CONTACT: David Chess, MD
Chief Executive Officer
(203) 925-9600
HC INNOVATIONS REPORTS SECOND QUARTER RESULTS
----------------------------------------------
REVENUES INCREASE 108% OVER PRIOR YEAR QUARTER
SECOND QUARTER AND SIX MONTHS HIGHLIGHTS:
o Revenue growth of 108% for the quarter and 88% for the six months;
o Major Contracts signed with HIP, Alere & McKesson;
o Expansion into nine states;
o Addition of two senior executives;
o Improved balance sheet; and
o Listed on NASDAQ OTC:BB.
SHELTON, CONNECTICUT (August 13, 2007) - HC Innovations, Inc. (OTCBB: HCNV), a
specialty care disease management company, today announced results for the
second quarter and six months ended June 30, 2007.
Total revenues for the second quarter ended June 30, 2007, increased 108% to
$2.8 million compared with total revenues of $1.3 million for the prior-year
period. Net loss for the three months ended June 30, 2007, was $1.9 million, or
$0.05 per diluted share, on 35.6 million shares of stock compared with a net
loss of $831,000, or $0.03 per diluted share, on 24.2 million shares of stock
for the three months ended June 30, 2006.
Total revenues for the six months ended June 30, 2007, increased 88% to $5.0
million compared with total revenues of $2.6 million for the prior year period.
Net loss for the first half of 2007, was $3.3 million, or $0.09 per diluted
share, compared with a net loss of $1.3 million, or $0.05 per diluted share, for
the first half of 2006.
In commenting on the results, Dr. David Chess, chief executive officer of HC
Innovations, said, "We are pleased with the progress we are making in expanding
the footprint of our company and communicating the value of our unique services.
We are confident that the major new contracts we signed during the first six
months of 2007 will enhance our future revenue and earnings. We view our success
in signing these contracts as a testimony to the integrity of our care
management programs, our strong leadership and the continued increasing demand
for our services. We have continued to invest heavily in building our corporate
infrastructure as well as expanded development of our proprietary electronic
health record (SAMehr(TM)) software systems that drive our programs and provide
significant competitive advantages. We have also invested heavily in expansion
markets, which, although it has temporarily suppressed short-term margins and
earnings, we expect to result in future growth and positive earnings.
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HCNV Announces Second Quarter Results
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August 13, 2007
"Our demand has been driven by extraordinary improvements in patient wellness
while delivering significant cost savings for our customers. We have expanded
our operations to nine states and revenues have more than doubled compared with
the second quarter of 2006. In addition, during the first six months of this
year, we have made significant strides in strengthening our balance sheet to
further position the Company for continued growth. We are confident that the
pace of our expansion will accelerate as our visibility increases and demand
grows."
Dr. Chess added, "We also are excited about the success we are having in
enhancing our management team. In the past quarter, we have added several
talented individuals to our senior management team. In early July, we announced
the addition of Brett Cohen as Vice President, Strategic Development, and
Maureen Mulvey as Director of Human Resources, and further additions will be
announced in the near future. Also, we are evaluating candidates for our Board
of Directors, and we look forward to announcing individuals who will add
expertise and make important contributions to our company. Lastly, our Medical
Advisory Board is in formation and will include several prominent national
industry members."
In closing, Dr. Chess added, "We believe our timing is excellent and that we are
at a tipping point in the healthcare industry. Costs are increasing
dramatically, reimbursement pressures are exacerbating the problem, medical
professionals are becoming scarcer, and all of this is happening while our
target populations of medically unstable and frail people are underserved and
expanding. We are on track and well positioned to meet this inevitable and
growing need."
ABOUT HC INNOVATIONS, INC.
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HC Innovations creates value and cost savings for HMOs, nursing homes, and
insurance companies (government and private) by identifying niche markets with
high medical costs and implementing proprietary solutions. HC Innovations
combines proprietary information systems with highly trained nurses and nurse
practitioners to improve health conditions with hands-on care. The results are
improved patient outcomes. HC Innovations currently provides services for
Medicare, Medicaid, sub-acute care and specialty-needs programs in Connecticut,
New Jersey, New York, Tennessee, Texas, Florida, Ohio, Illinois and
Massachusetts. For more information, visit WWW.HCINNOVATIONSINC.COM.
SAFE HARBOR ACT DISCLAIMER NOTICE
- ---------------------------------
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: THE STATEMENTS CONTAINED IN THIS RELEASE WHICH ARE NOT HISTORICAL FACTS
ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN OR
IMPLIED BY FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE THE
COMPANY'S ENTRY INTO NEW COMMERCIAL BUSINESSES, THE RISK OF OBTAINING FINANCING,
RECRUITING AND RETAINING QUALIFIED PERSONNEL, AND OTHER RISKS DESCRIBED IN THE
COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS. THE FORWARD LOOKING
STATEMENTS IN THIS PRESS RELEASE SPEAK ONLY AS OF THE DATE HEREOF, AND THE
COMPANY DISCLAIMS ANY OBLIGATION TO PROVIDE UPDATES, REVISIONS OR AMENDMENTS TO
ANY FORWARD-LOOKING STATEMENT TO REFLECT CHANGES IN THE COMPANY'S EXPECTATIONS
OR FUTURE EVENTS.
