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BASKING RIDGE, N.J., July 28, 2003 -- Hooper Holmes, Inc. (Amex: HH) today reported financial results for the second quarter and six months ended June 30, 2003.
Revenues for the quarter grew 15% to $76.2 million from $66.0 million in the second quarter last year, reflecting contributions from the Company's acquisitions of D&D Associates (the Diversified Business Unit) and Medicals Direct Group plc, which was added to the Health Information Business Unit in the second half of 2002.
Revenues for the Health Information Business Unit, which includes the Company's Portamedic, Infolink, and Heritage Labs divisions, and the August 2002 acquisition of the Medicals Direct Group, were $67.6 million, or 89% of total revenues. Revenues from Portamedic, Infolink and Heritage Labs were $62.5 million in the second quarter of 2003 versus $66.0 million in the prior year period primarily as a result of an 8% decrease in Portamedic's revenue. This was primarily due to softness in the life insurance market, however, both Infolink and Heritage Labs increased their revenue by 7.0% and 35%, respectively, over the prior year period. Medicals Direct increased its second quarter revenues over 50% to $5.1 million compared to $3.3 million in the first quarter of 2003. Revenues for the Diversified Business Unit, comprised of D&D Associates, were $8.6 million, or 11% of total revenues.
Net income for the 2003 second quarter was $5.1 million, or $0.08 per diluted share, compared to $3.9 million, or $0.06 per diluted share, reported for the second quarter of 2002. Net income for last year's second quarter included a pre-tax charge of $1.6 million, or $0.01 per diluted share after-tax, related to the Company's reserve against the carrying value of its investment in e-Nable Corporation. Net income for the second quarter 2003 versus the corresponding quarter in 2002 was impacted by increased SG&A expenses due to additional SG&A costs resulting from the companies acquired in late 2002, and higher insurance, legal and administrative costs.
Jim McNamee, Chairman and Chief Executive Officer, stated, "We are pleased to report solid second quarter results. Our 15% revenue increase primarily reflects the performance of D&D Associates and Medicals Direct Group. Additionally, we improved our gross margin to 29.3% from 28.8% in last year's second quarter, primarily as a result of the strong profitability of our Independent Medical Examination (IME) business. Due to the progress we've made integrating D&D and Medicals Direct Group and certain expenses that occurred only in the first quarter of 2003, SG&A expense as a percentage of revenues improved to 18.3% versus 20.0% in the first quarter of 2003."
For the six months ended June 30, 2003, revenues increased 14% to $151.0 million from $132.5 million in last year's comparable period. Net income was $9.8 million, or $0.15 per diluted share, compared to $9.7 million, or $0.14 per diluted share, in the first half of last year. Net income for the 2002 six-month period includes the previously disclosed $1.0 million after-tax e-Nable charge. Excluding this charge, net income for the first half of 2002 was $10.7 million, or $0.16 per diluted share.
Mr. McNamee continued, "Our second quarter performance, fueled by the strength of our Diversified Business Unit, underscores the rationale of our business strategy to expand our presence in complementary areas serving the insurance industries. Looking ahead, based on current information, we expect third quarter 2003 revenues to range between $75 million and $78 million. For the full year 2003, we continue to expect revenues to range between $300 million and $320 million, with earnings growth in the range of approximately 20% over 2002 earnings, excluding the total e-Nable charge of $4.1 million after-tax in 2002."
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 after 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 275 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.
2003 CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
Three Months ended Six Months ended
June 30, June 30,
2003 2002 2003 2002
Revenues $76,170 $66,015 $151,020 $132,505
Cost of operations 53,839 47,035 105,938 92,935
Gross profit 22,331 18,980 45,082 39,570
Selling, general and
administrative
expenses 13,976 11,288 28,926 22,525
Loss on investment 0 1,630 0 1,630
Operating income 8,355 6,062 16,156 15,415
Other income (expense):
Interest expense (115) (29) (175) (58)
Interest income 257 717 472 1,273
Other (expense) income,
net (189) (238) (514) (428)
(47) 450 (217) 787
Income before income
taxes 8,308 6,512 15,939 16,202
Income taxes 3,213 2,592 6,186 6,468
Net income $5,095 $3,920 $9,753 $9,734
Earnings per share:
Basic $0.08 $0.06 $0.15 $0.15
Diluted $0.08 $0.06 $0.15 $0.14
Weighted average number of shares:
Basic 64,756,409 65,265,493 64,750,322 65,069,706
Diluted 66,694,179 68,087,145 66,458,515 67,905,998
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
06/30/03 12/31/02
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $16,599,187 $23,298,151
Marketable securities 20,436,074 22,761,101
Accounts receivable, net 33,886,096 27,809,521
Other current assets 5,621,515 6,823,818
Total current assets 76,542,872 80,692,591
Property, plant and equipment: 31,868,122 30,620,147
Less: Accumulated depreciation
and amortization 22,993,284 1,924,363
Property, plant and
equipment, net 8,874,838 8,695,784
Goodwill, net 129,754,897 117,075,544
Intangible assets, net 30,510,296 28,474,439
Other assets 984,270 1,291,172
Total assets $246,667,173 $236,229,530
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt $1,000,000 $172,776
Accounts payable 10,146,313 10,436,388
Accrued expenses:
Insurance benefits 29,613 484,748
Salaries, wages and fees 1,523,109 1,816,791
Payroll and other taxes 542,800 449,093
Income taxes payable 1,652,189 2,703,713
Other 7,481,531 5,853,132
Total current liabilities 22,375,555 21,916,641
Long term debt, less current
maturities 2,051,343 3,313,983
Other long term liabilities 4,567,638 806,195
Deferred income taxes 3,339,344 3,483,114
Minority interest 226,556 902,650
Stockholders' equity:
Common stock, par value $.04 per share;
authorized 240,000,000 shares,
issued 67,499,074 in 2003
and 2002. 2,699,963 2,699,963
Additional paid-in capital 127,677,528 128,079,363
Accumulated other comprehensive
income 148,732 160,873
Retained earnings 104,142,365 96,009,551
234,668,588 226,949,750
Less: Treasury stock at cost
(2,712,651 and 2,754,151 shares) 20,561,851 21,142,803
Total stockholders' equity 214,106,737 205,806,947
Total liabilities and
stockholders' equity $246,667,173 $236,229,530
Contact: Hooper Holmes, Inc.
Fred Lash, Chief Financial Officer
+1-908-766-5000
FD Morgen-Walke
Investors:
Tiernan Cavanna or Lanie Fladell
Media: Sean Leous
+1-212-850-5600
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