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þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2004
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from           to

Delaware		94-3236644
(State of incorporation)		(I.R.S. employer identification no.)
669 River Drive, Center 2 Elmwood Park, New Jersey (Address of principal executive office)		07407-1361 (Zip code)

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				Page
Cautionary Statement Regarding Forward-Looking Statements					2
PART I
Item 1.		Business			3
Item 2.		Properties			42
Item 3.		Legal Proceedings			42
Item 4.		Submission of Matters to a Vote of Security Holders			47
PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			48
Item 6.		Selected Financial Data			50
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			52
Item 7A.		Quantitative and Qualitative Disclosures about Market Risk			95
Item 8.		Financial Statements and Supplementary Data			95
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			95
Item 9A.		Controls and Procedures			95
Item 9B.		Other Information			96
PART III
Item 10.		Directors and Executive Officers of the Registrant			97
Item 11.		Executive Compensation			97
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			97
Item 13.		Certain Relationships and Related Transactions			97
Item 14.		Principal Accountant Fees and Services			97
PART IV
Item 15.		Exhibits and Financial Statement Schedules			98
Signatures					99
Financial Statements					F-1
Schedule II. Valuation and Qualifying Accounts					S-1
Index to Exhibits					E-1
EX-12.1 COMPUTATION OF RATIO OF EARNINGS
EX-21.1 SUBSIDIARIES OF THE REGISTRANT
EX-23.1 CONSENT OF ERNST & YOUNG LLP
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO
EX-99.1 AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
EX-99.2 AMENDED AND RESTATED COMPENSATION COMMITTEE CHARTER
EX-99.3 AMENDED AND RESTATED NOMINATING COMMITTEE CHARTER

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	•	the failure to achieve sufficient levels of customer utilization and market acceptance of new or updated products and services,
	•	the inability to successfully deploy new or updated applications,
	•	difficulties in forming and maintaining relationships with customers and strategic partners,
	•	the anticipated benefits from acquisitions not being fully realized or not being realized within the expected time frames;
	•	the inability to attract and retain qualified personnel, and
	•	general economic, business or regulatory conditions affecting the healthcare, information technology, Internet and plastic industries being less favorable than expected.

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Item 1.	Business

	•	WebMD Business Services. WebMD Business Services provides healthcare reimbursement cycle management services for healthcare providers and transaction-related administrative services for healthcare payers, together with related technology solutions. We transmit transactions electronically between healthcare payers and providers and provide healthcare payers with transaction processing technology, decision support and data warehousing solutions, consulting services and outsourcing services. Our services for payers include conversion of paper claims to electronic ones and related document management services, as well as print-and-mail services for the distribution of checks, remittance advice and explanation of benefits. We also provide automated patient billing services to healthcare providers, including statement printing and mailing services. We are focused on continuing to increase the percentage of healthcare transactions that are handled electronically and on providing electronic solutions that can be used by payers and providers to automate the entire reimbursement process.

WebMD Business Services generates revenues by selling our transaction services to healthcare payers and providers, generally on either a per transaction basis or, in the case of some providers, on a monthly fixed fee basis. We also generate revenue by selling our patient statement and paid-claims communication services, typically on a per statement or per communication basis. Finally, we generate revenue by licensing software and providing information technology consulting services to payers, including governmental payers. We charge healthcare payers annual license fees, which are based on the number of covered members, for use of our software and provide business and information technology consulting services to them on a time and materials basis. The consulting services we provide to certain governmental agencies are typically billed on a cost-plus fee structure. WebMD Business Services revenue was $686.6 million in 2004 and $505.7 million in 2003.

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	•	WebMD Practice Services. WebMD Practice Services develops and markets information technology systems for healthcare providers, primarily under The Medical Manager, Intergy and WebMD Network Services brands. Our systems include:

	—	administrative and financial applications that enable healthcare providers and their administrative personnel to manage their practices more efficiently, and
	—	electronic medical record and other clinical applications that assist them in delivering quality patient care.

	Our systems and services are used by physician offices to automate their scheduling, billing and other administrative tasks, to transmit transactions electronically, to maintain electronic medical records and to automate documentation of patient encounters. In addition, through WebMD Network Services, we provide integrated access to our WebMD Business Services transaction services for our WebMD Practice Services customers.
	We generate revenues from: one-time fees for licenses to our software modules, for system hardware and for implementation services; and recurring fees for the maintenance and support of our software and system hardware. Pricing depends on the number and type of software modules to be licensed, the number of users, the complexity of the installation and other factors. Our WebMD Network Services and some of our WebMD Practice Services products and services are priced on a monthly fee per provider basis or a per transaction basis. WebMD Practice Services revenue was $296.1 million in 2004 and $302.6 million in 2003.

	•	WebMD Health. WebMD Health provides health information, health and benefit decision-support tools, continuing medical education services, and interactive communications services through its public online portals for consumers and physicians, through syndication and distribution relationships, through customized private portals for employers and payers, and, to a lesser extent, through offline publishing services. Our offerings for consumers help them become more informed about healthcare choices and assist them in playing an active role in managing their own health. Our offerings for healthcare professionals help them improve their clinical knowledge, as well as their communication with patients regarding treatment options for specific health conditions.

	—	We reach over 20 million unique users per month (based on the average during 2004) through www.webmd.com, www.medscape.com and our other public portals, as well as other Web sites with which we have relationships. We believe that Medscape from WebMD, our portal for healthcare professionals, reaches more physicians than any other physician-targeted Web site. Our private portals provide online health and benefit management services for employer and payer sponsors. These services assist the sponsors’ employees and members to make informed benefit, provider and treatment choices that help reduce healthcare costs while improving quality of care. We integrate the sponsor’s unique health and benefits content with our content and technology platform, to create private portals specific to the eligibility, coverage and health profile of each plan member. We generate revenue by providing healthcare and consumer products companies with opportunities to reach our public portals audience through a variety of content sponsorship formats and advertising products. In addition, we create and distribute accredited online continuing medical education programs funded by grants from a variety of sponsors. We also generate revenues by licensing private portals to employers and payers for use by their employees and members.
	—	We publish specialized physician directories, used by physicians, pharmacists and other healthcare professionals, and professional medical reference textbooks. We generate revenue from sales of subscriptions to our medical reference publications, from sales of physician directories, and from sales of advertisements in those directories.

	WebMD Health revenue was $134.3 million in 2004 and $110.7 million in 2003.

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	•	Porex. Porex develops, manufactures and distributes proprietary porous plastic products and components used in healthcare, industrial and consumer applications. Our Porex customers include both end-users of our finished products, as well as manufacturers that include our components in their products for the medical device, life science, research and clinical laboratory, surgical and other markets. Porex is an international business with manufacturing operations in North America, Europe and Asia and customers in more than 65 countries. Porex revenue from continuing operations was $77.1 million in 2004 and $71.9 million in 2003.

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	•	Healthcare Providers. For providers, WebMD Business Services can help them automate every step of the reimbursement cycle, including: checking patient coverage eligibility information;

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		seeking pre-authorization from a payer for services; submitting and tracking claims; and automated payment posting, credit card billing and patient statement processing. Our EDI connectivity services reduce paperwork and the need for communication by mail, telephone and fax, resulting in cost savings for payers and providers. These services also expedite the reimbursement process, which can result in a lower average number of outstanding accounts receivable days for providers. In addition, the use of EDI for eligibility and other coverage-related transactions can save hospital, physician and dentist office staff significant amounts of time compared to phone or other individual verification methods and allow them to provide faster answers to patient questions regarding coverage.
	•	Healthcare Payers. For a healthcare payer, the administrative cost of supporting patient medical encounters includes eligibility and benefit information distribution, intake of paper and electronic claims, claim adjudication, payment and explanation of benefits (or EOB) distribution, as well as a wide variety of member and provider service and communication activities. WebMD Business Services provides services that help automate and reduce the cost and improve the accuracy of these processes. Specifically, our electronic transaction services automate the data exchange between healthcare providers and payers for patient eligibility and benefits information, claims transactions, remittance information, referrals, claim status information and other processes. Payers using us as their managed EDI gateway for inbound transactions benefit from improved reliability and improved auto-adjudication rates. Our systems can apply customized payer-specific business rules to these transaction processes to further improve payer auto-adjudication rates (which means the percentage of claims that are adjudicated by the payer’s computer systems, without review by payer personnel), which provides additional cost savings to our clients. These automation tools, in conjunction with our imaging and scanning services for inbound transactions and print and mail services for remittances and other outbound communications, allow payers to better focus on their core activities: provider network management, employer marketing and contracting, benefit plan design, and member service. In addition, by outsourcing inbound and outbound transaction processes to us, payers can reduce their capital expenses and operating costs. Our acquisitions of Advanced Business Fulfillment in 2003 and Dakota Imaging in 2004 support our ability to provider more comprehensive business process outsourcing services. For a description of other services that WebMD Business Services provides to healthcare payers, see “— ViPS” below.

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	•	beginning with insurance eligibility verification,
	•	continuing through the claim submission process,
	•	followed by tracking the reimbursement through claim status inquiries, and
	•	concluding with electronic remittance information and payment posting.

	•	electronic ordering of clinical tests and the reporting of test results between healthcare providers and labs, and
	•	electronic prescribing that references medication histories, payer formularies, and drug usage reports at the point of care.

	•	Claim Master. Through our Claim Master service, providers can securely access our transaction services through the Internet. Claim Master can be used as a stand-alone system or as a complement to a practice management system or hospital information system. Claims are captured from the source healthcare information system and incorporated into the Claim Master relational database to be tracked through event-driven updates. The Claim Master database serves as the repository for all claim management functions including viewing, editing (in real time), correcting, submitting and managing payer responses. During validation, claims are separated into “clean”

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		claims and those needing additional information. Clean claims are passed on to our clearinghouse in a HIPAA-compliant format and then submitted to the appropriate payers. Claims needing additional information are edited, corrected, and then submitted. With Claim Master’s wide array of reporting and display options, providers can clearly understand the location and status of any claim or batch of claims at any given time, including the status of all claims in the system, types of claim errors and list of claims sorted by dollar amount, work queue and payer.
	•	WebMD Office. Through our WebMD Office Internet-based service, providers can securely access our transaction services through either a standard dial-up or high speed DSL or cable modem. WebMD Office can be used as a stand-alone system or as a complement to a practice management system through an import and data management function that allows transactions to be generated from the practice management system and submitted through WebMD Office. In addition, our practice management system vendor partners may elect to market a private-label brand version of WebMD Office.
	•	WebMD Assistant. WebMD Assistant integrates with hospital information systems to automate various registration activities such as insurance eligibility verification, credit checking and address verification. WebMD Assistant can be configured to automatically perform real-time tasks during patient registration. This saves the registration staff time by eliminating the need to use separate systems for registration and for eligibility verification. The eligibility response can be automatically stored within the patient record as a permanent reference.
	•	WebMD Receivable Analysis. WebMD Receivable Analysis is an electronic screening service designed to verify Medicaid and other forms of insurance eligibility in an electronic batch format. The healthcare provider submits a file electronically and the file is processed against the WebMD payer databases to determine eligibility. WebMD customers use this service to identify Medicaid and other forms of eligibility that may apply to patients who have been classified as not having coverage. The resulting reclassification often results in significant reimbursements.
	•	WebMD Accupost. WebMD Accupost automates the posting of payments received from governmental and commercial payers that provide an electronic remittance advice into the providers’ financial accounting system. Automated posting is completed in a fraction of the time it takes to perform these same tasks manually and is more accurate.

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	•	Centralized Medicare Beneficiary Eligibility Transaction System. This system will be used by healthcare providers and other submitters, network service providers and clearinghouses. ViPS is providing overall program management for this system. For this project, ViPS is working with other WebMD Business Services units and benefiting from their EDI subject matter expertise and is also working with Northrop Grumman Mission Systems.
	•	System to Support the Retiree Drug Subsidy Provisions of the MMA. Under the MMA, employers are eligible for a financial subsidy from Medicare if they keep retiree beneficiaries on their prescription drug plan rather than have them move to the new Medicare prescription drug benefit. ViPS is working with Group Health, Inc., Arkansas Blue Cross Blue Shield and Northrop Grumman Mission Systems on this project, which includes responsibility for processing enrollment applications and payment requests, issuing payments and remittance advices to eligible employers, providing a call center, conducting outreach activities, performing fraud analysis and providing related training.

	•	MCSource. MCSource is a medical management decision support system that consists of an integrated suite of analytical and Web-based applications designed to give health plans the ability to address critical issues such as medical cost and utilization, provider profiling, disease management, quality improvement and medical review. MCSource’s foundation is a high-performance data warehouse that can store all types of administrative healthcare information. MCSource is designed to support the complexities and usage volumes of large, information-driven health plans and has been deployed to more than 20 customers, including the BCBS Federal Employee Program, where it is used to manage a data warehouse covering approximately four million lives and five years of longitudinal member data.
	•	STARSentinel. STARSentinel is an early-warning detection system that looks at health plan data and evaluates claims against providers’ claims histories, specialty profiles and common, documented fraud schemes. By calling early attention to questionable patterns, STARSentinel helps prioritize cases and helps health plans use their resources with maximum productivity.

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	•	Patient Mailings. On behalf of healthcare provider customers, we print invoices, account statements, collection letters, recall notices and other communications and mail them to patients.
	•	Paper Claims. Claims that cannot be sent electronically to payers can be sent by healthcare providers electronically to WebMD ExpressBill, where we print and mail them on their behalf.
	•	Payment Processing. We process payments on behalf of providers and other customers, receiving and depositing checks, posting payments and transmitting funds in accordance with customer instructions.
	•	Electronic Presentment and Payment Services. Our electronic presentment and payment services offer healthcare providers the ability to present statement and invoice images to patients electronically and to receive payment via the Internet.

	•	We promote our EDI and print-and-mail services for providers to organizations that have relationships with or access to a large number of providers, such as practice management systems vendors, hospital information systems vendors, practice management companies and other clearinghouses. In certain cases, we agree to pay a sales commission to these organizations as an inducement to use WebMD Business Services as the clearinghouse for the transactions made through their systems or by providers with which they have relationships. We also market our EDI and print-and-mail services directly to small and large physician practices, dentists, hospitals and other healthcare providers. We offer our payer customers the opportunity to work with us in targeted programs to educate physicians and dentists to increase the utilization of electronic services. When a payer agrees to participate in such a program, WebMD utilizes information supplied by the payer to target providers that may not be sending claims electronically.
	•	A team of sales, marketing and account management personnel market our EDI services and other pre- and post-adjudication transaction services directly to healthcare payers. In addition, in the post-adjudication services area, we have established relationships with vendors of claims processing software.
	•	In the pharmacy EDI area, WebMD Business Services has established relationships with large retail pharmacy chains and pharmacy software vendors.
	•	A team of account management personnel, supported by professional services representatives, markets our ViPS Government Solutions Group products and services. The Government Solutions Group extends its government sales capabilities through key relationships with leading government contractors, including Computer Sciences Corp., SAIC, BearingPoint and Northrop Grumman.

