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HLTH Corporation Announces Second Quarter Financial Results
Date:7/30/2009

ELMWOOD PARK, N.J., July 30 /PRNewswire-FirstCall/ -- HLTH Corporation (Nasdaq: HLTH) today announced financial results for the three months ended June 30, 2009.

"I am pleased with WebMD's results this quarter. At a time when many internet and media companies are seeing declines in advertising revenue, WebMD continues to experience strong growth," said Martin J. Wygod, Chairman and Acting CEO of HLTH Corporation. "Advertiser demand for our high quality and highly engaged audience is increasing. The strength of the WebMD brand, the size and quality of our audience, the sophisticated set of services we offer our advertisers, and our technology platform and expertise clearly differentiate us from others in the marketplace and provide a solid foundation for growth."

Consolidated Financial Highlights

Revenue for the second quarter was $98.6 million compared to $86.0 million in the prior year period, an increase of 15%. Earnings before interest, taxes, non-cash and other items ("Adjusted EBITDA") for the second quarter was $20.0 million compared to $12.8 million in the prior year period, an increase of 56%.

Income from continuing operations for the second quarter was $700 thousand or $0.01 per share as compared to a loss from continuing operations of $(1.6) million or $(0.01) per share in the prior year period. Loss from discontinued operations was $(12.4) million or $(0.12) per share, compared to $(3.2) million or $(0.02) per share in the prior year period. Net loss was $(11.7) million or $(0.11) per share, compared to $(4.8) million or $(0.03) per share in the prior year period.

HLTH's financial results present Little Blue Book, WebMD's print directory business, and Porex as discontinued operations for current and prior periods, and present ViPS, which was sold in July 2008, as discontinued operations in the prior year period. Loss from discontinued operations and net loss for the second quarter of 2009 include an after-tax expense of approximately $11 million reflecting an increase in the estimate of HLTH's indemnification obligation for the defense costs of the eight former officers and directors of Emdeon Practice Services, a former subsidiary of HLTH which was divested in 2006, partially offset by proceeds from a settlement with one of our insurance carriers related to this matter. The loss from discontinued operations and net loss for the second quarter of 2009 also include a non-cash, after-tax impairment charge of $5 million related to the carrying value of WebMD's Little Blue Book physician directory business.

At June 30, 2009, HLTH had approximately $828 million in cash and investments, of which $373 million is attributable to WebMD.

Operating Highlights

Public portal advertising and sponsorship revenue was $76.0 million for the second quarter, compared to $64.1 million in the prior year period, an increase of 18%. Traffic to the WebMD Health Network continued to grow strongly, reaching an average of 59.8 million unique users per month and total traffic of 1.4 billion page views during the second quarter, increases of 24% and 31%, respectively, from a year ago. In the second quarter, 1.6 million continuing medical education (CME) programs were completed on the WebMD Professional Network, an increase of 25% from the prior year period.

Private portal services revenue was $22.6 million for the second quarter compared to $21.9 million in the prior year period, an increase of 4%. The base of large employers and health plans utilizing WebMD's private Health and Benefits portals during the second quarter was 137 as compared to 123 a year ago. During the quarter, WebMD launched integrated platform services for Blue Cross Blue Shield of Florida, Inc.

Merger with WebMD

As previously announced, HLTH and WebMD entered into a definitive merger agreement on June 17, 2009. On July 10, 2009, WebMD filed a Registration Statement with the SEC containing a preliminary joint proxy statement/prospectus relating to the merger and HLTH and WebMD have scheduled stockholders meetings for September 25, 2009 to seek the necessary stockholder approvals.

Financial Guidance

HLTH's financial guidance is provided in a schedule attached to this release.

In a separate release issued today, WebMD reaffirmed its financial guidance for 2009 and narrowed the ranges for its anticipated revenue and Adjusted EBITDA by raising the low end of those ranges.

Analyst and Investor Conference Call

As previously announced, HLTH and WebMD will host a conference call at 4:45 pm (Eastern) today to discuss their respective second quarter results. Investors can access the call via webcast at www.hlth.com (in the Investor Relations section). A replay of the call will be available at the same web address.

