EXHIBIT 99.3
News Release |
170 Mt. Airy Road
Basking Ridge, NJ 07920
Hooper Holmes | ||||
James Calver Chief Executive Officer | ||||
(908) 766-5000 | ||||
Financial Dynamics | ||||
Investors: Evan Smith, CFA | ||||
Media: Sean Leous | ||||
212-850-5600 |
HOOPER HOLMES ANNOUNCES SECOND QUARTER AND FIRST HALF 2006 RESULTS
Company’s Strategic Review Progressing According to Plan
BASKING RIDGE, NJ, Aug 9, 2006, Hooper Holmes, Inc. (AMEX:HH) today announced financial results for the second quarter and six months ended June 30, 2006.
For the three months ended June 30, 2006, total revenues decreased 10% to $75.6 million compared to $84.4 million in the second quarter 2005. The Company incurred a net loss of $0.5 million or $(0.01) per diluted share compared to net income of $3.1 million or $0.05 per diluted share in the second quarter 2005. The net loss for the second quarter 2006 includes $0.5 million ($0.3 million after tax) of restructuring charges, primarily relating to employee severance and branch office closure costs. The Company’s net income in the second quarter of 2005 was not affected by restructuring charges.
For the first six months of 2006, total revenues were $152.4 million compared to $166.4 million in the comparable period of 2005, a decrease of 8%. The Company’s net loss for the first six months of 2006 totaled $1.8 million, or $(0.03) per diluted share, compared to net income of $5.1 million, or $0.08 per diluted share in the comparable period of 2005. The 2006 net loss includes $1.7 million ($0.9 million after tax) of restructuring and other charges. The net income for the first six months of 2005 included $1.0 million ($0.6 million after tax) pertaining to restructuring charges.
Second Quarter 2006 Results by Division
Health Information Division (HID)
The HID reported a decline in second quarter revenues to $67.4 million compared to $74.2 million in 2005, due primarily to continued weakness in the Company’s core paramedical business.
• | Portamedicrevenues decreased 10% to $40.6 million, compared to $44.9 million in the second quarter 2005. The decrease is a result of fewer paramedical exams being completed during the quarter, primarily attributable to the overall decline in life insurance activity. |
• | Infolinkreported revenues of $8.8 million, an increase of 9% compared to $8.1 million in the second quarter of 2005. The increase reflects a greater number of tele-interviewing reports generated from an increasing number of customers. |
• | Medicals Direct Group revenues decreased 15% to $9.5 million compared to $11.2 million in the same period of 2005. The decrease is primarily due to a decline in medical screenings and outsourced underwriting revenues. The decline is partially attributable to a weaker U.K. housing market, resulting in fewer life insurance policies, which are customarily purchased in conjunction with home mortgages. |
• | Heritage Labs revenues decreased 15% to $4.5 million compared to 5.3 million in the same period of 2005, reflecting fewer specimens tested. |
• | Mid-America Agency Services (MAAS) reported revenues of $4.0 million, a decline of $0.7 million compared to the second quarter of 2005, as a result of a reduction in life insurance applications. |
Claims Evaluation Division (CED)
The CED reported second quarter revenues of $8.2 million, a decline of 20% compared to $10.2 million in the second quarter 2005. The decrease was primarily a result of decreased claims activity within its current customer base and a reduction in peer reviews.
Strategic Review Update
The Company’s previously announced full-scale Strategic Review is on schedule and expected to be completed in September. EHS Partners is advising in the process of identifying efficiency improvements and cost savings, in turn improving the overall performance of the Company.The Company intends to update the market on the conclusions of the review, including the implementation timetable and related financial impact, with the release of its third quarter financial results.
James Calver, Chief Executive Officer of Hooper Holmes, commented, “I am pleased with our direction as we approach the end of our Strategic Review. We have laid the foundation to begin implementation of the recovery process during the fourth quarter. We remain confident that the changes we have already implemented, combined with additional anticipated improvements to our operations, will strengthen the organization. This will provide future opportunities for revenue growth and profitability. As we have said in the past, 2006 is about correcting past imbalances and we look forward to a recovery that we expect to see in 2007 and beyond.”
