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WebMD Health Corp. (NASDAQ:WBMD)

Stockholders Annual Meeting Call

October 04, 2011 09:30 ET

Executives

Marty Wygod – Chairman

Wayne Gattinella – Chief Executive Officer

William Kennedy – American Stock Transfer and Trust Company

Risa Fisher – Vice President of Investor Relations

Dr. Steven Zatz – Executive Vice President, Professional Services

Anthony Vuolo – Chief Operating and Chief Financial Officer

Marty Wygod – Chairman

Good morning ladies and gentlemen. It’s a pleasure to welcome you to the Annual Meeting of Stockholders of WebMD Health Corporation. I am Marty Wygod, Chairman of the Board of WebMD. On the stage with me today are Wayne Gattinella, our Chief Executive Officer and Anthony Vuolo, our Chief Operating as well as Chief Financial Officer. Following individuals, who serve as Directors of WebMD are also seated upfront. We have Mark Adler, Kevin Cameron, Neil Dimick, Jerome Keller, Abdool Rahim Moossa, Herman Sarkowsky and Joseph Smith.

I also want to introduce the following senior officers of WebMD, who are seated upfront Greg Mason, our new Executive Vice President of Consumer Services, Bill Pence; Executive Vice President and Chief Technology Officer; Doug Wamsley, Executive Vice President and General Counsel; Dr. Steven Zatz, Executive Vice President, Professional Services and Mark Emkjer, CEO of WebMD Health Services.

I would also like to introduce you to (Tony Massarelli) of Ernst & Young Independent Order of WebMD. Please stand. Thank you. Lewis Leicher, the Assistant Secretary of WebMD will act as Secretary of me.

At this time, I would like to turn this over to Wayne, who chairs the meeting. At the conclusion of the formal business of the meeting, there will be a presentation by Wayne, which I think it would be quite interesting, and then we will have a full question-and-answer period to follow.

Wayne Gattinella – Chief Executive Officer

Thank you, Marty. Good morning everyone. The annual meeting will now come to order. The annual meeting will be conducted in accordance with the agenda and rules of conduct distributed as you entered. During the meeting, any person wishes to speak from the floor, should raise his/her hand and upon being recognized by the Chairman of the meeting should rise. We will bring over a handheld microphone and the stockholders should state his/her name and the number of shares that he/she represent.

I would also request that all matters not directly related to the proposals to be considered at the meeting be held until after the formal business of the meeting has been accomplished. A notice of meeting, proxy statement, any management proxy were sent to all persons, who are WebMD stockholders of record on the close of business on August 10, 2011 and reflects stockholders of record are entitle to vote at this meeting.

The Board of WebMD has designated Mr. William Kennedy of American Stock Transfer and Trust Company, the transfer agent for our common stock as the inspector of election to review the proxies and balance presented at the annual meeting and to tabulate the votes cast at the meeting. I will now ask Mr. Kennedy to stand. Mr. Kennedy is executed in votes of inspector of election, which will be filed that admits of this meeting. We please present to the secretary of the meeting you are assigned off of inspector of election.

With those present, who wishes to submit management proxies and he would not already done so, please deliver them to the inspector at this time. If anyone holds proxies from others that they propose to vote at this meeting, such proxies must now be submitted to the inspector for examination. All such proxies are management proxies will be filled at the records of this meeting. If anyone proposes to vote in person, they must now identify themselves to the inspector and order that they are authority to vote maybe determined.

In addition, this all votes at this meeting will be conducted by written ballot; all person to plan to vote at the meeting should request the ballot from the inspector at this time. Will the inspector after he has examined all such proxies and determine the identity of those present, who plan to vote in person, please submit his report to the number of shares represented at this meeting and the presence of quorum.

The inspector is ready to make his report and I ask that he does do at this time.

William Kennedy – American Stock Transfer and Trust Company

We have examined all such proxies, as are represented at this meeting in person or represented by proxy at least 52,911,817 shares of WebMD common stock. A total of 58,672,692 shares of WebMD common stock are entitle to vote at the meeting. Accordingly, who is present at this meeting in person all represented by proxy and majority of the outstanding shares of WebMD entitle to vote at the meeting.