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		ViPS often bids on government projects together with one or more of these companies. ViPS is seeking to extend its government services reach into additional government agencies.
	•	ViPS’ Healthpayer Solutions Group markets its products and services nationally through a direct sales organization. Because of ViPS’ long-standing industry relationships, particularly with BCBS plan organizations and other large commercial payers, ViPS is often invited to bid on contracts to be awarded based on competitive bidding procedures.

	•	automate scheduling, billing, receivables management and other administrative and financial management tasks,
	•	enable providers to maintain electronic medical records and to automate the documentation of patient encounters, and
	•	facilitate the use of electronic data interchange for administrative and clinical healthcare transactions.

	•	our WebMD Network Services administrative transactions services, generally on a per provider per month subscription basis or a per transaction basis; and
	•	our clinical transaction services, on a per provider per month subscription basis.

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	•	PhysicianFlow technology that enables physicians to access information from a variety of sources — including the patient chart, imaging systems, practice management systems, and laboratory systems — all from one screen.
	•	clinical encounter forms that guide the creation of documentation and capture structured data to facilitate correct coding and outcomes reporting. Physicians can review and approve coding as they create the encounter note so that billed procedures are appropriately documented. Intergy EHR provides a forms library for major medical specialties, including primary care, pediatrics, obstetrics/gynecology, cardiology, orthopedics and others.
	•	a clinical workflow manager, integrated with the electronic chart, that allows the physician to communicate with staff members and that automatically generates tasks list items for the physician when, for example, a lab report is ready, a transcription needs to be signed or a prescription needs approval.
	•	KnowledgeLink technology to enable physicians to access information from Medscape and other drug and medical reference information. This enables the physician to share education with the patient at the time of care, and document the event in the encounter notes.
	•	a selection of various input devices for physicians, including desktop, laptop and tablet PCs, and handheld personal digital assistant (PDA) devices. Handheld systems can be used for offline charge capture, schedule review and dictation, and tablet PCs for full mobile functionality. Physicians also can assign tasks and access clinical information from Intergy EHR systems connected to the practice over the Internet or over a wireless network.
	•	a prescription module that automates the process of writing and tracking prescriptions, providing improved efficiency with both the clinical and administrative aspects of the prescription process and can be linked to our optional clinical transaction services (see “— Transaction Services” below).

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	•	a Laboratory System module that allows providers to access, review and maintain all lab results from within the Intergy EHR system. Practices may also arrange to place orders and receive accurate and timely lab test results via a direct, bi-directional link with the laboratory. Test results are received electronically from the laboratory and are stored directly in the patient’s file for viewing, printing and analysis.

	•	appointment schedules, hospital rounds information and clinical tasks needing the provider’s attention;
	•	a user-friendly electronic prescription writer, with integrated drug utilization review, or DUR, and formulary checking, which electronically submits prescriptions to the patient’s chosen pharmacy and, at the same time, adds prescription information directly to the patient’s electronic medical record in the Intergy EHR system;
	•	electronic lab ordering and reporting of results that can be viewed using the handheld device;
	•	their patients’ electronic medical records, including demographic data, progress notes, medications, lab results, procedure histories and other information and transcribed patient documentation; and
	•	a fully customized encounter form for capturing patient charges, which displays procedure and diagnosis codes in customized checklists and automatically posts charge information to the practice management system.

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	•	provide customers with access to our telephone help desk, typically advising customers in the use and operation of our software and services and remotely accessing customers’ systems to provide support; and
	•	in most cases, provide customers with periodic releases updating our software.

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	•	enable consumers to check symptoms, assess risks, understand diseases and conditions, evaluate treatment options, find healthcare providers, communicate with peers about healthcare issues, and improve their personal health status;

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	•	make it easier for physicians to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education credits, and communicate with peers; and
	•	enable employees and health plan members to access health information and decision support tools that help them make informed benefit, provider and treatment choices.

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	•	lowering benefits administration and communication costs for employers and payers;
	•	increasing effectiveness of communications by delivering targeted, personalized messages; and
	•	efficiently identifying and enrolling candidates in disease management or other health management programs.

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	•	Health Manager. Health Manager provides a user-friendly experience that enables employees to access and manage health and benefits information and decision support tools relevant to their individual needs, risks and interests in one place. Health Manager includes The WebMD Personal Health Record, a secure online personal health record that allows employees to store and manage health information for themselves and their family members. We also enable employers to target employees with information, programs or messages specific to the individual employee’s needs. Finally, Health Manager makes available online lifestyle modification programs, including programs for smoking cessation, nutrition and fitness.
	•	Benefit Manager. Benefit Manager is a set of benefit decision-support applications that explain health plan benefit choices and facilitate informed selection and use of those benefits options. For example, CostCompare allows an employee to forecast and model their individual premium and out-of-pocket costs for the different types of benefit programs their plan sponsor may offer.
	•	Site Manager. Site Manager is our online service and administrative suite of applications that provides specialized decision support for our WebMD Health and Benefits Manager clients. With Site Manager, employers and health plans are able to analyze aggregate health data, address population health risks more effectively and proactively implement preventive programs. Site Manager’s messaging capabilities also allow employers to streamline their communication with their employees.
	•	Integration Services: We offer a proprietary suite of applications that allows us to integrate third party applications and data.

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	•	WebMD Health, our flagship consumer portal, which is located at www.webmd.com;
	•	MedicineNet, a health information site for consumers produced and written by practicing physicians, which is located at www.medicinenet.com;
	•	RxList, an online drug directory with information on over 1,400 pharmaceutical products, which is located at www.rxlist.com and which is also used by healthcare professionals; and
	•	Medscape from WebMD, our online Web site for physicians and healthcare professionals, which is located at www.medscape.com.

	•	our content and distribution alliance with AOL, pursuant to which we are the primary provider of healthcare content, tools and services for AOL properties and provide related co-branded services for AOL members; and
	•	our relationships with Fox News Online and CBS News Online, which distribute health content from WebMD through their online health channels.

	•	our reach of over 20 million unique users per month (based on the monthly average during 2004), which we believe is much larger than the number of unique users of any other sponsor supported health-oriented Web portal;
	•	our ability to attract health-involved consumers and clinically active physicians who view approximately 165 million of our Web pages of content per month (based on the monthly average during 2004);
	•	our ability to help advertisers and sponsors reach specific groups of consumers and physicians by specialty, product, disease or wellness topic, which typically produces a more efficient and productive marketing campaign; and
	•	our ability to provide advertisers and other sponsors with objective measures of the effectiveness of their online marketing.

	•	Media Solutions. These are traditional online advertising solutions — such as banners, buttons and badges — used to reach health-involved consumers. In addition, clients can sponsor a variety of condition-specific or specialty-specific email newsletters, keyword searches and specific educational programs.

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	•	Sponsored Content Solutions. These are customized collections of articles, topics, and decision support tools, sponsored by clients and distributed within WebMD environments.
	•	Patient Education Centers. Patient education centers are sponsored destinations on Medscape for physicians to access patient education materials on a particular topic or condition.

	Grant-Based Programs

	•	Conference Coverage. Medscape provides coverage of major medical conferences.
	•	CME Circle. CME Circle provides online multimedia extensions of sponsor-supported CME activities, including symposia, monographs and CD-ROMs.
	•	CME Live. These are original Medscape online events featuring live streaming video, audio and synchronized visual presentation by experts.
	•	CME Cases. These are original CME activities presented by healthcare professionals in a patient case format.
	•	Resource Centers. Resource centers are grant-based sponsored disease or condition-specific areas, for conditions such as congestive heart failure or breast cancers. These centers include news, expert columns, guidelines and reference material.

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	•	URAC. WebMD has been awarded e-Health accreditation from URAC, an independent accrediting body that has reviewed and approved the WebMD.com site for compliance with its more than 50 quality and ethics standards.
	•	TRUSTe. WebMD is a licensee of the TRUSTe Privacy Program. TRUSTe is an independent, non-profit organization whose goal is to build users’ trust and confidence in the Internet. In January 2005 a panel of privacy experts, sponsored by TRUSTe, ranked WebMD among the ten most trusted companies in America for privacy.
	•	Health on the Net Foundation. Our WebMD.com and Medicinet.com sites comply with the principles of the HON Code of Conduct established by the Health on the Net Foundation.

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	•	healthcare information system vendors and support providers, including physician practice management system and EMR system vendors and support providers;
	•	transaction processing companies, including those providing EDI and/or Internet-based services and those providing services through other means, such as paper and fax;
	•	large information technology consulting service providers;
	•	online services, portals, search engines or Web sites targeted to the healthcare industry, healthcare consumers and/or physicians generally, including both commercial sites and not-for-profit sites;
	•	health insurance companies, pharmacy benefit management companies and pharmacies that provide or are developing electronic transaction services for use by their members and customers;
	•	publishers and distributors of traditional offline media, including those targeted to healthcare professionals, many of which have established or may establish their own Web sites or partner with other Web sites;

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	•	general purpose consumer online services and portals and other high-traffic Web sites that provide access to healthcare-related content and services;
	•	public sector and non-profit Web sites that provide healthcare information without advertising or commercial sponsorships; and
	•	vendors of healthcare information, products and services distributed through other means, including direct sales, mail and fax messaging.

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	•	Filtering. In filtration applications, the pore structure acts as both a surface filter and a depth filter. The structure acts as a surface filter by trapping particles larger than its average pore size and as a depth filter by trapping much smaller particles deep in its complex channels. Unlike the direct passages in woven synthetic materials and metal screens, the pores in porous plastics join to form many tortuous paths. Examples of these applications include: filters for drinking water purification, air filters, fuel filters for power tools and appliances and other liquid filters for clarification of drugs, blood separation and chemicals.
	•	Venting. In venting applications, the pore structure allows gases to easily escape while retaining fluids. Examples of these applications include: vents for medical devices, printers and automotive batteries; and caps and closures.
	•	Wicking. When used as a wicking device, the pore structure creates capillary channels for liquid transfer allowing fluid to flow, or wick, from a reservoir. Examples of these applications include: nibs or tips for writing instruments, such as highlighters and coloring markers; fluid delivery components for printers and copiers; fragrance wicks; and absorbent media for diagnostic testing.
	•	Diffusing. When used in diffusion applications, porous plastic components emit a multitude of small, evenly distributed bubbles. Examples of these applications include air diffusers for fermentation, metal finishing and plating.
	•	Muffling. In muffling applications, exhaust air is channeled through a tortuous path, causing significant sound reduction by breaking up and diffusing the sound waves. Examples of these applications include industrial mufflers for pneumatic equipment.

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	•	Healthcare Products. We manufacture a variety of porous plastic components for the healthcare industry that are incorporated into the products of other manufacturers. These components are used to vent or diffuse gases or fluids and are used as membrane supports, including catheter vents, self-sealing valves in surgical vacuum canisters, fluid filtration components and components for diagnostic devices.

We also use proprietary porous plastic technology to produce MEDPOR® Biomaterial implantable products for use in reconstructive and aesthetic surgery of the head and face. These permanent implants, which are composed of biocompatible porous high-density plastics, are biomaterial alternatives for replacement or augmentation of bone and cartilage. Their unique porous structure allows for rapid in growth of the patient’s tissue and capillary blood vessels. Since the initial product introduction in 1985, we have continued to introduce new shapes and sizes of MEDPOR products to meet surgeons’ needs.

	•	Consumer Products. Our porous plastics are used in a variety of office and home products. These products include writing instrument tips, or “nibs,” which we supply to manufacturers of highlighting pens and children’s coloring markers. The porous nib conducts the ink stored in the pen barrel to the writing surface by capillary action. Our porous plastic components are also found in products such as air fresheners, power tool dust canisters and computer printers. We also produce a variety of porous plastic water filters used to improve the taste and safety of drinking water.
	•	Industrial Products. We manufacture a variety of custom porous plastic components for industrial applications, designed to customer specifications as to size, rigidity, porosity and other needs, including automobile battery vents and various types of filters and filtration components.
	•	Operating Room Products. We also produce two product lines for the operating room supplies market: surgical markers and surgical drainage systems.

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	•	the Standards for Electronic Transactions, published August 17, 2000, which we refer to as the Transaction Standards;
	•	the Standards for Privacy of Individually Identifiable Health Information, published December 28, 2000, which we refer to as the Privacy Standards;
	•	the Standard Unique Employer Identifier, published May 31, 2002;
	•	the Health Insurance Reform: Security Standards, published February 20, 2003, which we refer to as the Security Standards; and
	•	the Standard Unique Health Identifier for Health Care Providers, published January 23, 2004, which we refer to as the NPI Standard.

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

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Item 2.	Properties

	•	Nashville, Tennessee for WebMD Business Services’ headquarters and primary data and call centers and Medifax’s operations;
	•	Towson, Maryland;
	•	Columbia, Maryland;
	•	St. Louis, Missouri;
	•	Costa Rica;
	•	Waterloo, Iowa;
	•	Scottsdale, Arizona; and
	•	Toledo, Ohio.

Item 3.	Legal Proceedings

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Item 4.	Submission of Matters to a Vote of Security Holders

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

			High				Low
2003
	First quarter		$	10.28			$	8.25
	Second quarter			12.00				8.28
	Third quarter			12.49				8.20
	Fourth quarter			9.32				7.59
2004
	First quarter		$	10.23			$	8.26
	Second quarter			9.65				8.26
	Third quarter			9.28				6.68
	Fourth quarter			8.33				6.46

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

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															Maximum Number (or
											Total Number of Shares				Approximate Dollar Value)
											Purchased as Part of				of Shares that May Yet Be
			Total Number of				Average Price				Publicly Announced				Purchased Under the
Period			Shares Purchased				Paid per Share				Plans or Programs(1)				Plans or Programs
10/01/04-10/31/04				1,371,424	(2)		$	6.70				1,190,124			$	63,392,577
11/01/04-11/30/04				264,900			$	7.02				264,900			$	61,531,935
12/01/04-12/31/04				—				—				—			$	61,531,935
	Total			1,636,324			$	6.75				1,455,024			$	61,531,935

(1)	These repurchases were made pursuant to the repurchase program that we announced on March 29, 2001 where WebMD was originally authorized to use up to $50 million to purchase shares of its common stock from time to time beginning on April 2, 2001. On November 2, 2001, the maximum aggregate amount of purchases under the Program was increased to $100 million; on November 7, 2002, it was increased to $150 million; and on August, 19, 2004, it was increased to $200 million.
(2)	Includes 181,300 previously owned shares tendered to WebMD to pay the withholding taxes due upon exercise of employee stock options. The value of these shares was determined based on the closing fair market value of WebMD common stock on the date of exercise.

