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WebMD Health Corp · S-1/A · On 7/14/05

Filed On 7/14/05 9:48pm ET   ·   SEC File 333-124832   ·   Accession Number 950123-5-8510

  in   Show  and 
  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 7/15/05  WebMD Health Corp                 S-1/A                 10:348                                    950123

Pre-Effective Amendment to Registration Statement (General Form)   ·   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Amendment No. 1 to Form S-1                         HTML  1,660K 
 2: EX-10.35    Ex-10.35: Interactive Services Agreement            HTML    222K 
 3: EX-10.36    Ex-10.36: First Amendment to Interactive Services   HTML     14K 
                          Agreement                                              
 4: EX-10.37    Ex-10.37: Second Amendment to Interactive Services  HTML     23K 
                          Agreement                                              
 5: EX-10.38    Ex-10.38: Third Amendment to Interactive Services   HTML     20K 
                          Agreement                                              
 6: EX-10.39    Ex-10.39: Fourth Amendment to Interactive Services  HTML     27K 
                          Agreement                                              
 7: EX-10.40    Ex-10.40: Agreement of Lease                        HTML    482K 
 8: EX-10.41    Ex-10.41: First Amendment to Lease Agreement        HTML     33K 
 9: EX-23.1     Ex-23.1: Consent of Ernst & Young Llp               HTML      7K 
10: EX-23.2     Ex-23.2: Consent of J.H. Cohn Llp                   HTML      7K

S-1/A   ·   Amendment No. 1 to Form S-1
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Table of Contents
"Summary
"Risk Factors
"Forward-Looking Statements
"Our Use of Market and Industry Data
"Our Use of Certain Measures of Usage of The WebMD Health Network
"Use of Proceeds
"Dividend Policy
"Capitalization
"Dilution
"Selected Financial Information
"Management s Discussion and Analysis of Financial Condition and Results of Operations
"Business
"Government Regulation
"Management
"Certain Relationships and Related Party Transactions
"Principal Shareholders
"Description of Capital Stock
"Shares Eligible For Future Sale
"Certain U.S. Federal Income and Estate Tax Considerations for Non-U.S. Holders
"Underwriting
"Legal Matters
"Experts
"Where You Can Find Additional Information
"Index to Combined Consolidated Financial Statements
"Report of Independent Registered Public Accounting Firm
"Combined Consolidated Balance Sheets as of December 31, 2003 and 2004 and March 31, 2005 (unaudited)
"Combined Consolidated Statements of Operations for the Years Ended December 31, 2002, 2003 and 2004 and for the Three Months Ended March 31, 2004 and 2005 (unaudited)
"Combined Consolidated Statements of Owner s Net Investment for the Years Ended December 31, 2002, 2003 and 2004 and for the Three Months Ended March 31, 2005 (unaudited)
"Combined Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2003 and 2004 and for the Three Months Ended March 31, 2004 and 2005 (unaudited)
"Notes to Combined Consolidated Financial Statements
"Balance Sheets as of March 31, 2004 and September 30, 2004 (Unaudited)
"Statements of Operations for the Year Ended March 31, 2004 and for the Six Months Ended September 30, 2003 and 2004 (Unaudited)
"Statements of Shareholders Equity for the Year Ended March 31, 2004 and for the Six Months Ended September 30, 2004 (Unaudited)
"Statements of Cash Flows for the Year Ended March 31, 2004 and for the Six Months Ended September 30, 2003 and 2004 (Unaudited)
"Notes to Financial Statements
"Balance Sheets as of June 30, 2004 and December 31, 2004 (Unaudited)
"Statements of Operations for the Year Ended June 30, 2004 and for the Six Months Ended December 31, 2003 and 2004 (Unaudited)
"Statements of Redeemable Convertible Preferred Stock and Stockholders Deficit for the Year Ended June 30, 2004 and for the Six Months Ended December 31, 2004 (Unaudited)
"Statements of Cash Flows for the Year Ended June 30, 2004 and for the Six Months Ended December 31, 2003 and 2004 (Unaudited)
"Unaudited Pro Forma Condensed Combined Consolidated Statement of Operations for the Three Months Ended March 31, 2005
"Unaudited Pro Forma Condensed Combined Consolidated Statement of Operations for the Year Ended December 31, 2004
"Notes to the Unaudited Pro Forma Condensed Combined Consolidated Financial Statements
"Schedule II Valuation and Qualifying Accounts