Wayne Gattinella – Chief Executive Officer

The inspector as indicated that there his present at this meeting the holders of more than a majority of the outstanding shares of common stock of WebMD entitle to vote at this meeting. Accordingly, there is a quorum present and this meeting is competent to transact the business set forth in the notice of annual meeting. The secretary of the meeting shall present to the meeting, at this time a copy of the notice of annual meeting of stockholders and proxy statement, dated August 15, 2011 and the management proxy together with an affidavit of mailing of such document.

The inspector of election also has at the meeting list of the holders of record at the close of business from August 10, 2011, the record dated for this meeting, of the outstanding shares of WebMD stock, which list is certified by an officer of the American Stock Transfer and Trust. The affidavit of mailing will be filed with the minutes of this meeting and the list of stockholders is available for inspection.

As a result of the proxy material haven’t been sent to the stockholders on or about August 10th or 19, 2011 for today’s annual meeting, this meeting has been duly called in accordance with law and WebMD’s bylaws.

I will now present the proposals described in the proxy statement. The polls will be opened for voting after all of the proposals have been presented. Proposal number one is the election of three, Class III Directors of WebMD. The three directors, who are elected and the remaining eight directors, whose terms continue after this meeting will be the directors of the WebMD. The three nominees to survey three-year term as Class III Directors are Jerome Keller, Herman Sarkowsky and Martin J. Wygod.

The Board of Directors of WebMD recommends that the stockholders vote for each of these three nominees. Under WebMD’s bylaws, the three nominees receiving the greatest number of votes for their elections shall be elected directors. Is there a motion?

William Kennedy – American Stock Transfer and Trust Company

I move that in the series Keller, Sarkowsky and Wygod be elected as Class III Directors of WebMD.

Wayne Gattinella – Chief Executive Officer

Is there a second to this motion?

Unidentified Company Speaker

I second the motion.

Wayne Gattinella – Chief Executive Officer

The motion has been duly made and seconded. Proposal number two is an advisory vote to approve WebMD’s executive compensation, which is commonly referred to as a say-on-pay vote and behalf of WebMD’s Board, the Compensation Committee of the Board as unanimously recommended the stockholders vote for this proposal. Is there a motion?

William Kennedy – American Stock Transfer and Trust Company

I move that the proposal be approved.

Wayne Gattinella – Chief Executive Officer

Is there a second to this motion?

Unidentified Company Speaker

I second the motion.

Wayne Gattinella – Chief Executive Officer

The motion has been duly made and seconded. Proposal number three is an advisory note on the frequency of future say-on-pay votes. On behalf of WebMD’s Board, the Compensation Committee of the Board as unanimously recommended the stockholders vote to hold future’s say-on-pay votes each year. Is there a motion?

William Kennedy – American Stock Transfer and Trust Company

I move that the proposal be approved.

Wayne Gattinella – Chief Executive Officer

Is there a second to this motion?

Unidentified Company Speaker

I second the motion.

Wayne Gattinella – Chief Executive Officer

The motion has been duly made and seconded. Proposal number four is a proposal to ratify the appointment by the Audit Committee of the WebMD Board of Ernst & Young LLP is the independent registered public accounting firm to service WebMD’s independent auditor for the fiscal year ending December 31, 2011. The WebMD Board recommends its stockholders vote for this proposal. Is there a motion?

William Kennedy – American Stock Transfer and Trust Company

I move that the proposal be approved.

Wayne Gattinella – Chief Executive Officer

Is there a second to the motion?

Unidentified Company Speaker

I second the motion

Wayne Gattinella – Chief Executive Officer

The motion has been duly made and seconded. If any stockholder or stockholder representative has any questions or comments concerning any of these proposals, please signify now by raising your hand. Having presented all matters to be voted on by stockholders, I declare the polls now open for voting on the proposals. The votes on these proposals will be conducted by written ballot, it is important that all votes be cast. We have ballots for those stockholders, who wish to vote by ballot, however, it is not necessary if you either vote by ballot, if you previously return to proxy card unless you wish to change your vote.