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Item 6.	Selected Financial Data

			Years Ended December 31,
			2004				2003				2002				2001				2000
			(In thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue			$	1,160,351			$	963,980			$	871,696			$	842,020			$	574,524
Costs and expenses:
	Cost of operations			666,431				564,939				509,744				568,321				430,296
	Development and engineering			54,161				42,985				43,467				43,572				59,867
	Sales, marketing, general and administrative			324,027				282,482				283,424				448,082				535,462
	Depreciation, amortization and other			57,765				62,434				125,593				2,394,857				2,188,461
	Legal expense			9,230				3,959				—				—				—
	Impairment of long-lived and other assets			—				—				—				3,816,115				—
	Restructuring and integration charge (benefit)			4,535				—				(5,850	)			266,755				452,919
	Gain (loss) on investments			457				1,659				6,547				—				(40,365	)
	Interest income			18,717				22,901				19,590				30,409				51,467
	Interest expense			19,253				15,214				8,491				507				735
	Other income, net			121				4,218				3,844				—				—
Income (loss) from continuing operations before income tax provision (benefit)				44,244				20,745				(63,192	)			(6,665,780	)			(3,082,114	)
	Income tax provision (benefit)			4,910				4,140				(10,079	)			2,588				790
	Income (loss) from continuing operations			39,334				16,605				(53,113	)			(6,668,368	)			(3,082,904	)
	Income (loss) from discontinued operations, net of income taxes			—				(33,611	)			3,411				(3,950	)			1,296
Net income (loss)			$	39,334			$	(17,006	)		$	(49,702	)		$	(6,672,318	)		$	(3,081,608	)
Basic income (loss) per common share:
	Income (loss) from continuing operations		$	0.12			$	0.05			$	(0.17	)		$	(19.13	)		$	(12.60	)
	Income (loss) from discontinued operations			—				(0.11	)			0.01				(0.01	)			0.01
Net income (loss)			$	0.12			$	(0.06	)		$	(0.16	)		$	(19.14	)		$	(12.59	)
Diluted income (loss) per common share:
	Income (loss) from continuing operations		$	0.12			$	0.05			$	(0.17	)		$	(19.13	)		$	(12.60	)
	Income (loss) from discontinued operations			—				(0.10	)			0.01				(0.01	)			0.01
Net income (loss)			$	0.12			$	(0.05	)		$	(0.16	)		$	(19.14	)		$	(12.59	)
Weighted-average shares outstanding used in computing income (loss) per common share:
	Basic			320,080				304,858				304,168				348,570				244,688
	Diluted			333,343				325,811				304,168				348,570				244,688

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		As of December 31,
		2004				2003				2002				2001				2000
		(In thousands)
Consolidated Balance Sheets Data:
Cash, cash equivalents and short-term investments		$	107,694			$	270,681			$	186,484			$	378,762			$	505,793
Long-term marketable securities			515,881				456,034				456,716				18,769				222,774
Working capital			48,295				202,573				193,031				360,429				528,136
Total assets			2,302,224				2,135,306				1,766,248				1,601,454				8,487,108
Convertible subordinated notes			649,999				649,999				300,000				—				—
Other long-term liabilities			1,283				1,182				498				1,226				15,279
Convertible redeemable exchangeable preferred stock			98,299				—				—				—				—
Convertible redeemable preferred stock			—				—				—				10,000				10,000
Convertible preferred stock			—				—				—				—				710,746
Stockholders’ equity			1,224,216				1,178,597				1,153,801				1,255,512				8,097,435

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

	•	Introduction. This section provides a general description of our business, a brief discussion of our operating segments, a description of certain recent developments and a summary of the acquisitions we completed during the last two years.
	•	Critical Accounting Policies and Estimates. This section discusses those accounting policies that both are considered important to our financial condition and results of operations, and require us to exercise subjective or complex judgments in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 1 to the Consolidated Financial Statements included in this Annual Report.
	•	Results of Operations and Results of Operations by Operating Segment. These sections provide our analysis and outlook for the significant line items on our consolidated statements of operations, on both a company-wide and a segment-by-segment basis.
	•	Liquidity and Capital Resources. This section provides an analysis of our liquidity and cash flows, as well as a discussion of our outstanding debt and commitments that existed as of December 31, 2004.
	•	Recent Accounting Pronouncements. This section provides a summary of the most recent authoritative accounting standards and guidance that have either been recently adopted by the Company or may be adopted in the future.
	•	Key Trends Affecting Our Businesses and Our Healthcare Customers. This section provides background information on key trends in the healthcare industry and our strategic responses to those trends.
	•	Factors That May Affect Our Future Financial Condition or Results of Operations. This section describes circumstances or events that could have a negative effect on our financial condition or results of operations, or that could change, for the worse, existing trends in some or all of our businesses. The factors discussed in this section are in addition to factors that may be described elsewhere in this Annual Report.

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	Operating Segments

	•	WebMD Business Services. We provide healthcare reimbursement cycle management services for healthcare providers and transaction-related administrative services for healthcare payers, together with related technology solutions. We transmit transactions electronically between healthcare payers and providers and provide healthcare payers with transaction processing technology, consulting services and outsourcing services, including document management services for transaction processing and print-and-mail services for the distribution of checks, remittance advice and explanation of benefits. We also provide automated patient billing services to healthcare providers, including statement printing and mailing services. In addition, we provide software products, including decision support and data warehousing solutions, and related maintenance services to Blue Cross Blue Shield and commercial healthcare payers and perform software maintenance and consulting services for certain governmental agencies.
	•	WebMD Practice Services. We develop and market information technology systems for healthcare providers and related services, under The Medical Manager, Intergy and WebMD Network Services brands. These systems and services allow physician offices to automate their scheduling, billing and other administrative tasks, to transmit transactions electronically, to maintain electronic medical records and to automate documentation of patient encounters.
	•	WebMD Health. We provide health information, healthcare and benefit decision-support tools, continuing medical education (“CME”) services, and interactive communications services through our public online portals for consumers and physicians, through syndication and distribution relationships, through customized private online portals for employers and payers and, to a lesser extent, through offline publishing services. Our public portal sells advertising and sponsorship programs to companies interested in reaching consumers and physicians online, including pharmaceutical, biotech, medical device and consumer products companies.
	•	Porex. We develop, manufacture and distribute proprietary porous plastic products and components used in healthcare, industrial and consumer applications, as well as in finished products used in the medical device and surgical markets.

	Recent Developments

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	•	Revenue — Our revenue recognition policies for each reportable segment are as follows:

	WebMD Business Services. Healthcare payers and providers pay us fees for transaction services, generally on either a per transaction basis or, in the case of some providers, on a monthly fixed fee basis. Healthcare payers and providers also pay us fees for patient statement and paid-claims communication services, typically on a per statement or per communication basis. Additionally, payers, including government payers, pay us fees to license decision support software and provide related support and maintenance for that decision support software, and provide information technology consulting services. Healthcare payers pay us annual license fees, which are based on the number of covered members, for use of our software and for providing business and information technology consulting services to them on a time and materials basis. The consulting services we provide to certain governmental agencies are typically billed on a cost-plus fee structure.
	Revenue for transaction services, patient statement and paid-claims communication services is recognized as the services are provided. Decision support software and the related support and maintenance agreements are generally sold as bundled time-based license agreements and accordingly, the revenue for both the software and related support and maintenance is recognized ratably over the term of the license and maintenance agreement. Revenue for consulting services is recognized as the services are provided.
	WebMD Practice Services. Healthcare providers pay us fees to license our Medical Manager and Intergy practice management systems and Intergy EHR electronic medical records system. Our practice management systems are sold as multiple-element arrangements as these software arrangements typically include related hardware, support and maintenance agreements and implementation and training services. We also charge healthcare providers fees for transmitting, through WebMD Network Services, transactions to payers and billing statements to patients. We recognize revenue from these fees, which are generally paid on a per transaction or monthly basis, as we provide the service.
	Software revenue is recognized in accordance with SOP No. 97-2, “Software Revenue Recognition,” as amended by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.” Software license revenue is recognized when a customer enters into a non-cancelable license agreement, the software product has been delivered, there are no uncertainties surrounding product acceptance, there are no significant future

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	performance obligations, the license fees are fixed or determinable and collection of the license fee is considered probable. Amounts received in advance of meeting these criteria are deferred. As required by SOP 98-9, the Company determines the value of the software component of its multiple-element arrangements using the residual method as vendor specific objective evidence (“VSOE”) of fair value exists for the undelivered elements such as the support and maintenance agreements and related implementation and training services, but not for all the delivered elements such as the software itself. The residual method requires revenue to be allocated to the undelivered elements based on the fair value of such elements, as indicated by VSOE. VSOE is based on the price charged when an element is sold separately.
	The vast majority of our practice management and medical records systems include support and maintenance agreements of the underlying software and hardware. These arrangements provide customers with rights to unspecified software product upgrades released during the term of the support period, as well as Internet and telephone access to technical support personnel. Revenue from support and maintenance agreements is recognized ratably over the term of the arrangement, typically one year or less. Additionally, many of our software arrangements include implementation and training services. Revenues from these services are accounted for separately from the software revenue, as they are not essential to the functionality of any other element of the software arrangement, and are generally recognized as the services are performed.
	WebMD Health. Customers pay us for advertising, sponsorship, healthcare management tools, content syndication and distribution, and licenses of private online portals. In addition, in connection with our Medscape portal, our customers provide funding for online education programs for healthcare professionals, including online continuing medical education (“CME”). Revenue from advertising is recognized as advertisements are delivered. Revenues from sponsorship arrangements and healthcare management tools are recognized ratably over the term of the applicable agreement. Revenue from CME arrangements is recognized over the period we satisfy the minimum credit hour requirements of the applicable agreements. Revenue from fixed fee content license or carriage fees is recognized ratably over the term of the applicable agreement. E-commerce revenue is recognized when a subscriber or consumer utilizes our Internet-based services or purchases goods or services through our Web site or a Web site co-branded with one of our strategic partners. Subscription revenue, including subscription revenue from sponsorship arrangements, is recognized over the subscription period. When contractual arrangements contain multiple elements, revenue is allocated to the elements based on their relative fair values, determined using prices charged when elements are sold separately.
	Porex. We develop, manufacture and distribute porous plastic products and components. For standard products, we recognize revenue upon shipment of product, net of sales returns and allowances. For sales of certain custom products, we recognize revenue upon completion and customer acceptance. Recognition of amounts received in advance of meeting these criteria is deferred until we meet these criteria.

	•	Long-Lived Assets — Our long-lived assets consist of property and equipment, goodwill and other intangible assets. Goodwill and other intangible assets arise from the acquisitions we have made. The amount assigned to intangible assets is subjective and based on our estimates of the future benefit of the intangible asset using accepted valuation techniques, such as discounted cash flow and replacement cost models. Our long-lived assets, excluding goodwill, are amortized over their estimated useful lives, which we determined based on the consideration of several factors including the period of time the asset is expected to remain in service. We evaluate the carrying value and remaining useful lives of long-lived assets, excluding goodwill, whenever indicators of impairment are present. We evaluate the carrying value of goodwill annually. We use a discounted cash flow approach to determine the fair value of goodwill. There was no impairment of goodwill noted as a result of our impairment testing in 2004, 2003 or 2002.

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	•	Investments — Our investments, at December 31, 2004, consisted principally of certificates of deposit, municipal bonds, auction rate securities, asset-backed securities, Federal Agency Notes, U.S. Treasury Notes and marketable equity securities in publicly traded companies. Each reporting period we evaluate the carrying value of our investments and record a loss on investments when we believe an investment has experienced a decline in value that is other than temporary. Our investments are classified as available-for-sale and are carried at fair value. We do not recognize gains on an investment until sold. Unrealized gains and losses are recorded as a component of accumulated other comprehensive income. Future changes in market or economic conditions or operating results of our investments could result in gains or losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s carrying value.
	•	Deferred Tax Assets — Our deferred tax assets are comprised primarily of net operating loss carryforwards. At December 31, 2004, we had net operating loss carryforwards of approximately $2.0 billion. These loss carryforwards may be used to offset taxable income in future periods, reducing the amount of taxes we might otherwise be required to pay. Due to a lack of a history of generating taxable income, we record a valuation allowance equal to 100% of our net deferred tax assets. In the event that we are able to generate taxable earnings in the future and determine it is more likely than not that we can realize our deferred tax assets, an adjustment to the valuation allowance would be made which may increase income in the period that such determination was made.
	•	Tax Contingencies  — Our tax contingencies are recorded to address potential exposures involving tax positions we have taken that could be challenged by tax authorities. These potential exposures result from the varying application of statutes, rules, regulations and interpretations. Our estimates of tax contingencies reflect assumptions and judgments about potential actions by taxing jurisdictions. We believe that these assumptions and judgments are reasonable; however, our accruals may change in the future due to new developments in each matter and the ultimate resolution of these matters may be greater or less than the amount that we have accrued.

