in this Section 2(c), such that, after payment of such taxes, you will receive the full amount of the reimbursement.

(d) Supplemental Bonus Payment. Subject to your continued compliance with the Release Agreement and Sections 6, 7, 8 and 9 of this Agreement, you will receive payment of $210,000, less applicable withholding, reflecting the amount contributed to the 2015 Supplemental Bonus Trust. Such payment will be made to you within ten (10) days following the Effective Date.

(e) Company Stock Options. Pursuant to the stock option agreements and the plan documents governing such grants, the vesting of your stock options will cease on the Departure Date and any right to exercise any vested stock options will be as set forth in the applicable stock option agreement and plan, except as set forth below in this subparagraph. With respect to your option grants dated August 11, 2013 and March 25, 2015, subject to your continued compliance with the Release Agreement and Sections 6, 7, 8 and 9 of this Agreement, on the next vesting date of each such grant, you shall vest in a pro-rata portion of the number of options to purchase shares of the Company’s common stock (the “Common Stock”) subject to

2

such option grants, such that you shall vest (i) on March 25, 2017 in 20,000 of the 40,000 options that would have vested on March 25, 2017, and the post-termination exercise period in respect of those options will begin on March 25, 2017, and (ii) on August 11, 2017 in 6,250 of the 75,000 options that would have vested on August 11, 2017, and the post-termination exercise period in respect of those options will begin on August 11, 2017. All remaining unvested options to purchase Company Common Stock held by you shall be forfeited as of the Departure Date.

(f) Restricted Stock. Pursuant to the restricted stock agreements and the plan documents governing such grants, vesting of your shares of restricted Common Stock will cease on the Departure Date, except as set forth below in this paragraph. Subject to your continued compliance with the Release Agreement and Sections 6, 7, 8 and 9 of this Agreement, a pro-rata portion of the shares of restricted Common Stock that are scheduled to vest on March 25, 2017 (10,000 of the 20,000 restricted shares that would have vested on March 25, 2017) and August 11, 2017 (1,042 of the 12,500 restricted shares that would have vested on August 11, 2017) shall be deemed vested on the Departure Date, provided that you may not sell, transfer or pledge such shares until the applicable scheduled vesting date and the Company will hold such shares until the applicable scheduled vesting date. The Company will withhold from the shares of restricted Common Stock that will vest pursuant to this paragraph that amount of shares necessary to satisfy the minimum tax withholding obligations. All remaining unvested shares of restricted Common Stock held by you shall be forfeited as of the Departure Date.

3. Accrued Salary and Vacation; Expenses.

(a) Accrued Salary and Vacation. All your accrued but unpaid Base Salary as of the Departure Date will be paid to you promptly in accordance with applicable law, and your accrued but unused vacation as of the Departure Date, as reflected in the Company’s time off reporting system, will be paid to you in accordance with applicable law and the Company’s vacation policy. You are entitled to these amounts (less all applicable withholding and other authorized deductions) whether or not you sign this Agreement.

(b) Expense Reimbursements. You agree that, within thirty (30) days of the Departure Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through your last day of active employment, if any, for which you seek reimbursement.

4. Retirement Plan. You will be entitled to receive your vested, accrued benefits under the Company’s 401(k) plan in accordance with the terms and conditions of such plan.

5. No Other Compensation or Benefits. Except as otherwise specifically provided herein, you will not be entitled to any compensation or benefits or to participate in any past, present or future employee benefit programs or arrangements of the Company or its subsidiaries or affiliates on or after the Departure Date.

6. Covenants and Agreements. The provisions of (i) the Trade Secret and Proprietary Information Agreement that is attached as Annex B to the Employment Agreement, and (ii) all other agreements you have signed containing covenants regarding non-disclosure of

3

confidential/proprietary information and/or restrictions on solicitation or competition, including those annexed as part of an equity agreement or compensation plan (collectively, the “Restrictions”) shall remain in full force and effect and shall govern all periods prior to and following the Effective Date.

7. Cooperation. From and after the date hereof, you will (i) cooperate in all reasonable respects (after taking into account any employment obligations you may have) with the Company, its subsidiaries and affiliates and its directors, officers, attorneys and experts in connection with the conduct of any action, proceeding, investigation or litigation involving the Company, or any of its subsidiaries or affiliates, including any such action, proceeding, investigation or litigation in which you are called to testify and (ii) promptly respond to all reasonable requests by the Company and its subsidiaries and affiliates relating to the business, including providing information concerning actual or prospective customers of the Company or any subsidiary or affiliate that may be in your possession. If you receive a subpoena or other request for information, you agree to provide the Company with prompt notice of the subpoena or request so that the Company may take appropriate action to avoid or contest disclosure. The Company shall reimburse your reasonable, documented out-of-pocket expenses incident to providing such cooperation or response. Nothing contained in this Agreement (specifically including, without limitation, the provisions of this Section 7 or Section 9 of this Agreement) shall prohibit or restrict you from participating in a governmental investigation or from providing truthful information in response to any lawfully issued subpoena, or an inquiry or investigation conducted by a governmental or regulatory agency.

8. Return of Property. You will have thirty (30) days following the Departure Date to return to the Company all property of the Company and its subsidiaries and affiliates in your possession and all property made available to you in connection with your employment by the Company, including, without limitation, any and all records, manuals, customer lists, notebooks, computers, phones, PDAs, computer programs and files, papers, electronically stored information and documents (and all copies thereof) kept or made by you in connection with your employment; provided that, notwithstanding anything to the contrary in this Section 8, you will be entitled to retain (i) papers and other materials and correspondence of a personal nature, including, but not limited to, photographs, personal correspondence, personal diaries, personal calendars and rolodexes, (ii) information showing your equity awards or other compensation, or relating to expense reimbursements, (iii) compensation information that you reasonably believe may be needed for your own tax purposes and (iv) copies of employee benefit and compensation plans, programs, agreements and other arrangements of the Company or any of its affiliates in which you were a participant or covered. For thirty (30) days following the Departure Date, you will continue to have access to your Company computer, cell phone and to your Company e-mail account solely for the purposes of transitioning your personal matters conducted thereon from the Company’s email account. To the extent that you access Company information during that time period, you agree to keep all such information confidential and not to use it for any purpose whatsoever. You agree that the Company shall bear no responsibility for your personal matters related to your emails on the Company server.

9. Non-disparagement. You agree to refrain from making, directly or indirectly, now or at any time in the future: (i) any derogatory comment concerning the

4

Company, or its subsidiaries and affiliates or any of its officers, employees, directors and agents, or (ii) any other comment that could reasonably be expected to be detrimental to the business or financial prospects of the Company or any of its subsidiaries and affiliates, to any third person including, but not limited to: (x) the news or other media, (y) any employees of the Company, or its subsidiaries or affiliates, or (z) any individual or entity with whom the Company, or any of its subsidiaries or affiliates has or may reasonably expect to have a business relationship. Notwithstanding the foregoing, you shall be permitted to testify truthfully in any court action or proceeding, including any court action or proceeding to enforce the terms of this Agreement. The Company will provide any prospective or subsequent employer, or agent thereof, requesting information about you with only the following information: written confirmation of your employment and salary and dates of employment with the Company.

10. Remedies. You agree that a breach of any of the covenants contained in this Agreement or the Release Agreement will result in material and irreparable injury to the Company for which there is no adequate remedy at law, that it may not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, the Company shall be entitled to seek a temporary restraining order or a preliminary or permanent injunction, or both, without bond or other security, restraining you from engaging in activities prohibited by the covenants contained in this Agreement or the Release Agreement or such other relief as may be required specifically to enforce any of the covenants contained in this Agreement or the Release Agreement. In the event of any breach by you of any provision of Section 6, 7, 8 or 9 of the Agreement or the Release Agreement, in addition to any other remedy available to the Company, the Company (i) shall cease to have any obligation to continue to make payments or provide benefits to you under this Agreement, (ii) may recoup any of the compensation paid under Section 2 hereunder, including, without limitation, equity compensation and option profit and (iii) you shall be responsible for the reasonable attorneys’ fees and costs related to the Company’s enforcement of such provisions.

11. Miscellaneous.

(a) Entire Agreement. This Agreement, the Release Agreement, Annex B to the Employment Agreement and any other Restrictions, the Indemnification Agreement (as defined below), and the applicable equity plans and agreements set forth the entire agreement and understanding of the parties hereto with respect to the matters covered hereby and supersede and replace any express or implied prior agreement with respect to the terms of your employment and the termination thereof which you may have had with the Company or its subsidiaries or affiliates (including, without limitation, the Employment Agreement except as specifically provided in this Agreement). This Agreement may be amended only by a written document signed by the parties hereto.

(b) Governing Law; Consent to Jurisdiction/Venue. This Agreement shall be governed by and construed for all purposes according to the laws and public policy of the State of New York, as such laws are applied to agreements entered into and to be performed entirely within New York between New York residents and without regard to principles of conflicts of laws. The parties further agree that any disputes or controversies arising out of or relating to this Agreement shall be brought in the federal or state courts located in New York, New York. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any of the parties.

5

(c) Withholding. Any payments made or benefits provided to you under this Agreement will be reduced by all applicable withholding taxes and other authorized deductions.

(d) No Trust Created. This Agreement constitutes an unfunded promise of the Company to pay the benefits provided herein and will only be paid from the general assets of the Company.

(e) Voluntary Assent. You affirm that you have read this Agreement and the Release Agreement, and understand all of the terms, including the full and final release of claims set forth in the Release Agreement. You further acknowledge that you have voluntarily entered into this Agreement and the Release Agreement; that you have not relied upon any representation or statement, written or oral, not set forth in this Agreement or the Release Agreement; that the only consideration for signing this Agreement and the Release Agreement is as set forth herein; and that this document gives you the opportunity and encourages you to have this Agreement and the Release Agreement reviewed by your attorney and/or tax advisor.

(f) Section 409A of the Code. It is intended that this Agreement comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations relating thereto, or an exemption to Section 409A of the Code, and it will be considered and interpreted in accordance with that intent. Any payments that qualify for the “separation pay” or “short-term deferral” exception or another exception under Section 409A of the Code shall be paid under the applicable exception. For purposes of the limitations of nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. Despite any contrary provision of this Agreement, any references to “termination of employment” or the “date of termination” (or any similar term) shall mean and refer to the date of your “separation from service,” as that term is defined in Section 409A of the Code and Treasury Regulation Section 1.409-A1(h). In no event may you directly or indirectly designate the calendar year of any payment under this Agreement. Notwithstanding the foregoing, the Company makes no representation or warranty and shall have no liability to you or to any other person if any payments under this Agreement are determined to constitute “deferred compensation” subject to Section 409A, but do not satisfy an exemption from, or the conditions of, that section. To the extent that any reimbursements or corresponding in-kind benefits provided to you under this Agreement are determined to constitute “deferred compensation” subject to Section 409A, such amounts shall be paid or reimbursed reasonably promptly, but not later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv). The amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and your right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

6

(g) Waiver. The failure of any party to this Agreement or the Release Agreement to enforce any of the terms, provisions or covenants contained therein shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by any party hereto of any breach or default by another party of any term or provision of this Agreement or the Release Agreement shall not operate as a waiver of any other breach or default.

(h) Severability. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.

(i) Descriptive Headings. The paragraph headings contained herein and in the Release Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement or the Release Agreement.

(j) Notices. Any notices required or made pursuant to this Agreement or the Release Agreement will be in writing and will be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, as follows: David Schlanger at the last home address in the Company’s records; and

if to the Company:

WebMD Health Corp.

395 Hudson Street

New York, NY 10014

Attention: General Counsel

or to such other address as either party may furnish to the other in writing in accordance with this Section 11(j). Notices of change of address will be effective only upon receipt.

(k) Indemnification. You will be entitled to the indemnification rights and benefits set forth in your indemnification agreement, dated as of May 7, 2013 (the “Indemnification Agreement”).