As every stockholder present, who wishes to vote delivered in executed ballot or proxy to the inspector, if not please signify by raising your hand. The balloting having been completed, I declare that the polls are now closed. Before we pause, I would like to express my appreciation to the stockholders, who have attended this meeting this morning, as well as those who have submitted their proxy, but were not able to attend in person. There will now be a short pause in the meeting, while the inspector tabulates the vote.

Order please. We will now continue the meeting, as the inspector ready to report with respect to these proposals.

William Kennedy – American Stock Transfer and Trust Company

Yes, I have examined the ballots and the proxy is voted, with respect to the proposals, and I find that Jerome Keller, Herman Sarkowsky and Martin J. Wygod each received the vote of over 42 million shares vote of election. At least 90% of the outstanding share is present, represented at the meeting and entitled to vote or voted in favor of Proposal number 2. At least 95% of the outstanding shares present and represented at the meeting and entitled to vote or voted, have noted one-year on Proposal 3. At least 99% of the outstanding shares present or represented at the meeting and entitled to vote or voted in favor of Proposal number 4.

Wayne Gattinella – Chief Executive Officer

Based on that vote, messages Keller, Sarkowsky and Wygod have been duly elected as Class III Directors. In addition as the number of votes in favor of the approval of each of Proposals number 2 and Proposal 4 represents more than the majority of the outstanding shares present or represented at the meeting and entitled to vote on the matter, Proposals 2 and Proposal 4 have been approved.

Finally, more than a majority of the outstanding shares present or represented at the meeting and entitled to vote, cast their advisory vote on Proposal 3 in favor of having future say-on-pay votes every year. Approximately 1.4 million shares have been repurchased by WebMD since August 10, 2011, the record date for the annual meeting. Although those shares may have been voted by the persons, who held them on August 10th, those votes should not be given effect under Delaware Law, since those shares are now owned by the company.

However, even if all such shares were voted in favor of the proposals, the removal of that number of votes in favor would not have changed the outcome on any of these proposals. The report of the inspector certifying the vote of the stockholders with respect to the proposals shall be included in the minutes of the meeting.

This concludes the formal matters to be acted upon at this annual meeting. Are there any questions or comments regarding the formal part of the meeting? Since there is no further business that comes before this meeting, it would be in order to adjourn. Is there any motion?

William Kennedy – American Stock Transfer and Trust Company

I move that we adjourn the meeting.

Wayne Gattinella – Chief Executive Officer

Is there a second to this motion?

Unidentified Company Speaker

I second the motion.

Wayne Gattinella – Chief Executive Officer

It has been moved and seconded that the meeting adjourn. All on favor say ‘Aye’. All oppose say ‘Nay’. The motion is carried. The meeting is adjourned. A presentation will now follow. For those listening via webcast, we will take a few moments to setup and following the presentation we will have a question-and-answer period, while we are setting up Risa Fisher, our Vice President of Investor Relations will read the statement regarding the presentation. Risa?

Risa Fisher – Vice President, Investor Relations

All statements made today other than statements of historical facts are forward-looking statement, including those are regarding our guidance on future financial results and other projections or measures or future performance of WebMD, the amount and timing of the benefits expected from strategic initiatives and acquisitions, deployment of new or updated technologies, products, services or applications and other potential sources of additional revenue. These statements are based on WebMD’s current plans and expectations and involve risks and uncertainties that are described in WebMD’s SEC filings. Reconciliations between GAAP and non-GAAP financial measures discussed today are included in our quarterly earnings releases together with an explanation of the non-GAAP financial measures. Those earnings releases are available on www.wbmd.com in the Investor Relations section.

Wayne Gattinella – Chief Executive Officer

So we’re going to give a brief presentation really summarizing some of the recent achievements of the company over the past 12 months, and a short view of some of the growth drivers that we are building that will help continue future growth as we look forward over the next several years.

To begin with our company and our brand continues to be the most recommended recognized and trusted brand of health information. We lead in each of the three markets that we focus on. WebMD is the number one brand of health information to consumers. Medscape is our leading brand with health information for physicians and healthcare professionals and WebMD Health Services is our leading brand of health and benefits information for large employers and health plan.

We are very proud that for the second consecutive years not only we have been recognized that the most trusted health information brand, but one of the leading research firms that has a consumer study annually as again determined that WebMD is the most trusted consumer brand of all of the leading consumer brands here in the United States and you can see the other brand if you will that ranked as trusted it as well.