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			Years Ended December 31,
			2004								2003								2002
			$				%				$				%				$				%
Revenue				1,160,351				100.0				963,980				100.0				871,696				100.0
Costs and expenses:
	Cost of operations			666,431				57.4				564,939				58.6				509,744				58.5
	Development and engineering			54,161				4.7				42,985				4.5				43,467				5.0
	Sales, marketing, general and administrative			324,027				27.9				282,482				29.3				283,424				32.5
	Depreciation, amortization and other			57,765				5.0				62,434				6.5				125,593				14.4
	Legal expense			9,230				0.8				3,959				0.4				—				—
	Restructuring and integration charge (benefit)			4,535				0.4				—				—				(5,850	)			(0.7	)
	Gain on investments			457				0.1				1,659				0.2				6,547				0.8
	Interest income			18,717				1.6				22,901				2.4				19,590				2.3
	Interest expense			19,253				1.7				15,214				1.6				8,491				1.0
	Other income, net			121				0.0				4,218				0.4				3,844				0.4
Income (loss) from continuing operations before income tax provision (benefit)				44,244				3.8				20,745				2.1				(63,192	)			(7.2	)
	Income tax provision (benefit)			4,910				0.4				4,140				0.4				(10,079	)			(1.1	)
	Income (loss) from continuing operations			39,334				3.4				16,605				1.7				(53,113	)			(6.1	)
	Income (loss) from discontinued operations, net of income taxes			—				—				(33,611	)			(3.5	)			3,411				0.4
Net income (loss)				39,334				3.4				(17,006	)			(1.8	)			(49,702	)			(5.7	)

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	2004 and 2003

	Revenues

	Costs and Expenses

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	2003 and 2002

	Revenues

	Costs and Expenses

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			Years Ended December 31,
			2004				2003				2002
			(In thousands)
Revenues
WebMD Business Services			$	686,585			$	505,729			$	466,810
WebMD Practice Services				296,115				302,640				275,306
WebMD Health				134,317				110,665				84,296
Porex				77,099				71,940				65,811
Inter-segment eliminations				(33,765	)			(26,994	)			(20,527	)
			$	1,160,351			$	963,980			$	871,696
Income (loss) before restructuring, taxes, non-cash and other items
WebMD Business Services			$	131,834			$	94,218			$	85,154
WebMD Practice Services				14,533				20,924				26,685
WebMD Health				32,898				24,898				5,574
Porex				22,650				20,532				19,891
Corporate				(58,382	)			(50,251	)			(51,272	)
Interest income				18,717				22,901				19,590
Interest expense				(19,253	)			(15,214	)			(8,491	)
				142,997				118,008				97,131
Restructuring, taxes, non-cash and other items
Depreciation, amortization and other				(57,765	)			(62,434	)			(125,593	)
Non-cash content and distribution services and stock compensation				(27,801	)			(36,747	)			(50,971	)
Restructuring and integration (charge) benefit				(4,535	)			—				5,850
Legal expense				(9,230	)			(3,959	)			—
Gain on investments				457				1,659				6,547
Other income, net				121				4,218				3,844
Income tax (provision) benefit				(4,910	)			(4,140	)			10,079
Income (loss) from continuing operations				39,334				16,605				(53,113	)
Income (loss) from discontinued operations				—				(33,611	)			3,411
	Net income (loss)		$	39,334			$	(17,006	)		$	(49,702	)

	2004 and 2003

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		achieving certain milestones. In addition, we expect capital expenditures to be between $70,000 and $80,000 in 2005.

							Less Than												More Than
			Total				1 Year				1-3 Years				4-5 Years				5 Years
			(In thousands)
Long-term debt(a)			$	784,994			$	15,875			$	324,437			$	12,251			$	432,431
Leases(b)				119,987				24,252				42,121				27,612				26,002
Purchase obligations(c)				29,772				21,033				8,739				—				—
Strategic relationships				1,379				754				625				—				—
Other long-term liabilities				890				—				700				190				—
	Total		$	937,022			$	61,914			$	376,622			$	40,053			$	458,433

(a)		Long-term debt includes our $350,000 1.75% Convertible Subordinated Notes due 2023 and our $300,000 31/4% Convertible Subordinated Notes due 2007. Amounts include our contractual interest payments.
(b)		The lease amounts are net of sublease income.
(c)		Purchase obligations include amounts committed under legally enforceable contracts or purchase orders for goods and services with defined terms as to price, quantity and delivery.

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	•	High Rates of Increase in Healthcare Costs. According to the Centers for Medicare & Medicaid Services, or CMS, healthcare spending in the United States rose to $1.7 trillion in 2003, up from $1.6 trillion in 2002, $1.4 trillion in 2001 and $1.3 trillion in 2000. The CMS report indicated a growth rate in healthcare spending of 7.7% for 2003, compared to 9.3% for 2002, and 8.5% for 2001. The 7.7% rate of increase in 2003 was three percentage points higher than the 2003 increase gross domestic product for the United States. The rate of increase in private spending for physician services, which accounts for two-thirds of payments for physician services, accelerated 1.2 percentage points to 9.4%. CMS indicated that healthcare’s share of gross domestic product was 15.3% for 2004. The difficulties involved in controlling healthcare costs have resulted in the following key trends:

	—	Cost-Shifting by Employers to their Employees and Changes in Plan Design. Employers are seeking to shift a greater portion of healthcare costs onto their employees and to redefine traditional health benefits. People in employer-sponsored health plans are paying much more out of their own pockets than they did a few years ago and are likely to see their share continue to increase significantly in the near future. With the shift in financial burdens, consumers are assuming a more active role in managing their health and need information to make educated benefit, provider and treatment decisions. We are continuing the process of transforming WebMD Health, our consumer portal, from an online place that consumers go for information to a place where they can actively manage their health. In addition, through our WebMD Health Services business, we help employers and plans provide employees and plan members with answers to healthcare and plan benefit questions, decision-support tools and personalized information and feedback. WebMD Health intends to continue to make significant investments in its infrastructure, as well as in new products and services, to position ourselves to provide additional interactive online services.
	—	Increased Use of Information Technology for Clinical Purposes. Governmental and commercial payers continue to exert considerable pricing pressure on providers. As a result, in order to maintain their incomes, providers need to see more patients and increase productivity and/or reduce their operating costs. Use of information technology can assist providers in these efforts. Healthcare providers are also under pressure to increase quality and reduce medical errors. While information technology systems and electronic transaction services are used by many physician offices for administrative and financial applications, their use in clinical workflow is much more limited, especially in smaller practices. We believe that is changing and we are continuing to target the market for clinical applications as one of our priorities for the next several years. While it will be a long time before most physicians go to a “paperless office,” more physicians are beginning to incorporate information technology into their clinical workflow, and our products allow them to make this shift in a gradual way. In 2004, WebMD Practice Services released a new suite of clinical software called Intergy EHR. We believe that, in light of the increasing importance of clinical software to healthcare providers, WebMD Practice Services’ success in retaining existing practice management system customers and attracting new customers may depend, in substantial part, on their response to Intergy EHR.

	•	Improving Quality of Care Through Use of Information Technology

	—	Quality Initiatives. Health plans recognize that encouraging the good health of their members not only benefits the members but also has financial benefits for the health plans. Healthier people need less care and fewer costly services. Thus, controlling costs by keeping people healthier and better managing chronic conditions has become a significant focus for America’s healthcare system. Managed care emerged in the 1990s as a new approach to healthcare

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		delivery, combining a greater emphasis on preventive care with careful monitoring of resource utilization and provider performance. However, while managed care produced some important cost reductions, it also met with consumer resistance to what was perceived as its excessive restrictions. Then, in 1999 and 2000, a series of major studies suggested that the nation’s healthcare system should be fundamentally redirected to focus on continuous quality improvement and anticipating healthcare needs, rather than controlling access to services. To achieve this, the healthcare industry required both new thinking and new techniques. Today, health plans seek to understand the needs of their members, including those whose medical conditions are likely to generate the greatest cost of services, and are working to offer both providers and members timely information to improve their health through appropriate care. Health plans and employer sponsors also seek to anticipate member and employee needs and to reach out to them with personalized communications. Finally, health plans and employers want to be able to determine the effectiveness of these efforts. ViPS, which we acquired in 2004, provides software and services that helps health plans identify and serve members who need the most care and to anticipate the future needs of member populations. In addition, WebMD Health provides online private portals that assist employers and health plans in educating and encouraging employees and plan members to lower health risks and to take a more active role in their healthcare.

	—	Pay-for-Performance Initiatives. Both governmental and commercial payers have begun to reassess current healthcare provider compensation arrangements, which generally reimburse physicians and other healthcare providers based on the number and complexity of the services provided to patients. Pay-for-performance initiatives reward healthcare providers for better outcomes and adherence to evidence-based guidelines. These initiatives typically create incentives for improvements in the quality of care and for an increased focus on preventive medicine and appropriate management of chronic illnesses. The goal is both better outcomes and reductions in hospitalizations and expensive procedures. Information technology plays an important role in pay-for-performance initiatives, including with respect to the delivery of quality care by providers and quality measurement by payers. Some pay-for-performance programs provide incentives for use of electronic medical record systems, such as Intergy EHR, by providers. ViPS provides software and services that can be used to support “pay-for-performance” initiatives by payers. In addition, WebMD Health is working with Bridges to Excellence (BTE), a consortium of employers, providers and plans focused on improving outcomes and the quality of care through incentive programs. WebMD Health created and maintains the patient component of BTE’s Diabetes Care Link program, which provides tools to help patients make treatment and provider decisions in connection with managing their disease, and it is integrated into an outcomes-based physician incentive program.

	•	Increasing Automation of the Healthcare Reimbursement Cycle. Submission of claims electronically assists payers in reducing the cost of processing and servicing claims and can expedite the reimbursement process for providers. However, this is just a starting point for increasing administrative efficiency. We are continuing our efforts to transform WebMD Business Services (whose name was changed in 2004 from WebMD Envoy) from an electronic transactions clearinghouse to a provider of more complete reimbursement cycle management services for healthcare providers and transaction-related administrative services for healthcare payers. The new name is intended to reflect this transformation, which in turn is intended to allow us to provide the benefits of economies of scale to our customers in various stages of the healthcare reimbursement cycle. In order to be more efficient, many healthcare payers are focusing upon core activities — building cost-effective provider networks, marketing their services to employers, and adjudicating claims payment — and are outsourcing pre- and post-adjudication administrative activities, such as printing and mailing checks and explanation of benefits and other document management activities, including conversion of paper claims to electronic form. By outsourcing these services to us, payers can reduce operating costs and capital expenditures. Our acquisitions of Advanced Business Fulfillment and Medifax-EDI in 2003 and Dakota Imaging in April 2004 support our ability to

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		provide more comprehensive business process outsourcing services. Through ViPS, which we acquired in August 2004, we provide healthcare payers with information technology solutions and related services for claims processing, provider performance measurement, quality improvement, fraud detection, disease management and predictive modeling. We are working to cross-sell our additional services to healthcare payers.

	•	Increased Use of the Internet by Physicians and as a Source of Health Information for Consumers. A study published in 2003 by the Pew Internet and American Life Project estimated that approximately half of all American adults in the United States have accessed the Internet for health information, with nearly three-quarters of those who use the Internet reporting use of the Internet for health information. WebMD Health is a leading destination on the Internet for these consumers. See “Healthcare Information Services and Technology Solutions — WebMD Health” below. The Internet allows us to offer consumers the resources they are looking for, with immediate access to searchable information and dynamic interactive content. Physicians are also increasingly turning to the Internet for professional activities. In 2004, approximately 927,000 physicians and healthcare professional participants earned approximately 827,000 continuing medical education credits at Medscape, an increase of approximately 59% and 31% over 2003 respectively. As a result, WebMD Health enables its sponsors, including pharmaceutical, medical device and consumer products companies, to reach targeted consumers when they are looking for answers to healthcare questions and to reach physicians when they are exploring new treatment options. However, pharmaceutical companies and medical device manufacturers currently spend only a very small portion of their marketing and educational budgets on online media. Our strategy is to seek a greater portion of these budgets and to increase sponsorship of our portals by consumer products companies whose products have health claims.
	•	Governmental Initiatives Relating to Healthcare Information Technology. There are currently numerous federal, state and private initiatives seeking ways to increase the use of information technology in healthcare, including in the physician’s office. Most significantly, in April 2004, Executive Order 13335 directed the appointment of a National Coordinator for Health Information Technology to coordinate programs and policies regarding health information technology across the Federal government.

	—	The National Coordinator is charged with directing the health information technology programs within the Department of Health and Human Services, or HHS, and coordinating them with those of other relevant Executive Branch agencies. In May 2004, David J. Brailer M.D., Ph.D., was appointed to serve in this new position. Also in accordance with that Executive Order, HHS issued a report during 2004 entitled “The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care.” At WebMD, an important part of our mission has been fostering adoption of information technology and electronic communications in healthcare. Accordingly, we welcome governmental and private initiatives designed to achieve the same goals. However, these initiatives may encourage more companies

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		to enter our markets or result in the development of technology solutions that compete with ours. The National Coordinator has indicated that he intends to encourage widespread adoption of health information technology throughout the healthcare system and, to do that, intends to facilitate the development and transfer of knowledge and technology used by the federal government to the private sector.

	—	In November 2004, the National Coordinator published a Request for Information seeking public comment regarding considerations in implementing a national health information network (NHIN). We are committed to promoting the development and adoption of interoperable health care information services and technology solutions and were one of many healthcare information technology companies that responded to the Request for Information. We believe that our experience in processing large volumes of electronic healthcare transactions, together with our experience in providing electronic health records and practice management software to medical practices and clinics and providing IT services to private and governmental healthcare payers, makes us a good candidate to work with HHS on NHIN-related initiatives and projects.

	The financial results of WebMD Business Services could be adversely affected if payers conduct electronic data interchange, or EDI, transactions without using a clearinghouse or if their ability to do so allows them to terminate or modify their relationships with us

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	Some of our customers compete with us and some, instead of using a third party provider, perform internally some of the services that we offer

	WebMD Business Services’ transaction volume and financial results could be adversely affected if we do not maintain relationships with practice management system vendors and large submitters of healthcare EDI transactions

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	Contractual relationships with governmental customers may impose special burdens on us and provide special benefits to those customers, including the right to change or terminate the contract in response to budgetary constraints or policy changes

	•	termination when appropriated funding for the current fiscal year is exhausted;
	•	termination for the governmental customer’s convenience, subject to a negotiated settlement for costs incurred and profit on work completed, along with the right to place contracts out for bid before the full contract term, as well as the right to make unilateral changes in contract requirements, subject to negotiated price adjustments;
	•	“most-favored” pricing disclosure requirements that are designed to ensure that the government can negotiate and receive pricing akin to that offered commercially and requirements to submit proprietary cost or pricing data to ensure that government contract pricing is fair and reasonable;
	•	commercial customer price tracking requirements that require contractors to monitor pricing offered to a specified class of customers and to extend price reductions offered to that class of customers to the government;
	•	reporting and compliance requirements related to, among other things: equal employment opportunity, affirmative action for veterans and for workers with disabilities, and accessibility for the disabled;
	•	broader audit rights than we would usually grant to non-governmental customers; and
	•	specialized remedies for breach and default, including setoff rights, retroactive price adjustments, and civil or criminal fraud penalties, as well as mandatory administrative dispute resolution procedures instead of state contract law remedies.