About HLTH

HLTH Corporation (Nasdaq: HLTH) owns approximately 83% of WebMD Health Corp. (Nasdaq: WBMD). WebMD is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through its public and private online portals and health-focused publications. HLTH also owns Porex, a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications.

All statements contained in this press release and the related analyst and investor conference call, other than statements of historical fact, are forward-looking statements, including those regarding: our guidance on HLTH's and WebMD's future financial results and other projections or measures of their future performance; market opportunities and WebMD's ability to capitalize on them; the benefits expected from new products or services and from other potential sources of additional revenue; expectations regarding the market for WebMD's and HLTH's investments in auction rate securities (ARS); the merger transaction between HLTH and WebMD (the "Merger Transaction"); and the potential sale transaction with respect to Porex (the "Potential Porex Transaction"). These statements speak only as of the date of this press release, are based on HLTH's and WebMD's current plans and expectations, and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to: market acceptance of WebMD's products and services; WebMD's relationships with customers and strategic partners; changes in the markets for ARS; and changes in economic, political or regulatory conditions or other trends affecting the healthcare, Internet, information technology and plastics industries. Further information about these matters can be found in our other Securities and Exchange Commission filings. In addition, there can be no assurances regarding: whether HLTH and WebMD will be able to complete the Merger Transaction or as to the timing of such transaction; or whether HLTH will be able to complete the Potential Porex Transaction or as to the timing or terms of such transaction. Except as required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances.

This press release, and the accompanying tables, include both financial measures in accordance with accounting principles generally accepted in the United States of America, or GAAP, as well as certain non-GAAP financial measures. The tables attached to this press release include reconciliations of these non-GAAP financial measures to GAAP financial measures. In addition, an "Explanation of Non-GAAP Financial Measures" is attached to this press release as Annex A.

WebMD(R), and POREX(R) are trademarks of HLTH Corporation or its subsidiaries.

                                 -Tables Follow-


                          HLTH CORPORATION
               CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except per share data, unaudited)

                           Three Months Ended    Six Months Ended
                                June 30,             June 30,
                           ------------------    ----------------
                             2009     2008        2009      2008
                             ----     ----        ----      ----
                                      (a)                   (a)
    Revenue               $98,631  $85,964    $188,895  $166,614
    Cost of operations     39,229   31,968      75,794    62,895
    Sales and marketing    26,797   24,898      54,358    50,047
    General and
     administrative        22,003   22,778      43,851    43,627
    Depreciation and
     amortization           6,956    7,214      14,059    13,989
    Interest income         1,958    8,062       4,220    19,998
    Interest expense        5,781    6,585      12,317    13,110
    Gain on repurchases
     of convertible notes   3,473        -      10,120         -
    Gain on sale of EBS
     Master LLC                 -        -           -   538,024
    Impairment of auction
     rate securities            -        -           -    60,108
    Other expense, net        552      666         821     4,810
                              ---      ---         ---     -----
    Income (loss) from
     continuing operations
     before income tax
     provision (benefit)    2,744      (83)      2,035   476,050
      Income tax provision
       (benefit)              750      569        (467)   26,171
      Equity in earnings of
       EBS Master LLC           -        -           -     4,007
                              ---      ---         ---     -----
    Consolidated income
     (loss) from continuing
     operations             1,994     (652)      2,502   453,886
      Consolidated loss
       from discontinued
       operations, net
       of tax             (13,284)  (3,063)    (12,767)       (6)
                          -------   ------     -------        --
    Consolidated net
     (loss) income
     inclusive of
     noncontrolling
     interest             (11,290)  (3,715)    (10,265)  453,880
      (Income) loss
       attributable to
       noncontrolling
       interest              (387)  (1,071)       (997)    2,774
                             ----   ------        ----     -----
    Net (loss) income
     attributable to
     HLTH stockholders   $(11,677) $(4,786)   $(11,262) $456,654
                         ========  =======    ========  ========