(l) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

7

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

WEBMD HEALTH CORP.
By:	Douglas W. Wamsley
	Name:	Douglas W. Wamsley
	Title:	Executive Vice President, Co-General Counsel & Secretary

Accepted and Agreed:

/s/ David Schlanger

David Schlanger

Dated: September 18, 2016

8

EXHIBIT A

Release Agreement

This Release Agreement (this “Release Agreement”) is dated as of September 16, 2016 in connection with the termination of your employment with the Company.

1. General Release.

(a) In consideration for the receipt of those payments that are in excess of the amount required to be paid to you by applicable law, you, on behalf of yourself and your family, agents, representatives, heirs, executors, trustees, administrators, attorneys, successors and assigns (the “Releasors”), hereby irrevocably and unconditionally (i) represent and warrant that you have received in a timely manner full and complete payment of all amounts due to you under your employment arrangements with the Company or under any applicable law and/or in connection with the termination of your employment, both at law and pursuant to the terms of the employment arrangements and (ii) release, settle, cancel, acquit, discharge and acknowledge to be fully satisfied, and covenant not to sue the Company and each of its respective past and/or present subsidiaries, affiliates, successors and assigns, and each of their respective predecessors, and past and/or present stockholders, partners, members, directors, managers, officers, employees, agents or other representatives, and employee benefit plans of the Company or its affiliates, including, but not limited to, trustees and administrators of these plans, in each case, in their individual and/or representative capacities (collectively, the “Releasees”) from any and all claims, contractual or otherwise, demands, costs, rights, causes of action, charges, debts, liens, promises, obligations, complaints, losses, damages and all liability of whatever kind and nature, whether known or unknown, and hereby waive any and all rights that the Releasors may have, from the beginning of time up to and including the time of signing this Release Agreement, or that otherwise may exist or may arise in respect of your employment or separation from employment with the Company, or is any way connected with or related to any applicable compensatory or benefit plan, program, policy or arrangement, including, but not limited to, any claims relating to salaries, benefits, bonuses, compensation, fringe benefits, social benefits according to any law or agreement, amounts of director’s insurance, pension fund, provident fund and education fund, overtime, severance pay, sick pay, recreation payments, vacation payments, prior notice payments, options or other securities, reimbursement of expenses and/or any other payments or benefits due to you by any of the Releasees, as well as any claims arising under any United States federal, state or local laws, including, but not limited to, any and all claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Older Workers Benefit Protection Act of 1990, the Equal Pay Act, the Americans with Disabilities Act of 1990, as amended, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, as amended, the New York State Human Rights Law, New York City Human Rights Law, New York Equal Pay Law, New York Whistleblower Protection Law, New York Law for the Protection of Persons with a Disability, New York Military Family Leave Law, the New Jersey Law Against Discrimination, New Jersey Conscientious Employee Protection Act, New Jersey Family Leave Act, New Jersey Paid Family Leave Law, New Jersey

A-1

Equal Pay Act, New Jersey Civil Rights Act, New Jersey Administrative Code and any and all other United States federal, state or local regulations, ordinances or public policies, any common law or equity claims, or claims under any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company and any of its affiliates and yourself, now or hereafter recognized, including claims for wrongful discharge, slander and defamation, as well as all claims for counsel fees and costs; provided, that such released claims shall not include any claims to enforce your rights under, or with respect to, (i) any post-termination obligations of the Company expressly undertaken by the Company under your employment arrangements with the Company and any obligations of the Company expressly undertaken by the Company under the letter agreement to which this Release Agreement is attached, (ii) any claims with respect to any of your rights vested or accrued under any Company retirement or welfare benefits plans, (iii) any claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law, (iv) any claims not released under this Release Agreement that arise after the date of execution of this Agreement or (v) any claims under your indemnification agreement, dated as of May 7, 2013, or the protections of any directors’ and officers’ liability policies of the Company.

(b) The Releasors agree not to bring any action, suit or proceeding whatsoever (including the initiation of governmental proceedings or investigations of any type) against any of the Releasees hereto for any matter or circumstance concerning which the Releasors have released the Releasees under this Release Agreement. Further, the Releasors agree not to encourage any other person or suggest to any other person that he, she or it institute any legal action against the Releasees, and you hereby declare, confirm and undertake that, if the Releasors or anyone else in their name should deliver a claim as mentioned above you shall reimburse the Releasees and anyone else on their behalf to the full extent of the sum of the legal expenses and legal fees incurred by them as a result of any such claim. Notwithstanding the forgoing, this Release Agreement is not intended to interfere with your right to file a charge with the Equal Employment Opportunity Commission in connection with any claim you believe you may have against the Company. The Releasors hereby agree to waive the right to any relief (monetary or otherwise) in any action, suit or proceeding you may bring in violation of this Release Agreement, including any proceeding before the Equal Employment Opportunity Commission or any other similar body or in any proceeding brought by the Equal Employment Opportunity Commission or any other similar body on your behalf. This Release Agreement does not limit your right to receive an award from the Securities and Exchange Commission (the “SEC”) for information provided to the SEC. You understand that nothing contained in this Release Agreement limits your rights to communicate with the SEC about possible securities law violations at the Company, including providing documents or other information without notice to the Company.

2. Legal Advice; Reliance. You represent and acknowledge that (a) you have been given adequate time (at least twenty-one (21) days to consider this Release Agreement (which, by signing this Release Agreement prior to the expiration of such period, you have expressly agreed to waive) and have been advised to discuss all aspects of this Release Agreement with your private attorney, (b) you have carefully read and fully understand all the provisions of this Release Agreement, (c) you have voluntarily entered into this Release Agreement, without duress or coercion, and (d) you have not heretofore assigned or transferred or purported to assign or transfer, to any person or entity, any of the claims described in Section 1(a), any portion thereof or any interest therein. You understand that if you request additional time to review the terms of this Release Agreement, a reasonable extension of time will be granted.

A-2

3. Miscellaneous.

(a) No Violation of Law. You agree and acknowledge that this Release Agreement is not and shall not be construed to be an admission by the Company of any violation of any United States federal, state or local statute, ordinance or regulation, or of any duty owed by the Company to you.

(b) Governing Law; Consent to Jurisdiction/Venue. This Release Agreement shall be governed by and construed for all purposes according to the laws and public policy of the State of New York, as such laws are applied to agreements entered into and to be performed entirely within New York between New York residents and without regard to principles of conflicts of laws. The parties further agree that any disputes or controversies arising out of or relating to this Release Agreement shall be brought in the federal or state courts located in New York, New York. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any of the parties.

(c) Revocation. You may revoke this Release Agreement within seven (7) days after the date on which you sign this Release Agreement. You understand that this Release Agreement is not binding or enforceable until such seven (7) day period has expired. Any such revocation must be made in a signed letter executed by you and received by the Company at its headquarters no later than 5:00 p.m., New York time, on the seventh day after you have executed this Release Agreement. You understand that if you revoke this Release Agreement, you will not be entitled to any severance benefits (to the extent not already paid or provided) under your employment agreement with the Company.

*        *        *         *        *

ACCEPTED AND AGREED:

/s/ David Schlanger

Name: David Schlanger

Dated: September 18, 2016

A-3

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Steven L. Zatz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WebMD Health Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 9, 2016

        /s/ Steven L. Zatz

Steven L. Zatz

Chief Executive Officer

(Principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Blake DeSimone, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WebMD Health Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 9, 2016

        /s/ Blake DeSimone

Blake DeSimone

Executive Vice President and Chief Financial Officer

(Principal financial and accounting officer)

EX-32.1

Exhibit 32.1

STATEMENT OF CHIEF EXECUTIVE OFFICER OF

WEBMD HEALTH CORP.

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of WebMD Health Corp. (“WebMD”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven L. Zatz, Chief Executive Officer of WebMD, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of WebMD.

Dated:  November 9, 2016	/s/ Steven L. Zatz
	Steven L. Zatz
	Chief Executive Officer

The foregoing certification is being furnished to accompany WebMD’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016 (the “Report”) solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report or as a separate disclosure document and shall not be deemed incorporated by reference into any other filing of WebMD that incorporates the Report by reference. A signed original of this written certification required by Section 906 has been provided to WebMD and will be retained by WebMD and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

STATEMENT OF CHIEF FINANCIAL OFFICER OF

WEBMD HEALTH CORP.

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of WebMD Health Corp. (“WebMD”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Blake DeSimone, Executive Vice President and Chief Financial Officer of WebMD, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of WebMD.

Dated:  November 9, 2016	/s/ Blake DeSimone
	Blake DeSimone
	Executive Vice President and Chief Financial Officer

The foregoing certification is being furnished to accompany WebMD’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016 (the “Report”) solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report or as a separate disclosure document and shall not be deemed incorporated by reference into any other filing of WebMD that incorporates the Report by reference. A signed original of this written certification required by Section 906 has been provided to WebMD and will be retained by WebMD and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

Explanation of Non-GAAP Financial Measures

Item 2 of Part I (the “MD&A”) of the Quarterly Report on Form 10-Q to which this is filed as Exhibit 99.1 includes both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, non-cash and other items (which we refer to as “Adjusted EBITDA”). Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for net income or loss calculated in accordance with GAAP (referred to below as “net income”). The MD&A also includes reconciliations of non-GAAP financial measures to GAAP financial measures.

Adjusted EBITDA is used by our management as an additional measure of our company’s 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 our company’s financial results that may not be shown solely by period-to-period comparisons of net income. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees in order to evaluate our company’s performance. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in net income, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to net income that accompany our press releases and disclosure documents containing non-GAAP financial measures, including the reconciliations contained in the MD&A.

We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to net income, helps investors make comparisons between our company 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. However, Adjusted EBITDA is intended to provide a supplemental way of comparing our company with other public companies and is not intended as a substitute for comparisons based on net income. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

The following is an explanation of the items excluded by us from Adjusted EBITDA but included in net income:

• Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude depreciation and amortization expense from Adjusted EBITDA because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.

• Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our company’s operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our company’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

• Interest Income and Expense. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which we invest, and interest expense is related to our company’s capital structure (including non-cash interest expense relating to our convertible notes). Interest income and expense varies over time due to a variety of financing transactions and due to acquisitions and divestitures that we have entered into or may enter into in the future. We have, in the past, issued convertible debentures, repurchased shares in cash tender offers and repurchased shares and convertible debentures through other repurchase transactions, and completed the divestiture of certain businesses. We exclude interest income and interest expense from Adjusted EBITDA (i) because these items are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income and expense will recur in future periods.

• Income Tax Provision (Benefit). We maintain a valuation allowance on a portion of our net deferred tax assets (including our net operating loss carryforwards), the amount of which may change from quarter to quarter based on factors that are not directly related to our results for the quarter. The valuation allowance is either adjusted through the statement of operations or additional paid-in capital. The timing of such adjustments has not been consistent and as a result, our income tax expense can fluctuate significantly from period to period in a manner not directly related to our operating performance. We exclude the income tax provision (benefit) from Adjusted EBITDA (i) because we believe that the income tax provision (benefit) is not directly attributable to the underlying performance of our business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes. Investors should note that income tax provision (benefit) will recur in future periods.

• Other Items. We engage in other activities and transactions that can impact our net income. In recent periods, these other items included, but were not limited to: (i) gain on investments; (ii) settlements of litigation or claims; (iii) loss on repurchases of our convertible notes; and (iv) severance expense. We exclude these other items from Adjusted EBITDA because we believe these activities or transactions are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.