	Long sales, installation and implementation cycles for some WebMD Business Services applications and some WebMD Practice Services applications may result in unanticipated fluctuations in their revenues

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	WebMD Practice Services faces competition in providing support services to owners of The Medical Manager and other systems

	Our ability to generate revenue could suffer if we do not continue to update and improve our existing products and services and develop new ones

	Developing and implementing new or updated products and services may take longer and cost more than expected

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	New or updated products and services will not become profitable unless they achieve sufficient levels of market acceptance

	•	our updated electronic medical records products;
	•	the business process outsourcing services for payers we have developed internally and through acquisition; and
	•	our updated clinical transaction services.

	Achieving market acceptance of new or updated products and services is likely to require significant efforts and expenditures

	We could be subject to breach of warranty, product liability or other claims if our software products, information technology systems or transmission systems contain errors or experience failures

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	Performance problems with WebMD Business Services’ systems or system failures could cause us to lose customers or cause customers to reduce the number of transactions we process for them

	During times when we are making significant changes to our products and services, there are increased risks of performance problems

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	If our systems or the Internet experience security breaches or are otherwise perceived to be insecure, our business could suffer

	Performance problems with WebMD Business Services’ systems could affect our relationships with customers of our Practice Services business

	WebMD Business Services’ ability to provide transaction services depends on services provided by telecommunications companies

	Our advertising and sponsorship revenues may vary significantly from quarter to quarter

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	•	timing of FDA approval for new products or for new approved uses for existing products;
	•	seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that may affect the timing of promotional campaigns for specific products; and
	•	scheduling of conferences for physicians and other healthcare professionals.

	Our ability to maintain or increase our advertising and sponsorship revenues depends on our ability to retain or increase usage of our online offerings by consumers and physicians

	Our ability to retain or increase usage of our Web sites depends on our ability to create or license high quality health content, interactive tools and other features

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	Changes in government regulation or industry guidelines could adversely affect our online continuing medical education offerings

	Loss of a small number of sponsors could have a material adverse effect on our advertising and sponsorship revenues

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

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	Performance problems with the systems of our content providers could disrupt our Web sites

	Lengthy sales and implementation cycles for our private online portals make it difficult to forecast our revenues from these applications

	We must continue to upgrade our technology infrastructure, both hardware and software, to effectively meet demand for our private online portals

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	If the systems WebMD Health Services uses to provide private online portals experience security breaches or are otherwise perceived to be insecure, its business could suffer

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

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

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	Delivery of web-based services requires uninterrupted communications and computer service from third-party service providers and our own systems

	•	damage from fire, power loss and other natural disasters;
	•	communications failures;
	•	software and hardware errors, failures or crashes;
	•	security breaches, computer viruses and similar disruptive problems; and
	•	other potential interruptions.

	Implementation of changes in hardware and software platforms used to deliver our Web-based services may result in performance problems

	Government regulation of the Internet could adversely affect our business

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	WebMD Health’s primary businesses are difficult to evaluate because they have a limited operating history

	Third parties may bring claims against us as a result of content we provide, which may be expensive and time consuming to defend

	We face potential liability related to the privacy and security of personal information we collect on our Web sites

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	Third parties may challenge the enforceability of our online agreements

	Developments in the healthcare industry could adversely affect our business

	•	government regulation or private initiatives that affect the manner in which healthcare providers interact with patients, payers or other healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services (for additional discussion of the potential effects of regulatory matters on our business and on participants in the healthcare industry, see the other “Risks Related to Providing Products and Services to the Healthcare Industry” described below in this section and “Business — Government Regulation” above);
	•	consolidation of healthcare industry participants;
	•	reductions in governmental funding for healthcare; and
	•	adverse changes in business or economic conditions affecting healthcare payers or providers, pharmaceutical companies, medical device manufacturers or other healthcare industry participants.

	•	changes in the billing patterns of healthcare providers;
	•	changes in the design of health insurance plans;
	•	changes in the contracting methods payers use in their relationships with providers; and
	•	decreases in marketing expenditures by pharmaceutical companies or medical device manufacturers, including as a result of governmental regulation or private initiatives that discourage or prohibit promotional activities by pharmaceutical or medical device companies.

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	Governmental and private initiatives to support adoption of healthcare information technology may encourage additional companies to enter our markets or result in the development of technology solutions that compete with ours

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

	•	because we are in the business of applying information technology to healthcare, various aspects of HIPAA have had and are expected to continue to have significant consequences for WebMD Business Services and WebMD Practice Services and, to a lesser extent, WebMD Health;
	•	because our WebMD Health business involves advertising and promotion of prescription and over-the-counter drugs and medical devices, any increase in regulation of these areas by the Federal Drug Administration or the Federal Trade Commission could make it more difficult for us to contract for sponsorships and advertising;
	•	because we sell items and services to healthcare providers and physicians, our sales and promotional practices must comply with federal and state anti-kickback laws;
	•	our healthcare connectivity and transaction-related administrative services must be provided in compliance with federal and state false claims laws; and
	•	in providing health information to consumers, we must comply with corporate practice of medicine rules and not offer professional medical advice, diagnosis or treatment.

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	Porex’s success depends upon demand for its products, which in some cases ultimately depends upon end-user demand for the products of its customers

	Porex’s success may depend on satisfying rapidly changing customer requirements

	Potential new or enhanced Porex products may not achieve sufficient sales to be profitable or justify the cost of their development

	Porex may not be able to source the raw materials it needs or may have to pay more for those raw materials

	Disruptions in Porex’s manufacturing operations could have a material adverse effect on its business and financial results

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	Porex may not be able to keep third parties from using technology it has developed

	The nature of Porex’s products exposes it to product liability claims that may not be adequately covered by indemnity agreements or insurance

	Economic, political and other risks associated with Porex’s international sales and geographically diverse operations could adversely affect Porex’s operations and financial results

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	•	changes in foreign currency exchange rates;
	•	changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets;
	•	trade protection measures and import or export licensing requirements;
	•	potentially negative consequences from changes in tax laws;
	•	differing protection of intellectual property; and
	•	unexpected changes in regulatory requirements.

	Environmental regulation could adversely affect Porex’s business

	The ongoing investigations by the United States Attorney for the District of South Carolina and the SEC could negatively impact our company and divert management attention from our business operations

	We face significant competition for our products and services

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	Third parties may bring claims as a result of the activities of our strategic partners or resellers of our products and services

	The performance of our businesses depends on attracting and retaining qualified executives and employees

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

	Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products or services

	We have incurred and may continue to incur losses

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	We may be subject to litigation

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

	•	cash and cash equivalents on hand and marketable securities,
	•	proceeds from the incurrence of indebtedness, and
	•	proceeds from the issuance of additional common stock, preferred stock, convertible debt or other securities.

	•	cause substantial dilution of the percentage ownership of our stockholders at the time of the issuance,
	•	cause substantial dilution of our earnings per share, and
	•	adversely affect the prevailing market price for our outstanding securities.

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

	•	our ability to maintain relationships with the customers of the acquired business;
	•	our ability to cross-sell products and services to customers with which we have established relationships and those with which the acquired businesses have established relationships;
	•	our ability to retain or replace key personnel;
	•	potential conflicts in payer, provider, strategic partner, sponsor or advertising relationships;
	•	our ability to coordinate organizations that are geographically diverse and may have different business cultures; and
	•	compliance with regulatory requirements.

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

	We expect that accounting for employee stock options using the fair value method will have a material impact on our consolidated results of operations and earnings per share

	The separation of WebMD Health from WebMD Corporation currently being considered by our Board of Directors will expose you to additional risks and those risks may outweigh the potential benefits

	•	a one-step split-off of WebMD Health equity through an exchange offer transaction with WebMD Corporation’s stockholders; or
	•	an initial public offering of a minority interest in WebMD Health.

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Item 7A.	Quantitative and Qualitative Disclosures about Market Risk

Item 8.	Financial Statements and Supplementary Data

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

Item 9A.	Controls and Procedures

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Item 10.	Directors and Executive Officers of the Registrant

Item 11.	Executive Compensation

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

Item 13.	Certain Relationships and Related Transactions

Item 14.	Principal Accountant Fees and Services

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Item 15.	Exhibits and Financial Statement Schedules

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	WebMD Corporation

	By:	/s/ Andrew C. Corbin

	Andrew C. Corbin
	Executive Vice President and
	Chief Financial Officer

Signature				Capacity		Date
/s/ Kevin M. Cameron   Kevin M. Cameron				Director; Chief Executive Officer (principal executive officer)		March 16, 2005
/s/ Andrew C. Corbin   Andrew C. Corbin				Executive Vice President and Chief Financial Officer (principal financial and accounting officer)		March 16, 2005
/s/ Mark J. Adler   Mark J. Adler, M.D.				Director		March 16, 2005
/s/ Paul A. Brooke   Paul A. Brooke				Director		March 16, 2005
/s/ Neil F. Dimick   Neil F. Dimick				Director		March 16, 2005
/s/ Roger C. Holstein   Roger C. Holstein				Director		March 16, 2005
/s/ James V. Manning   James V. Manning				Director		March 16, 2005

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Signature				Capacity		Date
/s/ Herman Sarkowsky   Herman Sarkowsky				Director		March 16, 2005
/s/ Joseph E. Smith   Joseph E. Smith				Director		March 16, 2005
/s/ Martin J. Wygod   Martin J. Wygod				Director		March 16, 2005

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			Page
Historical Financial Statements:
	Report of Management on Internal Control Over Financial Reporting			F-2
	Report of Independent Registered Public Accounting Firm			F-3
	Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting			F-4
	Consolidated Balance Sheets at December 31, 2004 and 2003			F-5
	Consolidated Statements of Operations for the Years Ended December 31, 2004, 2003 and 2002			F-6
	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2004, 2003 and 2002			F-7
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002			F-8
	Notes to Consolidated Financial Statements			F-10
Supplemental Financial Data:
	The following supplementary financial data of the Registrant and its subsidiaries required to be included in Item 15(a)(2) of Form 10-K are listed below:
	Schedule II — Valuation and Qualifying Accounts			S-1

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	•	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
	•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
	•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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	/s/ Ernst & Young LLP

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	/s/ Ernst & Young LLP

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					December 31,
					2004				2003
ASSETS
Current assets:
	Cash and cash equivalents				$	46,019			$	39,648
	Short-term investments					61,675				231,033
	Accounts receivable, net of allowance for doubtful accounts of $13,433 in 2004 and $20,500 in 2003					214,437				181,173
	Inventory					13,476				12,158
	Prepaid expenses and other current assets					41,115				44,089
			Total current assets			376,722				508,101
Marketable debt securities						511,864				451,290
Marketable equity securities						4,017				4,744
Property and equipment, net						89,677				77,278
Goodwill						1,010,564				844,448
Intangible assets, net						260,509				184,130
Other assets						48,871				65,315
					$	2,302,224			$	2,135,306
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	17,366			$	10,390
	Accrued expenses					201,528				208,430
	Deferred revenue					109,533				86,708
			Total current liabilities			328,427				305,528
31/4% convertible subordinated notes due 2007						299,999				299,999
1.75% convertible subordinated notes due 2023						350,000				350,000
Other long-term liabilities						1,283				1,182
Commitments and contingencies
Convertible redeemable exchangeable preferred stock, $0.0001 par value; 10,000 shares authorized, issued and outstanding at December 31, 2004						98,299				—
Stockholders’ equity:
	Preferred stock, $0.0001 par value; 4,990,000 shares authorized; no shares issued					—				—
		Common stock, $0.0001 par value; 900,000,000 shares authorized; 394,041,320 shares issued at December 31, 2004; 384,751,705 shares issued at December 31, 2003				39				38
	Additional paid-in capital					11,776,911				11,726,734
	Deferred stock compensation					(7,819	)			(4,683	)
	Treasury stock, at cost; 80,849,495 shares at December 31, 2004; 76,576,865 shares at December 31, 2003					(379,968	)			(347,858	)
	Accumulated deficit					(10,172,904	)			(10,212,054	)
	Accumulated other comprehensive income					7,957				16,420
			Total stockholders’ equity			1,224,216				1,178,597
					$	2,302,224			$	2,135,306

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			Years Ended December 31,
			2004				2003				2002
Revenue			$	1,160,351			$	963,980			$	871,696
Costs and expenses:
	Cost of operations			666,431				564,939				509,744
	Development and engineering			54,161				42,985				43,467
	Sales, marketing, general and administrative			324,027				282,482				283,424
	Depreciation, amortization and other			57,765				62,434				125,593
	Legal expense			9,230				3,959				—
	Restructuring and integration charge (benefit)			4,535				—				(5,850	)
	Gain on investments			457				1,659				6,547
	Interest income			18,717				22,901				19,590
	Interest expense			19,253				15,214				8,491
	Other income, net			121				4,218				3,844
Income (loss) from continuing operations before income tax provision (benefit)				44,244				20,745				(63,192	)
	Income tax provision (benefit)			4,910				4,140				(10,079	)
	Income (loss) from continuing operations			39,334				16,605				(53,113	)
	Income (loss) from discontinued operations, net of income taxes			—				(33,611	)			3,411
Net income (loss)			$	39,334			$	(17,006	)		$	(49,702	)
Basic income (loss) per common share:
	Income (loss) from continuing operations		$	0.12			$	0.05			$	(0.17	)
	Income (loss) from discontinued operations			—				(0.11	)			0.01
Net income (loss)			$	0.12			$	(0.06	)		$	(0.16	)
Diluted income (loss) per common share:
	Income (loss) from continuing operations		$	0.12			$	0.05			$	(0.17	)
	Income (loss) from discontinued operations			—				(0.10	)			0.01
Net income (loss)			$	0.12			$	(0.05	)		$	(0.16	)
Weighted-average shares outstanding used in computing income (loss) per common share:
	Basic			320,080				304,858				304,168
	Diluted			333,343				325,811				304,168

