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 -- wes.winnekins@hfit.com -or-Dennis B. McGrath, McGrath Buckley Communications Counseling 651-646-4115; dennis@mcgrath-buckley.com HEALTH FITNESS ANNOUNCES INCREASE IN THIRD QUARTER 2004 RESULTS MINNEAPOLIS, November 1, 2004 --- Health Fitness Corporation (HFC) (OTC BB: HFIT) today announced financial results for the third quarter and nine months ended September 30, 2004. For the quarter ended September 30, 2004, revenue increased 76.7% to $13,154,340 from $7,445,094 for the same quarter last year. Gross profit increased 128.3% to $3,347,083 from $1,465,768 for the same quarter last year. As a percent of revenue, gross profit increased to 25.4% compared to 19.7% for the third quarter last year. Net earnings applicable to common shareholders increased 429.9% to $465,164 from $87,786 for the same quarter last year. Net earnings per diluted share of $0.03 increased 200% from $0.01 per diluted share for the same quarter last year. For the nine months ended September 30, 2004, revenue increased 71.6% to $38,950,429 from $22,695,925 for the same period last year. Gross profit increased 110.1% to $9,876,378 from $4,701,309 for the same period last year. As a percent of revenue, gross profit increased to 25.4% compared to 20.7% for the same period in 2003. Net earnings applicable to common shareholders increased 122.1% to $1,272,625 from $573,099 for the same period last year. Net earnings per diluted share of $0.08 increased 60% from $0.05 per diluted share for the same quarter last year. Jerry Noyce, HFC CEO and President said the significant improvement in financial results compared to 2003 is primarily attributed to HFC's December 2003 acquisition of the Health & Fitness Services Business of Johnson & Johnson Health Care Systems Inc, growth from HFC's Health Enhancement Program services and new contract growth outpacing contract attrition. "Our strong performance for the quarter and nine months is the result of hard work and dedication by our associates while we integrated and improved the operations of two companies," Noyce said. "Now that the integration process is essentially complete, we are very optimistic about our strategic direction in light of the scrutiny being placed on obesity, heart disease, diabetes and rising healthcare costs in the workplace. With a large customer base, an enhanced suite of health assessment, fitness, wellness and lifestyle management services, and a corporate market that is increasingly focused on the health of its employees, dependents and retirees, we are optimistic about the opportunity to continue growing our business." Health Fitness Corporation is the leading provider of results-oriented health improvement management services to corporations, hospitals, universities and communities. Serving clients since 1975, HFC provides fitness and wellness management services at 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 optimism regarding its strategic direction and excitement about growth opportunities. 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 September 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) Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ ------------------------------ 2004 2003 2004 2003 ------------ ------------ ------------ ------------ REVENUE $ 13,154,340 $ 7,445,094 $ 38,950,429 $ 22,695,925 COSTS OF REVENUE 9,807,257 5,979,326 29,074,051 17,994,616 ------------ ------------ ------------ ------------ GROSS PROFIT 3,347,083 1,465,768 9,876,378 4,701,309 OPERATING EXPENSES Salaries 1,408,482 834,781 4,180,760 2,407,539 Other selling, general and administrative 784,560 393,018 2,438,170 1,223,937 Amortization of acquired intangible assets 219,583 -- 658,750 ------------ ------------ ------------ ------------ Total operating expenses 2,412,625 1,227,799 7,277,680 3,631,476 ------------ ------------ ------------ ------------ OPERATING INCOME 934,458 237,969 2,598,698 1,069,833 OTHER INCOME (EXPENSE) Interest expense (118,102) (59,031) (380,698) (82,987) Other, net 908 (32,949) 2,298 (34,808) ------------ ------------ ------------ ------------ EARNINGS BEFORE INCOME TAXES 817,264 145,989 2,220,298 952,038 INCOME TAX EXPENSE 330,500 58,203 882,873 378,939 ------------ ------------ ------------ ------------ NET EARNINGS 486,764 87,786 1,337,425 573,099 Dividend to preferred shareholders 21,600 -- 64,800 -- ------------ ------------ ------------ ------------ NET EARNINGS APPLICABLE TO COMMON SHAREHOLDERS $ 465,164 $ 87,786 $ 1,272,625 $ 573,099 ============ ============ ============ ============ NET EARNINGS PER SHARE: Basic $ 0.04 $ 0.01 $ 0.10 $ 0.05 Diluted 0.03 0.01 0.08 0.05 WEIGHTED AVERAGE COMMON SHARES: Basic 12,550,679 12,341,284 12,482,060 12,324,292 Diluted 16,122,175 12,743,441 16,078,873 12,542,024 - MORE - HEALTH FITNESS CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, 2004 2003 ------------- ------------ ASSETS CURRENT ASSETS Cash $ 206,458 $ 281,294 Trade and other accounts receivable, less allowances of $154,400 and 7,913,590 5,218,224 $131,000 Prepaid expenses and other 244,179 187,347 Deferred taxes 1,294,300 850,300 ------------ ------------ Total current assets 9,658,527 6,537,165 PROPERTY AND EQUIPMENT, net 161,714 177,217 OTHER ASSETS Goodwill 9,022,501 8,725,574 Customer contracts, less accumulated amortization of $673,600 and 1,056,389 1,662,639 $67,400 Trademark, less accumulated amortization of $58,300 and $5,800 291,666 344,166 Other intangible assets, less accumulated amortization of $26,800 115,990 138,582 and $4,200 Cash held in escrow -- 471,999 Deferred taxes 513,382 1,686,301 Other 41,275 64,458 ------------ ------------ $ 20,861,444 $ 19,808,101 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $ 349,129 $ 569,730 Accrued salaries, wages, and payroll taxes 2,635,743 1,607,157 Other accrued liabilities 510,655 450,255 Accrued self funded insurance 497,043 228,084 Deferred revenue 1,525,068 1,427,057 ------------ ------------ Total current liabilities 5,517,638 4,282,283 LONG-TERM OBLIGATIONS 2,666,353 4,350,012 COMMITMENTS AND CONTINGENCIES -- -- CUMULATIVE CONVERTIBLE PREFERRED STOCK, 10,000,000 shares authorized, 1,048,874 and 1,003,833 issued and outstanding 1,508,632 1,443,833 STOCKHOLDERS' EQUITY Common stock, $0.01 par value; 50,000,000 shares authorized; 12,560,976 and 12,357,334 shares issued and outstanding 125,609 123,573 Additional paid-in capital 17,836,886 17,671,536 Accumulated comprehensive income 2,544 5,707 Accumulated deficit (6,796,218) (8,068,843) ------------ ------------ 11,168,821 9,731,973 ------------ ------------ $ 20,861,444 $ 19,808,101 ============ ============