EXHIBIT 99.1
[ENHANCED
CARE
INITIATIVES
INNOVATIVE/TARGETED HEALTH SOLUTIONS LOGO]
CONTACT: David Chess, MD
Chief Executive Officer
(203) 925-9600
HC INNOVATIONS REPORTS THIRD QUARTER RESULTS
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REVENUES INCREASE 93% OVER PRIOR YEAR QUARTER
THIRD QUARTER HIGHLIGHTS:
o Revenue growth of 93% for the quarter and 90% for the nine months;
o HealthSpring expands membership in Easy Care(TM) program due to major
improvements in hospitalization rates, emergency room visits and patient
quality of life;
o Addition of senior medical executive as Vice President of Medical Oncology
Services (Quality of Life Program);
o Key management additions to HC Innovations management company and
subsidiary, Enhanced Care Initiatives, Inc. (ECI); and
o Formation of National Clinical Advisory Board.
SHELTON, CONNECTICUT (November 15, 2007) - HC Innovations, Inc. (OTCBB: HCNV), a
specialty care disease management company, today announced results for the third
quarter and nine months ended September 30, 2007.
Total revenues for the third quarter ended September 30, 2007, increased 93.0%
to $3.4 million compared with total revenues of $1.8 million for the prior-year
period. Net loss for the three months ended September 30, 2007, was $3.2
million, or $0.08 per diluted share, on 38.2 million weighted average shares of
stock compared with a net loss of $660,000, or $0.02 per diluted share, on 30.0
million weighted average shares of stock for the three months ended September
30, 2006.
Total revenues for the nine months ended September 30, 2007, increased 89.8% to
$8.3 million compared with total revenues of $4.4 million for the prior year
period. Net loss for the nine months ended September 30, 2007, was $6.5 million,
or $0.18 per diluted share, compared with a net loss of $2.0 million, or $0.08
per diluted share, for the same period in 2006.
In commenting on the results, Dr. David Chess, chief executive officer of HC
Innovations, said, "The third quarter accelerated our strong momentum as we
continued to add customers, expand existing relationships and further enhance
the services we provide. In addition, we opened and staffed our New York
operations and commenced implementation of our contract with HIP Health Plans of
New York as previously announced. During the third quarter, revenues increased
93% over the prior year. In addition, we are aggressively perfecting our
business model by adding experienced executives to key positions. I am also
pleased to report that during the quarter we completed the formation of our
National Clinical Advisory Board composed of exceptionally qualified
professionals, whose participation confirms the bright promise of HC
Innovations. We believe that in every sense, it has been a productive and
rewarding quarter."
In closing, Dr. Chess added, "We expect to continue our progress in the fourth
quarter and into 2008. Demand is growing for our services as we gain visibility
for delivering measurable results and successful outcomes for our customers.
With costs of healthcare rising dramatically, the search for quality solutions
is expanding exponentially. Our company offers cost benefits and quality
products that are unique in healthcare, and we are ideally positioned to
continue our success and become a dynamic force in our industry. The confluence
of events - aging populations, soaring medical costs and demand for quality care
- - has created a perfect storm of opportunity for our company."
ABOUT HC INNOVATIONS, INC.
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.
HC INNOVATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- ----------------------
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Net revenues $ 3,394 $ 1,758 $ 8,345 $ 4,397
Cost of services 3,805 1,275 7,987 3,245
Selling, general and administrative expenses 2,658 998 6,395 2,747
Depreciation and amortization 108 69 313 184
-------- -------- -------- --------
6,571 2,342 14,695 6,176
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Loss from operations (3,177) (584) (6,350) (1,779)
Other income (expense)
Interest income 20 -- 49 2
Other expense (1) (1) (1) 5
Interest expense (36) (75) (233) (200)
-------- -------- -------- --------
(17) (76) (185) (193)
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Loss before provision for income taxes (3,194) (660) (6,535) (1,972)
Provision for income taxes -- -- -- --
Net loss $ (3,194) $ (660) $ (6,535) $ (1,972)
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Basic and diluted net loss per share $ (0.08) $ (0.02) $ (0.18) $ (0.08)
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Weighted average common shares outstanding 38,217 30,006 36,456 26,139
HC INNOVATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
SEPT. 30, DEC. 31,
2007 2006
----------- ---------
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 670 $ 152
Accounts receivable, net of contractual allowances 2,129 331
Prepaid expenses 392 142
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Total current assets 3,191 625
Fixed assets, net 809 292
Capitalized software development costs, net 1,998 1,311
Deferred issuance costs, net -- 51
Security deposits and other, net 91 65
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Total assets $ 6,089 $ 2,344
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Lines of credit $ 200 $ 200
Current portion of notes payable 893 441
Current portion of capital lease obligations 227 94
Notes payable to vendors 126 45
Convertible debentures, net of discount -- 1,223
Accounts payable 2,263 1,498
Accrued liabilities 830 369
Deferred revenue -- 31
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Total current liabilities 4,539 3,901
Notes payable, net of current portion 4 29
Capital lease obligations, net of current portion 401 152
Convertible debentures, net of discount and current portion -- 398
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Total liabilities 4,944 4,480
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Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 5,000,000 shares authorized -- --
Common stock, $0.001 par value, 100,000,000 shares authorized 38 31
Stock subscriptions receivable (22) (22)
Additional paid-in capital 12,911 3,102
Deficit (11,782) (5,247)
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Total stockholders' equity (deficit) 1,145 (2,136)
-------- --------
Total liabilities and stockholders' equity (deficit) $ 6,089 $ 2,344
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HC INNOVATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED
----------------------
SEPT. 30, SEPT. 30,
2007 2006
--------- ---------
Cash flows from operating activities: $(6,535) $(1,972)
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 313 184
Amortization of discount - convertible debentures 137 127
Consulting services expense - warrants 156 --
Consulting services expense - common stock 105 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (1,799) (279)
Prepaid expenses (249) --
Security deposits and other (28) (27)
Increase (decrease) in:
Notes payable to vendors 82 (147)
Accounts payable 764 759
Accrued liabilities 462 177
Deferred revenue (31) 44
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Net cash used in operating activities (6,623) (1,134)
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Cash flow from investing activities:
Purchases of fixed assets, net (139) (80)
Expenditures for capitalized software development costs (846) (364)
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Net cash used in investing activities (985) (444)
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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 450 720
Deferred issuance costs paid -- (10)
Payments on convertible debentures (50) --
Payments on notes payable (24) (23)
Payments on line of credit -- (10)
Payments on capital lease obligations (96) (61)
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Net cash provided by financing activities 8,126 1,223
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Net increase (decrease) in cash and cash equivalents 518 (355)
Cash and cash equivalents - beginning of period 152 435
------- -------
Cash and cash equivalents - end of period $ 670 $ 80
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Supplemental cash flow information:
Cash paid during the year for interest $ 62 $ 59
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Noncash investing and financing activities:
Common stock issued in connection with exercise of warrants and
satisfaction of note payable - related party $ -- $ 500
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Discount on convertible debentures $ -- $ 141
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Computer equipment acquired through capital lease $ 479 $ 60
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Capitalized software acquired through capital lease $ -- $ 115
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Common stock issued in connection with conversion of convertible
debentures $ 1,708 $ --
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