Hooper Holmes will host a conference call on Thursday, August 10, 2006 to discuss second quarter results at 11:00 a.m. Eastern Time. The call is accessible by dialing (800) 779-9618 or (312) 470-7054, password: Hooper Holmes. The call will also 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 to the life insurance industry through over 250 locations nationwide and in the United Kingdom, as well as claims evaluation information services to the automobile and workers’ compensation insurance industries.
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 their 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 OPERATIONS
(unaudited)
(in thousands, except share data)
Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Revenues | $ | 75,637 | $ | 84,389 | $ | 152,438 | $ | 166,418 | ||||||||
Cost of operations | 56,864 | 60,689 | 115,172 | 119,561 | ||||||||||||
Gross profit | 18,773 | 23,700 | 37,266 | 46,857 | ||||||||||||
Selling, general and administrative expenses | 19,192 | 18,458 | 38,545 | 36,944 | ||||||||||||
Restructuring and other charges | 463 | — | 1,732 | 1,041 | ||||||||||||
Operating income (loss) | (882 | ) | 5,242 | (3,011 | ) | 8,872 | ||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (98 | ) | (112 | ) | (186 | ) | (292 | ) | ||||||||
Interest income | 47 | 76 | 85 | 123 | ||||||||||||
Other expense, net | (87 | ) | (131 | ) | (202 | ) | (227 | ) | ||||||||
(138 | ) | (167 | ) | (303 | ) | (396 | ) | |||||||||
Income (loss) before income taxes | (1,020 | ) | 5,075 | (3,314 | ) | 8,476 | ||||||||||
Income tax (benefit) provision | (556 | ) | 1,982 | (1,499 | ) | 3,351 | ||||||||||
Net income (loss) | $ | (464 | ) | $ | 3,093 | $ | (1,815 | ) | $ | 5,125 | ||||||
Earnings (loss) per share: | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.05 | $ | (0.03 | ) | $ | 0.08 | ||||||
Diluted | $ | (0.01 | ) | $ | 0.05 | $ | (0.03 | ) | $ | 0.08 | ||||||
Weighted average number of shares: | ||||||||||||||||
Basic | 66,288,345 | 65,283,711 | 66,242,798 | 65,261,409 | ||||||||||||
Diluted | 66,288,345 | 66,255,343 | 66,242,798 | 66,358,120 |
HOOPER HOLMES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands except share data)
June 30, 2006 | December 31, 2005 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 4,720 | $ | 11,683 | ||
Marketable securities | 192 | 383 | ||||
Accounts receivable, net | 43,249 | 42,121 | ||||
Deferred income taxes | 1,318 | 1,295 | ||||
Income tax receivable | 8,806 | 5,612 | ||||
Other current assets | 4,878 | 4,907 | ||||
Total current assets | 63,163 | 66,001 | ||||
Property, plant and equipment, at cost | 44,039 | 40,563 | ||||
Less: Accumulated depreciation and amortization | 28,994 | 27,085 | ||||
Property, plant and equipment, net | 15,045 | 13,478 | ||||
Goodwill | 42,426 | 40,038 | ||||
Intangible assets, net | 10,865 | 12,203 | ||||
Deferred income taxes | 28,575 | 30,269 | ||||
Other assets | 478 | 342 | ||||
Total assets | $ | 160,552 | $ | 162,331 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Current maturities of long-term debt | $ | — | $ | 1,000 | ||
Accounts payable | 12,679 | 13,706 | ||||
Accrued expenses | 18,280 | 17,523 | ||||
Total current liabilities | 30,959 | 32,229 | ||||
Other long term liabilities | 1,469 | 1,200 | ||||
Commitments and Contingencies | ||||||
Stockholders’ equity: | ||||||
Common stock, par value $.04 per share; authorized 240,000,000 shares, issued 67,499,074 as of June 30, 2006 and December 31, 2005 | 2,700 | 2,700 | ||||
Additional paid-in capital | 120,571 | 121,278 | ||||
Accumulated other comprehensive income | 984 | 354 | ||||
Retained earnings | 12,759 | 14,574 | ||||
137,014 | 138,906 | |||||
Less: Treasury stock at cost 1,180,795 shares and 1,328,795 shares as of June 30, 2006 and December 31, 2005, respectively | 8,890 | 10,004 | ||||
Total stockholders’ equity | 128,124 | 128,902 | ||||
Total liabilities and stockholders’ equity | $ | 160,552 | $ | 162,331 | ||