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BASKING RIDGE, N.J., July 25, 2002 -- Hooper Holmes, Inc. (Amex:HH) today reported financial results for the second quarter and six months ended June 30, 2002.
Revenues for the quarter grew 9% to $66.0 million from $60.7 million in the second quarter last year. Net income, before an investment reserve, was $4.9 million, or $0.07 per diluted share, 40% above the $3.5 million, or $0.05 per diluted share, reported in the 2001 second quarter. The Company recorded a 25% write-down to the carrying value of its investment in e-Nable Corporation, which resulted in a pre-tax charge of $1.6 million, or $0.01 per diluted share. The adjustment was estimated based on an assessment of the fair value of the investment and the difficulty e-Nable had in securing additional capital in the recent capital markets. Including this charge, net income for the second quarter 2002 was $3.9 million, or $0.06 per diluted share. Second quarter results in 2001 would have been approximately $0.007 higher, if the discontinuation of goodwill amortization in accordance with the Statement of Financial Accounting Standards No. 142 had been applied in 2001 as the Company was required to do this year.
Jim McNamee, Chairman and Chief Executive Officer, stated, "We are pleased to report solid second quarter results highlighted by a 9% growth in revenues. Certain elements of cost of sales experienced upward pressure in the quarter, which are expected to retreat to more traditional levels in future quarters. In addition, we expanded our operating margin nearly 300 basis points to 12% from 9% in last year's second quarter, before the unusual charge."
"Regarding the e-Nable investment, the Company and e-Nable are firmly committed to continuing to pursue the promising strategic initiatives undertaken over the past 18 months and believe the processing solutions offered by e-Nable will be positively received by the insurance underwriting industry."
For the six months ended June 30, 2002, revenues increased 7% to $132.5 million from $124.4 million in last year's comparable period. Net income grew 31% to $10.7 million, or $0.16 per diluted share, excluding the unusual charge, compared to $8.2 million, or $0.12 per diluted share in the first half of 2001. Including the second quarter charge related to e-Nable, net income for the first six months of 2002 was $9.7 million. Six months results in 2001 would have been approximately $0.014 higher if the discontinuation of goodwill amortization in accordance with the Statement of Financial Accounting Standards No. 142 had been applied in 2001 as the Company was required to do this year.
Mr. McNamee continued, "We continue to focus on growing our business through geographic expansion, investments in technology and diligent cost management. Consistent with this strategy, we are pleased to have announced yesterday our agreement to acquire Medicals Direct Group. Upon completion of the acquisition, Medicals Direct Group will provide Hooper Holmes with the ability to offer services to insurance companies in the United Kingdom and to explore expansion opportunities throughout Europe. As our business continues to track at a strong and sustainable rate, we remain committed to investing in future growth prospects that will further advance our leading position in the paramedical market."
Looking ahead, Mr. McNamee stated, "Based on current information, and the improving life insurance market place, we are raising our full year 2002 guidance. We now expect to generate 8-10% revenue growth and earnings improvement of 20-25% in 2002 over 2001."
Hooper Holmes will host a conference call today to discuss second quarter results at 9:30 a.m. Eastern Time. The call will 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.
Hooper Holmes, Inc. provides health information services on insurance policy applicants to the life insurance industry. The Company provides these health information services through over 300 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 involving 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. The Company disclaims any obligation to update these forward-looking statements.
HOOPER HOLMES INC.
2002 CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
Three Months ended Six Months ended
June 30, June 30,
2002 2001 2002 2001
Revenues $66,015 $60,730 $132,505 $124,357
Cost of operations 47,035 43,829 92,935 88,604
Gross profit 18,980 16,901 39,570 35,753
Selling, general and
administrative
expenses 11,288 11,618 22,525 23,299
Investment reserve 1,630 0 1,630 0
Operating income 6,062 5,283 15,415 12,454
Other income (expense):
Interest expense (29) (55) (58) (119)
Interest income 717 831 1,273 1,835
Other (expense)
income, net (238) (104) (428) (158)
450 672 787 1,558
Income before income
taxes 6,512 5,955 16,202 14,012
Income taxes 2,592 2,462 6,468 5,841
Net income $3,920 $3,493 $9,734 $8,171
Earnings per share:
Basic $0.06 $0.05 $ 0.15 $0.13
Diluted $0.06 $0.05 $ 0.14 $0.12
Weighted average
number of shares:
Basic 65,265,493 64,936,162 65,069,706 65,069,858
Diluted 68,087,145 67,899,474 67,905,998 68,077,624
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
06/30/2002 12/31/01
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $49,826,958 $52,571,616
Marketable securities 35,723,292 31,225,891
Accounts receivable, net 29,124,858 24,939,364
Other current assets 6,272,980 5,676,399
Total current assets 120,948,088 114,413,270
Property, plant and equipment: 28,982,373 28,188,908
Less: Accumulated depreciation
and amortization 21,438,329 20,355,456
Property, plant and equipment, net 7,544,044 7,833,452
Goodwill, net 85,412,900 81,515,202
Intangible assets, net 10,359,009 11,995,686
Investment 4,682,499 5,218,750
Other assets 1,162,660 994,383
Total assets $230,109,200 $221,970,743
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $124,649 $239,669
Accounts payable 7,639,343 7,479,797
Accrued expenses:
Insurance benefits 199,037 386,093
Salaries, wages and fees 1,503,803 3,368,318
Payroll and other taxes 354,045 289,779
Income taxes payable 3,585,135 4,683,762
Other 3,899,497 3,906,662
Total current liabilities 17,305,509 20,354,080
Long term debt, less current maturities 3,346,902 3,280,496
Deferred income taxes 1,560,781 1,741,617
Minority interest 478,419 187,676
Stockholders' equity:
Common stock, par value $.04 per share;
authorized 240,000,000 shares,
issued 67,499,074 in 2002 and 2001 2,699,963 2,699,963
Additional paid-in capital 131,443,659 134,482,010
Accumulated other comprehensive income 142,916 201,589
Retained earnings 92,742,679 84,308,815
227,029,217 221,692,377
Less: Treasury stock at cost
(2,292,451 and 2,949,459 shares) 19,611,628 25,285,503
Total stockholders' equity 207,417,589 196,406,874
Total liabilities and
stockholders' equity $230,109,200 $221,970,743
Contacts:
Hooper Holmes
Fred Lash, Chief Financial Officer
+1-908-766-5000
FD Morgen-Walke
Investors:
Lauren Levine/Lanie Fladell
Media:
Dan Budwick
+1-212-850-5600
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