2

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 01, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	WBMD
Entity Registrant Name	WEBMD HEALTH CORP.
Entity Central Index Key	0001326583
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		38,760,044

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 88,600	$ 641,165
Accounts receivable, net of allowance for doubtful accounts of $1,346 at September 30, 2016 and $1,040 at December 31, 2015	153,255	174,313
Investments	949,488
Prepaid expenses and other current assets	17,972	18,998
Total current assets	1,209,315	834,476
Property and equipment, net	84,929	81,027
Goodwill	202,980	202,980
Intangible assets, net	8,554	10,894
Deferred tax assets, net	8,984	15,694
Other assets	8,497	10,852
TOTAL ASSETS	1,523,259	1,155,923
Current liabilities:
Accrued expenses	65,892	80,664
Deferred revenue	102,251	102,715
Total current liabilities	168,143	285,902
Other long-term liabilities	28,965	23,246
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 September 30, 2016 and December 31, 2015	574	574
Additional paid-in capital	9,283,379	9,238,444
Treasury stock, at cost; 19,300,926 shares at September 30, 2016 and 20,621,216 shares at December 31, 2015	(651,988)	(678,069)
Accumulated other comprehensive income	539	357
Accumulated deficit	(8,349,962)	(8,405,078)
Stockholders' equity	282,542	156,228
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,523,259	1,155,923
2.25% Convertible Notes Due 2016 [Member]
Current liabilities:
convertible notes current		102,523
2.50% Convertible Notes Due 2018 [Member]
Current liabilities:
Convertible notes	397,620	396,281
1.50% Convertible Notes Due 2020 [Member]
Current liabilities:
Convertible notes	295,140	$ 294,266
2.625% Convertible Notes Due 2023 [Member]
Current liabilities:
Convertible notes	$ 350,849

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Accounts receivable, net of allowance for doubtful accounts	$ 1,346	$ 1,040
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	650,000,000	650,000,000
Common stock, shares issued	57,437,992	57,437,992
Treasury stock, shares	19,300,926	20,621,216

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue	$ 171,438	$ 152,607	$ 497,574	$ 444,270
Cost of operations	65,458	59,552	193,759	177,836
Sales and marketing	35,264	32,850	104,634	97,896
General and administrative	20,005	22,942	67,744	67,397
Depreciation and amortization	7,912	7,266	23,071	23,103
Interest income	1,034	10	1,607	36
Interest expense	7,065	5,681	17,430	18,024
Loss on convertible notes		2,058		2,058
Gain on investments				139
Other expense	1,712		1,712	4,100
Income before income tax provision	35,056	22,268	90,831	54,031
Income tax provision	13,438	9,080	35,715	17,468
Net income	$ 21,618	$ 13,188	$ 55,116	$ 36,563
Net income per common share:
Basic	$ 0.57	$ 0.36	$ 1.46	$ 1.00
Diluted	$ 0.47	$ 0.32	$ 1.22	$ 0.89
Weighted-average shares outstanding used in computing per share amounts:
Basic	38,103	36,721	37,804	36,606
Diluted	55,845	49,958	53,836	49,912

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 21,618	$ 13,188	$ 55,116	$ 36,563
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains, net of tax	(153)	(605)	182	(516)
Total other comprehensive (loss) income, net of tax	(153)	(605)	182	(516)
Comprehensive income	$ 21,465	$ 12,583	$ 55,298	$ 36,047

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 55,116	$ 36,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23,071	23,103
Non-cash interest, net	2,827	3,276
Non-cash stock-based compensation	21,038	24,731
Deferred income taxes	6,632	(7,246)
Loss on convertible notes		2,058
Gain on investments		(139)
Changes in operating assets and liabilities:
Accounts receivable	21,058	(10,201)
Prepaid expenses and other, net	2,747	(5,692)
Accrued expenses and other long-term liabilities	(9,748)	(4,555)
Deferred revenue	(464)	15,280
Net cash provided by operating activities	122,277	77,178
Cash flows from investing activities:
Purchases of property and equipment	(24,449)	(25,638)
Purchase of investments	(948,078)
Partial redemption of cost-method investment	1,193
Proceeds from sale of investments		139
Net cash used in investing activities	(971,334)	(25,499)
Cash flows from financing activities:
Proceeds from exercise of stock options	52,702	15,185
Cash used for withholding taxes due on stock-based awards	(7,705)	(3,836)
Net proceeds from issuance of convertible notes	350,394
Maturity and repurchases of convertible notes	(102,682)	(151,038)
Purchases of treasury stock	(22,447)	(28,406)
Excess tax benefit on stock-based awards	26,230	21,972
Net cash provided by (used in) financing activities	296,492	(146,123)
Net decrease in cash and cash equivalents	(552,565)	(94,444)
Cash and cash equivalents at beginning of period	641,165	706,776
Cash and cash equivalents at end of period	$ 88,600	$ 612,332

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1.     Summary of Significant Accounting Policies

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 generates revenue from the advertising and sponsorship services of The WebMD Health Network and related operations, from the services it markets to employers and health plans under the WebMD Health Services brand and from certain information services, each of which is described below and discussed further under “Presentation of Segment Information” in this Note 1.

Advertising and Sponsorship. 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 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.

Health Services. The Company markets services under the WebMD Health Services brand that help employers and health plans improve the health of their employee and plan participant populations and, as a result, manage their healthcare costs. The Company hosts its WebMD Health Services platform for private and public sector employers and health plans and its cloud-based online services can be accessed by their employees and plan participants using a computer, a tablet or a smartphone. The WebMD Health Services platform provides an online personal health record application and personal health content, tools and other resources relevant to the specific individual’s eligibility, coverage and wellness profile, including decision-support applications that help users make informed decisions about health risks, lifestyle choices, healthcare providers, treatment options, and healthcare benefits options. The Company’s flexible architecture allows it to integrate with the client’s existing programs, Websites and intranets for their employees and plan participants. The Company also offers clients the ability to design team-based and individual wellness challenges that help foster a culture of wellness in the workplace. In addition, the Company offers telephonic, online and onsite health coaching and targeted condition management programs that help employees and plan participants make healthier lifestyle choices to achieve their health and 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.

Information Services. The Company also generates revenue from the sale of certain information products and services on a stand-alone basis using de-identified data that it licenses from a small number of third party data sources, of which the principal source is a license retained by HLTH Corporation (“HLTH”), the Company’s former parent company, in connection with the sale of its Emdeon Business Services (“EBS”) business. As the successor to HLTH, the Company received this license which provides the Company the rights to certain de-identified data from the operation of the EBS business (which is now known as Change Healthcare) through early February 2018 for use in the development and commercialization of various information products and services. Customers include data services, informatics and consulting companies.

Interim Financial Statements

The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2016. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations.

The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

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.

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 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.

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 “Health Services” (which the Company previously referred to as “Private Portal Services”) and consists of revenue from employers and health plans for subscriptions to the Company’s WebMD Health Services platform and for related services, including health coaching and condition management services. The change in the name of this group to “Health Services” began in the Company’s reporting on the quarter ended June 30, 2016 and did not reflect any change in the source of the revenue included in this group from prior periods. 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 segment.

The following table presents the revenues recognized from the four revenue groups described above during the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Advertising and sponsorship
Biopharma and medical device	$	107,048	$	89,870	$	296,353	$	251,692
OTC, CPG and other		29,026		28,850		93,907		89,047
		136,074		118,720		390,260		340,739
Health services		28,247		27,460		85,134		83,223
Information services		7,117		6,427		22,180		20,308
	$	171,438	$	152,607	$	497,574	$	444,270

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods presented. Diluted income 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):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income – Basic	$	21,618	$	13,188	$	55,116	$	36,563
Interest expense on 1.50% Notes, net of tax		878		864		2,635		2,592
Interest expense on 2.50% Notes, net of tax		1,827		1,797		5,480		5,392
Interest expense on 2.25% Notes, net of tax		—		—		457		—
Interest expense on 2.625% Notes, net of tax		1,675		—		2,235		—
Net income – Diluted	$	25,998	$	15,849	$	65,923	$	44,547
Denominator:
Weighted-average shares – Basic		38,103		36,721		37,804		36,606
Stock options and restricted stock		1,709		1,338		1,824		1,407
1.50% Notes		5,694		5,694		5,694		5,694
2.50% Notes		6,205		6,205		6,205		6,205
2.25% Notes		—		—		471		—
2.625% Notes		4,134		—		1,838		—
Adjusted weighted-average shares after assumed conversions – Diluted		55,845		49,958		53,836		49,912
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89

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 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 per common share during the periods presented (shares in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Options and restricted stock		383		4,235		302		3,672
2.25% Notes		—		2,516		—		3,180
		383		6,751		302		6,852

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During 2016

In June 2014, the FASB issued Accounting Standards Update (“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 was effective for the Company beginning in the quarter ended March 31, 2016. The adoption of the revised guidance did not have any impact on the Company’s consolidated financial statements as it does not have any share-based awards with performance targets currently outstanding.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The revised guidance was effective for the Company, on a retrospective basis, beginning in the quarter ended March 31, 2016. The adoption of the revised guidance only affected the balance sheet classification of its debt issuance costs. The impact of this reclassification on the consolidated balance sheet as of December 31, 2015 was a decrease to other assets of $9,612, a decrease to the carrying amount of the 2.25% Convertible Notes due 2016 (the “2.25% Notes”) of $159, a decrease to the carrying amount of the 2.50% Convertible Notes due 2018 (the “2.50% Notes”) of $3,719 and a decrease to the carrying amount of the 1.50% Convertible Notes due 2020 (the “1.50% Notes”) of $5,734 (see table below).

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance in determining whether a cloud computing arrangement includes a software license. If it is determined that a cloud computing arrangement does include a software license, the software element should be accounted for consistent with the acquisition of other software licenses. If the arrangement does not include a software license, it should be accounted for as a service contract. The revised guidance was effective for the Company beginning in the quarter ended March 31, 2016 and will be applied prospectively to all arrangements entered into or materially modified after the effective date. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting previously reported amounts. The revised guidance was effective for the Company, on a prospective basis, beginning in the quarter ended March 31, 2016. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent in the consolidated balance sheet instead of separating deferred taxes into current and noncurrent. The revised guidance was required to be effective for the Company beginning in the quarter ending March 31, 2017 and could be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. Early adoption was permitted and the Company elected to early adopt the guidance in the quarter ended March 31, 2016 on a retrospective basis. The adoption of the revised guidance only affected the balance sheet classification of its deferred tax assets and liabilities, and the related valuation allowance. The impact of this reclassification on the consolidated balance sheet as of December 31, 2015 was a decrease to current deferred tax assets of $16,126, an increase to noncurrent deferred tax assets of $15,694 and a decrease to other long-term liabilities of $432 (see table below).

The following table summarizes the reclassifications made to the consolidated balance sheet as of December 31, 2015 in connection with the adoption of ASU No. 2015-03 and ASU No. 2015-17:

	December 31, 2015
	As Reported		As Adjusted
Current assets:
Deferred tax assets		16,126		—
Total current assets		850,602		834,476
Deferred tax assets		—		15,694
Other assets		20,464		10,852
TOTAL ASSETS	$	1,165,967	$	1,155,923
Current liabilities:
2.25% convertible notes due 2016		102,682		102,523
Total current liabilities		286,061		285,902
2.50% convertible notes due 2018		400,000		396,281
1.50% convertible notes due 2020		300,000		294,266
Other long-term liabilities		23,678		23,246
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,165,967	$	1,155,923

Accounting Pronouncements to be Adopted in the Future

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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU No. 2014-09 by one year. As a result, the revised guidance is effective for the Company beginning in the quarter ending March 31, 2018. Early adoption is permitted, but not before the original effective date of the guidance. 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. In March, April and May 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, respectively. ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12 provide supplemental adoption guidance and clarification to ASU No. 2014-09, and must be adopted concurrently with the adoption of ASU No. 2014-09. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 also requires the change in fair value of many equity investments to be recognized in net income. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The revised guidance must be applied on a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2019. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2017. Early adoption is permitted. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2020 and must be adopted using a modified retrospective transition approach. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018 with early adoption permitted and must be applied retrospectively to all periods presented. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

XML

Convertible Notes

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Convertible Notes

2.    Convertible Notes

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, 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, 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, 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.

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. 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 was 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, 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 were 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, 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. The loss included the expensing of the remaining deferred issuance costs outstanding related to the repurchased notes. After these repurchases in 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, the conversion rate was adjusted to 13.9202 shares of Common Stock per thousand dollars principal amount of the 2.25% Notes. This was equivalent to an adjusted 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 following the September 10, 2014 adjustment.