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		Stockholders’ Equity
																														Accumulated
		Common Stock								Additional				Deferred				Treasury Stock												Other				Total
										Paid-In				Stock												Accumulated				Comprehensive				Stockholders’
		Shares				Amount				Capital				Compensation				Shares				Amount				Deficit				Income				Equity
Balances at December 31, 2001			366,956,160			$	37			$	11,652,743			$	(42,173	)			56,091,935			$	(222,582	)		$	(10,145,346	)		$	12,833			$	1,255,512
Net loss			—				—				—				—				—				—				(49,702	)			—				(49,702	)
Net decrease in unrealized gains on securities			—				—				—				—				—				—				—				(3,640	)			(3,640	)
Foreign currency translation adjustment			—				—				—				—				—				—				—				2,523				2,523
Comprehensive loss			—				—				—				—				—				—				—				—				(50,819	)
Issuance of common stock for option exercises, ESPP, 401(k) and other issuances			7,704,904				—				28,774				—				—				—				—				—				28,774
Issuance, net of repurchase, of warrants in connection with strategic alliances and services			—				—				29				—				—				—				—				—				29
Deferred stock compensation			—				—				2,500				(2,500	)			—				—				—				—				—
Stock compensation expense			—				—				392				24,873				—				—				—				—				25,265
Purchase of treasury stock			—				—				—				—				18,162,734				(104,960	)			—				—				(104,960	)
Adjustment to deferred stock compensation for terminations			—				—				(1,995	)			1,995				—				—				—				—				—
Balances at December 31, 2002			374,661,064				37				11,682,443				(17,805	)			74,254,669				(327,542	)			(10,195,048	)			11,716				1,153,801
Net loss			—				—				—				—				—				—				(17,006	)			—				(17,006	)
Net increase in unrealized gains on securities			—				—				—				—				—				—				—				1,419				1,419
Foreign currency translation adjustment			—				—				—				—				—				—				—				3,285				3,285
Comprehensive loss			—				—				—				—				—				—				—				—				(12,302	)
Issuance of common stock for option exercises, ESPP, 401(k) and other issuances			10,090,641				1				44,718				—				—				—				—				—				44,719
Issuance of warrants in connection with strategic alliances and services			—				—				67				—				—				—				—				—				67
Deferred stock compensation			—				—				25				(25	)			—				—				—				—				—
Stock compensation expense			—				—				335				12,293				—				—				—				—				12,628
Purchase of treasury stock			—				—				—				—				2,322,196				(20,316	)			—				—				(20,316	)
Adjustment to deferred stock compensation for terminations			—				—				(854	)			854				—				—				—				—				—
Balances at December 31, 2003			384,751,705				38				11,726,734				(4,683	)			76,576,865				(347,858	)			(10,212,054	)			16,420				1,178,597
Net income			—				—				—				—				—				—				39,334								39,334
Net decrease in unrealized gains on securities			—				—				—				—				—				—				—				(10,581	)			(10,581	)
Foreign currency translation adjustment			—				—				—				—				—				—				—				2,118				2,118
Comprehensive income			—				—				—				—				—				—				—				—				30,871
Issuance of common stock for option exercises, ESPP, 401(k) and other issuances			9,289,615				1				38,051				—				—				—				—				—				38,052
Issuance of warrants in connection with strategic alliances and services			—				—				15				—				—				—				—				—				15
Accretion of convertible redeemable exchangeable preferred stock			—				—				—				—				—				—				(184	)			—				(184	)
Deferred stock compensation			—				—				13,001				(13,001	)			—				—				—				—				—
Stock compensation expense			—				—				70				8,905				—				—				—				—				8,975
Purchase of treasury stock			—				—				—				—				4,272,630				(32,110	)			—				—				(32,110	)
Adjustment to deferred stock compensation for terminations			—				—				(960	)			960				—				—				—				—				—
Balances at December 31, 2004			394,041,320			$	39			$	11,776,911			$	(7,819	)			80,849,495			$	(379,968	)		$	(10,172,904	)		$	7,957			$	1,224,216

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					Years Ended December 31,
					2004				2003				2002
Cash flows from operating activities:
Net income (loss)					$	39,334			$	(17,006	)		$	(49,702	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Loss (income) from discontinued operations					—				33,611				(3,411	)
	Depreciation, amortization and other					57,765				62,434				125,593
	Amortization of debt issuance costs					2,975				2,246				1,109
	Non-cash content and distribution services					18,826				24,298				25,706
	Non-cash stock-based compensation					8,975				12,449				25,265
	Bad debt expense					3,606				6,328				11,305
	Gain on investments					(457	)			(1,659	)			(6,547	)
	Gain on sale of property and equipment					(121	)			(3,100	)			—
	Changes in operating assets and liabilities:
		Accounts receivable				(20,477	)			(813	)			(13,936	)
		Inventory				(1,041	)			(2,176	)			(872	)
		Prepaid expenses and other, net				3,478				3,792				(3,663	)
		Accounts payable				5,577				(651	)			(7,541	)
		Accrued expenses				(43,703	)			(42,419	)			(32,651	)
		Deferred revenue				15,307				(225	)			12,530
			Net cash provided by continuing operations			90,044				77,109				83,185
			Net cash provided by discontinued operations			—				5,130				9,912
			Net cash provided by operating activities			90,044				82,239				93,097
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale securities						1,253,491				1,079,897				949,920
Proceeds from maturities and redemptions of held-to-maturity securities						—				157,919				59,095
Purchases of available-for-sale securities						(1,153,703	)			(760,607	)			(1,067,362	)
Purchases of held-to-maturity securities						—				(590,113	)			(300,970	)
Purchases of property and equipment						(38,800	)			(18,385	)			(26,267	)
Proceeds received from sale of discontinued operations						—				46,500				—
Proceeds received from sale of property and equipment						417				9,779				—
Other changes in equity of discontinued operations						—				1,754				10,369
Cash paid in business combinations, net of cash acquired						(249,557	)			(400,491	)			(33,471	)
			Net cash used in continuing operations			(188,152	)			(473,747	)			(408,686	)
			Net cash used in discontinued operations			—				(2,529	)			(12,577	)
			Net cash used in investing activities			(188,152	)			(476,276	)			(421,263	)

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			Years Ended December 31,
			2004				2003				2002
Cash flows from financing activities:
Proceeds from issuance of common stock				38,052				44,719				28,765
Purchase of treasury stock				(32,110	)			(20,316	)			(104,960	)
Payment of notes payable and other				(602	)			(361	)			(2,904	)
Net proceeds from issuance of convertible debt				—				339,125				292,000
Net proceeds from issuance of convertible redeemable exchangeable preferred stock				98,115				—				—
Redemption of Series B Preferred Stock				—				—				(10,000	)
	Net cash provided by continuing operations			103,455				363,167				202,901
	Net cash used in discontinued operations			—				(6,546	)			(1,150	)
	Net cash provided by financing activities			103,455				356,621				201,751
Effect of exchange rates on cash				1,024				1,423				1,083
Net increase (decrease) in cash and cash equivalents				6,371				(35,993	)			(125,332	)
Changes in cash attributable to discontinued operations				—				3,945				3,815
Cash and cash equivalents at beginning of year				39,648				71,696				193,213
Cash and cash equivalents at end of year			$	46,019			$	39,648			$	71,696

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1.	Summary of Significant Accounting Policies

	•	WebMD Business Services. Through WebMD Business Services, the Company provides healthcare reimbursement cycle management services for healthcare providers and transaction-related administrative services for healthcare payers, together with related technology solutions. The Company transmits transactions electronically between healthcare payers and providers and provides healthcare payers with transaction processing technology, decision support and data warehousing solutions, consulting services and outsourcing services, including document management services for transaction processing and print-and-mail services for the distribution of checks, remittance advice and explanation of benefits. The Company also provides automated patient billing services to healthcare providers, including statement printing and mailing services.
	•	WebMD Practice Services. Through WebMD Practice Services, the Company develops and markets information technology systems for healthcare providers and related services, primarily under The Medical Manager, Intergy and WebMD Network Services brands. These systems and services allow physician offices to automate their scheduling, billing and other administrative tasks, to transmit transactions electronically, to maintain electronic medical records and to automate documentation of patient encounters.
	•	WebMD Health. Through WebMD Health, the Company provides health information, health and benefit decision-support tools, continuing medical education (“CME”) services, and interactive communications services through its public online portals for consumers and physicians, through syndication and distribution relationships, through customized private online portals for employers and payers and, to a lesser extent, through offline publishing services. WebMD Health’s public portals sell advertising and sponsorship programs to companies interested in reaching consumers and physicians online, including pharmaceutical, biotech, medical device and consumer products companies.
	•	Porex. The Company develops, manufactures and distributes proprietary porous plastic products and components used in healthcare, industrial and consumer applications, as well as in finished products used in the medical device and surgical markets.

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		December 31,
		2004				2003
Raw materials and supplies		$	3,925			$	3,142
Work-in-process			1,335				1,394
Finished goods and other			8,216				7,622
		$	13,476			$	12,158

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

	Goodwill and Intangible Assets

Customer lists			3 to 15  years
Trade names			1 to 10  years
Technology and patents			3 to 40  years
Non-compete agreements and other			3 to 5 years

	Recoverability

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	Software to be Sold, Leased or Otherwise Marketed

	Internal Use Software

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			Years Ended December 31,
			2004				2003				2002
Net income (loss) as reported			$	39,334			$	(17,006	)		$	(49,702	)
Add: Stock-based employee compensation expense included in reported net income (loss) (including stock-based employee compensation expense related to discontinued operations)				8,975				12,628				25,265
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards				(67,569	)			(76,483	)			(119,670	)
Pro forma net loss			$	(19,260	)		$	(80,861	)		$	(144,107	)
Net income (loss) per common share:
	Basic — as reported		$	0.12			$	(0.06	)		$	(0.16	)
	Diluted — as reported		$	0.12			$	(0.05	)		$	(0.16	)
	Basic and Diluted — pro forma		$	(0.06	)		$	(0.27	)		$	(0.47	)

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				Years Ended December 31,
				2004				2003				2002
Numerator:
		Income (loss) from continuing operations		$	39,334			$	16,605			$	(53,113	)
		Income (loss) from discontinued operations			—				(33,611	)			3,411
Net income (loss)				$	39,334			$	(17,006	)		$	(49,702	)
Denominator:
		Common stock			311,721				304,858				304,168
		Convertible redeemable exchangeable preferred stock			8,359				—				—
Weighted-average shares — Basic					320,080				304,858				304,168
		Employee stock options, restricted stock and warrants			13,263				20,953				—
Adjusted weighted-average shares after assumed conversions — Diluted					333,343				325,811				304,168
Basic income (loss) per common share:
	Income (loss) from continuing operations			$	0.12			$	0.05			$	(0.17	)
	Income (loss) from discontinued operations				—				(0.11	)			0.01
Net income (loss)				$	0.12			$	(0.06	)		$	(0.16	)
Diluted income (loss) per common share:
	Income (loss) from continuing operations			$	0.12			$	0.05			$	(0.17	)
	Income (loss) from discontinued operations				—				(0.10	)			0.01
Net income (loss)				$	0.12			$	(0.05	)		$	(0.16	)

		Years Ended December 31,
		2004				2003				2002
Options and warrants			83,986				82,267				136,147
Convertible notes			55,129				55,129				32,387
			139,115				137,396				168,534

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2.	Business Combinations

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			Years Ended December 31,
			2004				2003
Revenue			$	1,199,689			$	1,125,138
Income from continuing operations			$	40,964			$	30,457
Net income (loss)			$	40,964			$	(3,154	)
Basic income (loss) per common share:
	Income from continuing operations		$	0.13			$	0.10
	Net income (loss)		$	0.13			$	(0.01	)
Diluted income (loss) per common share:
	Income from continuing operations		$	0.12			$	0.09
	Net income (loss)		$	0.12			$	(0.01	)

3.	Significant Transactions

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4.	Restructuring and Integration Charges

5.	Discontinued Operations

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		For the Period
		January 1, 2003				For the Year
		through				Ended
		August 1, 2003				December 31, 2002
Revenue		$	31,004			$	54,181
Income (loss) from operations		$	(30,120	)		$	3,411
Loss on disposal			(3,491	)			—
Income (loss) from discontinued operations, net of income taxes		$	(33,611	)		$	3,411

6.	Convertible Redeemable Exchangeable Preferred Stock

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7.	Convertible Subordinated Notes

	$350,000 1.75% Convertible Subordinated Notes due 2023

	$300,000 31/4% Convertible Subordinated Notes due 2007

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8.	Segment Information

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			Years Ended December 31,
			2004				2003				2002
Revenues
WebMD Business Services			$	686,585			$	505,729			$	466,810
WebMD Practice Services				296,115				302,640				275,306
WebMD Health				134,317				110,665				84,296
Porex				77,099				71,940				65,811
Inter-segment eliminations				(33,765	)			(26,994	)			(20,527	)
			$	1,160,351			$	963,980			$	871,696
Income (loss) before restructuring, taxes, non-cash and other items
WebMD Business Services			$	131,834			$	94,218			$	85,154
WebMD Practice Services				14,533				20,924				26,685
WebMD Health				32,898				24,898				5,574
Porex				22,650				20,532				19,891
Corporate				(58,382	)			(50,251	)			(51,272	)
Interest income				18,717				22,901				19,590
Interest expense				(19,253	)			(15,214	)			(8,491	)
				142,997				118,008				97,131
Restructuring, taxes, non-cash and other items
Depreciation, amortization and other				(57,765	)			(62,434	)			(125,593	)
Non-cash content and distribution services and stock compensation				(27,801	)			(36,747	)			(50,971	)
Restructuring and integration (charge) benefit				(4,535	)			—				5,850
Legal expense				(9,230	)			(3,959	)			—
Gain on investments				457				1,659				6,547
Other income, net				121				4,218				3,844
Income tax (provision) benefit				(4,910	)			(4,140	)			10,079
Income (loss) from continuing operations				39,334				16,605				(53,113	)
Income (loss) from discontinued operations				—				(33,611	)			3,411
	Net income (loss)		$	39,334			$	(17,006	)		$	(49,702	)

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9.	Long-Lived Assets

	Property and Equipment

			December 31,
			2004				2003
Computer equipment			$	62,106			$	52,968
Land and buildings				17,847				17,136
Office equipment, furniture and fixtures				45,695				38,612
Software				35,195				27,219
Leasehold improvements				9,727				9,050
Construction in process				11,848				3,819
				182,418				148,804
Less: accumulated depreciation				(92,741	)			(71,526	)
	Property and equipment, net		$	89,677			$	77,278

	Goodwill and Intangible Assets

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			WebMD				WebMD
			Business				Practice				WebMD
			Services				Services				Health				Porex				Total
Balance as of January 1, 2003			$	341,967			$	182,085			$	23,705			$	38,286			$	586,043
	Goodwill recorded during the period			244,021				1,469				12,731				—				258,221
	Adjustments to finalize purchase price allocations			—				(745	)			407				—				(338	)
	Effects of exchange rates			—				—				—				522				522
Balance as of January 1, 2004				585,988				182,809				36,843				38,808				844,448
	Acquisitions during the period			99,829				—				14,942				4,122				118,893
	Contingent consideration payments for prior period acquisitions			60,955				155				1,500				—				62,610
	Tax reversals(a)			(7,141	)			(7,321	)			—				—				(14,462	)
	Adjustments to finalize purchase price allocations			(1,263	)			—				(116	)			—				(1,379	)
	Effects of exchange rates			—				—				—				454				454
Balance as of December 31, 2004			$	738,368			$	175,643			$	53,169			$	43,384			$	1,010,564

(a)		During the fourth quarter of 2004, in accordance with EITF 93-7, “Uncertainties Related to Income Taxes in a Purchase Business Combination,” the Company reduced goodwill and accrued liabilities by $7,141 and $7,321 for the WebMD Business Services and WebMD Practice Services segments, respectively. The reduction related to the favorable resolution of estimated tax liabilities established in connection with the 2000 acquisitions of Envoy and Medical Manager.

