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BASKING RIDGE, N.J., Aug. 9 -- Hooper Holmes, Inc. (Amex: HH - News) today announced financial results for the second quarter and six months ended June 30, 2006.
For the three months ended June 30, 2006, total revenues decreased 10% to $75.6 million compared to $84.4 million in the second quarter 2005. The Company incurred a net loss of $0.5 million or $(0.01) per diluted share compared to net income of $3.1 million or $0.05 per diluted share in the second quarter 2005. The net loss for the second quarter 2006 includes $0.5 million ($0.3 million after tax) of restructuring charges, primarily relating to employee severance and branch office closure costs. The Company's net income in the second quarter of 2005 was not affected by restructuring charges.
For the first six months of 2006, total revenues were $152.4 million compared to $166.4 million in the comparable period of 2005, a decrease of 8%. The Company's net loss for the first six months of 2006 totaled $1.8 million, or $(0.03) per diluted share, compared to net income of $5.1 million, or $0.08 per diluted share in the comparable period of 2005. The 2006 net loss includes $1.7 million ($0.9 million after tax) of restructuring and other charges. The net income for the first six months of 2005 included $1.0 million ($0.6 million after tax) pertaining to restructuring charges.
Second Quarter 2006 Results by Division
Health Information Division (HID)
The HID reported a decline in second quarter revenues to $67.4 million compared to $74.2 million in 2005, due primarily to continued weakness in the Company's core paramedical business.
- Portamedic revenues decreased 10% to $40.6 million, compared to
$44.9 million in the second quarter 2005. The decrease is a result of
fewer paramedical exams being completed during the quarter, primarily
attributable to the overall decline in life insurance activity.
- Infolink reported revenues of $8.8 million, an increase of 9% compared
to $8.1 million in the second quarter of 2005. The increase reflects a
greater number of tele-interviewing reports generated from an
increasing number of customers.
- Medicals Direct Group revenues decreased 15% to $9.5 million compared
to $11.2 million in the same period of 2005. The decrease is primarily
due to a decline in medical screenings and outsourced underwriting
revenues. The decline is partially attributable to a weaker U.K.
housing market, resulting in fewer life insurance policies, which are
customarily purchased in conjunction with home mortgages.
- Heritage Labs revenues decreased 15% to $4.5 million compared to
5.3 million in the same period of 2005, reflecting fewer specimens
tested.
- Mid-America Agency Services (MAAS) reported revenues of $4.0 million, a
decline of $0.7 million compared to the second quarter of 2005, as a
result of a reduction in life insurance applications.
Claims Evaluation Division (CED)
The CED reported second quarter revenues of $8.2 million, a decline of 20% compared to $10.2 million in the second quarter 2005. The decrease was primarily a result of decreased claims activity within its current customer base and a reduction in peer reviews.
Strategic Review Update
The Company's previously announced full-scale Strategic Review is on schedule and expected to be completed in September. EHS Partners is advising in the process of identifying efficiency improvements and cost savings, in turn improving the overall performance of the Company. The Company intends to update the market on the conclusions of the review, including the implementation timetable and related financial impact, with the release of its third quarter financial results.
James Calver, Chief Executive Officer of Hooper Holmes, commented, "I am pleased with our direction as we approach the end of our Strategic Review. We have laid the foundation to begin implementation of the recovery process during the fourth quarter. We remain confident that the changes we have already implemented, combined with additional anticipated improvements to our operations, will strengthen the organization. This will provide future opportunities for revenue growth and profitability. As we have said in the past, 2006 is about correcting past imbalances and we look forward to a recovery that we expect to see in 2007 and beyond."
Hooper Holmes will host a conference call on Thursday, August 10, 2006 to discuss second quarter results at 11:00 a.m. Eastern Time. The call is accessible by dialing (800) 779-9618 or (312) 470-7054, password: Hooper Holmes. The call will also be broadcast live over the Internet, and is accessible at the Company's website located at http://www.hooperholmes.com. In addition, an online archive of the broadcast will be available within two hours of the live call until the next quarterly conference call.
Hooper Holmes provides outsourced risk assessment services to the life insurance industry through over 250 locations nationwide and in the United Kingdom, as well as claims evaluation information services to the automobile and workers' compensation insurance industries.
Certain information contained herein includes information that is forward-looking. The matters referred to in forward-looking statements may be affected by the risks and uncertainties involving the Company's business.These forward-looking statements are qualified in their entirety by cautionary statements contained in the Company's Securities and Exchange Commission filings. The Company disclaims any obligation to update these forward-looking statements.
HOOPER HOLMES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share data)
Three Months ended Six Months ended
June 30, June 30,
2006 2005 2006 2005
(Restated) (Restated)
Revenues $ 75,637 $ 84,389 $ 152,438 $ 166,418
Cost of operations 56,864 60,689 115,172 119,561
Gross profit 18,773 23,700 37,266 46,857
Selling, general and
administrative expenses 19,192 18,458 38,545 36,944
Restructuring and other
charges 463 - 1,732 1,041
Operating income (loss) (882) 5,242 (3,011) 8,872
Other income (expense):
Interest expense (98) (112) (186) (292)
Interest income 47 76 85 123
Other expense, net (87) (131) (202) (227)
(138) (167) (303) (396)
Income (loss) before
income taxes (1,020) 5,075 (3,314) 8,476
Income tax (benefit)
provision (556) 1,982 (1,499) 3,351
Net income (loss) $ (464) $ 3,093 $ (1,815) $ 5,125
Earnings (loss) per share:
Basic $ (0.01) $ 0.05 $ (0.03) $ 0.08
Diluted $ (0.01) $ 0.05 $ (0.03) $ 0.08
Weighted average number
of shares:
Basic 66,288,345 65,283,711 66,242,798 65,261,409
Diluted 66,288,345 66,255,343 66,242,798 66,358,120
HOOPER HOLMES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
June 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $ 4,720 $ 11,683
Marketable securities 192 383
Accounts receivable, net 43,249 42,121
Deferred income taxes 1,318 1,295
Income tax receivable 8,806 5,612
Other current assets 4,878 4,907
Total current assets 63,163 66,001
Property, plant and equipment, at cost 44,039 40,563
Less: Accumulated depreciation and
amortization 28,994 27,085
Property, plant and equipment, net 15,045 13,478
Goodwill 42,426 40,038
Intangible assets, net 10,865 12,203
Deferred income taxes 28,575 30,269
Other assets 478 342
Total assets $ 160,552 $ 162,331
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt $ - $ 1,000
Accounts payable 12,679 13,706
Accrued expenses 18,280 17,523
Total current liabilities 30,959 32,229
Other long term liabilities 1,469 1,200
Commitments and
Contingencies
Stockholders' equity:
Common stock, par value $.04 per share;
authorized 240,000,000 shares, issued
67,499,074 as of June 30, 2006 and
December 31, 2005 2,700 2,700
Additional paid-in capital 120,571 121,278
Accumulated other comprehensive income 984 354
Retained earnings 12,759 14,574
137,014 138,906
Less: Treasury stock at cost 1,180,795
shares and 1,328,795 shares as of
June 30, 2006 and December 31, 2005,
respectively 8,809 10,004
Total stockholders' equity 128,124 128,902
Total liabilities and stockholders'
equity $ 160,552 $ 162,331
Contacts: James Calver, Chief Executive Officer of Hooper Holmes
+1-908-766-5000
Investors
Evan Smith, CFA
Media - Sean Leous
Financial Dynamics
+1-212-850-5600
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