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  WEBMD HEALTH HOLDINGS INC.  
Table of Contents

As filed with the Securities and Exchange Commission on July 14, 2005
Registration No. 333-124832
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 1
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
WEBMD HEALTH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
         
Delaware   7375   20-2783228
(State or other jurisdiction of
incorporation or organization)		   (Primary Standard Industrial
Classification Code Number)		   (IRS Employer
Identification Number)
111 Eighth Avenue
New York, New York 10011
(212) 624-3700
(Address, including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
 
Douglas W. Wamsley
Executive Vice President,
General Counsel and Secretary
111 Eighth Avenue
New York, New York 10011
(212) 624-3700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
 
Copies to:
     
Stephen T. Giove, Esq.
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
Facsimile: (212) 848-7179		   Marc S. Rosenberg, Esq.
Andrew J. Pitts, Esq.
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Facsimile: (212) 474-3700
 
     Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.
     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o
     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o
     If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o
     If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o
     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o
CALCULATION OF REGISTRATION FEE
             
             
             
      Proposed Maximum     Amount of
Title of Each Class of     Aggregate Offering     Registration
Securities to be Registered     Price(1)(2)     Fee(3)
             
Class A Common Stock, $.01 par value per share
     $100,000,000     $11,770
             
             
(1)  Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).
 
(2)  Including shares of common stock that may be purchased by the underwriters to cover overallotments, if any.
 
(3)  $5,885 of this amount was previously paid in connection with the initial filing of this Registration Statement.
 
     The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.
 
 

Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION DATED JULY 14, 2005
PROSPECTUS
                            Shares
WEBMD HEALTH HOLDINGS, INC.
Class A Common Stock
 
      This is our initial public offering of our Class A common stock. We are selling all of the Class A common stock in this offering.
      We are a wholly owned subsidiary of WebMD Corporation, which we refer to in this prospectus as our Parent. We intend to change our corporate name, prior to completion of this offering, to a new name that has not yet been chosen, but will include “WebMD,” which will also continue to be the primary brand name for our products and services. Our Parent will take the steps needed to change its corporate name to one that does not include “WebMD” and to cease using “WebMD” as a brand name for the products and services of its other business segments.
      We have two classes of authorized common stock — Class A common stock, which is offered hereby, and Class B common stock, all of which will be owned by our Parent. Holders of our Class A common stock generally will have identical rights to holders of our Class B common stock, except that holders of our Class A common stock will be entitled to one vote per share on all matters to be voted on by stockholders, while holders of our Class B common stock will be entitled to ten votes per share on all matters to be voted on by stockholders. The holders of our Class A common stock and Class B common stock generally will vote together as a single class. Upon the completion of this offering, without giving effect to any exercise of the underwriters’ option to purchase additional shares, our Parent will own all of our outstanding Class B common stock, which will represent approximately           % of our outstanding common stock, and approximately           % of the combined voting power of our outstanding common stock. As a result, after this offering, our Parent will continue to control us.
      We expect the public offering price of our Class A common stock to be between $          and $           per share. Currently, no public market exists for our shares. We intend to apply to have our Class A common stock quoted on The Nasdaq National Market under the symbol “WBMD.”
       Investing in our Class A common stock involves risks that are described in the “Risk Factors” section beginning on page 10.
 
                 
    Per Share   Total
         
Public offering price
   $       $    
Underwriting discount
   $       $    
Proceeds, before expenses, to our company
   $       $    
 
      The underwriters may also purchase up to an additional                      shares of our Class A common stock from us, at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments.
      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
      The shares of Class A common stock will be ready for delivery on or about                     , 2005.
 
Morgan Stanley Citigroup
Goldman, Sachs & Co.
 
The date of this prospectus is                     , 2005.

