WebMD Health Corp.

On July 24, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with MH Sub I, LLC, a Delaware limited liability company (“Parent”), and Diagnosis Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Purchaser”). Parent and Purchaser are affiliates of Internet Brands, a portfolio company of investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. Pursuant to the terms of the Merger Agreement, Purchaser will commence a tender offer (the “Tender Offer”), no later than 10 business days after the date of the Merger Agreement, to purchase all of the issued and outstanding shares of Common Stock of the Company, par value $0.01 per share (each, a “Share”), at a purchase price of $66.50 per Share (the “Offer Price”), without interest, and subject to any required withholding of taxes.

The obligation of Purchaser to purchase Shares tendered in the Tender Offer is subject to certain conditions, including (i) the expiration or termination of any waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other applicable antitrust laws, (ii) there having been validly tendered and not withdrawn the number of Shares that, when added to the Shares already owned by Parent or its subsidiaries, shall constitute a majority of the then outstanding Shares at the expiration of the Tender Offer (determined in accordance with the terms of the Merger Agreement, which provides for the inclusion of certain additional Shares underlying equity awards and convertible securities for which all the requirements for the obtaining of Shares have been satisfied but excluding Shares held by the Company), and (iii) the completion of a specified marketing period for the debt financing Parent and Purchaser are using to fund a portion of the aggregate Offer Price and Merger Consideration. The consummation of the Merger is subject to certain customary closing conditions, including consummation of the Tender Offer and the absence of any law, injunction, judgment or other legal restraint that prohibits the consummation of the Merger. Neither the Tender Offer nor the Merger is subject to a financing condition.

Pending Acquisition of WebMD by Internet Brands.    As previously announced, WebMD has entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated as of July 24, 2017, with MH Sub I, LLC, a Delaware limited liability company (“Parent”), and Diagnosis Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Purchaser”), pursuant to which Parent and Purchaser have agreed to acquire WebMD for $66.50 per share, on the terms and subject to the conditions set forth in the Merger Agreement. Parent and Purchaser are affiliates of Internet Brands, a portfolio company of investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. A description of the Merger Agreement and the transactions contemplated thereby was included in Item 1.01 of the Current Report on Form 8-K filed by WebMD on July 26, 2017. A copy of that Item 1.01 is attached to this Quarterly Report as Exhibit 99.2 and is incorporated by reference herein.

While the acquisition of WebMD by Internet Brands (which we refer to below as the Transaction) is pending, uncertainty about the effect of the Transaction may impact our ability to attract, retain and motivate key personnel and could cause customers, vendors and other third parties to seek to terminate or modify their business relationships with us. Although we intend to take steps designed to reduce any business uncertainties from the pending Transaction, those steps may not be effective. If we are unable to attract or retain qualified employees, or if customers, vendors or other third parties terminate or otherwise seek to terminate or modify their relationships with us, it could adversely affect our business, financial condition and results of operations. In addition, integration planning while the Transaction is pending could place a significant burden on management, employees and other internal resources, which could otherwise have been devoted to pursuing other business opportunities. We could also be involved in litigation relating to the Transaction, which could be costly and disruptive to our business.

The Privacy Standards and Security Standards under HIPAA establish a set of national privacy and security standards for the handling of protected health information by health plans, healthcare clearinghouses and healthcare providers (referred to as “covered entities”) and their “business associates,” which are persons or entities that perform certain services for, or functions or activities on behalf of, a covered entity (or another business associate) that involve the creation, receipt, maintenance, or transmission of protected health information. Certain portions of our business, such as those managing employee or plan member health information for employers or health plans, are subject to HIPAA as business associates of covered entities. In addition to imposing privacy and security requirements, HIPAA also creates obligations for us to report any unauthorized acquisition, access, use or disclosure of protected health information, known as a breach, to our covered entity customers. The 2013 final HITECH rule modified the breach reporting standard in a manner that made more data security incidents qualify as reportable breaches. In addition, HITECH and its implementing regulations imposed similar data breach notification requirements on vendors of personal health records that require us to notify affected individuals, the FTC, and, in some cases, the media in the event of a data breach involving the unsecured personal information of users of The WebMD Health Network. Violations of HIPAA may result in civil and criminal penalties and could damage our reputation and harm our business. HITECH increased civil penalty amounts for violations of HIPAA and significantly strengthened enforcement by requiring HHS to conduct periodic audits to confirm compliance and authorizing state attorneys general to bring civil actions seeking either injunctions or damages in response to violations of HIPAA Privacy Standards and Security Standards that threaten the privacy of state residents. In July 2016, OCR announced a new phase of the HIPAA Audit Program, which for the first time targets business associates. Audits may, in certain circumstances, lead to full compliance reviews, with the potential for civil or criminal penalties. We cannot assure you that we will adequately address the risks created by these amended HIPAA Privacy Standards and Security Standards. In addition, we are unable to predict what changes to these Standards might be made in the future or how those changes, or other changes in applicable laws and regulations, could affect our business.