			December 31, 2004												December 31, 2003
			Gross												Gross
			Carrying				Accumulated								Carrying				Accumulated
			Amount				Amortization				Net				Amount				Amortization				Net
Customer lists			$	369,704			$	(217,874	)		$	151,830			$	325,160			$	(206,163	)		$	118,997
Technology and patents				234,722				(155,687	)			79,035				191,318				(146,905	)			44,413
Trade names				40,716				(26,923	)			13,793				30,316				(19,756	)			10,560
Non-compete agreements and other				17,920				(2,069	)			15,851				11,019				(859	)			10,160
	Total		$	663,062			$	(402,553	)		$	260,509			$	557,813			$	(373,683	)		$	184,130

Year Ending December 31,
2005		$	33,617
2006			30,668
2007			29,856
2008			27,489
2009			20,769
Thereafter			118,110

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10.	Accrued Expenses

			December 31,
			2004				2003
Accrued outside services			$	13,142			$	17,855
Accrued restructuring costs				1,423				25,915
Accrued acquisition contingent consideration				43,500				—
Accrued compensation				40,001				37,344
Accrued customer deposits				19,804				16,539
Accrued income, sales and other taxes				27,770				51,781
Other accrued liabilities				55,888				58,996
	Total accrued expenses		$	201,528			$	208,430

11.	Commitments and Contingencies

	Investigations by United States Attorney for the District of South Carolina and the SEC

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	Litigation Regarding Distribution of Shares in Healtheon Initial Public Offering

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	Merrill Lynch Fundamental Growth Fund, Inc. et al. v. McKesson HBOC, Inc., et al.

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	Porex Mammary Implant Litigation

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	Other Legal Proceedings

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Year Ending December 31,
2005			$	24,252
2006				22,205
2007				19,916
2008				18,092
2009				9,520
Thereafter				26,002
	Total minimum lease payments		$	119,987

12.	Retirement Plans

13.	Stockholders’ Equity

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14.	Stock Compensation Plans

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			Years Ended December 31,
			2004								2003								2002
							Weighted								Weighted								Weighted
							Average								Average								Average
			Number of				Exercise Price				Number of				Exercise Price				Number of				Exercise Price
			Shares				Per Share				Shares				Per Share				Shares				Per Share
Outstanding at the beginning of the year				104,760,726			$	12.86				108,232,050			$	12.73				121,184,501			$	12.99
	Granted			19,230,750				8.31				12,326,350				9.88				4,946,459				6.58
	Exercised			(7,796,440	)			4.42				(8,773,510	)			4.73				(5,316,668	)			3.26
	Cancelled			(9,937,784	)			15.18				(7,024,164	)			15.82				(12,582,242	)			16.49
Outstanding at the end of the year				106,257,252				12.44				104,760,726				12.86				108,232,050				12.73
Exercisable at the end of the year				77,325,908			$	13.72				73,927,473			$	14.03				70,764,983			$	13.86

		Outstanding												Exercisable
										Weighted
						Weighted				Average								Weighted
						Average				Remaining								Average
						Exercise				Contractual								Exercise
Exercise Prices		Shares				Price				Life (In Years)				Shares				Price
$0.25-$5.34			11,912,774			$	3.57				6.24				11,203,642			$	3.53
$5.40-$7.27			13,244,058				6.37				6.61				7,908,445				6.05
$7.28-$8.59			12,819,819				8.44				8.95				1,306,234				8.11
$8.60-$11.44			11,091,681				9.24				8.34				3,203,901				9.63
$11.55-$11.69			11,879,927				11.55				5.42				11,877,677				11.55
$11.73-$13.38			11,373,783				12.45				6.16				8,713,346				12.65
$13.50-$15.88			10,281,637				14.10				5.08				10,169,637				14.09
$16.06-$21.69			13,287,044				17.80				5.50				12,936,044				17.75
$22.12-$105.00			10,366,529				31.28				4.78				10,006,982				31.18
			106,257,252			$	12.44				6.39				77,325,908			$	13.72

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		2004				2003				2002
Expected dividend yield			0	%			0	%			0	%
Expected volatility			0.58				0.85				0.9
Risk free interest rate			1.70	%			1.33	%			1.85	%
Expected post-vesting option lives (years)			0.75-3.0				0.75-3.0				0.75-3.0
Weighted fair value of options granted during the year		$	3.68			$	5.64			$	4.06

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15.	Income Taxes

			December 31,
			2004				2003
Deferred tax assets:
	Net operating loss carryforwards		$	770,471			$	729,963
	Capital loss carryforwards			4,623				1,967
	Restructuring costs			541				9,943
	Research and development tax credits			17,591				15,274
	Other accrued expenses			53,478				33,589
	Allowance for doubtful accounts			5,067				7,692
	Depreciation			4,674				4,846
	Intangible assets			64,608				131,979
	Prepaid assets			7,043				—
	Other			4,465				515
Total deferred tax assets				932,561				935,768
Valuation allowance				(915,452	)			(926,767	)
Net deferred tax assets				17,109				9,001
Deferred tax liabilities:
	Tax basis			(2,541	)			(2,582	)
	Convertible subordinated notes			(12,212	)			—
	Other			(2,356	)			(6,419	)
Total deferred tax liabilities				(17,109	)			(9,001	)
Net deferred tax assets and liabilities			$	—			$	—

		2004				2003				2002
United States federal statutory rate			34.0	%			34.0	%			(34.0	)%
State income taxes (net of federal benefit)			4.0				3.3				(3.6	)
Restructuring costs			0.0				0.0				(3.1	)
Goodwill amortization			(9.1	)			(12.3	)			5.6
Valuation allowance			(15.4	)			(2.0	)			21.0
Other			(2.4	)			(3.0	)			(1.9	)
Effective income tax rate			11.1	%			20.0	%			(16.0	)%

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16.	Fair Value of Financial Instruments

			December 31, 2004								December 31, 2003
			Cost Basis				Fair Value				Cost Basis				Fair Value
Assets:
	Cash and cash equivalents		$	46,019			$	46,019			$	39,648			$	39,648
	Short-term investments			62,077				61,675				229,612				231,033
	Marketable securities — long term			516,188				515,881				447,583				456,034
Liabilities:
	Convertible subordinated notes		$	649,999			$	615,124			$	649,999			$	657,812
	Convertible exchangeable redeemable preferred stock			98,299				94,750				—				—

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				December 31, 2004																December 31, 2003
				Cost or				Gross				Gross								Cost or				Gross				Gross
				Amortized				Unrealized				Unrealized				Fair				Amortized				Unrealized				Unrealized				Fair
				Cost				Gains				Losses				Value				Cost				Gains				Losses				Value
Short-Term
	Certificate of deposits and marketable debt securities			$	62,077			$	—			$	402			$	61,675			$	229,612			$	1,421			$	—			$	231,033
Long-Term
	Marketable debt securities			$	514,696			$	1,633			$	4,465			$	511,864			$	445,810			$	6,043			$	563			$	451,290
	Equity securities				1,492				2,527				2				4,017				1,773				2,971				—				4,744
		Total		$	516,188			$	4,160			$	4,467			$	515,881			$	447,583			$	9,014			$	563			$	456,034

				In Loss Position								In Loss Position
				Less Than								More Than
				12 Months								12 Months								Total
								Gross								Gross								Gross
				Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
				Value				Losses				Value				Losses				Value				Losses
Short-Term
	Certificate of deposits and marketable debt securities			$	54,598			$	402			$	—			$	—			$	54,598			$	402
Long-Term
	Marketable debt securities			$	297,050			$	2,505			$	126,040			$	1,960			$	423,090			$	4,465
	Equity securities				6				2				—				—				6				2
		Total		$	297,056			$	2,507			$	126,040			$	1,960			$	423,096			$	4,467

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				Cost or
				Amortized Cost				Fair Value
Available-for-sale:
	Due in one year or less			$	62,077			$	61,675
	Due after one year through five years				514,696				511,864
		Total		$	576,773			$	573,539

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17.	Related Party Transactions

18.	Comprehensive Income (Loss)

			2004				2003				2002
Foreign currency translation gains			$	2,118			$	3,285			$	2,523
Unrealized gains (losses) on securities:
	Unrealized holding gains (losses)			(10,124	)			3,078				2,907
	Less: reclassification adjustment for net gains realized in net income (loss)			(457	)			(1,659	)			(6,547	)
Net unrealized (losses) gains on securities				(10,581	)			1,419				(3,640	)
Other comprehensive (loss) income				(8,463	)			4,704				(1,117	)
Net income (loss)				39,334				(17,006	)			(49,702	)
Comprehensive income (loss)			$	30,871			$	(12,302	)		$	(50,819	)

		Years Ended December 31,
		2004				2003				2002
Unrealized (losses) gains on securities		$	(709	)		$	9,872			$	8,453
Foreign currency translation gains			8,666				6,548				3,263
Total accumulated other comprehensive income		$	7,957			$	16,420			$	11,716

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19.	Supplemental Disclosures of Cash Flow Information

		Years Ended December 31,
		2004				2003				2002
Supplemental Disclosure of Cash Flow Information:
Interest paid		$	16,190			$	12,714			$	5,021
Taxes paid		$	5,635			$	7,215			$	1,090
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Accretion of convertible redeemable exchangeable preferred stock		$	184			$	—			$	—
Issuance of equity securities in connection with strategic alliances and services		$	15			$	67			$	39
Deferred stock compensation related to restricted stock awards		$	13,001			$	25			$	2,500

20.	Quarterly Financial Data (Unaudited)

			2004
			First				Second				Third				Fourth
			Quarter				Quarter				Quarter				Quarter
Revenue			$	271,214			$	281,881			$	299,615			$	307,641
	Cost of operations			162,642				163,961				168,571				171,257
	Development and engineering			11,096				12,991				14,392				15,682
	Sales, marketing, general and administrative			76,994				83,298				84,762				78,973
	Depreciation, amortization and other			12,585				13,148				15,189				16,843
	Legal expense			2,037				2,215				2,325				2,653
	Interest income (expense), net			735				(327	)			(331	)			(613	)
	Restructuring and other income (expense), net			37				447				(4,441	)			—
Income from continuing operations before income tax provision				6,632				6,388				9,604				21,620
	Income tax provision			931				613				1,435				1,931
Net income			$	5,701			$	5,775			$	8,169			$	19,689
Basic income per common share			$	0.02			$	0.02			$	0.03			$	0.06
Diluted income per common share			$	0.02			$	0.02			$	0.02			$	0.06

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				2003
				First				Second				Third				Fourth
				Quarter				Quarter				Quarter				Quarter
Revenue				$	221,531			$	233,418			$	250,635			$	258,396
		Cost of operations			125,845				135,441				149,270				154,383
		Development and engineering			10,917				10,403				11,334				10,331
		Sales, marketing, general and administrative			68,108				69,359				72,450				72,565
		Depreciation, amortization and other			26,920				14,944				11,097				9,473
		Legal expense			—				—				493				3,466
		Interest income, net			2,233				2,059				1,698				1,697
		Other income, net			183				1,118				3,039				1,537
Income (loss) from continuing operations before income tax provision					(7,843	)			6,448				10,728				11,412
	Income tax provision				987				1,001				1,273				879
	Income (loss) from continuing operations				(8,830	)			5,447				9,455				10,533
	Income (loss) from discontinued operations, net of income taxes				1,472				(31,717	)			(3,366	)			—
Net income (loss)				$	(7,358	)		$	(26,270	)		$	6,089			$	10,533
Basic income (loss) per common share:
		Income (loss) from continuing operations		$	(0.03	)		$	0.02			$	0.03			$	0.03
		Income (loss) from discontinued operations, net of income taxes			0.01				(0.11	)			(0.01	)			—
Net income (loss)				$	(0.02	)		$	(0.09	)		$	0.02			$	0.03
Diluted income (loss) per common share:
		Income (loss) from continuing operations		$	(0.03	)		$	0.02			$	0.03			$	0.03
		Income (loss) from discontinued operations, net of income taxes			0.01				(0.10	)			(0.01	)			—
Net income (loss)				$	(0.02	)		$	(0.08	)		$	0.02			$	0.03

21.	Subsequent Event

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	Schedule II. Valuation and Qualifying Accounts

			Years Ended December 31, 2004, 2003 and 2002
			Balance at				Charged to
			Beginning				Costs and																Balance at
			of Year				Expenses				Acquired				Write-offs				Other(a)				End of Year
			(In thousands)
December 31, 2004
	Allowance for Doubtful Accounts		$	20,500			$	3,606			$	157			$	(10,830	)		$	—			$	13,433
	Valuation Allowance for Deferred Tax Assets			926,767				(7,991	)			(18,145	)			—				14,821				915,452
December 31, 2003
	Allowance for Doubtful Accounts			22,417				6,328				768				(9,013	)			—				20,500
	Valuation Allowance for Deferred Tax Assets			941,507				(1,423	)			(33,277	)			—				19,960				926,767
December 31, 2002
	Allowance for Doubtful Accounts			26,972				11,305				34				(15,894	)			—				22,417
	Valuation Allowance for Deferred Tax Assets			939,764				10,471				(17,355	)			—				8,627				941,507

(a)		Represents valuation allowance created through equity as a result of stock option and warrant exercises.