 
TABLE OF CONTENTS
 
         
 Summary
     1  
 Risk Factors
     10  
 Forward-Looking Statements
     32  
 Our Use of Market and Industry Data
     32  
 Our Use of Certain Measures of Usage of The WebMD Health Network
     33  
 Use of Proceeds
     34  
 Dividend Policy
     34  
 Capitalization
     35  
 Dilution
     36  
 Selected Financial Information
     37  
 Management’s Discussion and Analysis of Financial Condition and Results of Operations
     39  
 Business
     57  
 Government Regulation
     81  
 Management
     88  
 Certain Relationships and Related Party Transactions
     108  
 Principal Shareholders
     111  
 Description of Capital Stock
     112  
 Shares Eligible For Future Sale
     118  
 Certain U.S. Federal Income and Estate Tax Considerations for Non-U.S. Holders
     119  
 Underwriting
     122  
 Legal Matters
     125  
 Experts
     125  
 Where You Can Find Additional Information
     125  
 Index to Combined Consolidated Financial Statements
     F-1  
 EX-10.35: INTERACTIVE SERVICES AGREEMENT
 EX-10.36: FIRST AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
 EX-10.37: SECOND AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
 EX-10.38: THIRD AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
 EX-10.39: FOURTH AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
 EX-10.40: AGREEMENT OF LEASE
 EX-10.41: FIRST AMENDMENT TO LEASE AGREEMENT
 EX-23.1: CONSENT OF ERNST & YOUNG LLP
 EX-23.2: CONSENT OF J.H. COHN LLP
 
      You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
 
      All Web site references in this prospectus are intended to be inactive textual references only. The content of such Web sites are not incorporated by reference in this prospectus.
 
      WebMD®, WebMD Health®, Medscape®, CME Circle®, Medpulse®, The Little Blue Book™, MedicineNet®, RxList® and Select Quality Care® are among our trademarks.

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SUMMARY
      This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of this offering, but does not contain all of the information that you should consider before investing in our Class A common stock. You should read the entire prospectus carefully before making an investment decision, especially the risks of investing in our Class A common stock discussed under “Risk Factors.” Unless the context otherwise requires, the terms “we,” “us,” “our,” “our company” and “WebMD” refer to WebMD Health Holdings, Inc. and its consolidated subsidiaries following the contribution and transfer to us of the subsidiaries and certain related assets and liabilities that comprise our Parent’s WebMD Health business segment. Unless the context otherwise requires, the term “Parent” refers to our parent company, currently known as WebMD Corporation, and its other consolidated subsidiaries. References in this prospectus to “common stock” include both our Class A common stock, par value $.01 per share, and our Class B common stock, par value $.01 per share. Unless we specifically state otherwise, all information in this prospectus assumes the conversion of all outstanding shares of our common stock into shares of Class B common stock immediately prior to the completion of this offering. Unless otherwise indicated, industry data are derived from publicly available sources, which we have not independently verified. The terms “unique user,” “page view” and “aggregate page views” are used in this prospectus as described in the section captioned “Our Use of Certain Measures of Usage of The WebMD Health Network.”  
Our Business
Introduction
      We are a leading provider of health information services to consumers, physicians and healthcare professionals through our public and private online portals. The online healthcare information, decision-support applications and communications services that we provide:
  •  enable consumers to obtain detailed information on a particular disease or condition, analyze symptoms, locate physicians, store individual healthcare information, receive periodic e-newsletters on topics of individual interest, enroll in interactive courses and participate in online communities with peers and experts;
 
  •  make it easier for physicians and healthcare professionals 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 employers and health plans to provide their employees and plan members with access to personalized health and benefit information and decision-support technology that helps them make more informed benefit, provider and treatment choices.
      WebMD Health, our primary public portal for consumers, and our other consumer portals, help consumers take an active role in managing their health by providing objective and trusted healthcare and lifestyle information. WebMD Health’s content offerings include access to high quality health and wellness news articles and features, and decision-support services that help consumers make better informed decisions about treatment options, health risks and healthcare providers. Medscape from WebMD, our primary public portal for physicians and healthcare professionals, helps physicians and healthcare professionals improve their clinical knowledge and practice of medicine. Its original content, including daily medical news, commentary, conference coverage, expert columns and continuing medical education, or CME, activities are written by authors from widely respected academic institutions and edited and managed by our in-house editorial staff.
      The WebMD Health Network consists of the public portals that we own, such as www.WebMD.com and www.Medscape.com, as well as third party sites through which we provide our branded health and wellness content, tools and services, such as the America Online service. The WebMD Health Network had an average of approximately 23 million aggregate unique users per month and generated approximately