During the three and nine months ended September 30, 2015, the Company repurchased $149,550 principal amount of its 2.25% Notes for $151,038 in cash in privately negotiated transactions. The Company recognized a pre-tax loss of $2,058 during the three and nine months ended September 30, 2015 related to these repurchases, which is reflected within loss on convertible notes in the accompanying consolidated statements of operations. The loss included the expensing of the remaining deferred issuance costs outstanding related to the repurchased notes. After these repurchases, the remaining principal amount of the 2.25% Notes outstanding was $102,682, which, in the aggregate, was convertible into 1,429,354 shares of Common Stock. The 2.25% Notes matured on March 31, 2016 and the remaining principal amount of $102,682 was repaid to the holders of the 2.25% 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.

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, 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.

2.625% Convertible Notes due 2023

On June 1, 2016, the Company issued $360,000 aggregate principal amount of its 2.625% Convertible Notes due 2023 (the “2.625% Notes”) in a private offering. Unless previously converted, the 2.625% Notes will mature on June 15, 2023. Net proceeds from the sale of the 2.625% Notes were approximately $350,394, after deducting the related offering expenses. Interest on the 2.625% Notes is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2016. Under the terms of the 2.625% Notes, holders may surrender their 2.625% Notes for conversion into the Company’s Common Stock at an initial conversion rate of 11.4845 shares of Common Stock per thousand dollars principal amount of the 2.625% Notes. This is equivalent to an initial conversion price of approximately $87.07 per share of Common Stock. In the aggregate, the 2.625% Notes are convertible into 4,134,420 shares of the Company’s Common Stock. The conversion rate may be adjusted under certain circumstances.

Under the terms of the 2.625% Notes, if the Company undergoes certain change of control or other fundamental change transactions prior to the maturity date of the 2.625% Notes, holders of the 2.625% Notes will have the right, at their option, to require the Company to repurchase some or all of their 2.625% Notes at a repurchase price equal to 100% of the principal amount of the 2.625% 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 2.625% Notes become convertible into the same consideration.

The balance of the Company’s convertible notes as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016							December 31, 2015
	Principal Amount		Less Unamortized Debt Issuance Costs			Net Carrying Amount		Principal Amount		Less Unamortized Debt Issuance Costs			Net Carrying Amount
2.25% Notes	$	—	$	—		$	—	$	102,682	$	(159	)	$	102,523
2.50% Notes	$	400,000	$	(2,380	)	$	397,620	$	400,000	$	(3,719	)	$	396,281
1.50% Notes	$	300,000	$	(4,860	)	$	295,140	$	300,000	$	(5,734	)	$	294,266
2.625% Notes	$	360,000	$	(9,151	)	$	350,849	$	—	$	—		$	—

XML

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

3.    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.

Cash and Marketable Securities

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 September 30, 2016 and December 31, 2015:

			September 30, 2016						December 31, 2015
	Fair Value Estimate Using:		Amortized Cost Basis		Fair Value		Gross Unrealized Gains		Amortized Cost Basis		Fair Value		Gross Unrealized Gains
Cash and cash equivalents		Level 1	$	88,600	$	88,600	$	—	$	641,165	$	641,165	$	—
U.S. Treasury securities		Level 1	$	949,125	$	949,488	$	363	$	—	$	—	$	—
Equity security		Level 1	$	—	$	311	$	311	$	—	$	598	$	598

During the nine months ended September 30, 2016 the Company invested $948,078 in U.S. Treasury securities which have a maturity date of December 22, 2016. These securities are reflected within Investments on the accompanying consolidated balance sheet as of September 30, 2016.

The Company’s equity security consists of an equity investment in a publicly traded company that completed its initial public offering in December 2014. During the nine months ended September 30, 2015, the Company recorded a gain on investments of $139, which represents the proceeds received by the Company when it sold a portion of this security. The unrealized gain related to this investment, net of tax, is included within accumulated other comprehensive income in the accompanying consolidated balance sheets as of September 30, 2016 and December 31, 2015.

Foreign Currency Forward Contracts

The Company is exposed to fluctuations in foreign currencies related to contracts with certain of the Company’s customers that are denominated in foreign currencies, principally the British Pound and the Euro. In order to manage this risk, the Company has hedged portions of its foreign currency denominated customer contracts with foreign currency forward contracts. At September 30, 2016 and December 31, 2015, the Company had foreign currency forward contracts with U.S. dollar equivalent notional amounts of $8,757 and $0, respectively, all of which were designated as and qualified as cash flow hedges. These forward contracts are intended to fix the amount of these foreign currency obligations in terms of the Company’s functional currency, the U.S. dollar. All of the Company’s derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes.

The Company recognizes the fair value of its foreign currency forward contracts as either assets or liabilities on the consolidated balance sheets. Changes in the fair value of hedging instruments are recorded each period in accumulated other comprehensive income (loss) as unrealized gains and losses until the forecasted underlying transaction occurs. Realized gains and losses for the effective portion of such contracts are recognized in cost of operations in the consolidated statement of operations in the period when the forecasted underlying transaction occurs. The Company classifies the cash flows from hedging instruments in the same category as the cash flows from the hedged items.

The Company assesses, both at inception and on an ongoing basis, whether the foreign currency forward contracts used in hedging transactions are highly effective in offsetting the changes in cash flows of the hedged items. The Company also assesses hedge ineffectiveness quarterly and, if determined to be ineffective, records the gain or loss related to the ineffective portion in its consolidated statements of operations. Gains and losses related to hedge ineffectiveness were not material during the periods presented.

The following table sets forth the fair values of foreign currency forward contracts, which are valued using Level 2 inputs, and the balance sheet lines in which they are recorded:

	Fair Value Asset (Liability)
	September 30, 2016			December 31, 2015
Prepaid expenses and other current assets	$	579		$	—
Accrued expenses	$	(41	)	$	—
Other long-term liabilities	$	(1	)	$	—

The impact on accumulated other comprehensive income (“AOCI”) and net income from foreign currency forward contracts, for the three and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended     September 30,				Nine Months Ended     September 30,
	2016		2015		2016		2015
Gain recognized in AOCI	$	126	$	—	$	704	$	—
Gain reclassified from AOCI to cost of operations	$	175	$	—	$	521	$	—

Other

For disclosure purposes, the Company is required to measure the outstanding value of its debt on a recurring basis. The following table presents the principal amount and estimated fair value (based on Level 1 market price data) of the Company’s convertible notes as of September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Principal Amount		Fair Value		Principal Amount		Fair Value
2.25% Notes	$	—	$	—	$	102,682	$	102,618
2.50% Notes	$	400,000	$	415,716	$	400,000	$	416,000
1.50% Notes	$	300,000	$	346,326	$	300,000	$	340,566
2.625% Notes	$	360,000	$	350,402	$	—	$	—

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 total amount of the Company’s investment in this privately held company was $5,278 and $6,471 as of September 30, 2016 and December 31, 2015, respectively. The decrease during the nine months ended September 30, 2016 was due to partial cash redemptions of this investment of $526 and $667 during the three months ended March 31, 2016 and the three months ended September 30, 2016, respectively. 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 September 30, 2016 and December 31, 2015.

XML

Equity

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Equity

4.    Equity

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, November 2014 and September 2015, the Company’s Board of Directors authorized increases to the Program of $75,000, $50,000, $40,000, $30,000, $23,895 and $27,451, respectively. Additionally, on September 16, 2016, the Company’s Board of Directors authorized an increase to the Program of $35,198, bringing the total then available under the Program to $50,000. During both the three and nine months ended September 30, 2016, the Company repurchased 432,072 of its Common Stock shares at an aggregate cost of $22,447 under the Program. During the three and nine months ended September 30, 2015, the Company repurchased 557,776 shares and 688,467 shares, respectively, at an aggregate cost of $23,055 and $28,406, respectively, under the Program. As of September 30, 2016, $46,807 remained available for repurchases under the Program.

Accumulated Other Comprehensive Income

The following table summarizes the Company’s changes in AOCI:

	Unrealized Gains on Marketable Securities, net of tax			Unrealized Gains on Foreign Currency Forward Contracts, net of tax			Total
Balance at December 31, 2015	$	357		$	—		$	357
Unrealized gain before reclassifications		69			436			505
Amounts reclassified from AOCI to cost of operations		—			(323	)		(323	)
Net current period other comprehensive income		69			113			182
Balance at September 30, 2016	$	426		$	113		$	539
Balance at December 31, 2014	$	976		$	—		$	976
Unrealized loss before reclassifications		(433	)		—			(433	)
Amounts reclassified from AOCI to cost of operations		(83	)		—			(83	)
Net current period other comprehensive loss		(516	)		—			(516	)
Balance at September 30, 2015	$	460		$	—		$	460

XML

Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

5.    Intangible Assets

Intangible assets consist of the following:

	September 30, 2016									December 31, 2015
	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		(30,763	)		3,294		2.1		34,057		(29,218	)		4,839		2.7
Technology and patents		17,882		(17,086	)		796		0.8		17,882		(16,291	)		1,591		1.5
Trade names-definite lives		2,530		(2,530	)		—		—		2,530		(2,530	)		—		—
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	74,887	$	(66,333	)	$	8,554			$	74,887	$	(63,993	)	$	10,894

(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.

Amortization expense was $780 and $2,340 during the three and nine months ended September 30, 2016, respectively, and $833 and $2,499 during the three and nine months ended September 30, 2015, respectively. Aggregate amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2016 (October 1st to December 31st)	$	780
2017	$	2,044
2018	$	1,266

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

6.    Commitments and Contingencies

Legal Proceedings

Dual Diagnosis Treatment Center, et al. v. Blue Cross of California, et al.

On May 8, 2015, six providers of substance abuse and/or mental health treatment services located in the States of California, Arizona and Florida filed an action in the United States District Court for the Central District of California (the “Action”) initially against twenty-eight (28) Blue Cross and Blue Shield companies (collectively “Blue Cross”), as well as at least forty-one (41) health and benefit plans, including the WebMD Health and Welfare Plan (the “Health Plan”). Additional defendants have since been added. Horizon Blue Cross Blue Shield of New Jersey, one of the Blue Cross companies named as a defendant, serves as third-party claims administrator for the Health Plan, a welfare plan sponsored by the Company under the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Company self-insures (up to the deductible amount under the Company’s stop loss insurance policy) the group health plan component of the Health Plan. The Company serves as “plan administrator” for the Health Plan under ERISA. The plaintiffs, “out-of-network” providers to Blue Cross, claim that Blue Cross improperly ignored assignments of benefits received by the plaintiffs from the individual plan participants and sent payments directly to such individual participants who then failed to remit those payments to the providers. Plaintiffs claim that defendants’ failures to honor the assignments violate ERISA and state law and they seek recovery for benefit claims in unspecified amounts that they claim have been paid to the wrong party together with attorney fees, as well as removal of all fiduciaries who are found to have breached ERISA-imposed duties under the relevant health and benefit plans on account of such conduct, and injunctive relief to enjoin Blue Cross from alleged unlawful practices regarding assignments of benefits. The Company has not yet filed an answer to the complaint. On September 14, 2015, most of the named defendants, including the Company, filed an omnibus motion to dismiss the complaint for failure to state a claim. Thereafter, the plaintiffs amended the complaint and added new parties. Defendants received an extension of time to respond to the amended complaint and on January 25, 2016, 184 defendants, including the Company, renewed the omnibus motion to dismiss after all new parties were served and appeared in the Action. Opposition papers were filed on the motion on March 21, 2016, and reply papers were filed by the moving defendants on April 4, 2016. Oral argument on the motion was held on May 31, 2016, after which the parties filed additional submissions at the Court’s direction. The motion is currently pending. 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.

Other Legal Proceedings

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.

XML

Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

7.    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 24,975,000 as of September 30, 2016, subject to adjustment in accordance with the terms of the 2005 Plan. The Company had an aggregate of 2,633,642 shares of Common Stock available for future grants under the 2005 Plan at September 30, 2016, of which 1,501,500 shares are available for grant only to individuals who are not executive officers of the Company (other than in the case of a new hire who joins the Company as an executive officer) or members of the Company’s Board of Directors.