And in fact in that same study not only where we have recognized is the most trusted consumer brand, but we are also recognized as the most trusted and recommended of all other internet brands. We are certainly very proud of that, where company that spends a little to no dollars on advertising versus many of those other competing brands, and it certainly humbling to be recognized for something that consumers themselves actually vote on.

One of the things that we look at is also how we recognized in the public market. We brought a little clip.

[Company Advertisement]

As we point out, when we presented at investor meetings, none of those placements, who are paid for they were all in fact requested and used by the various news and media sources.

So, let’s talk about our assets and how we are utilizing those assets. Our network of site that are fully owned and operated by the company include our flagship consumer site WebMD and on your right the other consumer sites of MedicineNet, eMedicineHealth and RxList. Medscape is our leading healthcare professional site also complemented by the theheart.org and Medscape Education.

If you look at our traffic growth over the past several years, you can see that our growth in monthly users has gone from 26 million now to exceeding over a 100 million visitors despite the visitors on the sites that we fully own and operate has grown equally to 83 million, roughly about 80% of all of the traffic that we serve on sites that we fully own and operate.

If you look at the page view growth over the same period, you can see that our page views have increased to about 2.2 billion page views in the last quarter and over 90% of the page views that we deliver now are on sites that we fully own and operate.

Well, when you look at the number of people that we reach in total today, on an annual basis WebMD reaches about one in every two adults in the U.S., three out of every four women, and 95% of all those adults were seeking health information online. When consumers are asked where do you go? When you’re looking for health information, you can name more than one place.

Certainly the majority, vast majority of consumers name, WebMD is the site they turn to most. You can see that the other health information sites trail us by significant margin and even we are far exceed the largest search engine in terms of where people go to and they’re looking for health information. But even when people do use search to look for health information, the most frequently searched health terms, number one is WebMD and you can see three out of the five most frequently searched health terms are our brand or derivatives of WebMD.

Importantly not only do we reach a vast array of consumers, but we also reach and across the entire health continuing, whether they’re looking for health information to prevent a particular illness or whether they’re preparing to go to doctor, they are experiencing symptoms they have been diagnosed, they are undergoing treatment or they are living with that condition. Whichever of those particular consumer segments that are there, we lead versus any other health information source against each of those particular segments, which clearly is very important to particular brands or advertisers that their products are ordinarily segmented against one of those individual kinds of consumer segment.

On the professional side with more than 2.5 million physician visits now every month, Medscape reaches 8 out of 10 practicing physicians here in the U.S. Those physicians themselves represent roughly about 76% of our prescription written in the country. Not only do are we the leading source of health information for doctors, but because Medscape is the companion with more than 30 separate specialties. We also are the leading side across virtually the majority of those specialties that we serve as well.

When doctors and healthcare professionals are asked, where do you go to, when you’re looking for medical information, Medscape and WebMD are despite of the leading source. You see that the second and third sources NIH and CDC are also significant. They compete for traffic, but those are government provided sites, so they actually don’t compete for the revenue in our market.

What we are most proud of is that we are the site that physicians recommend most to their patients. More and more doctors do respect trusted health information sources from their patient and increasingly they are also advising patients, when they lead the office to seek a trusted source to gain more information about their particular situation and again you can see that we far exceeding the second side of the CDC in terms of where doctors appoint their patients for more health information, when they do lead their office.

However, leading advertiser and sponsor customer certainly represent virtually all of the largest pharmaceutical company, all of the largest biotech and increasingly medical device company and the consumer product segment, we are attracting an increasing number of companies, who have health related products and services for general consumers across the United States.

In our private portal business, we serve many of those largest employers in health plan with a private version of WebMD that customized for those particular companies to serve their employees or their health plan members.

What excite us most is not our accomplishments, but rather the prospect for the future. The market that we serve is still largely under penetrated in terms of a digital promotion and advertising. Its estimated that just about $30 billion spent annually here in the United States to promote products and services on behalf of pharmaceutical, medical device and other health related consumer company and yet less than 5% of that spent is online and certainly as we look forward over the next several years we expect that this which is really, but left the largest vertical that will be transformed by the internet, we will move more of its traditional marketing and promotional activities online.

