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BASKING RIDGE, N.J., Feb 25, 2004 -- Hooper Holmes, Inc. (Amex: HH) today reported financial results for the fourth quarter and twelve months ended December 31, 2003. Both revenue and operating results were consistent with expectations.
Total revenues for the quarter increased 10.8% to $75.6 million from $68.2 million in the fourth quarter of 2002. Net income was $2.8 million, or $0.04 per diluted share, compared to $4.4 million, or $0.07 per diluted share, in the 2002 fourth quarter. Selling, general, and administrative expenses in the fourth quarter of 2003 included additional expenses associated with the companies acquired in late 2002 and 2003 and approximately $600,000 ($0.005 per diluted share) in legal expenses related to an agreement with a client. The Company does not expect to incur any material additional legal expenses with respect to this client agreement.
Revenues for the Company's Health Information Business Unit ("HIBU"), comprised of Portamedic, Infolink, Heritage Labs and Medicals Direct Group (our UK subsidiary acquired in August 2002), grew 7.4% to $67.7 million compared to $63.1 million in last year's fourth quarter. Fourth quarter revenue growth in the HIBU reflects strong performance from Medicals Direct Group, Heritage Labs and Infolink, which was offset by lower revenue from Portamedic due to continued softness in life insurance application activity and competitive pricing in the life insurance market.
Revenues for the Company's Diversified Business Unit ("DBU"), including D&D Associates which was acquired in October 2002, were $7.9 million in the fourth quarter of 2003 compared to $8.3 million in the third quarter of 2003 due to lower automobile claims activity in New York state and certain clients distributing claims cases more evenly among its service providers.
Jim McNamee, Chairman, President and Chief Executive Officer of Hooper Holmes, stated, "2003 was a good year for Hooper Holmes. In the HIBU, our ability to generate revenue growth despite continued softness in the life insurance industry underscores the strength of our business strategy to broaden our service offering and expand internationally in order to reduce our dependence on life insurance application activity.
The HIBU's performance was generated by: continuing favorable trends in the U.K. life insurance market driving strong revenue growth in Medicals Direct, which, as a part of Hooper Holmes consolidated results since August of 2002, increased its revenues $5.1 million from $3.0 million in the fourth quarter of 2002 to $8.1 million in the fourth quarter of 2003; Heritage Labs, which generated 34% revenue growth due to continued market share gains; and Infolink, which generated 15% revenue growth on the success of it's new state-of-the-art call center. Additionally, amid continued softness and rising competition, management believes it maintained its share of the U.S. paramedical examinations market.
In our parallel operating division, the DBU, we made good progress refining the operating infrastructure to make way for expanded profitability in the long term and implemented important strategic initiatives to expand our medical evaluation services practice into new fields-such as workers' compensation."
For the year ended December 31, 2003, Hooper Holmes's revenues increased 15.3% to $300.2 million from $260.3 million in 2002. Net income for 2003 was $15.8 million, or $0.24 per diluted share, which included over $1 million ($0.01 per diluted share) of the previously mentioned legal expenses and the additional SG&A expense of acquired companies in late 2002 and 2003. Throughout 2004, we expect our SG&A cost levels to steadily improve, and in the long-term, we believe SG&A expense will return to more traditional levels. Reported net income for 2002 was $14.3 million, or $0.21 per diluted share. Net income for 2002 included a charge of $4.1 million, or $0.06 per diluted share, related to the Company's write-down of its investment in e-Nable Corporation.
Mr. McNamee added, "Capitalizing on our strategic progress in the DBU, in October, we purchased Medimax, Inc. and entered the Pennsylvania and New Jersey independent medical examination (IME) markets and in early January 2004, we entered New York's workers' compensation IME market with our acquisition of Allegiance Health Services, Inc. The combination of Allegiance and D&D Associates creates one of the largest IME providers in New York State, with superior geographic coverage, expertise in automobile no-fault and workers' compensation insurance and an impressive operating infrastructure.
Looking ahead, we expect 2004 to be another solid year for Hooper. For the full-year 2004, we expect revenues to range between $325 million and $335 million, with earnings in the range of $0.27 to $0.29 per diluted share."
Hooper Holmes will host a conference call today to discuss fourth quarter and year end 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 provides outsourced risk assessment services, including underwriting and claims information to the life, health, automobile, and workers' compensation insurance industries. The Company provides these health information services through over 275 locations nationwide and in the United Kingdom.
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 Twelve Months ended
December 31, December 31,
2003 2002 2003 2002
Revenues $75,609 $68,221 $300,182 $260,317
Cost of operations 54,830 49,098 213,709 185,760
Gross profit 20,779 19,123 86,473 74,557
Selling, general and
administrative
expenses 15,743 12,347 59,679 45,935
Investment reserve 0 0 0 6,750
Operating income (loss) 5,036 6,776 26,794 21,872
Other income (expense):
Interest expense (173) (27) (443) (113)
Interest income 185 383 768 2,309
Other (expense) income,
net (145) (67) (820) (619)
(133) 289 (495) 1,577
Income before
income taxes 4,903 7,065 26,299 23,449
Income taxes 2,122 2,642 10,452 9,156
Net income $2,781 $4,423 $15,847 $14,293
Earnings per share:
Basic $0.04 $0.07 $0.24 $0.22
Diluted $0.04 $0.07 $0.24 $0.21
Weighted average number
of shares:
Basic 64,803,095 64,505,296 64,773,346 64,868,163
Diluted 66,560,189 66,288,419 66,598,604 67,229,119
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
12/31/03 12/31/02
ASSETS
Current Assets:
Cash and cash equivalents $28,291,019 $23,298,151
Marketable securities 10,603,332 22,761,101
Accounts receivable, net 34,663,082 27,809,521
Other current assets 6,569,707 6,823,818
Total current assets 80,127,140 80,692,591
Property, plant and equipment: 33,736,508 30,620,147
Less: Accumulated depreciation
and amortization 24,152,655 21,924,363
Property, plant and equipment, net 9,610,853 8,695,784
Goodwill, net 135,130,744 117,075,544
Intangible assets, net 29,617,156 28,474,439
Other assets 810,358 1,291,172
Total assets $255,296,251 $236,229,530
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $1,000,000 $172,776
Accounts payable 12,106,987 10,436,388
Accrued expenses:
Insurance benefits 149,613 484,748
Salaries, wages and fees 1,478,189 1,816,791
Payroll and other taxes 552,464 449,093
Income taxes payable 3,116,446 2,703,713
Other 8,714,175 5,853,132
Total current liabilities 27,117,874 21,916,641
Long term debt, less current maturities 2,028,363 3,313,983
Other long term liabilities 4,554,160 806,195
Deferred income taxes 1,758,879 3,483,114
Minority interest 358,705 902,650
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 127,487,718 128,079,363
Accumulated other comprehensive income 855,719 160,873
Retained earnings 108,613,932 96,009,551
239,657,332 226,949,750
Less: Treasury stock at cost
(2,662,151 and 2,754,151 shares) 20,179,062 21,142,803
Total stockholders' equity 219,478,270 205,806,947
Total liabilities and
stockholders' equity $255,296,251 $236,229,530
Contacts: Fred Lash, Chief Financial Officer
908-766-5000
Financial Dynamics
Investors - Tiernan Cavanna or Lanie Fladell
Media - Sean Leous
212-850-5600
http://www.hooperholmes.com
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