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588 million aggregate page views in the first quarter of 2005. The WebMD Health Network does not include our private portals for employers and health plans, which are described below. We believe our focus on creating and organizing high quality content and offering innovative interactive services has made The WebMD Health Network the leading online health destination and has made the WebMD brand among the most recognized and trusted in healthcare. According to recent studies conducted by Manhattan Research, a leading Internet market research firm, WebMD is the information source most frequently recommended by physicians to their patients for healthcare information and Medscape from WebMD is the information source most recommended by physicians to their peers.
      Our public portals generate revenue primarily through the sale of advertising and sponsorship products, including CME services. We do not charge user fees for access to our public portals. The WebMD Health Network provides an efficient and effective means for sponsors to reach, educate and inform target audiences of health-involved consumers and clinically-active physicians within the trusted environment of WebMD. We work closely with our sponsors to develop programs to reach specific groups of consumers, physicians and healthcare professionals and give them placement on the most relevant areas on our portals. Our advertisers and sponsors consist primarily of pharmaceutical, biotechnology and medical device companies and consumer products companies whose products relate to health, wellness, diet, fitness, lifestyle, safety and illness prevention.
      Our private portals enable employees and health plan members to make more informed benefit, treatment and provider decisions. We provide a personalized user experience by integrating individual user data (including personal health information), plan-specific data from our employer or health plan clients and much of the content, decision-support technology and personal communication services that we make available through our public portals. We generate revenue from private portals through the licensing of our content and technology to employers, such as American Airlines, Inc., Microsoft Corporation and PepsiCo, Inc., and to health plans, such as Cigna and Empire Blue Cross and Blue Shield. Our private portals do not generate revenue from advertising or sponsorship and, accordingly, we do not include users or page views from these portals in The WebMD Health Network.
      In addition to our online presence, we also have a Publishing Services segment that provides complementary offline health content. Our offline publications also increase awareness of our brand among consumers, physicians and healthcare professionals. These publications include The Little Blue Book, a physician directory, ACP Medicine and ACS Surgery: Principles of Practice, our medical reference textbooks, and WebMD the Magazine, a consumer publication launched in early 2005 that we distribute free of charge to physician office waiting rooms.
Industry Background
      The Internet. The Internet has emerged as a major communications medium and has already fundamentally changed many sectors of the economy, including the marketing and sales of financial services, travel and entertainment, among others. The Internet is also changing the healthcare industry and has transformed how consumers and physicians find and utilize healthcare information. WebMD has been a leader in enabling this transition.
      Advertising and sponsorship trends. Internet advertising continues to grow rapidly. Total online advertising spending in the United States was projected by eMarketer to increase approximately 21.0% in 2005 to $11.5 billion and rise to about $17.6 billion in 2008. We believe that this market growth is driven by several factors, including consumers shifting their buying and media preferences to online services and the benefits of online advertising relative to traditional media, which include interactivity, rapid and measurable user feedback and the ability to target consumers more efficiently.
      Based upon industry estimates, we believe that, in the United States in 2004, pharmaceutical, biotechnology and medical device companies spent approximately $12 billion on marketing, promotion and education activities, excluding costs of product samples, and consumer products companies spent in excess of $10 billion on media to advertise products that relate to health, wellness, diet, fitness, safety and illness prevention. We estimate that pharmaceutical, biotechnology and medical device companies currently spend

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less than 5% of their marketing and educational budgets on online media, but are becoming increasingly aware of the benefits of using online media, including the ability to reach targeted audiences cost-effectively. We believe that we are well positioned to benefit from the expected trend toward increased online spending by these companies because of our track record in providing a more efficient use of advertising expenditures than traditional media and our good working relationships with a significant number of the major health-related advertisers and sponsors.
      Healthcare industry trends. Our business is affected by a number of trends in the healthcare industry, including:
  •  Healthcare cost-shifting by employers. While overall healthcare costs are rising at a rapid annual rate, employers’ costs of providing healthcare benefits to their employees are increasing at an even faster rate. In response to these cost increases, employers and health plans have been changing benefit plan designs to increase consumer out-of-pocket costs and have been enhancing wellness programs. These changes include taking steps to provide healthcare information and education to employees and members, including through the use of online services.
 
