EXHIBIT 99.1
News Release
170 Mt. Airy Road
Basking Ridge, NJ 07920
CONTACT:
Fred Lash
Chief Financial Officer
908-766-5000
FOR IMMEDIATE RELEASE
Investors: Tiernan Cavanna/Lanie Fladell
Media: Sean Leous
FD Morgen-Walke
212-850-5600
HOOPER HOLMES REPORTS SECOND QUARTER FINANCIAL RESULTS
- Revenues Increase 15% to $76.2 Million -
- Gross Margin Improves to 29.3% versus 28.8% Last Year -
BASKING RIDGE, NJ, 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 ine-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-taxe-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 totale-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 athttp://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.
-TABLES TO FOLLOW-
HOOPER HOLMES INC.
2003 CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
| | | Three Months ended June 30,
| | | Six Months ended June 30,
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| | | 2003
| | | 2002
| | | 2003
| | | 2002
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Revenues | | $ | 76,170 | | | $ | 66,015 | | | $ | 151,020 | | | $ | 132,505 | |
Cost of operations | | | 53,839 | | | | 47,035 | | | | 105,938 | | | | 92,935 | |
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Gross profit | | | 22,331 | | | | 18,980 | | | | 45,082 | | | | 39,570 | |
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Selling, general and administrative expenses | | | 13,976 | | | | 11,288 | | | | 28,926 | | | | 22,525 | |
Loss on investment | | | 0 | | | | 1,630 | | | | 0 | | | | 1,630 | |
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Operating income | | | 8,355 | | | | 6,062 | | | | 16,156 | | | | 15,415 | |
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Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (115 | ) | | | (29 | ) | | | (175 | ) | | | (58 | ) |
Interest income | | | 257 | | | | 717 | | | | 472 | | | | 1,273 | |
Other (expense) income, net | | | (189 | ) | | | (238 | ) | | | (514 | ) | | | (428 | ) |
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| | | | (47 | ) | | | 450 | | | | (217 | ) | | | 787 | |
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Income before income taxes | | | 8,308 | | | | 6,512 | | | | 15,939 | | | | 16,202 | |
Income taxes | | | 3,213 | | | | 2,592 | | | | 6,186 | | | | 6,468 | |
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Net income | | $ | 5,095 | | | $ | 3,920 | | | $ | 9,753 | | | $ | 9,734 | |
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Earnings per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.08 | | | $ | 0.06 | | | $ | 0.15 | | | $ | 0.15 | |
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Diluted | | $ | 0.08 | | | $ | 0.06 | | | $ | 0.15 | | | $ | 0.14 | |
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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 | |
-MORE-
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
| | | 06/30/03
| | 12/31/02
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| | | (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 |
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Total current assets | | | 76,542,872 | | | 80,692,591 |
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Property, plant and equipment: | | | 31,868,122 | | | 30,620,147 |
Less: Accumulated depreciation and amortization | | | 22,993,284 | | | 21,924,363 |
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Property, plant and equipment, net | | | 8,874,838 | | | 8,695,784 |
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Goodwill, net | | | 129,754,897 | | | 117,075,544 |
Intangible assets, net | | | 30,510,296 | | | 28,474,439 |
Other assets | | | 984,270 | | | 1,291,172 |
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Total assets | | $ | 246,667,173 | | $ | 236,229,530 |
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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 |
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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 |
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| | | | 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 |
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Total stockholders’ equity | | | 214,106,737 | | | 205,806,947 |
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Total liabilities and stockholders’ equity | | $ | 246,667,173 | | $ | 236,229,530 |
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