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Exhibit No.				Description
	2	.1		Stock Purchase Agreement dated as of June 15, 2003 between WebMD Corporation and Joseph Q. DiMartini, individually and as Trustee U/A dated February 6, 1998 f/b/o Joseph Q. DiMartini, and as Trustee of the Joseph Q. DiMartini 2002 Irrevocable Trust dated October 14, 2002, Eric J. Schaefer, an individual, Daniel A. Schmitt, individually and as Trustee of the Daniel A. Schmitt Revocable Trust dated March 26, 1999, and as Trustee of the Daniel Schmitt 2002 Irrevocable Trust dated September 24, 2002, and Dru A. Schmitt, individually and as Trustee U/A dated October 20, 1997 f/b/o Dru A. Schmitt (incorporated by reference to Exhibit 2.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003)
	2	.2		Stock Purchase Agreement dated as of October 21, 2003 between TPG Holding Company Limited and Envoy Corporation (incorporated by reference to Exhibit 2.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)
	2	.3		Amendment No. 1, dated as of November 28, 2003, to the Stock Purchase Agreement dated as of October 21, 2003 between TPG Holding Company Limited and Envoy Corporation (incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed December 1, 2003)
	2	.4		Amendment No. 2, dated as of December 22, 2003, to the Stock Purchase Agreement dated as of October 21, 2003 between TPG Holding Company Limited and Envoy Corporation (incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed December 24, 2003)
	2	.5		Agreement and Plan of Merger, dated as of July 9, 2004, by and among VIPS, Inc., WebMD Corporation, Envoy Corporation and Valor, Inc. (incorporated by reference to Exhibit 2.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004)
	3	.1		Eleventh Amended and Restated Certificate of Incorporation of Registrant, as amended (incorporated by reference to Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
	3	.2		Certificate of Designations for Convertible Redeemable Exchangeable Preferred Stock, as amended (incorporated by reference to Exhibit 3.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
	3	.3		Amended and Restated Bylaws of Registrant, as currently in effect (incorporated by reference to Exhibit 3.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004)
	4	.1		Specimen Common Stock certificate (incorporated by reference to Exhibit 4.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000)
	4	.2		Indenture between WebMD Corporation and The Bank of New York, dated as of April 1, 2002 (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002)
	4	.3		Registration Rights Agreement dated as of April 1, 2002 between WebMD Corporation and UBS Warburg LLC (incorporated by reference to Exhibit 4.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002)
	4	.4		Form of 31/4% Convertible Subordinated Note Due 2007 (included in Exhibit 4.2)
	4	.5		Indenture, dated as of June 25, 2003, between WebMD Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003)
	4	.6		Form of 1.75% Convertible Subordinated Note Due 2023 (included in Exhibit 4.5)
	4	.7		Registration Rights Agreement dated as of June 25, 2003 between WebMD Corporation and Banc of America Securities LLC (incorporated by reference to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003)

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Exhibit No.				Description
	4	.8		Registration Rights Agreement dated as of July 17, 2003 between WebMD Corporation and Joseph Q. DiMartini, individually and as Trustee U/A dated February 6, 1998 f/b/o Joseph Q. DiMartini, and as Trustee of the Joseph Q. DiMartini 2002 Irrevocable Trust dated October 14, 2002, Eric J. Schaefer, an individual, Daniel A. Schmitt, individually and as Trustee of the Daniel A. Schmitt Revocable Trust dated March 26, 1999, and as Trustee of the Daniel Schmitt 2002 Irrevocable Trust dated September 24, 2002, and Dru A. Schmitt, individually and as Trustee U/A dated October 20, 1997 f/b/o Dru A. Schmitt (incorporated by reference to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003)
	4	.9		Convertible Redeemable Exchangeable Preferred Stock Purchase Agreement, dated as of March 4, 2004, between CalPERs/PCG Corporate Partners, LLC and WebMD Corporation (incorporated by reference to Exhibit 4.9 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003)
	4	.10		Form of Stock Certificate for Convertible Redeemable Exchangeable Preferred Stock (included in Exhibit 3.2)
	4	.11		Form of Indenture for 10% Subordinated Notes due 2010 (included in Exhibit 3.2)
	4	.12		Form of 10% Subordinated Note due 2010 (included in Exhibit 3.2)
	10	.1		Form of Indemnification Agreement to be entered into by Registrant with each of its directors and officers (incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002)
	10	.2		Healtheon/WebMD Corporation Registration Rights Agreement dated January 26, 2000 among Registrant, Eastrise Profits Limited, AHN/FIT Cable, LLC, AHN/FIT Internet, LLC, News America Incorporated and Fox Broadcasting Company (incorporated by reference to Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000), as amended by Amendment dated February 15, 2001 (incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001)
	10	.3		Healtheon/WebMD Media Services Agreement dated January 26, 2000 among Registrant, Eastrise Profits Limited and Fox Entertainment Group, Inc. (incorporated by reference to Exhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000) , as amended by Amendment dated February 15, 2001 (incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001)
	10	.4		Warrant to Purchase Shares of Common Stock of WebMD, Inc. dated May 12, 1999 issued to Microsoft Corporation (incorporated by reference to Exhibit 10.9 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000)
	10	.5*		Employment Agreement dated as of February 1, 1998 between Registrant and K. Robert Draughon (incorporated by reference to Exhibit 10.51 to Registrant’s Form 10-K to Annual Report on Form 10-K for the year ended December 31, 2000, as amended by Amendment No. 1 on Form 10-K/A)
	10	.6*		Letter Agreement dated as of September 12, 2000 between Registrant and K. Robert Draughon (incorporated by reference to Exhibit 10.52 to Registrant’s Form 10-K to Annual Report on Form 10-K for the year ended December 31, 2000, as amended by Amendment No. 1 on Form 10-K/A)
	10	.7*		Agreement dated as of October 8, 2001 between Registrant and Martin J. Wygod (incorporated by reference to Exhibit 10.55 to Registrant’s Form 10-K to Annual Report on Form 10-K for the year ended December 31, 2001)
	10	.8*		Amended and Restated Stock Option Agreement dated August 21, 2000 between the Registrant (as successor to Medical Manager Corporation) and Martin J. Wygod (incorporated by reference to Exhibit 10.21 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000, as amended by Amendment No. 1 on Form 10-K/A)

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Exhibit No.				Description
	10	.9*		Employment Agreement dated as of October 23, 2002 between the Registrant and Roger C. Holstein (incorporated by reference to Exhibit 10.14 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002)
	10	.10*		Employment Agreement dated as of May 16, 1999 between the Registrant (as successor to Synetic, Inc.) and Michael A. Singer (incorporated by reference to Exhibit 10.26 to Medical Manager Corporation’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999)
	10	.11*		Letter Agreement dated as of September 5, 2000 between Registrant (as successor to Medical Manager Corporation) and Michael A. Singer (incorporated by reference to Exhibit 10.50 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, as amended by Amendment No. 1 on Form 10-K/A)
	10	.12*		Employment Agreement dated as of July 1, 2000 between Registrant (as successor to Medical Manager Corporation) and Charles A. Mele, as amended (incorporated by reference to Exhibit 10.51 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, as amended by Amendment No. 1 on Form 10-K/A)
	10	.13*		Employment Agreement dated as of July 1, 2000 between Registrant (as successor to Medical Manager Corporation) and Anthony Vuolo, as amended (incorporated by reference to Exhibit 10.52 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, as amended by Amendment No. 1 on Form 10-K/A)
	10	.14*		Form of Amended and Restated Stock Option Agreement dated August 21, 2000, between Registrant (as successor to Medical Manager Corporation) and each of Charles A. Mele and Anthony Vuolo (incorporated by reference to Exhibit 10.54 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, as amended by Amendment No. 1 on Form 10-K/A)
	10	.15*		WebMD Corporation 2001 Employee Non-Qualified Stock Option Plan, as amended (incorporated by reference to Exhibit 10.46 to Registrant’s Form 10-K for the year ended December 31, 2001, as amended by Amendment No. 1 on Form 10-K/A)
	10	.16*		WebMD Corporation 2002 Restricted Stock Plan and Form of Award Agreement (incorporated by reference to Exhibit 10.21 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002)
	10	.17*		Healtheon Corporation 1996 Stock Plan and Form of Stock Option Agreement (incorporated by reference to Exhibit 10.2 to Amendment No. 2 to Registrant’s Registration Statement on Form S-1 (No. 333-70553) filed February 10, 1999)
	10	.18*		WebMD Corporation Amended and Restated 1998 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.27 to Registrant’s Registration Statement on Form S-8 (No. 333-47250) filed October 4, 2000)
	10	.19*		WebMD Corporation 2000 Long-Term Incentive Plan (incorporated by reference to Annex G to the Proxy Statement/Prospectus, filed on August 7, 2000, and included in Registrant’s Registration Statement on Form S-4 (No. 333-39592)
	10	.20*		WebMD, Inc. Amended and Restated 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to Registrant’s Registration Statement on Form S-8 (No. 33-90795) filed November 12, 1999)
	10	.21*		Envoy Stock Plan (incorporated by reference to Exhibit 99.1 to Registrant’s Registration Statement on Form S-8 (No. 333-42616) filed July 31, 2000)
	10	.22*		Amended and Restated 1989 Class A Non-Qualified Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 10.1 to Synetic, Inc.’s Registration Statement on Form S-1 (No. 333-28654) filed May 18, 1989)
	10	.23*		Amended and Restated 1989 Class B Non-Qualified Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 10.2 to Synetic, Inc.’s Registration Statement on Form S-1 (No. 333-28654) filed May 18, 1989)
	10	.24*		1991 Director Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.2 to Synetic, Inc.’s Registration Statement on Form S-8 (No. 333-46640) filed March 24, 1992)

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Exhibit No.				Description
	10	.25*		Amended and Restated 1991 Special Non-Qualified Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.3 to Synetic, Inc.’s Registration Statement on Form S-8 (No. 333-36041) filed September 19, 1997)
	10	.26*		Medical Manager Corporation’s 1996 Amended and Restated Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Medical Manager Corporation’s (Commission File No. 0-29090) Quarterly Report on Form 10-Q for the quarter ended September 30, 1998)
	10	.27*		Medical Manager Corporation’s 1996 Amended and Restated Non-Employee Director’s Stock Plan (incorporated by reference to Exhibit 10.2 to Medical Manager Corporation’s (Commission File No. 0-29090) Annual Report on Form 10-K for the fiscal year ended December 31, 1997)
	10	.28*		1996 Class C Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.1 to Synetic, Inc.’s Registration Statement on Form S-8 (No. 333-36041) filed September 19, 1997)
	10	.29*		1997 Class D Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.2 to Synetic, Inc.’s Registration Statement on Form S-8 (No. 333-36041) filed September 19, 1997)
	10	.30*		1998 Class E Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.1 to Synetic, Inc.’s Registration Statement on Form S-8 (No. 333-72517) filed February 17, 1999)
	10	.31*		The 1999 Medical Manager Corporation Stock Option Plan for Employees of Medical Manager Systems, Inc. (incorporated by reference to Exhibit 10.28 to Medical Manager Corporation’s Annual Report on Form 10-K for the year ended June 30, 1999)
	10	.32*		Form of Stock Option Agreement between the Corporation and each of John H. Kang and Michael A. Singer (incorporated by reference to Exhibit 99.5 to Amendment No. 1 to Medical Manager Corporation’s Registration Statement on Form S-4 (No. 333-81123) filed June 24, 1999)
	10	.33*		1998 Porex Technologies Corp. Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.2 to Synetic, Inc.’s Registration Statement on Form S-8 (No. 333-72517) filed February 17, 1999)
	10	.34*		CareInsite, Inc. 1999 Officer Stock Option Plan (incorporated by reference to Exhibit 10.18 to Amendment No. 6 to CareInsite, Inc.’s Registration Statement on Form S-1 (No. 333-75071) filed June 11, 1999)
	10	.35*		CareInsite, Inc. 1999 Employee Stock Option Plan (incorporated by reference to Exhibit 10.17 to Amendment No. 6 to CareInsite, Inc.’s Registration Statement on Form S-1 (No. 333-75071) filed June 11, 1999)
	10	.36*		CareInsite, Inc. 1999 Director Stock Option Plan (incorporated by reference to Annex H to the Proxy Statement/Prospectus, filed on August 7, 2000, and included in Registrant’s Registration Statement on Form S-4 (No. 333-39592)
	10	.37*		Amendment to the Company Stock Option Plans of Medical Manager Corporation and CareInsite, Inc. (incorporated by reference to Exhibit 99.28 to Registrant’s Registration Statement on Form S-8 (No. 333-47250) filed October 4, 2000)
	10	.38*		Employment Agreement, dated as of September 11, 2000, between the Registrant and Kirk Layman (incorporated by reference to Exhibit 10.44 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003)
	10	.39*		2003 Non-Qualified Stock Option Plan for Employees of Advanced Business Fulfillment, Inc. (incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)
	10	.40*		2004 Non-Qualified Stock Option Plan for Employees of Dakota Imaging, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)
	10	.41*		2004 Non-Qualified Stock Option Plan for Employees of VIPS, Inc. (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)

E-4

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Table of Contents

Exhibit No.				Description
	10	.42*		Employment Agreement, dated as of August 20, 2001, between the Registrant and Wayne Gattinella (incorporated by reference to Exhibit 10.46 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003)
	10	.43*		Stock Option Agreement between the Registrant and Wayne Gattinella dated August 20, 2001 (incorporated by reference to Exhibit 4.8 to Registrant’s Registration Statement on Form S-8 (No. 333-888420) filed May 16, 2002)
	10	.44*		Employment Agreement, dated as of September 23, 2003, between the Registrant and Andrew Corbin (incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003)
	10	.45*		Employment Agreement, dated as of December 4, 2003, between Envoy Corporation and Tony Holcombe (incorporated by reference to Exhibit 10.49 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003)
	10	.46*		Letter Amendment, dated September 23, 2004, between the Registrant and Tony Holcombe (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed September 28, 2004)
	10	.47*		Employment Agreement, dated September 23, 2004, between the Registrant and Kevin Cameron (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed September 28, 2004)
	10	.48*		Letter Agreement, dated February 9, 2005, between Michael A. Singer and WebMD Corporation (incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed February 9, 2005)
	12	.1		Computation of Ratio of Earnings to Fixed Charges
	14	.1		Code of Business Conduct (incorporated by reference to Exhibit 14.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003, as amended by Amendment No. 1 on Form 10-K/A)
	21	.1		Subsidiaries of Registrant
	23	.1		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
	24	.1		Power of Attorney (see page 99)
	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		Amended and Restated Audit Committee Charter
	99	.2		Amended and Restated Compensation Committee Charter
	99	.3		Amended and Restated Nominating Committee Charter
	99	.4		Governance & Compliance Committee Charter (incorporated by reference to Exhibit 99.4 to Registrant’s Current Report on Form 8-K filed November 4, 2004)

*	Agreement relates to executive compensation.

E-5