  •  Quality initiatives. We believe that health plans and employers have begun to recognize that encouraging the good health of their members and employees not only benefits the members and employees but also has financial benefits for the health plans and employers. As part of the initiatives to promote member and employee wellness and to allow members and employees to better manage chronic conditions, health plans and employers are offering their members and employees online access to health and wellness information and decision-support tools.
      We believe that we are well positioned to benefit from these trends because our private portal services provide the tools and information employees and plan members need in order to take a more active role in their healthcare, such as helping members make more informed decisions about benefit, treatment and healthcare provider options. As employers continue to implement high deductible and consumer-directed healthcare plans, we believe we will be able to attract more employers and health plans to use our private online portals. Additionally, we believe that as consumers are required to bear increased financial responsibility for their healthcare, our public portals will benefit as consumers utilize our decision-support and personal health information applications to better manage their health decisions.
Our Strengths
      Our public portals provide an efficient and effective means for advertisers and sponsors to reach, educate and inform health-involved consumers and clinically-active physicians within the trusted environment of WebMD. Our private portals provide a cost-effective way for employers and health plans to help their members make more informed benefit, treatment and provider decisions. We believe that we are able to fulfill the needs of our clients with differentiated offerings based upon our:
  •  Recognized and trusted brand. Our brand is widely recognized and viewed as a trusted source of health and wellness information. In June 2005, Consumer Health WebWatch, a joint project of Consumer Reports WebWatch and the Health Improvement Institute, rated the 20 most-trafficked health Web sites (listing WebMD Health as the most-trafficked site, according to Neilsen/NetRatings). Three of the six sites that were rated “Excellent” (the highest rating) are owned by us and included in The WebMD Health Network: WebMD Health, Medscape from WebMD and MedicineNet.com. The ratings were based on evaluations of credibility and quality across nine different attributes, including identity, advertising and sponsorship disclosure, ease of use, corrections and currency, privacy, coverage, design, accessibility and contents. The strengths of WebMD Health that were noted included its large amount of trustworthy information on mainstream health topics and its coverage of current health news and trends; the strengths of Medscape from WebMD that were noted included its breadth and depth of authoritative articles; and the strengths of MedicineNet.com that were noted included its easy-to-read health information on a wide range of topics, written by physicians.

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  •  Leading online health destination. The WebMD Health Network is the leading online health destination today. According to comScore MediaMetrix, a leading Internet audience measurement service, The WebMD Health Network had more than twice as many unique visitors (U.S. only) in May 2005 as any other non-governmental online health destination. In addition, Medscape from WebMD is the leading online provider of CME programs, with approximately 67% of online CME participants taking at least one of their CME courses on Medscape from WebMD in 2004.
 
  •  Motivated users. The WebMD Health Network enables health-involved consumers and clinically-active physicians to readily access healthcare information relevant to their specific areas of interest.
 
  •  Highly targeted advertising and sponsorship model. We are able to offer advertisers and sponsors programs that deliver their message to either our entire audience or to more targeted audiences of consumers, physicians and other healthcare professionals based upon the audience members’ specific interests or specialties.
 
  •  Ability to deliver efficient marketing solutions. We have good working relationships with our advertising and sponsorship clients and their advertising agencies as well as a proven track record of providing them with a more efficient use of their marketing expenditures compared to traditional media.
 
  •  Comprehensive and personalized private portal solutions. We offer employers and health plans a platform that provides a personalized user experience for employees and health plan members, which includes access to individual user data, specific health plan benefit data, relevant health-oriented content, treatment decision- support applications, personal communication services, and integrated third party applications and data. We believe that our private portal services have several important advantages over competitive offerings, including: the fact that we offer products and services both for selecting healthcare benefits and for managing overall health status; the organization of our services around our electronic personal health record application and the capability of that application to include both self-reported and imported claims and clinical data; and the level of personalization, for content and messaging, that our platform allows us to provide.
 
  •  Proven and experienced management team. Our senior management’s experience in and understanding of the healthcare industry allows us to respond quickly to developing industry trends with new products and services that build on our existing content, infrastructure and capabilities.
Our Strategy
      We have positioned our services to benefit from the trends described above under “Industry Background,” and the other trends affecting the Internet, online advertising and healthcare industries described in this prospectus. Our goal is to be the leading provider of online health information services in each of the markets in which we participate and to use our content, technology platform and expertise to continue to enter additional complementary markets. The strategies we expect to pursue include:
  •  Enhancing our current products and services. We intend to continue to invest in the resources needed to deliver high quality health and medical information by continuing to build our repository of in-depth health content, broadening our interactive services and increasing their functionality.
 
  •  Expanding awareness of the WebMD brand. We plan to promote the WebMD brand through relationships with other well known Internet media and healthcare companies, through advertising and through the breadth of online and offline products and services that we offer.
 
