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BASKING RIDGE, N.J., Feb. 18, 1999 -- Hooper Holmes, Inc. (Amex:
HH) today reported record operating results for the fourth quarter
and year ended December 31, 1998, on a post split basis.
Revenues for the fourth quarter increased 13% to $48.1 million,
the fourth consecutive quarter of double digit revenue growth.
Operating income grew at a significantly greater rate to $7.1
million, a 40% increase over the $5.1 million reported for the same
period last year. Net income from continuing operations grew to
$4.1 million, a 43% increase over net income of $2.9 million
reported for the comparable period last year. In addition, an after
tax charge from discontinued operations of $1.5 million was
recorded during the quarter. The charge evolved from residual
workers' compensation charges and certain reimbursement issues
associated with the divestiture of Nurse's House Call in fiscal
1995. Excluding the discontinued operations charge, split adjusted
earnings per diluted share for the fourth quarter were $0.14
compared with the $0.10 reported in the fourth quarter of 1997.
For the year ended December 31, 1998, revenue increased 12% to
$185.2 million. Operating income grew 57% to $25.6 million,
compared to the $16.3 million reported for the twelve month period
of fiscal 1997. Income from continuing operations rose 62% to $14.2
million over the $8.8 million reported for the comparable period
last year. Split adjusted earnings per diluted share, excluding the
charge, increased 55% to $0.48 over the $0.31 reported last
year.
The Company's previously announced 2-for-1 stock split was
effective January 8, 1999 and the shares were distributed on
January 29, 1999. The split increased the total number of fully
diluted shares outstanding to approximately 29.8 million. On a
pre-split basis, earnings per diluted share from continuing
operations for the fourth quarter and year 1998 were $0.27 and
$0.95, respectively.
The Company stated that revenue growth for the quarter and the
year was fueled by an increase in the demand for additional tests
and services performed per insurance exam and an increase in market
share. For the fourth quarter of 1998, exams generated from
non-traditional direct response insurance sales remained strong, as
did the traditional agent/broker outlets. The increased sales
volume combined with the Company's ability to leverage its existing
nationwide network of offices and state-of-the-art technology,
resulted in the expansion of Hooper Holmes' operating margin in the
fourth quarter to 14.7% from 11.9% reported in last year's fourth
quarter. For fiscal 1998, operating margin expanded to 13.8% from
last fiscal year's 9.9%.
Jim McNamee, Chairman and Chief Executive Officer, commented,
"1998 was another year of significant accomplishments for Hooper
Holmes, demonstrated by our continued improvement in operating
results. We are growing in both the traditional channels of
insurance sales as well as the direct response channels. The strong
cash flow generated from operations continues to dramatically
strengthen Hooper Holmes' solid balance sheet which is free of
long-term debt and has shareholder's equity of approximately $62
million."
Mr. McNamee continued, "Along with our strong revenue and
earnings growth we continued to focus on our growth strategies.
During the quarter, we acquired a majority interest in Heritage
Labs International, LLC, a provider of a wide range of laboratory
testing services, primarily to insurance companies for the purpose
of underwriting life and health insurance policies, as a
longer-term platform to expand the services we provide.
Additionally, the Board of Directors split the stock two-for-one
for the second time in less than two years and increased the cash
dividend payout by 25%."
"Looking ahead, we expect to continue building our core business
and capitalize on outsourcing service opportunities to our growing
client base. As Hooper Holmes enters its second hundred years in
business, we are advantageously positioned to benefit from the
market dynamics of the life and health insurance industries and
strategically increase our position in the alternate site health
care information services market," Mr. McNamee stated.
The Company stated that including the charge from discontinued
operations, net income for the fourth quarter was $2.6 million, or
$0.09 per diluted share on a split adjusted basis. Net income for
fiscal 1998 was $12.7 million, or $0.43 per diluted share, compared
to $8.8 million, or $0.31 per diluted share, reported in fiscal
1997 on a split adjusted basis.
Hooper Holmes, Inc. provides medical and other underwriting
information on insurance policy applicants to the major companies
in the life and health insurance industry. The Company provides
these health information services through its 200 locations
nationwide.
