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BASKING RIDGE, N.J., Nov. 14 -- Hooper Holmes, Inc. (Amex: HH) today announced financial results for the third quarter and nine months ended September 30, 2006.
For the three months ended September 30, 2006, total revenues decreased 9% to $70.2 million compared to $77.4 million in the third quarter 2005. The Company incurred a net loss of $42.0 million or $(0.63) per share compared to a net loss of $2.4 million or $(0.04) per share in the third quarter 2005. The net loss for the third quarter 2006 includes a non-cash charge of $31.8 million related to an increase in the valuation allowance for deferred tax assets and a charge of approximately $6.8 million pertaining to restructuring and other charges. Third quarter 2005 results included approximately $4.6 million in restructuring and other charges.
For the first nine months of 2006, total revenues were $222.7 million compared to $243.8 million in the comparable period of 2005, a decrease of 9%. The Company's net loss for the first nine months of 2006 totaled $43.8 million, or $(0.66) per share, compared to net income of $2.7 million, or $0.04 per diluted share, in the comparable period of 2005. The net loss for the first nine months of 2006 includes a non-cash charge of $31.8 million related to an increase in the valuation allowance for deferred tax assets. Restructuring and other charges included in these results are $8.6 million and $5.7 million for the first nine months of 2006 and 2005, respectively.
Third Quarter 2006 Results by Division
Health Information Division (HID)
The HID reported a decline in third quarter revenues to $62.5 million compared to $68.2 million in 2005, due primarily to continued weakness in the Company's core paramedical business.
* Portamedic revenues decreased 8% to $36.9 million, compared to $40.2
million in the third 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 application
activity.
* Infolink reported revenues of $7.7 million, a decrease of 3% compared to
$7.9 million in the third quarter of 2005. The decrease reflects fewer
Attending Physician Statement (APS) orders, partially offset by an
increase in tele-interviewing revenue.
* Medicals Direct Group revenues were down 11% to $9.6 million compared to
$10.9 million in the same period of 2005. The decrease is primarily due
to a decline in our medical screenings and underwriting revenue. The
decline is partially attributable to a weaker UK housing market, among
other factors, resulting in fewer life insurance policies, which are
customarily purchased in conjunction with home mortgages.
* Heritage Labs revenues fell 8% to $4.3 million compared to $4.7 million
in the same period of 2005, reflecting fewer units being tested.
* Mid-America Agency Services (MAAS) reported revenues of $4.0 million, a
decline of $0.5 million compared to the third quarter of 2005, the
result of a reduction in life insurance applications.
Claims Evaluation Division (CED)
The CED reported third quarter revenues of $7.7 million, down 17% compared to $9.2 million in the third quarter 2005. The decrease was primarily a result of fewer independent medical exams and peer review services ordered by our current customers.
James Calver, Chief Executive Officer of Hooper Holmes, commented, "Our third quarter results, along with our strategic review findings, underscore our need to implement change at Hooper Holmes. We remain optimistic that we have laid the groundwork for a recovery in our business through the implementation of the Strategic Review announced last week. This is focused on reducing our cost base, restoring growth in the core businesses, maximizing use of our existing assets, and seeking opportunities in new areas of business. We believe this is the right approach to improve our financial performance, position Hooper Holmes for long-term growth and create value for shareholders."
On November 10, 2006, the Company held a conference call to present the findings of their recently completed strategic review. To summarize, management has developed plans which, when fully implemented, are expected to result in approximately $17.5 million of additional operating income on an annual basis. An online archive of the call is available on the Company's website located at http://www.hooperholmes.com.
Hooper Holmes, Inc. provides outsourced risk assessment services, including underwriting and claims information to the life, health, automobile, and workers' compensation insurance industries. The Company provides these health information services through over 250 locations nationwide and in the United Kingdom.
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.
2006 CONSOLIDATED STATEMENTS OF INCOME
(unaudited: in thousands, except share data)
Three Months ended Nine Months ended
September 30, September 30,
2006 2005 2006 2005
Revenues $70,216 $77,429 $222,655 $243,847
Cost of operations 54,007 58,608 169,179 178,170
Gross profit 16,209 18,821 53,476 65,677
Selling, general
and administrative
expenses 19,332 18,220 57,876 55,163
Restructuring and
other charges 6,817 4,609 8,550 5,650
Operating income
(loss) (9,940) (4,008) (12,950) 4,864
Other income (expense):
Interest expense (132) (119) (319) (411)
Interest income 51 83 136 206
Other expense, net (102) (126) (305) (353)
(183) (162) (488) (558)
Income (loss) before
income taxes (10,123) (4,170) (13,438) 4,306
Income tax (benefit)
provision 31,835 (1,734) 30,336 1,618
Net income (loss) $(41,958) $(2,436) $(43,774) $2,688
Earnings (loss) per
share:
Basic $(0.63) $(0.04) $(0.66) $0.04
Diluted $(0.63) $(0.04) $(0.66) $0.04
Weighted average
number of shares:
Basic 66,972,197 65,527,594 66,488,603 65,351,112
Diluted 66,972,197 65,527,594 66,488,603 66,080,614
Hooper Holmes, Inc.
Consolidated Balance Sheets
(unaudited; in thousands except share data)
September 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $6,816 $11,683
Marketable securities - 383
Accounts receivable, net 40,656 42,121
Deferred income taxes - 1,295
Income tax receivable 2,614 5,612
Other current assets 4,799 4,907
Total current assets 54,885 66,001
Property, plant and equipment, at cost 45,500 40,563
Less: Accumulated depreciation and amortization 29,967 27,085
Property, plant and equipment, net 15,533 13,478
Goodwill 41,645 40,038
Intangible assets, net 10,964 12,203
Deferred income taxes - 30,269
Other assets 781 342
Total assets $123,808 $162,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $- $1,000
Accounts payable 11,646 13,706
Accrued expenses 21,527 17,523
Total current liabilities 33,173 32,229
Other long term liabilities 1,187 1,200
Commitments and Contingencies
Stockholders' equity:
Common stock, par value $.04 per share;
authorized 240,000,000 shares, issued
67,651,674 shares and 67,499,074 shares
as of September 30, 2006 and December 31,
2005, respectively 2,706 2,700
Additional paid-in capital 114,549 121,278
Accumulated other comprehensive income 1,464 354
Retained earnings (29,200) 14,574
89,519 138,906
Less: Treasury stock at cost (9,395
shares and 1,328,795 shares
as of September 30, 2006 and December 31,
2005, respectively 71 10,004
Total stockholders' equity 89,448 128,902
Total liabilities and stockholders'
equity $123,808 $162,331
Source: Hooper Holmes, Inc.
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