One of the questions that were asked often times at investor conference is the impact of patent expiration on our business. From pharmaceutical companies, I thought we would show you slide that represents really what’s happening in their marketplace. It’s estimated that close to a $100 billion of pharmaceutical revenues will come off patent between the years 2010 and 2015.

These are pharmaceutical play out. But its also estimated that during that same period slightly more than $100 billion of increased sales from in line products and sales from newly launched product were also be generated during that same period. So, if you look at the kind of the macro view what’s happening on the pharmaceutical business it’s roughly an offset during that same period.

Our view is as many of those newer products that are anticipated to be launched over the next several years are attractive to our audience because these tends to be a little more niche oriented, more deep, these oriented products as opposed to the lifestyle products that are going off patent and so we do see the opportunity of new product launches continuing to represent opportunity for new pharmaceutical market.

So, right now I am going to just briefly review what we view as our infrastructure investment in the assets and platforms that will help support future growth. Some of these areas we have commented on over the last couple of years, I am going to give you an update and others are new areas for our current and future investment.

In each of these cases, whether its new content platforms, new markets were focused on or the incorporation of new data to provide greater intelligence and targeting, each of these are designed to increase the reach of our audience, to increase the engagement of our audience that is help people utilize WebMD, and finally to generate greater inventory at a premium level that will be attractive to advertisers in each of these particular market.

I will start with start new content platforms. The first is multimedia. As we have invested significantly in video and interactive content as peoples experiences on the web is becoming more interactive in less about just slide information. We have seen a complimentary increase in utilization on our site.

Today, more than half of the pages used delivered on WebMD are in some form of multimedia format to our users, which is an increase of fivefold in the last few years. It increases the engagement that also generates greater premium inventory for those advertisers that are also seeking greater use of multimedia inventory.

We have talked about personalization that is offering a greater custom view of content and information, its more tailored to an individual needs and over the last few years we have seen a fivefold increase of users on WebMD, who are providing certain information about themselves in order to receive more personalized information back as roughly a 31% of our users on WebMD are engaged in some form of personalized interactive content.

Certainly social and community content has driven utilization of the web and we have also seen that on WebMD. We have seen a 22% growth in demand for social content and information that is uses on our site for going to areas, where community are user-generated information is created so that our users have the benefit of seeing how other like them are also coping or living or sharing health and wellness information on WebMD.

And finally, mobile, which is really is the almost (indiscernible) we expect over the next few years continues to be a significant and fast growing platform for delivering WebMD’s content and information. On the consumer side, we now have delivered roughly about 6.5 million downloads of WebMD’s mobile application to consumers, significant jump over the last few years and Netscape Mobile, which provides medial information on-demand for professional, healthcare professionals, now commence about close to 1.5 million registered healthcare professionals interacting with Medscape’s mobile view of our content and reference information. Certainly this will be a very important platform for the future for content and certainly for revenue growth.

Let’s talk about new markets for a moment. Investing in new market certainly is an important way to generate new users and also new advertisers. There is three areas this year in 2011 that we have launched and have invested in. The first is Healthy Beauty, which is really the new definition of beauty as it relates to overall health and wellness, very important to our user community across all age groups and also increasingly important to our advertiser community to filling the consumer product area.

Children’s health is an area that we are deeply invested in a couple of different ways. We have launched the teen channel on WebMD that provides a very safe environment for teens to find health and information. It’s clearly tailored to their own particular needs in a secure and safe environment. And in the second quarter, we launched our new investment to address childhood obesity certainly, one of the most significant health issues facing American today in conjunction with Sanford Health, the largest rural, not-for-profit healthcare provider. We have launched the series of site that are designed expressly for children and separately for their parents to begin to inform, educate and hopefully influence the factors behind childhood obesity.

The third area, which will be talking more about on our conference call in a few weeks is iHealth and the recognition that the care of your vision from the moment of birth to your later years is one of the most important and potentially most under managed health, areas of health and it’s an area that we are now beginning to deeply invest in on both the consumer side and on healthcare professional side.