Stock Options

Generally, options under the Plans vest and become exercisable ratably over periods ranging from three to four 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 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, 2016		7,870,435		$	35.81
Granted		304,300			54.83
Exercised		(1,952,129	)		34.74
Cancelled		(537,902	)		40.11
Outstanding at September 30, 2016		5,684,704		$	36.79		6.2	$	75,374
Vested and exercisable at the end of the period		3,046,256		$	31.90		4.6	$	54,451

(a) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on September 30, 2016, which was $49.70, 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 September 30, 2016.

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 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.

	Nine Months Ended September 30,
	2016			2015
Expected dividend yield		0.0	%		0.0	%
Expected volatility		0.38 -  0.44			0.44 - 0.48
Risk-free interest rate		0.86% - 1.71	%		1.01% - 1.56	%
Expected term (years)		4.0 - 4.8			4.1 - 4.7
Weighted-average fair value of options granted during the period	$	18.92		$	16.31

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:

	Shares			Weighted Average Grant Date Fair Value
Balance at January 1, 2016		854,845		$	39.17
Granted		52,000			57.49
Vested		(201,969	)		33.19
Forfeited		(131,702	)		42.90
Balance at September 30, 2016		573,174		$	42.60

Proceeds received from the exercise of options to purchase shares of the Company’s Common Stock were $3,290 and $52,702 during the three and nine months ended September 30, 2016, respectively, and $3,532 and $15,185 during the three and nine months ended September 30, 2015, respectively. Additionally, in connection with the exercise of certain stock options and the vesting of restricted stock, the Company made payments of $3,895 and $7,705 during the three and nine months ended September 30, 2016, respectively, and $876 and $3,836 during the three and nine months ended September 30, 2015, 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 $14,245 and $53,539 for the three and nine months ended September 30, 2016, respectively, and $5,641 and $24,423 for the three and nine months ended September 30, 2015, 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 $117 and $350 of stock-based compensation expense for the three and nine months ended September 30, 2016, respectively, and $117 and $350 of stock-based compensation expense for the three and nine months ended September 30, 2015, 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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	3,176	$	5,771	$	13,366	$	15,704
Restricted stock		1,345		3,254		7,322		8,677
Other		117		117		350		350
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731
Included in:
Cost of operations	$	1,277	$	1,370	$	3,707	$	3,791
Sales and marketing		1,351		1,968		4,295		5,099
General and administrative		2,010		5,804		13,036		15,841
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731

In the table above, stock-based compensation expense included in general and administrative expense for the three and nine months ended September 30, 2016 includes the net reversal of $2,394 of stock-based compensation expense recorded in prior periods for stock-based awards that were forfeited by the Company’s former Chief Executive Officer and former Chief Financial Officer upon their termination of employment in September 2016.

As of September 30, 2016, approximately $37,621 of unrecognized stock-based compensation expense related to unvested awards (net of estimated forfeitures) is expected to be recognized over a weighted-average period of approximately 1.9 years, related to the Plans.

Tax benefits attributable to stock-based compensation represented 38% of stock-based compensation expense for the three and nine months ended September 30, 2016 and 2015.

XML

Other Expense

9 Months Ended

Sep. 30, 2016

Other Income and Expenses [Abstract]

Other Expense

8.    Other Expense

Other expense for the three and nine months ended September 30, 2016 represents cash severance and related expenses due to the September 2016 departure of the Chief Executive Officer and the Chief Financial Officer of the Company. Other expense for the nine months ended September 30, 2015 represents a charge related to the resolution of a patent infringement claim made by International Business Machines Corporation against the Company.

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Background

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 generates revenue from the advertising and sponsorship services of The WebMD Health Network and related operations, from the services it markets to employers and health plans under the WebMD Health Services brand and from certain information services, each of which is described below and discussed further under “Presentation of Segment Information” in this Note 1.

Advertising and Sponsorship. 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 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.

Health Services. The Company markets services under the WebMD Health Services brand that help employers and health plans improve the health of their employee and plan participant populations and, as a result, manage their healthcare costs. The Company hosts its WebMD Health Services platform for private and public sector employers and health plans and its cloud-based online services can be accessed by their employees and plan participants using a computer, a tablet or a smartphone. The WebMD Health Services platform provides an online personal health record application and personal health content, tools and other resources relevant to the specific individual’s eligibility, coverage and wellness profile, including decision-support applications that help users make informed decisions about health risks, lifestyle choices, healthcare providers, treatment options, and healthcare benefits options. The Company’s flexible architecture allows it to integrate with the client’s existing programs, Websites and intranets for their employees and plan participants. The Company also offers clients the ability to design team-based and individual wellness challenges that help foster a culture of wellness in the workplace. In addition, the Company offers telephonic, online and onsite health coaching and targeted condition management programs that help employees and plan participants make healthier lifestyle choices to achieve their health and 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.

Information Services. The Company also generates revenue from the sale of certain information products and services on a stand-alone basis using de-identified data that it licenses from a small number of third party data sources, of which the principal source is a license retained by HLTH Corporation (“HLTH”), the Company’s former parent company, in connection with the sale of its Emdeon Business Services (“EBS”) business. As the successor to HLTH, the Company received this license which provides the Company the rights to certain de-identified data from the operation of the EBS business (which is now known as Change Healthcare) through early February 2018 for use in the development and commercialization of various information products and services. Customers include data services, informatics and consulting companies.

Interim Financial Statements

Interim Financial Statements

The unaudited consolidated financial statements of the Company have been prepared by management and reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for any subsequent period or for the entire year ending December 31, 2016. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under the Securities and Exchange Commission’s rules and regulations.

The unaudited consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Seasonality

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.

Accounting Estimates

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 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.

Presentation of Segment Information

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 “Health Services” (which the Company previously referred to as “Private Portal Services”) and consists of revenue from employers and health plans for subscriptions to the Company’s WebMD Health Services platform and for related services, including health coaching and condition management services. The change in the name of this group to “Health Services” began in the Company’s reporting on the quarter ended June 30, 2016 and did not reflect any change in the source of the revenue included in this group from prior periods. 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 segment.

The following table presents the revenues recognized from the four revenue groups described above during the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Advertising and sponsorship
Biopharma and medical device	$	107,048	$	89,870	$	296,353	$	251,692
OTC, CPG and other		29,026		28,850		93,907		89,047
		136,074		118,720		390,260		340,739
Health services		28,247		27,460		85,134		83,223
Information services		7,117		6,427		22,180		20,308
	$	171,438	$	152,607	$	497,574	$	444,270

Net Income Per Common Share

Net Income Per Common Share

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods presented. Diluted income 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):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income – Basic	$	21,618	$	13,188	$	55,116	$	36,563
Interest expense on 1.50% Notes, net of tax		878		864		2,635		2,592
Interest expense on 2.50% Notes, net of tax		1,827		1,797		5,480		5,392
Interest expense on 2.25% Notes, net of tax		—		—		457		—
Interest expense on 2.625% Notes, net of tax		1,675		—		2,235		—
Net income – Diluted	$	25,998	$	15,849	$	65,923	$	44,547
Denominator:
Weighted-average shares – Basic		38,103		36,721		37,804		36,606
Stock options and restricted stock		1,709		1,338		1,824		1,407
1.50% Notes		5,694		5,694		5,694		5,694
2.50% Notes		6,205		6,205		6,205		6,205
2.25% Notes		—		—		471		—
2.625% Notes		4,134		—		1,838		—
Adjusted weighted-average shares after assumed conversions – Diluted		55,845		49,958		53,836		49,912
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89

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 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 per common share during the periods presented (shares in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Options and restricted stock		383		4,235		302		3,672
2.25% Notes		—		2,516		—		3,180
		383		6,751		302		6,852

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During 2016

In June 2014, the FASB issued Accounting Standards Update (“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 was effective for the Company beginning in the quarter ended March 31, 2016. The adoption of the revised guidance did not have any impact on the Company’s consolidated financial statements as it does not have any share-based awards with performance targets currently outstanding.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The revised guidance was effective for the Company, on a retrospective basis, beginning in the quarter ended March 31, 2016. The adoption of the revised guidance only affected the balance sheet classification of its debt issuance costs. The impact of this reclassification on the consolidated balance sheet as of December 31, 2015 was a decrease to other assets of $9,612, a decrease to the carrying amount of the 2.25% Convertible Notes due 2016 (the “2.25% Notes”) of $159, a decrease to the carrying amount of the 2.50% Convertible Notes due 2018 (the “2.50% Notes”) of $3,719 and a decrease to the carrying amount of the 1.50% Convertible Notes due 2020 (the “1.50% Notes”) of $5,734 (see table below).

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance in determining whether a cloud computing arrangement includes a software license. If it is determined that a cloud computing arrangement does include a software license, the software element should be accounted for consistent with the acquisition of other software licenses. If the arrangement does not include a software license, it should be accounted for as a service contract. The revised guidance was effective for the Company beginning in the quarter ended March 31, 2016 and will be applied prospectively to all arrangements entered into or materially modified after the effective date. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting previously reported amounts. The revised guidance was effective for the Company, on a prospective basis, beginning in the quarter ended March 31, 2016. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent in the consolidated balance sheet instead of separating deferred taxes into current and noncurrent. The revised guidance was required to be effective for the Company beginning in the quarter ending March 31, 2017 and could be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. Early adoption was permitted and the Company elected to early adopt the guidance in the quarter ended March 31, 2016 on a retrospective basis. The adoption of the revised guidance only affected the balance sheet classification of its deferred tax assets and liabilities, and the related valuation allowance. The impact of this reclassification on the consolidated balance sheet as of December 31, 2015 was a decrease to current deferred tax assets of $16,126, an increase to noncurrent deferred tax assets of $15,694 and a decrease to other long-term liabilities of $432 (see table below).

The following table summarizes the reclassifications made to the consolidated balance sheet as of December 31, 2015 in connection with the adoption of ASU No. 2015-03 and ASU No. 2015-17:

	December 31, 2015
	As Reported		As Adjusted
Current assets:
Deferred tax assets		16,126		—
Total current assets		850,602		834,476
Deferred tax assets		—		15,694
Other assets		20,464		10,852
TOTAL ASSETS	$	1,165,967	$	1,155,923
Current liabilities:
2.25% convertible notes due 2016		102,682		102,523
Total current liabilities		286,061		285,902
2.50% convertible notes due 2018		400,000		396,281
1.50% convertible notes due 2020		300,000		294,266
Other long-term liabilities		23,678		23,246
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,165,967	$	1,155,923

Accounting Pronouncements to be Adopted in the Future

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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU No. 2014-09 by one year. As a result, the revised guidance is effective for the Company beginning in the quarter ending March 31, 2018. Early adoption is permitted, but not before the original effective date of the guidance. 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. In March, April and May 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, respectively. ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12 provide supplemental adoption guidance and clarification to ASU No. 2014-09, and must be adopted concurrently with the adoption of ASU No. 2014-09. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 also requires the change in fair value of many equity investments to be recognized in net income. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The revised guidance must be applied on a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2019. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2017. Early adoption is permitted. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2020 and must be adopted using a modified retrospective transition approach. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018 with early adoption permitted and must be applied retrospectively to all periods presented. The Company has not yet determined the impact the revised guidance will have on its consolidated financial statements.