    Amounts attributable
     to HLTH stockholders:
      Income (loss) from
       continuing
       operations            $703  $(1,611)       $509  $456,711
      Loss from
       discontinued
       operations         (12,380)  (3,175)    (11,771)      (57)
                          -------   ------     -------       ---
    Net (loss) income
     attributable to
     HLTH stockholders   $(11,677) $(4,786)   $(11,262) $456,654
                         ========  =======    ========  ========

    Basic (loss) income
     per common share:
      Income (loss)
       from continuing
       operations           $0.01   $(0.01)      $0.00     $2.50
      Loss from
       discontinued
       operations           (0.12)   (0.02)      (0.11)    (0.00)
                            -----    -----       -----     -----
    Net (loss) income
     attributable to
     HLTH stockholders     $(0.11)  $(0.03)     $(0.11)    $2.50
                           ======   ======      ======     =====

    Diluted (loss) income
     per common share:
      Income (loss)
       from continuing
       operations           $0.01   $(0.01)      $0.00     $2.04
      Loss from
       discontinued
       operations           (0.12)   (0.02)      (0.11)    (0.01)
                            -----    -----       -----     -----
    Net (loss) income
     attributable to
     HLTH stockholders     $(0.11)  $(0.03)     $(0.11)    $2.03
                           ======   ======      ======     =====

    Weighted-average
     shares outstanding
     used in computing
     (loss) income per
     common share:
          Basic           102,608  182,622     102,178   182,399
                          =======  =======     =======   =======
          Diluted         105,674  186,243     104,962   228,209
                          =======  =======     =======   =======


    (a)  The consolidated financial statements for the three and six months
         ended June 30, 2008 have been adjusted to reflect (i) the required
         adoption, effective January 1, 2009, of Financial Accounting
         Standards Board's Staff Position APB Opinion No. APB 14-1,
         "Accounting for Convertible Debt Instruments That May Be Settled
         in Cash Upon Conversion (Including Partial Cash Settlement)" and
         Statement of Financial Accounting Standards No. 160,
         "Noncontrolling Interests in Consolidated Financial Statements -
         an amendment of ARB No. 51" and (ii) the reclassification of WebMD's
         Little Blue Book print directory business to discontinued
         operations.



                                HLTH CORPORATION
                        CONSOLIDATED SEGMENT INFORMATION
                (In thousands, except per share data, unaudited)

                                      Three Months Ended   Six Months Ended
                                           June 30,            June 30,
                                      ------------------   ----------------
                                         2009     2008      2009      2008
                                         ----     ----      ----      ----
    Revenue                                       (d)                 (d)
      WebMD:
          Public portal advertising
           and sponsorship            $75,992  $64,138  $143,281  $122,865
          Private portal services      22,639   21,866    45,614    43,789
      Inter-segment eliminations            -      (40)        -       (40)
                                            -      ---         -       ---
                                      $98,631  $85,964  $188,895  $166,614
                                      =======  =======  ========  ========
    Earnings before interest,
     taxes, non-cash and other items
      ("Adjusted EBITDA") (a)
      WebMD                           $23,218  $18,392   $41,906   $34,724
      Corporate                        (3,197)  (5,573)   (6,624)  (10,632)
                                       ------   ------    ------   -------
                                       20,021   12,819    35,282    24,092

      Adjusted EBITDA per
       diluted common share (b)         $0.19    $0.07     $0.34     $0.11
                                        -----    -----     -----     -----

