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BASKING RIDGE, N.J., March 1, 2005 -- Hooper Holmes, Inc. (HH) today reported financial results for the fourth quarter and full year ended December 31, 2004.
Total revenues for the quarter increased 9.1% to $82.5 million from $75.6 million in the fourth quarter of 2003, reflecting the strong performance of Medicals Direct Group, InfoLink and Heritage Labs as well as $6.9 million in revenues from the Company's acquisitions of MAAS, Allegiance Health and MEG, all of which occurred subsequent to December 31, 2003.
Cost cutting initiatives implemented in the second quarter of 2004 benefited the Company's operating performance. However, such benefits were offset in the fourth quarter by continued revenue declines in the Company's core Portamedic examination business. In addition, $0.7 million (approximately $0.01 per diluted share) of after-tax Sarbanes-Oxley compliance costs and residual costs related to the Company's completed audit committee investigation impacted the Company's performance during the fourth quarter of 2004. For the 2004 fourth quarter, operating profit was $4.1 million compared to $5.0 million in the fourth quarter of the prior year. Fourth quarter net income was $1.9 million, or $0.03 per diluted share, compared to $2.8 million, or $0.04 per diluted share in the 2003 fourth quarter.
Revenues for the Company's Health Information Division ("HID"), formerly the Health Information Business Unit ("HIBU") grew 5.1% to $71.2 million in the 2004 fourth quarter compared to $67.7 million in the fourth quarter of 2003.
The HID's fourth quarter 2004, compared to fourth quarter 2003, performance reflects:
* Medicals Direct's increase in revenues of 38% to $11.2 million from
$8.1 million a year earlier, attributed to aggressive expansion efforts,
select small acquisitions, exceptional customer service and continued
client outsourcing of policy underwriting;
* Infolink's 16% revenue growth;
* Heritage Labs' 9% revenue growth, indicating increased market share;
* A 9% decline in Portamedic's revenue to $45.0 million, due to ongoing
industry softness and pricing pressure; and
* The addition of Mid-America Agency Services, acquired in May 2004, which
reported revenues of $3.7 million in the fourth quarter, an improvement
of 5% over the third quarter of 2004.
Revenues for the Company's Claims Evaluation Division ("CED"), formerly the Diversified Business Unit ("DBU"), increased approximately 43% to $11.3 million in the fourth quarter of 2004 from $7.9 million in the fourth quarter of 2003, as a result of positive revenue improvements from D&D Associates and revenue contributions of $3.2 million from the acquisitions of Allegiance Health and MEG.
Jim McNamee, Chairman, President and Chief Executive Officer of Hooper Holmes, stated, "Our fourth quarter results demonstrate the increased contribution of Medicals Direct, which has exceeded expectations. The management team of Medicals Direct will now be working more closely with the Company's Portamedic examination business. This structural change will better position Hooper Holmes as a full service underwriting and claims management service company. As we move ahead in 2005, the Company is focused on growing its business and achieving improved operating leverage through a modified operating structure and strategic business initiatives.
"I was pleased with the progress of our cost cutting initiatives, in that we have maintained margins on lower revenues in the core paramedical business and we improved margins on a sequential basis in the CED; however, I believe there is more to be done to achieve stronger contributions in the quarters ahead."
For the full year ended December 31, 2004, revenues increased 9.2% to $327.7 million from $300.2 million in the prior year. These year-over-year results reflect:
* Medicals Direct's increase in revenues of 82% to $41.2 million from
$22.6 million a year earlier;
* Infolink's 28% revenue growth;
* Heritage Labs' 11% revenue growth;
* A 9% decline in Portamedic's revenue; and,
* The addition of Mid-America Agency Services, acquired in May, 2004,
which reported revenues of $9.4 million.
Net income was $10.7 million, or $0.16 per diluted share in 2004, compared to $15.8 million, or $0.24 per diluted share, in 2003. Net income in 2004 includes $.9 million after-tax associated with the Company's independent audit committee investigation and $.8 million after-tax associated with compliance with the internal control provisions of the Sarbanes-Oxley Act.
Looking ahead, Mr. McNamee commented, "For the full year 2005, we expect to generate revenues in the range of $345 million to $355 million, reflecting revenue growth in all businesses except our core business. Additionally, we look to continue our cost cutting initiatives. As such, if our core examination business revenues stabilize, we expect diluted earnings per share to grow 15% to 20% above 2004 levels."
Hooper Holmes will host a conference call today to discuss fourth quarter and full year 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 management services, 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.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
Three Months ended Twelve Months ended
December 31, December 31,
2004 2003 2004 2003
Revenues $82,466 $75,609 $327,747 $300,182
Cost of operations 59,821 54,830 235,900 213,709
Gross profit 22,645 20,779 91,847 86,473
Selling, general and
administrative
expenses 18,567 15,743 72,972 59,679
Operating income 4,078 5,036 18,875 26,794
Other income (expense):
Interest expense (182) (173) (742) (443)
Interest income 104 185 355 768
Other expense, net (81) (145) (347) (820)
(159) (133) (734) (495)
Income before
income taxes 3,919 4,903 18,141 26,299
Income taxes 2,009 2,122 7,431 10,452
Net income $1,910 $2,781 $10,710 $15,847
Earnings per share:
Basic $0.03 $0.04 $0.16 $0.24
Diluted $0.03 $0.04 $0.16 $0.24
Weighted average
number of shares:
Basic 65,089,440 64,803,095 64,996,778 64,773,346
Diluted 66,451,191 66,560,189 66,534,421 66,598,604
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
12/31/04 12/31/03
ASSETS
Current Assets:
Cash and cash equivalents $16,972,763 $18,651,019
Marketable securities 6,886,612 20,243,332
Accounts receivable, net 42,001,091 34,663,082
Other current assets 7,241,973 6,569,707
Total current assets 73,102,439 80,127,140
Property, plant and equipment: 36,739,824 33,004,834
Less: Accumulated depreciation
and amortization 25,539,505 23,393,981
Property, plant and equipment, net 11,200,319 9,610,853
Goodwill 155,501,562 135,130,744
Intangible assets 35,379,597 29,617,156
Other assets 520,711 810,358
Total assets $275,704,628 $255,296,251
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $1,067,034 $1,028,363
Accounts payable 14,701,048 12,106,987
Accrued expenses:
Salaries, wages and fees 1,105,224 1,478,189
Income taxes payable 2,511,423 3,116,446
Other 15,453,412 9,416,252
Total current liabilities 34,838,141 27,146,237
Long term debt, less current maturities 1,000,000 2,000,000
Other long term liabilities 3,881,090 4,554,160
Deferred income taxes 7,475,247 1,758,879
Minority interest 253,514 358,705
Stockholders' equity:
Common stock, par value $.04 per share;
authorized 240,000,000 shares,
issued 67,499,074 in 2004 and 2003. 2,699,963 2,699,963
Additional paid-in capital 126,085,383 127,487,718
Accumulated other comprehensive income 1,466,219 855,719
Retained earnings 115,423,834 108,613,932
245,675,399 239,657,332
Less: Treasury stock at cost (2,297,995
and 2,662,151 shares) 17,418,763 20,179,062
Total stockholders' equity 228,256,636 219,478,270
Total liabilities and stockholders' equity $275,704,628 $255,296,251
Contact:
Hooper Holmes, Inc.
Fred Lash, Chief Financial Officer
1-908-766-5000
or
Investors: Jonathan Birt, or Lanie Marcus
Media: Sean Leous, all of Financial Dynamics
+1-212-850-5600
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