  •  Deepening our relationships with existing clients and expanding our sponsorship base. We intend to increase The WebMD Health Network’s advertising and sponsorship revenues by continuing to provide an efficient and effective channel for sponsors to reach, educate and inform large audiences of health-involved consumers and clinically-active physicians within the trusted environment of WebMD. We believe that we are well positioned to benefit from the expected increases in the portion of their advertising and sponsorship spending allocated to online media by pharmaceutical, biotechnology and medical device companies and by consumer products companies that wish to communicate health- and lifestyle-related messages for their products.

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  •  Increasing market penetration of our private portals. We intend to increase the market penetration of our private health and benefits portals for employers and health plans, and we expect demand for these services to increase as more employers and health plans seek to complement or replace their existing offline benefit-related services with more efficient Web-based decision-support tools and related online services.
 
  •  Acquiring complementary online and offline services. Since 2001, we have a history of acquiring and successfully integrating complementary companies. We expect to continue to supplement our internal product development efforts with strategic acquisitions that add new capabilities or help us enter additional complementary markets.
 
  •  Capitalizing upon governmental initiatives relating to the use of information technology in healthcare. There are currently numerous federal, state and private initiatives seeking ways to increase the use of information technology in healthcare, including the creation of portable consumer health records. We believe that we are well positioned to play a role in such efforts, as well as efforts to establish the adoption of electronic medical records among physicians and to provide channels for the exchange of information among patients, providers and payers. While we do not expect to realize any short term benefit as a result of these government initiatives, we believe that such initiatives will create opportunities for our company over the long term.
Risks and Challenges That We Face
      We face a number of competitive challenges and potential risks, including risks relating to our operations and financial performance, risks relating to our relationships with clients, risks relating to our technological infrastructure and risks relating to the legal and regulatory environment in which we operate. Some of those risks include:
  •  if we are unable to attract and retain users of The WebMD Health Network at a level that is attractive to advertisers and sponsors, our revenues could be reduced;
 
  •  most of our revenue is derived from the healthcare industry and could be adversely affected by changes impacting that industry, including changes in healthcare delivery and spending, changes in healthcare regulation, changes in the design of health insurance plans or changes in marketing strategies and budgets of pharmaceutical, biotechnology or medical device companies;
 
  •  we face significant competition for our products and services from numerous competitors, some of which have greater financial, technical, marketing and other resources than we do and some of which are better known than we are, and since there are no substantial barriers to entry into the markets in which we participate, we expect that additional competitors will continue to enter these markets;
 
  •  acquisitions, business combinations and other transactions may be difficult to complete and, if completed, may not result in the benefits anticipated and may have negative consequences for our business and our securityholders; and
 
  •  implementation of changes to hardware and software platforms used to deliver our online services may result in performance problems or an interruption in our ability to operate those services, which could have an adverse effect on our relationships with users and clients.
In addition, our online businesses are difficult to evaluate because they have a limited operating history and participate in relatively new and rapidly evolving markets. We have only earned income in three of our historical fiscal quarters and, even if user demand for our online services exists, we cannot assure you that providing these services will be profitable.
      For a description of risks and potential conflicts of interest that may arise out of our relationship with our Parent, please see the section of this Summary entitled “Our Relationship with Our Parent” below.

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Our Corporate Structure
      The businesses that comprise our company include acquisitions made by our Parent beginning in 1999. Our operations were, until 2001, commingled with other operations of our Parent. In 2000 and 2001, our Parent initiated two restructuring and integration plans, and in 2001, our businesses were organized as a separate segment of our Parent, which is currently called WebMD Health.
      WebMD Health Holdings, Inc., the registrant whose name appears on the cover of the registration statement of which this prospectus is a part, was incorporated in Delaware on May 3, 2005, to be a holding company for our Parent’s WebMD Health business segment in order to conduct this offering. Prior to the completion of this offering, our Parent will contribute and transfer to us the subsidiaries and certain related assets and liabilities that comprise our Parent’s WebMD Health business segment. We intend to change our corporate name, prior to the completion of this offering, to a new name that has not yet been chosen, but that will include “WebMD,” which will also continue to be the primary brand name for our products and services. Our Parent will take the steps needed to change its corporate name to one that does not include “WebMD” and to cease using “WebMD” as a brand name for the products and services of its other segments.
      Prior to the completion of this offering, the certificate of incorporation of WebMD Health Holdings, Inc. will be amended and restated to, among other things:
  •  create two classes of common stock — Class A common stock and Class B common stock;
 