    Interest, taxes, non-cash and
     other items  (c)
      Interest income                   1,958    8,062     4,220    19,998
      Interest expense                 (5,781)  (6,585)  (12,317)  (13,110)
      Income tax (provision) benefit     (750)    (569)      467   (26,171)
      Depreciation and amortization    (6,956)  (7,214)  (14,059)  (13,989)
      Non-cash stock-based
       compensation                    (9,412)  (6,448)  (18,566)  (12,388)
      Non-cash advertising                  -        -    (1,753)   (1,558)
      Gain on repurchases of
       convertible notes                3,473        -    10,120         -
      Equity in earnings of EBS
       Master LLC                           -        -         -     4,007
      Gain on sale of EBS Master LLC        -        -         -   538,024
      Impairment of auction rate
       securities                           -        -         -   (60,108)
      Other expense, net                 (559)    (717)     (892)   (4,911)
                                         ----     ----      ----    ------
    Consolidated income (loss) from
     continuing operations              1,994     (652)    2,502   453,886
      Consolidated loss from
       discontinued operations,
       net of tax                     (13,284)  (3,063)  (12,767)       (6)
                                      -------   ------   -------        --
    Consolidated net (loss) income
     inclusive of noncontrolling
     interest                         (11,290)  (3,715)  (10,265)  453,880
      (Income) loss attributable
       to noncontrolling interest        (387)  (1,071)     (997)    2,774
                                         ----   ------      ----     -----
    Net (loss) income attributable
     to HLTH stockholders            $(11,677) $(4,786) $(11,262) $456,654
                                     ========  =======  ========  ========

    Amounts attributable to HLTH
     stockholders:
      Income (loss) from
       continuing operations             $703  $(1,611)     $509  $456,711
      Loss from discontinued
       operations                     (12,380)  (3,175)  (11,771)      (57)
                                      -------   ------   -------       ---
    Net (loss) income attributable
     to HLTH stockholders            $(11,677) $(4,786) $(11,262) $456,654
                                     ========  =======  ========  ========

    Basic (loss) income per common
     share:
      Income (loss) from continuing
       operations                       $0.01   $(0.01)    $0.00     $2.50
      Loss from discontinued
       operations                       (0.12)   (0.02)    (0.11)    (0.00)
                                        -----    -----     -----     -----
    Net (loss) income attributable
     to HLTH stockholders              $(0.11)  $(0.03)   $(0.11)    $2.50
                                       ======   ======    ======     =====

    Diluted (loss) income per
     common share:
      Income (loss) from continuing
       operations                       $0.01   $(0.01)    $0.00     $2.04
      Loss from discontinued
       operations                       (0.12)   (0.02)    (0.11)    (0.01)
                                        -----    -----     -----     -----
    Net (loss) income attributable
     to HLTH stockholders              $(0.11)  $(0.03)   $(0.11)    $2.03
                                       ======   ======    ======     =====

    Weighted-average shares outstanding
     used in computing (loss) income
       per common share:
      Basic                           102,608  182,622   102,178   182,399
                                      =======  =======   =======   =======
      Diluted                         105,674  186,243   104,962   228,209
                                      =======  =======   =======   =======


    (a)  See Annex A-Explanation of Non-GAAP Financial Measures.
    (b)  Adjusted EBITDA per diluted common share is based on the weighted-
         average shares outstanding used in computing diluted (loss) income
         per common share.
    (c)  Reconciliation of Adjusted EBITDA to consolidated income (loss)
         from continuing operations.
    (d)  The consolidated financial statements for the three and six
         months ended June 30, 2008 have been adjusted to reflect (i) the
         required adoption, effective January 1, 2009, of Financial
         Accounting Standards Board's Staff Position No. APB 14-1,
         "Accounting for Convertible Debt Instruments That May Be Settled
         in Cash Upon Conversion (Including Partial Cash Settlement)" and
         Statement of Financial Accounting Standards No. 160,
         "Noncontrolling Interests in Consolidated Financial Statements
         - an amendment of ARB No. 51" and (ii) the reclassification of
         WebMD's Little Blue Book print directory business to discontinued
         operations.



                         HLTH CORPORATION
              CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In thousands, unaudited)

                                       June 30,     December 31,
                                         2009           2008
                                       -------      -----------
    Assets
    ------
    Cash and cash equivalents         $555,247       $629,848
    Accounts receivable, net            78,674         93,082
    Prepaid expenses and other
     current assets                     48,974         44,740
    Assets of discontinued
     operations                        124,945        131,350
                                       -------        -------
            Total current assets       807,840        899,020

    Investments                        273,209        288,049
    Property and equipment,  net        56,864         56,633
    Goodwill                           202,104        202,104
    Intangible assets, net              28,888         32,328
    Other assets                        24,863         23,600
                                        ------         ------
    Total Assets                    $1,393,768     $1,501,734
                                    ==========     ==========