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Revenues from Four Revenue Groups

The following table presents the revenues recognized from the four revenue groups described above during the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Advertising and sponsorship
Biopharma and medical device	$	107,048	$	89,870	$	296,353	$	251,692
OTC, CPG and other		29,026		28,850		93,907		89,047
		136,074		118,720		390,260		340,739
Health services		28,247		27,460		85,134		83,223
Information services		7,117		6,427		22,180		20,308
	$	171,438	$	152,607	$	497,574	$	444,270

Schedule of Net Income Per Common Shares

Basic income per common share has been computed using the weighted-average number of shares of Common Stock outstanding during the periods presented. Diluted income 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):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income – Basic	$	21,618	$	13,188	$	55,116	$	36,563
Interest expense on 1.50% Notes, net of tax		878		864		2,635		2,592
Interest expense on 2.50% Notes, net of tax		1,827		1,797		5,480		5,392
Interest expense on 2.25% Notes, net of tax		—		—		457		—
Interest expense on 2.625% Notes, net of tax		1,675		—		2,235		—
Net income – Diluted	$	25,998	$	15,849	$	65,923	$	44,547
Denominator:
Weighted-average shares – Basic		38,103		36,721		37,804		36,606
Stock options and restricted stock		1,709		1,338		1,824		1,407
1.50% Notes		5,694		5,694		5,694		5,694
2.50% Notes		6,205		6,205		6,205		6,205
2.25% Notes		—		—		471		—
2.625% Notes		4,134		—		1,838		—
Adjusted weighted-average shares after assumed conversions – Diluted		55,845		49,958		53,836		49,912
Net income per common share:
Basic	$	0.57	$	0.36	$	1.46	$	1.00
Diluted	$	0.47	$	0.32	$	1.22	$	0.89

Weighted Average Number of Potentially Dilutive Common Shares Excluded from Computation of Diluted Income Per Common Share

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 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 per common share during the periods presented (shares in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Options and restricted stock		383		4,235		302		3,672
2.25% Notes		—		2,516		—		3,180
		383		6,751		302		6,852

Summary of Reclassifications Made to Previously Reported Balance Sheet

The following table summarizes the reclassifications made to the consolidated balance sheet as of December 31, 2015 in connection with the adoption of ASU No. 2015-03 and ASU No. 2015-17:

	December 31, 2015
	As Reported		As Adjusted
Current assets:
Deferred tax assets		16,126		—
Total current assets		850,602		834,476
Deferred tax assets		—		15,694
Other assets		20,464		10,852
TOTAL ASSETS	$	1,165,967	$	1,155,923
Current liabilities:
2.25% convertible notes due 2016		102,682		102,523
Total current liabilities		286,061		285,902
2.50% convertible notes due 2018		400,000		396,281
1.50% convertible notes due 2020		300,000		294,266
Other long-term liabilities		23,678		23,246
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,165,967	$	1,155,923

XML

Convertible Notes (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Schedule of Convertible Notes

The balance of the Company’s convertible notes as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016							December 31, 2015
	Principal Amount		Less Unamortized Debt Issuance Costs			Net Carrying Amount		Principal Amount		Less Unamortized Debt Issuance Costs			Net Carrying Amount
2.25% Notes	$	—	$	—		$	—	$	102,682	$	(159	)	$	102,523
2.50% Notes	$	400,000	$	(2,380	)	$	397,620	$	400,000	$	(3,719	)	$	396,281
1.50% Notes	$	300,000	$	(4,860	)	$	295,140	$	300,000	$	(5,734	)	$	294,266
2.625% Notes	$	360,000	$	(9,151	)	$	350,849	$	—	$	—		$	—

XML

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Financial Assets Measured and Recorded at Fair Value on Recurring Basis

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 September 30, 2016 and December 31, 2015:

			September 30, 2016						December 31, 2015
	Fair Value Estimate Using:		Amortized Cost Basis		Fair Value		Gross Unrealized Gains		Amortized Cost Basis		Fair Value		Gross Unrealized Gains
Cash and cash equivalents		Level 1	$	88,600	$	88,600	$	—	$	641,165	$	641,165	$	—
U.S. Treasury securities		Level 1	$	949,125	$	949,488	$	363	$	—	$	—	$	—
Equity security		Level 1	$	—	$	311	$	311	$	—	$	598	$	598

Schedule of Fair Values of Foreign Currency Forward Contracts, Assets and Liabilities

The following table sets forth the fair values of foreign currency forward contracts, which are valued using Level 2 inputs, and the balance sheet lines in which they are recorded:

	Fair Value Asset (Liability)
	September 30, 2016			December 31, 2015
Prepaid expenses and other current assets	$	579		$	—
Accrued expenses	$	(41	)	$	—
Other long-term liabilities	$	(1	)	$	—

Impact on Accumulated Other Comprehensive Income ("AOCI") and Net Income from Foreign Currency Forward Contracts

The impact on accumulated other comprehensive income (“AOCI”) and net income from foreign currency forward contracts, for the three and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended     September 30,				Nine Months Ended     September 30,
	2016		2015		2016		2015
Gain recognized in AOCI	$	126	$	—	$	704	$	—
Gain reclassified from AOCI to cost of operations	$	175	$	—	$	521	$	—

Principal Amount and Estimated Fair Value of Company's Convertible Notes

The following table presents the principal amount and estimated fair value (based on Level 1 market price data) of the Company’s convertible notes as of September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Principal Amount		Fair Value		Principal Amount		Fair Value
2.25% Notes	$	—	$	—	$	102,682	$	102,618
2.50% Notes	$	400,000	$	415,716	$	400,000	$	416,000
1.50% Notes	$	300,000	$	346,326	$	300,000	$	340,566
2.625% Notes	$	360,000	$	350,402	$	—	$	—

XML

Equity (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Summary of Changes in AOCI

The following table summarizes the Company’s changes in AOCI:

	Unrealized Gains on Marketable Securities, net of tax			Unrealized Gains on Foreign Currency Forward Contracts, net of tax			Total
Balance at December 31, 2015	$	357		$	—		$	357
Unrealized gain before reclassifications		69			436			505
Amounts reclassified from AOCI to cost of operations		—			(323	)		(323	)
Net current period other comprehensive income		69			113			182
Balance at September 30, 2016	$	426		$	113		$	539
Balance at December 31, 2014	$	976		$	—		$	976
Unrealized loss before reclassifications		(433	)		—			(433	)
Amounts reclassified from AOCI to cost of operations		(83	)		—			(83	)
Net current period other comprehensive loss		(516	)		—			(516	)
Balance at September 30, 2015	$	460		$	—		$	460

XML

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite and Indefinite Lived Intangible Assets

Intangible assets consist of the following:

	September 30, 2016									December 31, 2015
	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		(30,763	)		3,294		2.1		34,057		(29,218	)		4,839		2.7
Technology and patents		17,882		(17,086	)		796		0.8		17,882		(16,291	)		1,591		1.5
Trade names-definite lives		2,530		(2,530	)		—		—		2,530		(2,530	)		—		—
Trade names-indefinite lives		4,464		—			4,464		n/a		4,464		—			4,464		n/a
Total	$	74,887	$	(66,333	)	$	8,554			$	74,887	$	(63,993	)	$	10,894

(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.

Schedule of Finite-Lived Intangible Assets, Aggregate Amortization Expense for Intangible Assets

Amortization expense was $780 and $2,340 during the three and nine months ended September 30, 2016, respectively, and $833 and $2,499 during the three and nine months ended September 30, 2015, respectively. Aggregate amortization expense for intangible assets is estimated to be:

Year Ending December 31:
2016 (October 1st to December 31st)	$	780
2017	$	2,044
2018	$	1,266

XML

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-Based Compensation, Stock Options, Activity

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, 2016		7,870,435		$	35.81
Granted		304,300			54.83
Exercised		(1,952,129	)		34.74
Cancelled		(537,902	)		40.11
Outstanding at September 30, 2016		5,684,704		$	36.79		6.2	$	75,374
Vested and exercisable at the end of the period		3,046,256		$	31.90		4.6	$	54,451

(a) The aggregate intrinsic value is based on the market price of the Company’s Common Stock on September 30, 2016, which was $49.70, 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 September 30, 2016.

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

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.

	Nine Months Ended September 30,
	2016			2015
Expected dividend yield		0.0	%		0.0	%
Expected volatility		0.38 -  0.44			0.44 - 0.48
Risk-free interest rate		0.86% - 1.71	%		1.01% - 1.56	%
Expected term (years)		4.0 - 4.8			4.1 - 4.7
Weighted-average fair value of options granted during the period	$	18.92		$	16.31

Schedule of Share-based Compensation, Restricted Stock Awards, Activity

The following table summarizes the activity of the Company’s Restricted Stock:

	Shares			Weighted Average Grant Date Fair Value
Balance at January 1, 2016		854,845		$	39.17
Granted		52,000			57.49
Vested		(201,969	)		33.19
Forfeited		(131,702	)		42.90
Balance at September 30, 2016		573,174		$	42.60

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	3,176	$	5,771	$	13,366	$	15,704
Restricted stock		1,345		3,254		7,322		8,677
Other		117		117		350		350
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731
Included in:
Cost of operations	$	1,277	$	1,370	$	3,707	$	3,791
Sales and marketing		1,351		1,968		4,295		5,099
General and administrative		2,010		5,804		13,036		15,841
Total stock-based compensation expense	$	4,638	$	9,142	$	21,038	$	24,731

XML

Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) Segment	Dec. 31, 2015 USD ($)	Sep. 30, 2015	Nov. 26, 2013	Mar. 14, 2011	Jan. 11, 2011
Summary Of Significant Accounting Policies [Line Items]
Reportable segments | Segment	1
Decrease to other long-term liabilities	$ (28,965)	$ (23,246)
Adjustments for New Accounting Principle, Early Adoption [Member]
Summary Of Significant Accounting Policies [Line Items]
Decrease to current deferred tax assets		(16,126)
Increase to noncurrent deferred tax assets		15,694
Decrease to other long-term liabilities		432
2.25% Convertible Notes Due 2016 [Member]
Summary Of Significant Accounting Policies [Line Items]
Interest on convertible notes	2.25%
2.25% Convertible Notes Due 2016 [Member] | Senior Notes [Member]
Summary Of Significant Accounting Policies [Line Items]
Decrease in carrying amount		$ (159)
Interest on convertible notes		2.25%			2.25%
2.50% Convertible Notes Due 2018 [Member]
Summary Of Significant Accounting Policies [Line Items]
Interest on convertible notes	2.50%		2.50%
2.50% Convertible Notes Due 2018 [Member] | Senior Notes [Member]
Summary Of Significant Accounting Policies [Line Items]
Decrease in carrying amount		$ (3,719)
Interest on convertible notes		2.50%				2.50%
1.50% Convertible Notes Due 2020 [Member]
Summary Of Significant Accounting Policies [Line Items]
Interest on convertible notes	1.50%		1.50%
1.50% Convertible Notes Due 2020 [Member] | Senior Notes [Member]
Summary Of Significant Accounting Policies [Line Items]
Decrease in carrying amount		$ (5,734)
Interest on convertible notes		1.50%		1.50%
Other Assets [Member]
Summary Of Significant Accounting Policies [Line Items]
Recent accounting pronouncements, decrease in assets or liabilities		$ 9,612

XML

Summary of Significant Accounting Policies - Summary of Revenues from Four Revenue Groups (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Summary of revenues relating to public and private portal
Revenue	$ 171,438	$ 152,607	$ 497,574	$ 444,270
Biopharma and Medical Device [Member]
Summary of revenues relating to public and private portal
Revenue	107,048	89,870	296,353	251,692
OTC, CPG and Other [Member]
Summary of revenues relating to public and private portal
Revenue	29,026	28,850	93,907	89,047
Advertising and Sponsorship [Member]
Summary of revenues relating to public and private portal
Revenue	136,074	118,720	390,260	340,739
Health Services [Member]
Summary of revenues relating to public and private portal
Revenue	28,247	27,460	85,134	83,223
Information Services [Member]
Summary of revenues relating to public and private portal
Revenue	$ 7,117	$ 6,427	$ 22,180	$ 20,308

XML

Summary of Significant Accounting Policies - Schedule of Net Income Per Common Shares (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income - Basic	$ 21,618	$ 13,188	$ 55,116	$ 36,563
Net income - Diluted	$ 25,998	$ 15,849	$ 65,923	$ 44,547
Denominator:
Weighted-average shares - Basic	38,103	36,721	37,804	36,606
Stock options and restricted stock	1,709	1,338	1,824	1,407
Adjusted weighted-average shares after assumed conversions - Diluted	55,845	49,958	53,836	49,912
Net income per common share:
Basic	$ 0.57	$ 0.36	$ 1.46	$ 1.00
Diluted	$ 0.47	$ 0.32	$ 1.22	$ 0.89
1.50% Convertible Notes Due 2020 [Member]
Numerator:
Interest expense, net of tax	$ 878	$ 864	$ 2,635	$ 2,592
Denominator:
Convertible note	5,694	5,694	5,694	5,694
2.50% Convertible Notes Due 2018 [Member]
Numerator:
Interest expense, net of tax	$ 1,827	$ 1,797	$ 5,480	$ 5,392
Denominator:
Convertible note	6,205	6,205	6,205	6,205
2.25% Convertible Notes Due 2016 [Member]
Numerator:
Interest expense, net of tax			$ 457
Denominator:
Convertible note			471
2.625% Convertible Notes Due 2023 [Member]
Numerator:
Interest expense, net of tax	$ 1,675		$ 2,235
Denominator:
Convertible note	4,134		1,838