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HCNV Announces Second Quarter Results
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August 13, 2007
HC INNOVATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2007 2006 2007 2006
-------- -------- -------- --------
Net revenues $ 2,753 $ 1,322 $ 4,950 $ 2,639
Cost of services 2,443 1,077 4,182 1,970
Selling, general and administrative expenses 2,102 954 3,736 1,749
Depreciation and amortization 83 60 205 115
-------- -------- -------- --------
4,628 2,091 8,123 3,834
-------- -------- -------- --------
Loss from operations (1,875) (769) (3,173) (1,195)
Other income (expense)
Interest income 25 2 28 2
Other expense 1 6 1 7
Interest expense (30) (70) (197) (125)
-------- -------- -------- --------
(4) (62) (168) (116)
-------- -------- -------- --------
Loss before provision for income taxes (1,879) (831) (3,341) (1,311)
Provision for income taxes -- -- -- --
Net loss $ (1,879) $ (831) $ (3,341) $ (1,311)
======== ======== ======== ========
Basic and diluted net loss per share $ (0.05) $ (0.03) $ (0.09) $ (0.05)
======== ======== ======== ========
Weighted average common shares outstanding 35,561 24,173 35,561 24,173
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HCNV Announces Second Quarter Results
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August 13, 2007
HC INNOVATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
JUNE 30, 2007 DEC. 31, 2006
(UNAUDITED) (AUDITED)
------------- -------------
Current assets:
Cash and cash equivalents $ 3,736 $ 152
Accounts receivable, net of contractual allowances 1,169 331
Prepaid expenses 327 142
-------- --------
Total current assets 5,232 625
Fixed assets, net 381 292
Capitalized software development costs, net 1,740 1,311
Deferred issuance costs, net -- 51
Security deposits and other, net 108 65
-------- --------
Total assets $ 7,461 $ 2,344
======== ========
Current liabilities:
Lines of credit $ 200 $ 200
Current portion of notes payable 442 441
Current portion of capital lease obligations 121 94
Notes payable to vendors 23 45
Convertible debentures, net of discount -- 1,223
Accounts payable 1,503 1,498
Accrued liabilities 461 369
Deferred revenue 182 31
-------- --------
Total current liabilities 2,932 3,901
Notes payable, net of current portion 13 29
Capital lease obligations, net of current portion 177 152
Convertible debentures, net of discount and current portion -- 398
-------- --------
Total liabilities 3,122 4,480
-------- --------
Stockholders' equity (deficit):
Common stock, $.001 par value, 100,000,000 shares authorized 38 31
Preferred stock, $.001 par value, 5,000,000 shares authorized -- --
Stock subscriptions receivable (22) (22)
Additional paid-in capital 12,910 3,102
Deficit (8,588) (5,247)
-------- --------
Total stockholders' equity (deficit) 4,339 (2,136)
-------- --------
Total liabilities and stockholders' equity (deficit) $ 7,461 $ 2,344
======== ========
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HCNV Announces Second Quarter Results
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August 13, 2007
HC INNOVATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
-----------------------------
JUNE 30, 2007 JUNE 30, 2006
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Cash flows from operating activities:
Net loss $(3,342) $(1,311)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 205 116
Amortization of discount - convertible debentures 137 79
Consulting services expense - warrants 156 --
Consulting services expense - common stock 105 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (838) (125)
Prepaid expenses (184) 56
Security deposits and other (43) (16)
Increase (decrease) in:
Notes payable to vendors (22) (147)
Accounts payable 5 199
Accrued liabilities 93 31
Deferred revenue 151 178
------- -------
Net cash used in operating activities (3,577) (940)
------- -------
Cash flow from investing activities:
Purchases of fixed assets, net (24) (44)
Expenditures for capitalized software development costs (531) (98)
------- -------
Net cash used in investing activities (555) (142)
------- -------
Cash flows from financing activities:
Proceeds from issuance of convertible debentures -- 500
Proceeds from issuance of common stock, net 7,846 107
Proceeds from notes payable -- 225
Deferred issuance costs paid -- (10)
Payments on convertible debentures (50) --
Payments on notes payable (16) (15)
Payments on line of credit -- (10)
Payments on capital lease obligations (63) (41)
------- -------
Net cash provided by financing activities 7,717 756
------- -------
Net increase (decrease) in cash and cash equivalents 3,585 (326)
Cash and cash equivalents - beginning of period 151 435
------- -------
Cash and cash equivalents - end of period $ 3,736 $ 109
======= =======
Supplemental cash flow information:
Cash paid during the year for interest $ 38 $ 38
======= =======
Noncash investing and financing activities:
Common stock issued in connection with exercise of warrants and
satisfaction of note payable - related party $ -- $ 500
======= =======
Discount on convertible debentures $ -- $ 141
======= =======
Computer equipment acquired through capital lease $ 116 $ --
======= =======
Issuance of warrants for consulting services $ 156 $ --
======= =======
Common stock issued in exchange for consulting services $ 105 $ --
======= =======
Capitalized software acquired through capital lease $ -- $ 114
======= =======
Common stock issued in connection with conversion of convertible
debentures $ 1,708 $ --
======= =======
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