    Liabilities and Equity
    ----------------------
    Accrued expenses                   $45,090        $54,595
    Deferred revenue                    86,261         79,613
    Liabilities of discontinued
     operations                        113,588        100,771
                                       -------        -------
          Total current liabilities    244,939        234,979

    1.75% convertible notes            264,583        350,000
    3 1/8% convertible notes, net of
     discount of $26,409 at June 30,
     2009 and $35,982 at December 31,
     2008                              223,891        264,018
    Other long-term liabilities         19,670         21,816

    HLTH stockholders' equity          491,627        496,698
    Noncontrolling interest in WHC     149,058        134,223
                                       -------        -------
      Equity                           640,685        630,921

                                    ----------     ----------
    Total Liabilities and Equity    $1,393,768     $1,501,734
                                    ==========     ==========



                               HLTH CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands, unaudited)

                                                         Six Months Ended
                                                             June 30,
                                                         ----------------
                                                         2009        2008
                                                         ----        ----
    Cash flows from operating activities:                            (a)
      Consolidated net (loss) income inclusive of
       noncontrolling interest                       $(10,265)   $453,880
      Adjustments to reconcile consolidated net
       (loss) income inclusive of noncontrolling
        interest to net cash provided by operating
        activities:
        Consolidated loss from discontinued
         operations, net of tax                        12,767           6
        Depreciation and amortization                  14,059      13,989
        Equity in earnings of EBS Master LLC                -      (4,007)
        Non-cash interest expense                       5,310       5,365
        Non-cash advertising                            1,753       1,558
        Non-cash stock-based compensation              18,566      12,388
        Deferred income taxes                          (2,363)      5,247
        Gain on repurchases of convertible notes      (10,120)          -
        Gain on sale of EBS Master LLC                      -    (538,024)
        Impairment of auction rate securities               -      60,108
        Changes in operating assets and liabilities:
          Accounts receivable                          14,408      15,249
          Prepaid expenses and other, net              (3,775)      6,466
          Accrued expenses and other long-term
           liabilities                                 (9,544)     (3,620)
          Deferred revenue                              6,648      10,194
                                                        -----      ------
            Net cash provided by continuing
             operations                                37,444      38,799
            Net cash provided by  discontinued
             operations                                 5,509      17,395
                                                        -----      ------
            Net cash provided by operating activities  42,953      56,194

    Cash flows from investing activities:
      Proceeds from maturities and sales of
       available-for-sale securities                    1,100     106,586
      Purchases of available-for-sale securities            -    (177,150)
      Purchases of property and equipment             (10,955)     (6,945)
      Proceeds related to the sales of EBS
       Master LLC                                           -     574,617
      Proceeds from the sale of discontinued
       operations                                         250      24,318
      Proceeds from advances to EBS Master LLC              -       1,155
      Other                                                 -         148
                                                            -         ---
            Net cash (used in) provided by continuing
             operations                                (9,605)    522,729
            Net cash used in discontinued operations   (2,356)     (3,184)
                                                       ------      ------
            Net cash (used in) provided by investing
            activities                                (11,961)    519,545

    Cash flows from financing activities:
      Proceeds from issuance of HLTH and WHC common
       stock                                           18,194       9,644
      Repurchases of convertible notes               (123,857)          -
      Other                                                 -         (80)
                                                          ---         ---
            Net cash (used in) provided by
             continuing operations                   (105,663)      9,564
            Net cash used in discontinued operations        -         (76)
                                                          ---         ---
            Net cash (used in) provided by financing
             activities                              (105,663)      9,488
    Effect of exchange rates on cash                       70       1,793
                                                           --       -----
    Net (decrease) increase in cash and cash
     equivalents                                      (74,601)    587,020
    Cash and cash equivalents at beginning of period  629,848     536,879
                                                      -------     -------
    Cash and cash equivalents at end of period       $555,247  $1,123,899
                                                     ========  ==========

    (a)  The consolidated financial statements for the six months ended
         June 30, 2008 have been adjusted to reflect (i) the Required
         adoption, effective January 1, 2009, of Financial Accounting
         Standards Board's Staff Position No. APB 14-1, "Accounting for
         Convertible Debt Instruments That May Be Settled in Cash Upon
         Conversion (Including Partial Cash Settlement)" and Statement of
         Financial Accounting Standards No. 160, "Noncontrolling Interests
         in Consolidated Financial Statements - an amendment of ARB No. 51"
         and (ii) the reclassification of WebMD's Little Blue Book print
         directory business to discontinued operations.