XML

Summary of Significant Accounting Policies - Schedule of Net Income Per Common Shares (Parenthetical) (Detail)	Sep. 30, 2016	Sep. 30, 2015
1.50% Convertible Notes Due 2020 [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Interest on notes	1.50%	1.50%
2.50% Convertible Notes Due 2018 [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Interest on notes	2.50%	2.50%
2.25% Convertible Notes Due 2016 [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Interest on notes	2.25%
2.625% Convertible Notes Due 2023 [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Interest on notes	2.625%

XML

Summary of Significant Accounting Policies - Weighted Average Number of Potentially Dilutive Common Shares Excluded from Computation of Diluted Income Per Common Share (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share	383	6,751	302	6,852
Options and Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share	383	4,235	302	3,672
2.25% Convertible Notes Due 2016 [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average number of potentially dilutive common shares that were excluded from the computation of diluted income per common share		2,516		3,180

XML

Summary of Significant Accounting Policies - Summary of Reclassifications Made to Previously Reported Balance Sheet (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Total current assets	$ 1,209,315	$ 834,476
Other assets	8,497	10,852
TOTAL ASSETS	1,523,259	1,155,923
Current liabilities:
Total current liabilities	168,143	285,902
Other long-term liabilities	28,965	23,246
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,523,259	1,155,923
2.25% Convertible Notes Due 2016 [Member]
Current liabilities:
convertible notes current		102,523
2.50% Convertible Notes Due 2018 [Member]
Current liabilities:
Convertible notes	397,620	396,281
1.50% Convertible Notes Due 2020 [Member]
Current liabilities:
Convertible notes	$ 295,140	294,266
Adjustments for New Accounting Pronouncement [Member]
Current assets:
Total current assets		834,476
Deferred tax assets		15,694
Other assets		10,852
TOTAL ASSETS		1,155,923
Current liabilities:
Total current liabilities		285,902
Other long-term liabilities		23,246
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		1,155,923
Adjustments for New Accounting Pronouncement [Member] | 2.25% Convertible Notes Due 2016 [Member]
Current liabilities:
convertible notes current		102,523
Adjustments for New Accounting Pronouncement [Member] | 2.50% Convertible Notes Due 2018 [Member]
Current liabilities:
Convertible notes		396,281
Adjustments for New Accounting Pronouncement [Member] | 1.50% Convertible Notes Due 2020 [Member]
Current liabilities:
Convertible notes		294,266
As Reported [Member] | Adjustments for New Accounting Pronouncement [Member]
Current assets:
Deferred tax assets		16,126
Total current assets		850,602
Other assets		20,464
TOTAL ASSETS		1,165,967
Current liabilities:
Total current liabilities		286,061
Other long-term liabilities		23,678
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		1,165,967
As Reported [Member] | Adjustments for New Accounting Pronouncement [Member] | 2.25% Convertible Notes Due 2016 [Member]
Current liabilities:
convertible notes current		102,682
As Reported [Member] | Adjustments for New Accounting Pronouncement [Member] | 2.50% Convertible Notes Due 2018 [Member]
Current liabilities:
Convertible notes		400,000
As Reported [Member] | Adjustments for New Accounting Pronouncement [Member] | 1.50% Convertible Notes Due 2020 [Member]
Current liabilities:
Convertible notes		$ 300,000

XML

Convertible Notes - Additional Information (Detail) $ / shares in Units, $ in Thousands									3 Months Ended	9 Months Ended		12 Months Ended
	Jun. 01, 2016 USD ($) shares $ / shares	Mar. 31, 2016 USD ($)	Sep. 10, 2014 shares $ / shares	Nov. 26, 2013 USD ($) shares $ / shares	Sep. 11, 2013 shares $ / shares	Apr. 04, 2012 shares $ / shares	Mar. 14, 2011 USD ($) shares $ / shares	Jan. 11, 2011 USD ($) shares $ / shares	Sep. 30, 2015 USD ($) shares	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($) shares	Dec. 31, 2013 USD ($) shares	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Proceeds from sale of notes										$ 350,394
Cash paid to repurchase common stock										22,447	$ 28,406
Pre-tax loss on repurchase of notes									$ (2,058)		(2,058)
Maturity of convertible notes										102,682	$ 151,038
2.50% Convertible Notes Due 2018 [Member]
Debt Instrument [Line Items]
Convertible notes due										$ 400,000			$ 400,000
Interest on convertible notes									2.50%	2.50%	2.50%
Convertible notes										$ 397,620			$ 396,281
2.50% Convertible Notes Due 2018 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Convertible notes due								$ 400,000
Interest on convertible notes								2.50%					2.50%
Debt instrument, maturity date								Jan. 31, 2018
Proceeds from sale of notes								$ 387,345
Cash paid to repurchase common stock								$ 100,000
Common stock repurchased, shares | shares								1,920,490
Common stock repurchased, price per share | $ / shares								$ 52.07
Conversion price per share of common stock | $ / shares			$ 64.47		$ 64.61	$ 65.26		$ 66.13
Conversion rate of notes per thousand dollar of principal amount			15.5118		15.4764	15.3223		15.1220
Common stock available upon conversion | shares			6,204,720		6,190,560	6,128,920		6,048,800
Percentage of principal amount equal to repurchase price										100.00%
2.25% Convertible Notes Due 2016 [Member]
Debt Instrument [Line Items]
Convertible notes due													$ 102,682
Interest on convertible notes										2.25%
2.25% Convertible Notes Due 2016 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Convertible notes due							$ 400,000
Interest on convertible notes							2.25%						2.25%
Proceeds from sale of notes							$ 387,400
Cash paid to repurchase common stock							$ 50,000
Common stock repurchased, shares | shares							868,507
Common stock repurchased, price per share | $ / shares							$ 57.57
Conversion price per share of common stock | $ / shares			$ 71.84		$ 72.00	$ 72.73	$ 73.69
Conversion rate of notes per thousand dollar of principal amount			13.9202		13.8884	13.7502	13.5704
Common stock available upon conversion | shares			3,511,120		5,555,360	5,500,080	5,428,160		1,429,354		1,429,354	3,503,099
Pre-tax loss on repurchase of notes									$ (2,058)		$ (2,058)	$ (4,871)
Convertible notes									102,682		102,682	252,232
Maturity of convertible notes		$ 102,682
2.25% Convertible Notes Due 2016 [Member] | Senior Notes [Member] | Privately Negotiated Transaction [Member]
Debt Instrument [Line Items]
Convertible notes repurchased									149,550		149,550	100,000
Repurchased amount in cash open market									$ 151,038		$ 151,038	101,750
2.25% Convertible Notes Due 2016 [Member] | Senior Notes [Member] | Open Market [Member]
Debt Instrument [Line Items]
Convertible notes repurchased												47,768
Repurchased amount in cash open market												$ 48,604
1.50% Convertible Notes Due 2020 [Member]
Debt Instrument [Line Items]
Convertible notes due										$ 300,000			$ 300,000
Interest on convertible notes									1.50%	1.50%	1.50%
Convertible notes										$ 295,140			$ 294,266
1.50% Convertible Notes Due 2020 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Convertible notes due				$ 300,000
Interest on convertible notes				1.50%									1.50%
Debt instrument, maturity date				Dec. 01, 2020
Proceeds from sale of notes				$ 291,823
Conversion price per share of common stock | $ / shares			$ 52.69	$ 52.81
Conversion rate of notes per thousand dollar of principal amount			18.9795	18.9362
Common stock available upon conversion | shares			5,693,850	5,680,860
Percentage of principal amount equal to repurchase price										100.00%
Minimum percentage of consideration received or to be received by holders of common stock for repurchase option										90.00%
2.625% Convertible Notes Due 2023 [Member]
Debt Instrument [Line Items]
Convertible notes due										$ 360,000
Interest on convertible notes										2.625%
Convertible notes										$ 350,849
2.625% Convertible Notes Due 2023 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Convertible notes due	$ 360,000
Interest on convertible notes	2.625%
Debt instrument, maturity date	Jun. 15, 2023
Proceeds from sale of notes	$ 350,394
Conversion price per share of common stock | $ / shares	$ 87.07
Conversion rate of notes per thousand dollar of principal amount	11.4845
Common stock available upon conversion | shares	4,134,420
Percentage of principal amount equal to repurchase price										100.00%
Minimum percentage of consideration received or to be received by holders of common stock for repurchase option										90.00%

XML

Convertible Notes - Schedule of Convertible Notes (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
2.25% Convertible Notes Due 2016 [Member]
Debt Instrument [Line Items]
Principal Amount		$ 102,682
Unamortized Debt Issuance Costs		(159)
Net Carrying Amount		102,523
2.50% Convertible Notes Due 2018 [Member]
Debt Instrument [Line Items]
Principal Amount	$ 400,000	400,000
Unamortized Debt Issuance Costs	(2,380)	(3,719)
Net Carrying Amount	397,620	396,281
1.50% Convertible Notes Due 2020 [Member]
Debt Instrument [Line Items]
Principal Amount	300,000	300,000
Unamortized Debt Issuance Costs	(4,860)	(5,734)
Net Carrying Amount	295,140	$ 294,266
2.625% Convertible Notes Due 2023 [Member]
Debt Instrument [Line Items]
Principal Amount	360,000
Unamortized Debt Issuance Costs	(9,151)
Net Carrying Amount	$ 350,849

XML

Fair Value of Financial Instruments - Financial Assets Measured and Recorded at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Amortized Cost Basis	$ 88,600	$ 641,165	$ 612,332	$ 706,776
U.S. Treasury securities, Amortized Cost Basis	949,488
U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury securities, Amortized Cost Basis	948,078
Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Amortized Cost Basis	88,600	641,165
Cash and cash equivalents, Fair Value	88,600	641,165
Cash and cash equivalents, Gross Unrealized Gains	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Equity Security [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity security, Fair value	311	598
Equity security, Gross unrealized gains	311	$ 598
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury securities, Amortized Cost Basis	949,125
U.S. Treasury securities, Fair Value	949,488
U.S. Treasury securities, Gross Unrealized Gains	$ 363

XML

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 949,488
Gain on investments			$ 139
Derivative, notional amount	8,757			$ 0
U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	948,078
Privately Held Company [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Amount	5,278			$ 6,471
Decrease in investments due to partial cash redemptions	$ 667	$ 526

XML

Fair Value of Financial Instruments - Schedule of Fair Values of Foreign Currency Forward Contracts, Assets and Liabilities (Detail) - Level 2 Inputs [Member] $ in Thousands	Sep. 30, 2016 USD ($)
Accrued Expenses [Member]
Derivatives, Fair Value [Line Items]
Fair values of foreign currency forward contracts, liabilities	$ (41)
Prepaid Expenses and Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Fair values of foreign currency forward contracts, assets	579
Other Long-Term Liabilities [Member]
Derivatives, Fair Value [Line Items]
Fair values of foreign currency forward contracts, liabilities	$ (1)

XML

Fair Value of Financial Instruments - Impact on Accumulated Other Comprehensive Income ("AOCI") and Earnings from Foreign Currency Forward Contracts (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Foreign Currency [Abstract]
Gain recognized in AOCI	$ 126	$ 704
Gain reclassified from AOCI to cost of operations	$ 175	$ 521