Second area of new market is international. We have commented certainly in the past of our investments in the U.K. with our partnership with Boots and the most recent investments that we made internally launching Medscape France. In both cases, we are beginning to attract a number of international pharmaceutical, biotech and consumer products companies, both the consumer side as well as the professional side. And we are beginning to see some momentum pickup in terms of our international efforts and certainly see the future of international market as a great prospect over the years to come.

The third platform I’ll just comment on briefly is the incorporation of data into everything we do, not just from an analytic standpoint, but actually live on the site that better informed the user, appropriately better inform the advertiser, and enable us to better target the relevant user, but both our content and the related product information that benefits both. The idea of audience targeting is the critical driver right now of revenue on the web and we see using that appropriately on WebMD as an opportunity. We also see the ability of using more data to expand our audience – to expand our audience and beyond even our own sites and utilizing that information to be able to reach people even when they lead WebMD.

And finally, the use of data to the increased yield of our own inventory, there are times we have available inventory that is unsold if you will and by using data we’re able to better inform other opportunities using some of the new technology the demand and supply side. Our platforms to actually increase the yield of the overall site in general, so we certainly that’s an important area for the future.

If you look across from a macro standpoint, each of those platforms we see the impact for the future important to affecting the reach to a greater audience over time to being able to engage users in our site and our content at a deeper level and certainly to create more valuable online inventory for the advertising community as we’re able to better deliver on their product messaging to the kind of users that they’re trying to reach them out.

So in summary, we continue to be very, very enthused about the business that we operate in. We are recognized that the most trusted health information brand as we mentioned not only by the general health community by increasingly by a number of organizations outside of the health category. We are not only the recognized leader, but the market that we compete in, still is dramatically under penetrated from an online and internet standpoint that we believe will fuel our business for many years.

We attract not only a large audience but a very high quality audience, if you look at the user metrics or time spent, page views, utilization metrics, et cetera, the types of metrics that advertisers look at beyond just simply the initial impression, we’re able to demonstrate that people who come to WebMD will come on their own represent the behavior that advertisers seek which is simply people who are going to be involved, interested and engaged in their product information.

We’ve invested over the years in infrastructure that is permutable both in terms of our people, our technology and our experience and we do believe and have demonstrated that it gives us lead time that is significant as potentially there are other entrants who come into a large market place.

And finally, as we talked briefly today, the investments in our business continue. We continue to invest in our people, on our plan and equipment and in our technologies that we believe we are going to be platforms that will enable us to grow across each of those particular markets for the future.

So with that, that concludes our presentation. We would now like to open up the floor for any questions that you have for the management team, and if you raise your hands, someone will bring the microphone over to you to ask your question.

Question-and-Answer Session

Marty Wygod

Can’t believe there is no question. Here we go there is one in the back.

Unidentified Analyst

Good morning. You’ve gone quite a bit and there is no question about the value of your brand. Can you just clarify the following? In our conversations you have shared that you’re a critical partner to your customers on the pharma side, in terms of deciding how to extend the dollars. Having said that we have had a deceleration in revenue growth and probably a period of time when the revenues will not grow because of the issues which we discussed. How much of the win did you have in your customers stand and can you after all address that 5% spending of the total, grow to 6% to 7%, what has to happen for that to really come through, and obviously results in much higher growth?

Wayne Gattinella

We do have a window into our customer spend. We have relationship team who are focused on individual customer accounts and then the brands within those accounts. So if you look at, the most significant vendors or manufacturers in the marketplace we do have a good deal of where they’re spending. Clearly a dollar job and our roll to be able to propose and deliver value on WebMD and largely on the Internet that is compelling to move that spend, that today is largely stand in traditional channels, states the page marketing on the professional side and large media channels like television on the consumer side. And as we are able to do that, obviously our goal is to pull the greater share of those dollars as they do move on line.

Unidentified Analyst

Any other comment on that?

Marty Wygod

Sure. We generally need a catalyst to motivate pharma and biopharma to spend substantially well online. I think a number of factors are taking place which are going to pass, we accomplish this.

Number one, pharma is going to start to see major margin contraction as a result of a lot of their blockbuster drugs coming off the patent which we do very little on. They go into, have some markets smaller drugs that they are introducing half billion, billion dollar drugs which is really our sweet spot. It’s up to us, to go to them and convince them.