    FINANCIAL GUIDANCE SUMMARY

                              HLTH CORPORATION
                          2009 Financial Guidance
                  (in millions, except per share amounts)

                                                         Year Ending
                                                      December 31, 2009
                                                            Range
                                                      -----------------
    Revenue                                             $420.0  $440.0
                                                        ======  ======

    Earnings before interest, taxes, non-cash and
     other items ("Adjusted EBITDA") (a)
      WebMD                                             $110.0  $120.0
      Corporate                                          (14.0)  (13.0)
                                                         -----   -----
                                                         $96.0  $107.0

    Adjusted EBITDA per diluted common share             $0.89   $0.99
                                                         -----   -----

    Interest, taxes, non-cash and other items (b)
      Interest income                                      9.0     9.0
      Interest expense (c)                               (24.0)  (24.0)
      Depreciation and amortization                      (34.0)  (31.0)
      Non-cash advertising                                (1.8)   (1.8)
      Non-cash stock-based compensation                  (39.0)  (36.0)
      Gain on repurchases of convertible notes (e)        10.1    10.1
      Income tax provision (d)                            (7.4)  (15.6)
      Other expenses (e)                                  (0.9)   (0.9)

                                                           ---    ----
    Consolidated income from continuing operations         8.0    16.8
      Consolidated loss from discontinued
       operations (e)                                    (12.8)  (12.8)
                                                         -----   -----
    Consolidated net (loss) income inclusive of
     noncontrolling interest                              (4.8)    4.0
      Income attributable to noncontrolling interest      (4.0)   (6.0)
                                                          ----    ----
    Net loss attributable to HLTH stockholders           $(8.8)  $(2.0)
                                                         =====   =====

    Net loss attributable to HLTH stockholders per
     common share:
      Basic and diluted                                 $(0.08) $(0.02)
                                                        ======  ======

    Weighted-average shares outstanding used in
     computing  net loss attributable to HLTH
     stockholders per common share:
      Basic                                              104.0   104.0
      Diluted                                            108.0   108.0


    (a) See Annex A - Explanation of Non-GAAP Financial Measures.

    (b) Reconciliation of Adjusted EBITDA to consolidated income from
        continuing operations.

    (c) Interest expense includes additional non-cash interest expense
        from the January 1, 2009 adoption of Financial Accounting
        Standards Board's Staff Position APB Opinion No. 14-1, "Accounting
        for Convertible Debt Instruments That May Be Settled in Cash Upon
        Conversion (Including Partial Cash Settlement)."

    (d) The income tax provision excludes any benefit relating to any
        reversal in 2009 of the valuation  allowance against deferred tax
        assets.

    (e) Net income attributable to HLTH stockholders excludes guidance
        relating to the HLTH's discontinued operations.  This table reflects
        actual income and expense through June 30, 2009 for the "gain on
        repurchases of convertible notes," "other expenses" and
        "consolidated loss from discontinued operations" but does not
        reflect guidance for these items in any future quarter.  We do not
        make projections for these items, although they may recur in future
        quarters.

    The above guidance excludes potential reductions in Corporate expenses,
    reductions in weighted-average shares outstanding, transaction expenses
    and other impacts of the pending merger of WebMD and HLTH.


ANNEX A

Explanation of Non-GAAP Financial Measures

The accompanying HLTH Corporation press release and financial tables include both financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures. The non-GAAP financial measures represent earnings before interest, taxes, non-cash and other items (which we refer to as "Adjusted EBITDA") and related per share amounts. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, "consolidated income (loss) from continuing operations" or "net (loss) income attributable to HLTH stockholders" calculated in accordance with GAAP. The tables attached to the accompanying press release include reconciliations of non-GAAP financial measures to GAAP financial measures.