XML

Fair Value of Financial Instruments - Principal Amount and Estimated Fair Value of Company's Convertible Notes (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 01, 2016	Dec. 31, 2015	Nov. 26, 2013	Mar. 14, 2011	Jan. 11, 2011
2.25% Convertible Notes Due 2016 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount			$ 102,682
2.50% Convertible Notes Due 2018 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount	$ 400,000		400,000
1.50% Convertible Notes Due 2020 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount	300,000		300,000
2.625% Convertible Notes Due 2023 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount	360,000
Senior Notes [Member] | 2.25% Convertible Notes Due 2016 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount					$ 400,000
Senior Notes [Member] | 2.50% Convertible Notes Due 2018 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount						$ 400,000
Senior Notes [Member] | 1.50% Convertible Notes Due 2020 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount				$ 300,000
Senior Notes [Member] | 2.625% Convertible Notes Due 2023 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount		$ 360,000
Level 1 [Member] | Senior Notes [Member] | 2.25% Convertible Notes Due 2016 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount			102,682
Notes, Fair Value			102,618
Level 1 [Member] | Senior Notes [Member] | 2.50% Convertible Notes Due 2018 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount	400,000		400,000
Notes, Fair Value	415,716		416,000
Level 1 [Member] | Senior Notes [Member] | 1.50% Convertible Notes Due 2020 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount	300,000		300,000
Notes, Fair Value	346,326		$ 340,566
Level 1 [Member] | Senior Notes [Member] | 2.625% Convertible Notes Due 2023 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes, Principal Amount	360,000
Notes, Fair Value	$ 350,402

XML

Fair Value of Financial Instruments - Principal Amount and Estimated Fair Value of Company's Convertible Notes (Parenthetical) (Detail)	Sep. 30, 2016	Jun. 01, 2016	Dec. 31, 2015	Sep. 30, 2015	Nov. 26, 2013	Mar. 14, 2011	Jan. 11, 2011
2.25% Convertible Notes Due 2016 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	2.25%
2.25% Convertible Notes Due 2016 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes			2.25%			2.25%
2.50% Convertible Notes Due 2018 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	2.50%			2.50%
2.50% Convertible Notes Due 2018 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes			2.50%				2.50%
1.50% Convertible Notes Due 2020 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	1.50%			1.50%
1.50% Convertible Notes Due 2020 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes			1.50%		1.50%
2.625% Convertible Notes Due 2023 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	2.625%
2.625% Convertible Notes Due 2023 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes		2.625%
Level 1 [Member] | 2.25% Convertible Notes Due 2016 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	2.25%
Level 1 [Member] | 2.50% Convertible Notes Due 2018 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	2.50%
Level 1 [Member] | 1.50% Convertible Notes Due 2020 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	1.50%
Level 1 [Member] | 2.625% Convertible Notes Due 2023 [Member] | Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest on convertible notes	2.625%

XML

Equity - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 17, 2016	Sep. 16, 2016	Nov. 30, 2014	Apr. 30, 2014	Mar. 31, 2014	Feb. 28, 2014	Oct. 31, 2011	Aug. 31, 2011
Equity, Class of Treasury Stock [Line Items]
Cash paid to repurchase common stock			$ 22,447	$ 28,406
2011 Program [Member]
Equity, Class of Treasury Stock [Line Items]
Funds authorized to repurchase common stock		$ 27,451		$ 27,451	$ 50,000	$ 35,198	$ 23,895	$ 30,000	$ 40,000	$ 50,000	$ 75,000	$ 75,000
Common stock repurchased, shares	432,072	557,776	432,072	688,467
Cash paid to repurchase common stock	$ 22,447	$ 23,055	$ 22,447	$ 28,406
Stock repurchase program, remaining authorized repurchase amount	$ 46,807		$ 46,807

XML

Equity - Summary of Changes in AOCI (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 357
Ending Balance	539
Unrealized Gains on Marketable Securities, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	357	$ 976
Unrealized gain (loss) before reclassifications	69	(433)
Amounts reclassified from AOCI to cost of operations		(83)
Net current period other comprehensive income (loss)	69	(516)
Ending Balance	426	460
Unrealized Gains on Foreign Currency Forward Contracts, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gain (loss) before reclassifications	436
Amounts reclassified from AOCI to cost of operations	(323)
Net current period other comprehensive income (loss)	113
Ending Balance	113
Total [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	357	976
Unrealized gain (loss) before reclassifications	505	(433)
Amounts reclassified from AOCI to cost of operations	(323)	(83)
Net current period other comprehensive income (loss)	182	(516)
Ending Balance	$ 539	$ 460

XML

Intangible Assets - Schedule of Finite and Indefinite Lived Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Acquired Finite And Indefinite Lived Intangible Assets [Line Items]
Indefinite and finite lived intangible assets, Gross Carrying Amount	$ 74,887	$ 74,887
Intangible Assets, Accumulated Amortization	(66,333)	(63,993)
Indefinite and finite lived intangible assets, Net	8,554	10,894
Content [Member]
Acquired Finite And Indefinite Lived Intangible Assets [Line Items]
Finite lived intangible assets, Gross Carrying Amount	15,954	15,954
Intangible Assets, Accumulated Amortization	(15,954)	(15,954)
Customer Relationships [Member]
Acquired Finite And Indefinite Lived Intangible Assets [Line Items]
Finite lived intangible assets, Gross Carrying Amount	34,057	34,057
Intangible Assets, Accumulated Amortization	(30,763)	(29,218)
Finite lived intangible assets, Net	$ 3,294	$ 4,839
Intangible Assets, Weighted Average Remaining Useful Life	2 years 1 month 6 days	2 years 8 months 12 days
Technology and Patents [Member]
Acquired Finite And Indefinite Lived Intangible Assets [Line Items]
Finite lived intangible assets, Gross Carrying Amount	$ 17,882	$ 17,882
Intangible Assets, Accumulated Amortization	(17,086)	(16,291)
Finite lived intangible assets, Net	$ 796	$ 1,591
Intangible Assets, Weighted Average Remaining Useful Life	9 months 18 days	1 year 6 months
Trade Names-Definitive Lives [Member]
Acquired Finite And Indefinite Lived Intangible Assets [Line Items]
Finite lived intangible assets, Gross Carrying Amount	$ 2,530	$ 2,530
Intangible Assets, Accumulated Amortization	(2,530)	(2,530)
Trade Names-Indefinite Lives [Member]
Acquired Finite And Indefinite Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets, Gross Carrying Amount	4,464	4,464
Indefinite-lived intangible assets, Net	$ 4,464	$ 4,464

XML

Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 780	$ 833	$ 2,340	$ 2,499

XML

Intangible Assets - Schedule of Finite-Lived Intangible Assets, Aggregate Amortization Expense for Intangible Assets (Detail) $ in Thousands	Sep. 30, 2016 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2016 (October 1st to December 31st)	$ 780
2017	2,044
2018	$ 1,266

XML

Commitments and Contingencies - Additional Information (Detail)	Jan. 25, 2016 Defendants	May 08, 2015 Defendants Plaintiff
Dual Diagnosis Treatment Center [Member]
Loss Contingencies [Line Items]
Number of plaintiffs | Plaintiff		6
Dual Diagnosis Treatment Center [Member] | Blue Cross Blue Shield [Member]
Loss Contingencies [Line Items]
Number of defendants		28
Dual Diagnosis Treatment Center [Member] | Claims Against Health Plan [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Number of defendants		41
Dual Diagnosis Treatment Center Amended Complaint [Member] | Claims Against Health Plan [Member]
Loss Contingencies [Line Items]
Number of defendants	184

XML

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Shares authorized under 2005 Plan	24,975,000		24,975,000
Common stock available for future grants	2,633,642		2,633,642
Proceeds from exercise of stock options	$ 3,290	$ 3,532	$ 52,702	$ 15,185
Employee withholding tax paid	3,895	876	7,705	3,836
Combined value of stock options exercised and vested restricted stock	14,245	5,641	53,539	24,423
Stock-based compensation expense	4,638	$ 9,142	21,038	$ 24,731
Unrecognized stock-based compensation expense related to unvested awards	$ 37,621		$ 37,621
Period for recognition of unrecognized stock based compensation expense			1 year 10 months 24 days
Percentage of tax benefit attributable to stock-based compensation	38.00%	38.00%	38.00%	38.00%
Non Executive Officer [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Common stock available for future grants	1,501,500		1,501,500
Directors [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock-based compensation expense	$ 117	$ 117	$ 350	$ 350
General and Administrative [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock-based compensation expense	2,010	5,804	13,036	15,841
Net reversal of stock-based compensation expense for awards forfeited	2,394		$ 2,394
Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Expiration period from grant date			10 years
Stock-based compensation expense	3,176	5,771	$ 13,366	15,704
Restricted Stock [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Stock-based compensation expense	$ 1,345	$ 3,254	$ 7,322	$ 8,677
Minimum [Member] | Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Share based compensation arrangement by share based payment award, award vesting period			3 years
Minimum [Member] | Restricted Stock [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Share based compensation arrangement by share based payment award, award vesting period			3 years
Maximum [Member] | Stock Options [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Share based compensation arrangement by share based payment award, award vesting period			4 years
Maximum [Member] | Restricted Stock [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Share based compensation arrangement by share based payment award, award vesting period			4 years

XML

Stock-Based Compensation - Schedule of Share-Based Compensation, Stock Options, Activity (Detail) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares Outstanding, Beginning Balance | shares	7,870,435
Granted, Shares | shares	304,300
Exercised, Shares | shares	(1,952,129)
Cancelled, Shares | shares	(537,902)
Shares Outstanding, Ending Balance | shares	5,684,704
Vested and Exercisable, Shares | shares	3,046,256
Weighted Average Exercise Price Per Share, Outstanding, at the beginning of the period | $ / shares	$ 35.81
Weighted Average Exercise Price Per Share, Granted | $ / shares	54.83
Weighted Average Exercise Price Per Share, Exercised | $ / shares	34.74
Weighted Average Exercise Price Per Share, Cancelled | $ / shares	40.11
Weighted Average Exercise Price Per Share, Outstanding, at the end of the period | $ / shares	36.79
Weighted Average Exercise Price per Share, Vested and exercisable at the end of the period | $ / shares	$ 31.90
Weighted Average Remaining Contractual Life (In Years), Outstanding	6 years 2 months 12 days
Weighted Average Remaining Contractual Life (In Years), Vested and exercisable at the end of the period	4 years 7 months 6 days
Aggregate Intrinsic Value, Outstanding | $	$ 75,374
Aggregate Intrinsic Value, Vested and Exercisable | $	$ 54,451

XML

Stock-Based Compensation - Schedule of Share-Based Compensation, Stock Options, Activity (Parenthetical) (Detail)	Sep. 30, 2016 $ / shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Market price of common stock	$ 49.70

XML

Stock-Based Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Detail) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Expected volatility, Minimum	38.00%	44.00%
Expected volatility, Maximum	44.00%	48.00%
Risk-free interest rate, Minimum	0.86%	1.01%
Risk-free interest rate, Maximum	1.71%	1.56%
Weighted-average fair value of options granted during the period	$ 18.92	$ 16.31
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (years)	4 years	4 years 1 month 6 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (years)	4 years 9 months 18 days	4 years 8 months 12 days

XML

Stock-Based Compensation - Schedule of Share-based Compensation, Restricted Stock Awards, Activity (Detail) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Awards, Shares, Balance at the beginning of the year | shares	854,845
Restricted Stock Awards, Shares, Granted | shares	52,000
Restricted Stock Awards, Shares, Vested | shares	(201,969)
Restricted Stock Awards, Shares, Forfeited | shares	(131,702)
Restricted Stock Awards, Shares, Balance at the end of the year | shares	573,174
Weighted Average Grant Date Fair Value, Balance at the beginning of the year | $ / shares	$ 39.17
Weighted Average Grant Date Fair Value, Granted | $ / shares	57.49
Weighted Average Grant Date Fair Value, Vested | $ / shares	33.19
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	42.90
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares	$ 42.60

XML

Stock-Based Compensation - Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 4,638	$ 9,142	$ 21,038	$ 24,731
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	3,176	5,771	13,366	15,704
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1,345	3,254	7,322	8,677
Cost of Operations [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1,277	1,370	3,707	3,791
Sales and Marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1,351	1,968	4,295	5,099
General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	2,010	5,804	13,036	15,841
Other [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 117	$ 117	$ 350	$ 350