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 involved
in the Company's business. These forward-looking statements are
qualified in the entirety by cautionary statements contained in the
Company's Securities and Exchange Commission filings.
HOOPER HOLMES, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except share and per share amounts)
Three Months ended Twelve Months ended
December 31, December 31,
1998 1997 1998 1997
Revenues $48,147 $42,539 $185,209 $165,353
Cost of operations 34,069 30,656 129,261 119,193
Gross profit 14,078 11,883 55,948 46,160
Selling, general and
administrative expenses 7,008 6,825 30,356 29,816
Operating income 7,070 5,058 25,592 16,344
Other income (expense)
Interest expense (3) (21) (3) (169)
Interest income 246 146 769 296
Other 54 299 (88) 420
297 424 677 547
Income before income
taxes 7,367 5,482 26,269 16,891
Income taxes 3,299 2,631 12,084 8,121
Income from continuing
operations 4,068 2,851 14,185 8,770
Discontinued operations
Loss on disposal,
net of taxes (1,485) 0 (1,485) 0
Loss from discontinued
operations (1,485) 0 (1,485) 0
Net income $2,583 $2,851 $12,700 $8,770
Earnings per share - basic:
Income from continued
operations $0.14 $0.10 $0.50 $0.32
Discontinued operations
- net of taxes $(0.05) $-- $(0.05) $--
Net income $0.09 $0.10 $0.45 $0.32
Earnings per share - diluted:
Income from continued
operations $0.14 $0.10 $0.48 $0.31
Discontinued operations -
net of taxes $(0.05) $-- $(0.05) $--
Net income $0.09 $0.10 $0.43 $0.31
Weighted average
number of shares
-- basic 28,194,049 27,824,294 28,120,685 27,536,668
Weighted average
number of shares
-- diluted 29,984,338 29,183,626 29,834,375 28,564,132
Note: Per share calculations are adjusted to reflect a two for one stock
split effective January 29, 1999.
HOOPER HOLMES, INC.
CONSOLIDATED BALANCE SHEET
December 31, December 31,
1998 1997
ASSETS
Current Assets:
Cash and cash
equivalents $29,752,361 $13,159,431
Accounts receivable
- trade 17,783,256 18,011,490
Accounts receivable
- other 362,600 508,857
Escrow funds 0 0
Refundable income taxes 7,408 23,535
Other current assets 5,388,794 2,458,283
Total current assets 53,294,419 34,161,596
Property, plant and equipment:
Land and land improvements 591,213 591,213
Building 4,236,358 3,931,574
Furniture, fixtures
and equipment 17,345,110 15,675,217
Leasehold improvements 314,544 300,115
Total property, plant
and equipment 22,487,225 20,498,119
Less: Accumulated
depreciation 14,166,163 12,050,903
Net property, plant
and equipment 8,321,062 8,447,216
Cost in excess of net assets
of acquired companies 16,398,245 15,089,108
Intangible assets 6,728,112 7,647,711
Other assets 274,547 595,486
Total assets $ 85,016,385 $ 65,941,117
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities
of long term debt $450,000 $0
Accounts payable 6,606,518 5,577,158
Accrued expenses:
Insurance benefits 1,662,747 1,969,403
Salaries, wages and fees 2,356,582 1,935,277
Payroll and other taxes 204,893 170,152
Income taxes payable 3,315,758 610,487
Discontinued operations 2,845,007 573,970
Other 2,377,000 2,944,248
Total current liabilities 19,818,505 13,780,695
Long term debt, less
current maturities 0 0
Deferred income taxes 2,518,487 3,641,051
Minority interest 385,441 0
Common stock 1,135,199 557,565
Additional paid-in
capital 29,515,099 27,079,265
Retained earnings 32,616,294 20,901,043
63,266,592 48,537,873
Less: Treasury stock 972,640 18,502
Total stockholders'
equity 62,293,952 48,519,371
Total liabilities and
stockholders' equity $85,016,385 $65,941,117
"Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995: Statements in this press
release regarding Hooper Holmes Inc.'s business which are not
historical facts are "forward-looking statements" that involve
risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from
those contained in the forward-looking statements, see "Risk
Factors" in the Company's Annual Report or Form 10-K for the most
recently ended fiscal year.
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