Adjusted EBITDA is used by HLTH's management as an additional measure of HLTH's overall performance and its reporting segments' performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help HLTH's management identify additional trends in HLTH's and its reporting segments' financial results that may not be shown solely by period-to-period comparisons of consolidated income (loss) from continuing operations or net (loss) income attributable to HLTH stockholders. In addition, HLTH uses Adjusted EBITDA in the incentive compensation programs applicable to many of its employees in order to evaluate HLTH's performance. HLTH management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in consolidated income (loss) from continuing operations or net (loss) income attributable to HLTH stockholders, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to consolidated income (loss) from continuing operations or to net (loss) income attributable to HLTH stockholders that accompany our press releases containing non-GAAP financial measures, including the reconciliations contained in the tables attached to the accompanying press release.

HLTH believes that the presentation of Adjusted EBITDA is useful to investors in their analysis of HLTH's results for reasons similar to the reasons why HLTH's management finds it useful and because it helps facilitate investor understanding of decisions made by HLTH's management in light of the performance metrics used in making those decisions. In addition, as more fully described below, HLTH believes that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to consolidated income (loss) from continuing operations or to net (loss) income attributable to HLTH stockholders, helps investors make comparisons between HLTH and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITDA is intended to provide a supplemental way of comparing HLTH with other public companies and is not intended as a substitute for comparisons based on "consolidated income (loss) from continuing operations" or "net (loss) income attributable to HLTH stockholders" calculated in accordance with GAAP. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

The following is an explanation of the items excluded by HLTH from Adjusted EBITDA but included in consolidated income (loss) from continuing operations:

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

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

  • Non-Cash Advertising Expense. This expense relates to the usage of non-cash advertising obtained from News Corporation ("Newscorp") in exchange for equity securities issued by HLTH in 2000. The advertising was available only on various Newscorp properties, primarily its television network and cable channels, without any cash cost to HLTH and expired this year. HLTH excludes this expense from Adjusted EBITDA (i) because it is a non-cash expense, (ii) because it is incremental to other non-television cash advertising expense that HLTH otherwise incurs and (iii) to assist management and investors in comparing its operating results over multiple periods. Investors should note that it is likely that HLTH derives some benefit from such advertising.

  • Interest Income and Expense. Interest income is associated with the level of marketable debt securities and other interest bearing accounts in which HLTH invests, as well as with interest expense, including non-cash interest expense, arising from the capital structure of HLTH. Interest income and expense varies over time due to a variety of financing transactions and due to acquisitions and divestitures that HLTH has entered into or may enter into in the future. HLTH has, in the past several years, issued convertible debentures and preferred stock, repurchased shares in cash tender offers and through other repurchase transactions, conducted an initial public offering of equity in its WebMD Health Corp. subsidiary (referred to below as WHC) and completed the divestiture of certain businesses. HLTH excludes interest income and interest expense from Adjusted EBITDA (i) because these items are not directly attributable to the performance of HLTH's business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income and expense will recur in future periods.

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

  • Other Items. HLTH engages in other activities and transactions that can impact HLTH's overall consolidated income (loss) from continuing operations. These other items included, but were not limited to, (i) legal expenses relating to the on-going Department of Justice investigation, (ii) equity in earnings of EBS Master LLC, which represented 48% of EBS's income through February 8, 2008, (iii) gain on repurchases of our convertible notes, (iv) a reduction of certain sales and use tax contingencies resulting from the expiration of certain applicable statutes of limitations, (v) advisory expenses relating to the potential merger of HLTH into WHC, (vi) gain on sale from the sale of the remaining 48% ownership interest in EBS Master LLC, and (vii) loss on the impairment of auction rate securities. HLTH excludes these other items from Adjusted EBITDA because it believes these activities or transactions are not directly attributable to the performance of HLTH's business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.


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