  •  establish the voting rights associated with each such class of our common stock, pursuant to which holders of our Class A common stock will be entitled to one vote per share on all matters to be voted on by stockholders and holders of our Class B common stock will be entitled to ten votes per share on all matters to be voted on by stockholders; and
 
  •  provide for the conversion of the Class B common stock into Class A common stock upon the terms and subject to the conditions set forth therein.
Our Relationship with Our Parent
      Our Parent’s Business. Our Parent’s business is comprised of our business and three other segments:
  •  Our Parent’s WebMD Practice Services segment develops and markets information technology systems for healthcare providers.
 
  •  Our Parent’s WebMD Business Services segment provides healthcare reimbursement cycle management services for healthcare providers and transaction-related administrative services for healthcare payers, together with related technology solutions.
 
  •  Our Parent’s Porex segment develops, manufactures and distributes proprietary porous plastic products and components used in healthcare, industrial and consumer applications.
      Background to this Offering. As disclosed in our Parent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, our Parent believes that the benefits of an initial public offering of our company include creating a security that would allow investors to participate directly in the performance of its WebMD Health segment, enabling us to motivate our employees through equity compensation plans that provide for equity participation in our company and enabling us to make acquisitions using our own equity as consideration.
      Our Parent Will Be Our Controlling Stockholder. Immediately following this offering, holders of our Class A common stock will own approximately                % of our outstanding common stock and           % of the combined voting power of our outstanding common stock (approximately           % of our outstanding common stock and           % of the combined voting power of our outstanding common stock if the underwriters exercise in full their option to purchase additional shares).
      Immediately following this offering, our Parent, which will hold 100% of our Class B common stock, will own approximately           % of our outstanding common stock and           % of the combined voting power of our outstanding common stock (approximately           % of our outstanding common stock and           % of

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the combined voting power of our outstanding common stock if the underwriters exercise in full their option to purchase additional shares).
      As a result, our Parent will continue to control us following the completion of this offering, and will be able to exercise control over all matters requiring shareholder approval, including the election of our directors and approval of significant corporate transactions. In addition, our Parent’s controlling interest may discourage a change of control that the holders of our Class A common stock may favor.
      As of the date of this prospectus, our Parent has indicated that it has no current intention to sell or otherwise dispose of its Class B common stock. However, our Parent is not subject to any contractual obligation to retain any of its Class B common stock, except that it has agreed not to sell or otherwise dispose of any of our common stock for a period of 180 days after the date of this prospectus without the prior written consent of the representatives of the underwriters, as described in “Underwriting.”
      Agreements Between Us and Our Parent. We expect to enter into a number of agreements with our Parent governing our future relationship with our Parent, including a services agreement, a tax sharing agreement, a release and indemnity agreement and an intellectual property license agreement. These agreements cover a variety of matters, including matters related to our Parent providing us with administrative services, such as payroll, accounting, tax, employee benefit plan, employee insurance, intellectual property, legal and information processing services, tax-related matters and the indemnification by our Parent against certain liabilities. The terms of these agreements will be determined by our Parent, in preparation for this offering, and may be more or less favorable than those that we could have negotiated with unaffiliated third parties.
      It is our Parent’s intention that, under the services agreement, our Parent will receive an amount that reasonably approximates its cost of providing services to us. Our Parent has agreed to make the services available to us for up to 5 years. However, we will not be required, under the services agreement, to continue to obtain services from our Parent. In the event we decide to replace our Parent’s services, we will have the option to terminate services, in whole or in part, at any time we choose to do so, generally by providing, with respect to the specified services or groups of services, 60 days’ prior notice and, in some cases, paying a termination fee of not more than $30,000 to cover costs of our Parent relating to the termination.
      We also expect to enter into several agreements pursuant to which our Parent or one or more of its subsidiaries will be a customer for some of our services, including our private portal services.
 
Company Information
      Our principal executive offices are located at 111 Eighth Avenue, New York, New York 10011 and our telephone number at that address is (212) 624-3700.

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The Offering
Class A common stock offered
by us		                      shares
 
Common stock outstanding after the offering:
 
     Class A common stock                      shares
 
     Class B common stock                      shares
 
Use of proceeds We estimate that our net proceeds from this offering will be approximately $           million ($           million if the underwriters exercise in full their option to purchase additional shares). We intend to use these net proceeds for working capital and general corporate purposes, including capital expenditures and acquisitions.
 
