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BASKING RIDGE, N.J., July 22, 1999 - Hooper Holmes, Inc. (AMEX: HH) today reported record results for the second quarter and six months ended June 30, 1999.
Revenues for the second quarter of 1999 rose 19.5% to $54.5 million from $45.6 million in the second quarter of last year. Net income grew at a significantly greater rate to $4.8 million, a 42.2% increase over the $3.4 million reported in last year's second quarter. Earnings per fully diluted share grew to $0.16, a 45.5% increase over the $0.11 reported for the second quarter of 1998. Operating income was up significantly to $8.4 million, a 35.9% improvement from the $6.2 million reported for the same quarter last year.
For the six months ended June 30, 1999, revenues increased 17.2% to $107.4 million from $91.7 million in the comparable period last year. Net income was up a dramatic 45.5% to $ 9.6 million, over the $6.6 million reported for the comparable period last year. Earnings per fully diluted share grew to $0.31, a 41% increase over the $0.22 reported for the first six months of 1998. Operating income rose 39.5% to $16.9 million over the $12.1 million reported for the comparable period last year.
The Company stated that revenue growth for the quarter and six-month period was fueled by unit growth, increased demand for additional tests and related services performed per examination and an expanding market. For the second quarter of 1999, exams generated from non-traditional direct response insurance sales continued to grow, 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 second quarter to 15.4% from the 14.7% reported in last year's fourth quarter. For the first six months of 1999, the Company's operating margin expanded to 15.7% compared to 13.2% for the same period last year. Commenting on the results, Jim McNamee, Chairman and Chief Executive Officer stated, "The Company continued to build momentum in the second quarter driven by solid double-digit revenue growth from both the traditional and direct response insurance sales channels. Sales generated by the internet and technology driven direct response channels accounted for 17% of our sales in the second quarter compare to 11% in the same period last year and reflects a 7% increase over the sequential 1999 first quarter. This is primarily attributable to term life insurance applicants sourcing more of their needs through insurance brokers over the internet or by toll free quoting services. Importantly, our insurance company clients outsource more of the services we supply when applications originate from this growing sales channel. And, at the same time, revenue resulting from traditional insurance sales channels also continues to increase, growing 13% over last year's second quarter."
"We expect this evolution of the insurance industry to continue for the foreseeable future and are committed to providing our customers the superior professional health information services which they have come to expect and rely on from Hooper Holmes. This in turn will drive greater operating efficiencies leading to increased cash flow and earnings," Mr. McNamee added. "Accretive acquisitions that complement our core business remain part of our growth strategy going forward as well."
The Company also stated that Heritage Labs, its majority owned clinical reference laboratory, continues on plan. The Company expects to begin cross-selling these services in the third quarter and the subsidiary to be slightly accretive to 1999 earnings beginning in the fourth quarter. 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.
1999 CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
Three Months Six Months
ended June 30 ended June 30
1999 1998 1999 1998
Revenues $54,472 45,569 107,411 91,680
Cost of operations 37,540 31,819 73,430 63,433
Gross profit 16,932 13,750 33,981 28,247
Selling, general and
administrative expenses 8,499 7,546 17,070 16,124
Operating income 8,433 6,204 16,911 12,123
Other income (expense) (10) 0 (19) 0
Interest expense 233 187 439 316
Interest income 23 (56) 26 (95)
Other 246 131 446 222
Income before income
taxes 8,679 6,335 17,357 12,345
Income taxes 3,858 2,945 7,785 5,766
Net income 4,821 3,390 9,572 6,579
Net income per
common share:
Basic $0.17 $ 0.12 $0.34 $0.23
Diluted $0.16 $ 0.11 $0.31 $0.22
Weighted average shares
outstanding (1)
Basic 28,745,066 28,162,455 28,569,375 28,044,488
Diluted 30,740,177 30,050,593 30,512,416 29,776,708
Note: Per share calculations are adjusted to reflect a two for
one stock split effective January 8, 1999.
HOOPER HOLMES, INC. CONSOLIDATED BALANCE SHEET
June 30, Dec. 31,
1999 1998
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 34,877,002 $29,752,361
Accounts receivable 23,364,188 18,145,856
Other current assets 5,809,249 5,396,202
Total current assets 64,050,439 53,294,419
Property, plant and equipment:
Land and land improvements 618,972 591,213
Building 4,494,904 4,236,358
Furniture, fixtures and equipment 7,998,219 17,345,109
Leasehold improvements 318,843 315,545
Total property, plant and equipment 23,430,938 22,487,225
Less: Accumulated depreciation 15,056,705 14,166,163
Net property, plant and equipment 8,374,233 8,321,062
Cost in excess of net assets of
acquired companies, net 16,017,321 16,398,245
Intangible assets, net 6,047,924 6,728,112
Other assets 401,256 274,547
Total assets $94,891,173 $85,016,385
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable $450,000 $450,000
Accounts payable 7,161,254 6,606,518
Accrued expenses:
Insurance benefits 1,565,171 1,662,747
Salaries, wages and fees 895,639 2,356,582
Payroll and other taxes 203,895 204,893
Income taxes payable 3,230,785 3,315,758
Discontinued operations 1,578,630 2,845,007
Other 1,343,004 2,377,001
Total current liabilities 16,428,378 19,818,506
Deferred income taxes 2,181,230 2,518,487
Minority interest 270,755 385,441
Stockholders' equity;
Common stock, par value $.04 per share;
authorized 80,000,000 shares
issued 28,933,726 in 1999 and 28,379,964
in 1998 1,157,349 1,135,199
Additional paid-in capital 34,352,028 29,515,099
Retained earnings 41,474,073 32,616,294
76,983,450 63,266,591
Less:
Treasury stock at cost, 104,332
shares in 1999 and 1998 972,640 972,640
Total stockholders' equity 76,010,810 62,293,951
Total liabilities and stockholders'
equity $ 94,891,173 $ 85,016,385
CONTACT: Hooper Holmes, Inc.
Fred Lash
Chief Financial Officer
908/766-5000
or
Edward J. Bisno/Jill Zames
Stacy Nield - Media
Morgen-Walke Associates
212/850-5600
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