Then from the regulatory point of view, from a ROI point of view that we are much better positioned to communicate with the physicians and communicate with the patients in such a way to create better awareness, earlier intervention, improved patient outcomes, and end up in a much strong marketing arm for the pharmaceutical and biopharmaceutical industry.

I think we’ve accomplished that. A lot of the products that we’re rolling out and it will be rolling out over the next few months, I think we’ll go a long way and doing that as well as creating the necessary analytics for pharma. So, they can fully appreciate how much we can move market share when there is a meaningful indication on a drug and to a much more cost effective.

On the professional side, the physician side, we have the ability to go ahead and get to all of the physicians on the entire spectrum. Steve, would you like to talk to that little bit? Steven Zatz, Dr. Steven Zatz.

Dr. Steven Zatz

We really do have remarkable ability to reach physicians and now not just through their desktops or laptops through their phones, through their tablet computers and really to spend much more of their day with getting information. So, whether they need quick lookup of reference information or they have more time to go deeply in a topic as Marty is indicating if each year, each month we’ve gotten additional engagement from our physician already and they look more to us to get information. They’re very busy practitioners. They don’t have time in the internet is really proven to be the ideal place for them to get information and Medscape in our properties in particular are really designed to be effective ways for those physicians to get information and for pharmaceutical company to communicate their messages to those physicians.

Marty Wygod

What about Steve in relation to being able to get the physicians to pharma does not get to the general practitioners and moving in from one desk, I want you to elaborate of the WebMD.

Dr. Steven Zatz

More than 25% of physicians today don’t see reps at all. They are unreachable by the pharmaceutical industry. Many of the rest of physicians have severely limited the assets of pharmaceutical representative. We reach those physicians. We can reach physicians also the pharmaceutical company even if that doctor will see the reps. Those physicians may not be cost effective for the pharmaceutical company to go after because relatively speaking, we don’t prescribe that much of their product.

But online were so much more efficient that not only do we reach the majority of physicians, but we can reach those physicians, who inform us par in to well to our physicians they prescribed less of that product. But those are the physicians who have the opportunity to educate so that they can identify patients appropriately and prescribe those products. So, from a cost efficiency standpoint all physicians become opportunities, whereas pharma today is a very limited number of physicians that they can reach the representative.

Marty Wygod

Thank you, Steve. I just want everybody understand that our Board of Directors, our Senior Management, the entire company is not satisfied with our current results and we’re going to do whatever it takes, whatever is necessary to go ahead and get the momentum back that our shareholders are used to both on the consumer side as well as on the professional side. Yes.

Unidentified Analyst

Thank you. A couple of items I want to ask. First of all on the international fee, can you give us a little bit more color in regard to how many users are contributing to our total user and where we’re expanding from like you just said we went in to France, we’re in South America. Are there any plans for any future areas and how much of these areas are we getting contributed to our total volume?

Wayne Gattinella

I think we will be providing a little more detail on color in the earnings call. At a general level, what we’re seeing is an uptake in professional demand for the kind of reach for pharmaceutical company that we have here in the US from both many companies outside the US as well as their affiliated in country teams and headquarters depending upon how decentralized for the decision making is, but given on the professional side, our large reach to physicians around the world as most doctors learned in English and can actually and is the Medscape’s English version right here in the U.S. We’re increasingly segmenting that audience and enabling pharmaceutical companies with their own in-country strategy to be able to reach those particular doctors, who’re practicing in those particular market.

And as you appreciate in terms of Western Europe from a regulatory standpoint the opportunities primarily in professional physician marketing, so the most part direct-to-consumer marketing of pharmaceutical is actually not allowable. And again, I think we will provide more color in the next several weeks, or are you asking country-by-country where the particular opportunities are, but we see that it’s pretty nascent across all those markets. There is no WebMD or Medscape like, online brand or property in those markets and so our ability to deliver like we are doing here on that region targeting has a lot of potential for us.

Unidentified Analyst

Thank you. One more part, as for as earnings where you gave a change of outlook, going forward is there any color in that regard, as far as potential I mean where we are looking at this?

Wayne Gattinella

And could you repeat that one more time please?

