EXHIBIT 99.1
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| | News Release |
170 Mt. Airy Road
Basking Ridge, NJ 07920
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CONTACT: Fred Lash Chief Financial Officer 908-766-5000 Investors: Jonathan Birt / Lanie Marcus Media: Sean Leous Financial Dynamics 212-850-5600 |
HOOPER HOLMES ANNOUNCES 2004 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS
BASKING RIDGE, NJ, March 1, 2005 - Hooper Holmes, Inc. (AMEX: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 athttp://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.
-TABLES TO FOLLOW-
HOOPER HOLMES INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
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| | | Three Months ended December 31,
| | | Twelve Months ended
December 31,
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| | | 2004
| | | 2003
| | | 2004
| | | 2003
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Revenues | | $ | 82,466 | | | $ | 75,609 | | | $ | 327,747 | | | $ | 300,182 | |
Cost of operations | | | 59,821 | | | | 54,830 | | | | 235,900 | | | | 213,709 | |
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Gross profit | | | 22,645 | | | | 20,779 | | | | 91,847 | | | | 86,473 | |
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Selling, general and administrative expenses | | | 18,567 | | | | 15,743 | | | | 72,972 | | | | 59,679 | |
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Operating income | | | 4,078 | | | | 5,036 | | | | 18,875 | | | | 26,794 | |
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Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense | | | (182 | ) | | | (173 | ) | | | (742 | ) | | | (443 | ) |
Interest income | | | 104 | | | | 185 | | | | 355 | | | | 768 | |
Other expense, net | | | (81 | ) | | | (145 | ) | | | (347 | ) | | | (820 | ) |
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| | | | (159 | ) | | | (133 | ) | | | (734 | ) | | | (495 | ) |
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Income before income taxes | | | 3,919 | | | | 4,903 | | | | 18,141 | | | | 26,299 | |
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Income taxes | | | 2,009 | | | | 2,122 | | | | 7,431 | | | | 10,452 | |
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Net income | | $ | 1,910 | | | $ | 2,781 | | | $ | 10,710 | | | $ | 15,847 | |
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Earnings per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.03 | | | $ | 0.04 | | | $ | 0.16 | | | $ | 0.24 | |
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Diluted | | $ | 0.03 | | | $ | 0.04 | | | $ | 0.16 | | | $ | 0.24 | |
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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 | |
- MORE -
HOOPER HOLMES INC.
CONSOLIDATED BALANCE SHEETS
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| | | 12/31/04
| | 12/31/03
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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 |
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Total current assets | | | 73,102,439 | | | 80,127,140 |
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Property, plant and equipment: | | | 36,739,824 | | | 33,004,834 |
Less: Accumulated depreciation and amortization | | | 25,539,505 | | | 23,393,981 |
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Property, plant and equipment, net | | | 11,200,319 | | | 9,610,853 |
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Goodwill | | | 155,501,562 | | | 135,130,744 |
Intangible assets | | | 35,379,597 | | | 29,617,156 |
Other assets | | | 520,711 | | | 810,358 |
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Total assets | | $ | 275,704,628 | | $ | 255,296,251 |
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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 |
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Total current liabilities | | | 34,838,141 | | | 27,146,237 |
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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 |
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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 |
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| | | | 245,675,399 | | | 239,657,332 |
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Less: Treasury stock at cost (2,297,995 and 2,662,151 shares) | | | 17,418,763 | | | 20,179,062 |
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Total stockholders’ equity | | | 228,256,636 | | | 219,478,270 |
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Total liabilities and stockholders’ equity | | $ | 275,704,628 | | $ | 255,296,251 |
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