|
BASKING RIDGE, N.J., Oct. 24, 2002 -- Hooper Holmes, Inc. (Amex:HH) today reported financial results for the third quarter and nine months ended September 30, 2002.
Revenues for the quarter increased 4% to $59.6 million from $57.2 million in the third quarter last year. Net income, as adjusted to exclude an investment reserve recorded for e-Nable, was $3.2 million, or $0.05 per diluted share, approximately the same as the $3.2 million, or $0.05 per diluted share, reported in the 2001 third quarter. Third quarter 2002 results reflect softness in life insurance application activity and an increase in certain elements of cost of operations. Including the investment reserve for e-Nable, actual net income for the third quarter 2002 was $0.1 million. The Company recorded a write-down of the remaining carrying value of its investment in e-Nable Corporation, which resulted in an after-tax charge of $3.1 million, or $0.046 per diluted share. The adjustment was based on the further assessment of the carrying value of the investment, given that e-Nable has been unsuccessful in its attempt to raise additional capital. e-Nable is, however, partnering with a major public corporation to outsource certain operating needs to sustain itself until the capital markets are more receptive. As stated previously, the Company and e-Nable are firmly committed to pursuing the promising strategic initiatives offered by e-Nable.
Jim McNamee, Chairman, President and Chief Executive Officer of Hooper Holmes, commented, "Given the sudden downturn in life insurance application activity, we are pleased to report respectable third quarter results, before the investment reserve, reflecting the strength and sustainability of our business model. To that end, we continue to aggressively pursue cost reduction initiatives and remain committed to garnering additional operating leverage from our existing infrastructure."
Hooper Holmes also announced today that it has entered into a definitive agreement to acquire privately held D & D Associates, a $30 million provider of Independent Medical Examinations. The acquisition is expected to close by November of 2002 and to be accretive on an annual basis.
Mr. McNamee added, "D & D's financial performance testifies to the strength of its business, as it has a solid track record of revenue growth and profitability and no debt. D & D expects to grow 2002 revenues by approximately 25% over 2001 revenues of approximately $24 million. We are very excited for the opportunity to enter the attractive $2 to $4 billion IME market."
Commenting on the transaction, Mr. McNamee stated, "This acquisition, coupled with the recently acquired Medicals Direct Group, our United Kingdom based paramedical examination company, is an important step in the implementation of our strategy to build our presence in areas that complement our core health information business."
For the nine months ended September 30, 2002, Hooper's revenues increased 6% to $192.1 million from $181.6 million in last year's comparable period. Net income for the first nine months of 2002, as adjusted to exclude investment reserves, grew 22% to $14.0 million, or $0.21 per diluted share, compared to $11.4 million, or $0.17 per diluted share in last year's first nine months. Including the pre-tax charges related to e-Nable of $1.6 million in the second quarter and $5.1 million in the third quarter 2002, actual net income for the first nine months of 2002 was $9.9 million, or $0.15 per diluted share. Nine months results in 2001 would have been approximately $0.02 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.
Looking ahead, Mr. McNamee concluded, "Long-term, the life insurance market outlook remains favorable. We are continuing to make gains in our markets and secure significant new customers for our laboratory. Given the third quarter results, and anticipating growth in the fourth quarter over last year, we expect revenues for 2002 to range between $258 million and $262 million, and earnings, before the e-Nable charges, to grow 15-17% over 2001. We expect to return to the 8-10% revenue growth range in the next twelve months."
Hooper Holmes will host a conference call today to discuss third 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 until the next quarterly conference 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, Nine Months ended
September 30 September 30,
2002 2001 2002 2001
Revenues $59,591 $57,238 $192,096 $181,595
Cost of operations 43,727 41,482 136,662 130,086
Gross profit 15,864 15,756 55,434 51,509
Selling, general and
administrative expenses 11,063 10,913 33,588 34,212
Loss on investment 5,120 0 6,750 0
Operating income (loss) (319) 4,843 15,096 17,297
Other income (expense):
Interest expense (28) (46) (86) (165)
Interest income 653 856 1,926 2,692
Other (expense) income, net (125) (59) (553) (219)
500 751 1,287 2,308
Income before income taxes 181 5,594 16,383 19,605
Income taxes 46 2,348 6,514 8,189
Net income $135 $3,246 $9,869 $11,416
Earnings per share:
Basic $0.00 $0.05 $0.15 $0.18
Diluted $0.00 $0.05 $0.15 $0.17
Weighted average
number of shares:
Basic 64,834,518 64,944,481 64,990,448 65,027,607
Diluted 66,820,460 67,306,045 67,544,152 67,820,431
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
09/30/2002 12/31/01
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $41,645,219 $52,571,616
Marketable securities 33,839,367 31,225,891
Accounts receivable, net 25,908,819 24,939,364
Other current assets 6,586,953 5,676,399
Total current assets 107,980,358 114,413,270
Property, plant and equipment: 29,955,716 28,188,908
Less: Accumulated depreciation
and amortization 21,713,346 20,355,456
Property, plant and equipment, net 8,242,370 7,833,452
Goodwill, net 94,937,873 81,515,202
Intangible assets, net 10,746,756 11,995,686
Investment 0 5,218,750
Other assets 3,494,448 994,383
Total assets $225,401,805 $221,970,743
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $143,342 $239,669
Accounts payable 8,368,569 7,479,797
Accrued expenses:
Insurance benefits 179,435 386,093
Salaries, wages and fees 1,728,760 3,368,318
Payroll and other taxes 508,802 289,779
Income taxes payable 1,894,328 4,683,762
Other 4,406,411 3,906,662
Total current liabilities 17,229,647 20,354,080
Long term debt, less current maturities 3,381,860 3,280,496
Other long term liabilities 652,410 0
Deferred income taxes 2,029,621 1,741,617
Minority interest 763,475 187,676
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 130,417,612 134,482,010
Accumulated other comprehensive income 222,963 201,589
Retained earnings 92,229,298 84,308,815
225,569,836 221,692,377
Less: Treasury stock at cost
(3,134,351 and 2,949,459 shares) 24,225,044 25,285,503
Total stockholders' equity 201,344,792 196,406,874
Total liabilities and stockholders'
equity $225,401,805 $221,970,743
Contacts:
Fred Lash, Chief Financial Officer
908-766-5000
FD Morgen-Walke
Investors - Lauren Levine or Lanie Fladell
Media - Sean Leous
212-850-5600
|