Unidentified Analyst

As for as future earnings and way the companies change the outlook any further color in that regard, back in August we talked about are slow it down.

Unidentified Company Speaker

Yeah. The question is in terms of looking forward are there any new for me. I don’t know in prior call.

Marty Wygod

There is no new outlook at this point, but we will be giving an update and fresh guidance on the analyst call next month. Tony other would like to he is put you on a spot maybe one or two as compared to third quarter and anything else that could have just ended but it always as a option that feels where we’re at.

Anthony Vuolo

Sure. In terms of third quarter we just ended, we’re likely to be, our revenue range was $135 million to $140 million were likely to be towards the lower end of that range or would be above the EBITDA guidance that we put out. Fourth quarter is still little premature. The sales quarter just ended last Friday, so we’re still looking at the sales orders that come in and trying to estimate how much is going to hit the back half of the last quarter of the year versus 2012.

Also fourth quarter is also a quarter that we see a lot of activity during the quarter in terms of sales that convert to revenues, but that activity usually happens later in the quarter so we’re not updating the fourth quarter and the full year this time. I think your question is related more toward when we might see pickup in the revenue growth rate from what we see the back half of the year as we come and back in August we wouldn’t expect to see a pickup until the second half of 2012.

Unidentified Analyst

One final, any update as far as shares repurchased. I know we have the $75 million buyback program going on. I think.

Anthony Vuolo

I think as Wayne mentioned, in the pharma formal part of the meeting, we purchased $1.4 million shares under that $75 million buyback authorization which is approximately $43 million today under the buyback program, over the $75 million.

Marty Wygod

Average price will be somewhere around 30 and change, 31.

Unidentified Analyst

Thank you.

Wayne Gattinella

Any questions. Yes sir.

Unidentified Analyst

When we originally were exposed to the slippage that was occurring in the volume couple of quarters looking forward part of that I understood was attributable to the fact that the advertisers have not got any clear signals from Washington. The FDA is specifically as to what the parameters of advertising should contain, include with regard to all the good things the medications do versus all the bad things. As that been clarified any further so that the advertisers can feel more comfortable about doing advertising on the Internet?

Marty Wygod

Unfortunately no, the medical legal review process at pharma is very, very serious problem. Lot of the major pharma companies can only allow a certain amount of the legal time to each Brand Manager or each proposal that comes in. We have nine of the largest pharma companies that are functioning and Corporate Integrity Agreements. So the size of finds now anywhere from $0.5 billion to $2 billion and that it’s closed major large and makes it very difficult. At this point to introduce new exciting products that can create the necessary attention of the patients and specific disease category and the physician that specialize in that area. So we are leading struggling with that area right now. We think it will get resolved. We’re working closely with the FDA and with our appliance and hoping to get something accomplish. So that we can move must moving and don’t have the type of delays that were currently experience.

Wayne Gattinella

Any other question.

Unidentified Analyst

Can I take it to the consumer side; you have unique franchise on the pharma and physician side. But on the consumer side it’s a very different business. Is there something that you’re seeing where the advertisers are beginning to think the way Ford did, not a number of years ago and when the spending on the Internet completely changed because Ford decided to advertise? Is there something on the consumer side that you’re seeing that we could find in the next year or two years that could become very significant in terms of movement of the dollar store WebMD?

Wayne Gattinella

On the consumer side, it’s a wide swap of verticals. So it’s really hard to talk about as sort of a monolithic segment, the way you can’t in a pharma business. What we see in the consumer side is there are clear big opportunities for us with those companies whose products are very centered in health and wellness. Whereas those consumer companies that are less health oriented tend to look for the cheapest ad impression they can find which is there is platter of potential media depending upon how wide you’re trying to reach.

And our view on the consumer markets right now is we are focused where our strength lies, we don’t want to try to address that market place too wide. There is weakness in certain consumer sectors given the economy and again where we can resonate best is where you have J&J like companies who have a real mission statement and series of products that are geared towards healthy living, whether that be a new mom or an aging adult and those are the areas that we see the greatest growth potential right now. Other questions?

Marty Wygod – Chairman

Thank you very much.

Wayne Gattinella – Chief Executive Officer

Thank you very much and good morning. Thanks for coming.

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