EXHIBIT 99.1
FOR IMMEDIATE RELEASE
FROM: Health Fitness Corporation
3600 American Blvd West, Suite 560
Minneapolis, MN 55431
952-831-6830
CONTACT: Wes Winnekins, CFO, 952-897-5275 - wwinnekins@hfit.com
-or- Dennis B. McGrath, McGrath Buckley Communications Counseling
651-646-4115; dennis@mcgrath-buckley.com
HEALTH FITNESS ANNOUNCES SIGNIFICANT INCREASE IN SECOND QUARTER 2004 RESULTS
MINNEAPOLIS, August 2, 2004 --- Health Fitness Corporation (OTC BB:
HFIT) today announced financial results for the second quarter and six months
ended June 30, 2004.
For the quarter ended June 30, 2004, revenue increased 69.8% to
$13,129,715 from $7,732,626 for the same quarter last year. Gross profit
increased 117.7% to $3,442,358 from $1,581,142 for the same quarter last year.
As a percent of revenue, gross profit increased to 26.2% compared to 20.4% for
the second quarter last year. Net earnings applicable to common shareholders
increased 116.6% to $470,754 from $217,333 for the same quarter last year. Net
earnings per diluted share of $0.03 increased 50% from $0.02 per diluted share
for the same quarter last year.
For the six months ended June 30, 2004, revenue increased 69.1% to
$25,796,089 from $15,250,831 for the same period last year. Gross profit
increased 101.8% to $6,529,295 from $3,235,541 for the same period last year. As
a percent of revenue, gross profit increased to 25.3% compared to 21.2% for the
same period in 2003. Net earnings applicable to common shareholders increased
66.4% to $807,461 from $485,313 for the same period last year. Net earnings per
diluted share of $0.05 increased 25% from $0.04 per diluted share for the same
quarter last year.
Jerry Noyce, HFC CEO and President said the gains in revenue, gross
profit and net earnings applicable to common shareholders is primarily
attributed to HFC's December 2003 acquisition of the Health & Fitness Services
Business of Johnson & Johnson Health Care
Systems Inc. Also contributing to these gains was growth from HFC's Health
Enhancement Program (HEP) services.
"We are very pleased with our financial performance for the quarter
and six months ended June 30, 2004," Noyce said. "Our recent acquisition of the
Johnson & Johnson health and fitness business has clearly strengthened our
financial position. We are also encouraged by the progress being made in selling
HEP services at our managed fitness centers. As the leading provider of
corporate health management services, our goal is to build upon our current
success by helping companies address the issues of rising healthcare costs and
enable them to establish work environments focused on employee health and
productivity."
Health Fitness Corporation is the leading provider of results-oriented
health improvement management services to corporations, hospitals, universities
and communities. HFC has been serving clients since 1975 and manages more than
400 sites across the U.S. and Canada. For more information about Health Fitness
Corporation, go to www.hfit.com
This press release contains forward-looking statements within the
meaning of federal securities laws. These statements include statements
regarding intent, belief, or current expectations of the Company and its
management and specifically include the statement regarding the Company's goal
to build upon current success. These forward-looking statements are not
guarantees of future performance and involve a number of risks and uncertainties
that may cause the Company's actual results to differ materially from the
results discussed in these statements. These statements should be read in
conjunction with the various factors affecting the Company's operations and
financial condition discussed in the section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained within the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, as
well as the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2004. There is no assurance that the Company will be able to capitalize on
any of these forward-looking statements.
Financial tables follow ...
- MORE -
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<Table>
<Caption>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
REVENUE $ 13,129,715 $ 7,732,626 $ 25,796,089 $ 15,250,831
COSTS OF REVENUE 9,687,357 6,151,484 19,266,794 12,015,290
------------ ------------ ------------ ------------
GROSS PROFIT 3,442,358 1,581,142 6,529,295 3,235,541
OPERATING EXPENSES
Salaries 1,429,569 789,216 2,772,278 1,572,758
Other selling, general and administrative 823,504 421,605 1,653,610 830,919
Amortization of acquired intangible assets 219,583 -- 439,167 --
------------ ------------ ------------ ------------
Total operating expenses 2,472,656 1,210,821 4,865,055 2,403,677
------------ ------------ ------------ ------------
OPERATING INCOME 969,702 370,321 1,664,240 831,864
OTHER INCOME (EXPENSE)
Interest expense (128,344) (13,451) (262,596) (23,956)
Other, net 469 (831) 1,390 (1,859)
------------ ------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES 841,827 356,039 1,403,034 806,049
INCOME TAX EXPENSE (BENEFIT) 342,873 138,706 552,373 320,736
------------ ------------ ------------ ------------
NET EARNINGS 498,954 217,333 850,661 485,313
Dividend to preferred shareholders 28,200 -- 43,200 --
------------ ------------ ------------ ------------
NET EARNINGS APPLICABLE TO
COMMON SHAREHOLDERS 470,754 217,333 807,461 485,313
============ ============ ============ ============
NET EARNINGS PER SHARE:
Basic $ 0.04 $ 0.02 $ 0.06 $ 0.04
Diluted 0.03 0.02 0.05 0.04
WEIGHTED AVERAGE COMMON SHARES:
Basic 12,483,979 12,322,908 12,447,374 12,315,655
Diluted 16,066,003 12,467,821 16,054,047 12,436,254
See notes to consolidated financial statements.
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HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<Table>
<Caption>
June 30, December 31,
2004 2003
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ -- $ 281,294
Trade and other accounts receivable, less allowances of $145,800
and $131,000 7,374,545 5,218,224
Prepaid expenses and other 348,538 187,347
Deferred tax assets 1,100,300 850,300
------------ ------------
Total current assets 8,823,383 6,537,165
PROPERTY AND EQUIPMENT, net 178,187 177,217
OTHER ASSETS
Goodwill 8,919,140 8,725,574
Customer contracts, less accumulated amortization of $471,500
and $67,400 1,258,472 1,662,639
Trademark, less accumulated amortization of $40,800 and $5,800 309,166 344,166
Other intangible assets, less accumulated amortization of $19,300
and $4,200 123,520 138,582
Cash held in escrow 473,738 471,999
Deferred tax assets 991,308 1,686,301
Other 44,610 64,458
------------ ------------
$ 21,121,524 $ 19,808,101
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 347,042 $ 569,730
Accrued salaries, wages, and payroll taxes 1,854,136 1,607,157
Other accrued liabilities 438,857 450,255
Accrued self funded insurance 646,784 228,084
Deferred revenue 1,433,533 1,427,057
------------ ------------
Total current liabilities 4,720,352 4,282,283
LONG-TERM OBLIGATIONS 4,269,000 4,350,012
COMMITMENTS AND CONTINGENCIES -- --
CUMULATIVE CONVERTIBLE PREFERRED STOCK, 10,000,000 shares
authorized, 1,033,751 and 1,003,833 issued and outstanding 1,487,032 1,443,833
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 50,000,000 shares authorized;
12,508,345 and 12,357,334 shares issued and outstanding 125,083 123,573
Additional paid-in capital 17,779,151 17,671,536
Accumulated comprehensive income 2,288 5,707
Accumulated deficit (7,261,382) (8,068,843)
------------ ------------
10,645,140 9,731,973
------------ ------------
$ 21,121,524 $ 19,808,101
============ ============
See notes to consolidated financial statements.