Voting rights Each share of our Class A common stock will entitle its holder to one vote on all matters to be voted on by stockholders generally. The holders of our Class B common stock generally will have rights identical to holders of our Class A common stock, except that each share of Class B common stock will entitle its holder to ten votes on all matters to be voted on by stockholders generally. Holders of our Class A common stock and Class B common stock will generally vote together as a single class.
 
Conversion rights Each share of Class B common stock is convertible while held by our Parent at the option of our Parent into one share of Class A common stock. Under certain circumstances, our Class B common stock may be converted into our Class A common stock at the option of the holder or automatically.
 
Risk factors See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our Class A common stock.
 
Proposed Nasdaq National Market symbol “WBMD.”
      Unless we specifically state otherwise, all information in this prospectus:
  •  assumes that the underwriters do not exercise their option to purchase additional shares;
 
  •  assumes the conversion of all outstanding shares of our common stock into shares of Class B common stock immediately prior to the completion of this offering; and
 
  •  excludes                     shares of our Class A common stock reserved for grants under our incentive compensation plans. Following this offering, we expect to make initial grants in respect of           shares of our Class A common stock, of which                     will be in the form of options to purchase shares of our Class A common stock with an exercise price equal to the initial public offering price per share, and                     will be in the form of restricted Class A common stock.

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Summary Financial Data
      You should read the following summary combined consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our combined consolidated financial statements and notes thereto and the unaudited pro forma financial statements and related notes, all included elsewhere in this prospectus. The “Pro Forma” combined consolidated statement of operations data for the year ended December 31, 2004 and for the three months ended March 31, 2005 is adjusted to reflect our acquisitions of MedicineNet, Inc. and HealthShare Technology, Inc., as though those acquisitions occurred as of January 1, 2004. The pro forma information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transactions had been consummated as of January 1, 2004, nor is it indicative of future operating results. The “As Adjusted” combined consolidated balance sheet data as of March 31, 2005 is adjusted to reflect the sale of the shares of our Class A common stock offered hereby and the receipt of the estimated net proceeds after deducting underwriting discounts and commissions and the estimated offering expenses. All amounts in the following tables are presented in thousands.
                                                           
    Years Ended December 31,   Three Months Ended March 31,
         
    2002   2003   2004   2004   2005
                     
                Pro Forma       Actual   Pro Forma
            Actual   (unaudited)   (unaudited)   (unaudited)   (unaudited)
                             
Combined Consolidated Statements of Operations Data:
                                                        
Revenue
   $ 84,203     $ 110,152     $ 134,148     $ 144,637     $ 26,266     $ 33,761     $ 35,585  
Costs and expenses:
                                                        
 
Cost of operations
     47,888       46,998       52,377       55,327       11,207       14,895       15,353  
 
Sales and marketing
     49,033       47,917       49,315       51,201       11,585       10,988       11,207  
 
General and administrative
     15,690       18,016       20,165       23,487       4,979       6,540       7,310  
 
Depreciation and amortization
     2,486       4,463       5,620       12,016       1,204       2,233       3,003  
 
Restructuring and integration benefit
     (5,850 )     —       —       —       —       —       —  
 
Other (income) expense
     (823 )     —       —       19       —       —       (3 )
                                           
Income (loss) before income tax provision
     (24,221 )     (7,242 )     6,671       2,587       (2,709 )     (895 )     (1,285 )
 
Income tax provision
     140       183       210       397       44       61       52  
                                           
Net income (loss)
   $ (24,361 )   $ (7,425 )   $ 6,461     $ 2,190     $ (2,753 )   $ (956 )   $ (1,337 )
                                           
                                 
            March 31, 2005
             
    December 31,   December 31,   Actual   As Adjusted(1)
    2003   2004   (unaudited)   (unaudited)
                 
Combined Consolidated Balance Sheet Data:
                                
Working capital
   $ 3,384     $ 9,119     $ 2,665          
Total assets
     120,630       146,496       173,274          
Owner’s net investment/Stockholders’ equity
     85,527       100,737       124,839          
 
(1)  Reflects (a) the sale of the shares of our Class A common stock in this offering and the receipt of the estimated net proceeds after deducting underwriting discounts and commissions and estimated offering expenses, (b) the reclassification of Owner’s net investment to Stockholders’