EXHIBIT 99.1
FOR IMMEDIATE RELEASE
FROM: Health Fitness Corporation
3600 American Blvd West, Suite 560
Minneapolis, Minnesota 55431
CONTACT: Wes Winnekins,
Chief Financial Officer
952.897.5275 or wes.winnekins@hfit.com
HEALTH FITNESS CORPORATION ANNOUNCES SIGNIFICANT INCREASE IN FINANCIAL
PERFORMANCE FOR FOURTH QUARTER AND YEAR-END 2004 RESULTS
MINNEAPOLIS, MN, MARCH 7, 2005 -- Health Fitness Corporation (OTC Bulletin
Board: HFIT) today announced financial results for the fourth quarter and year
ended December 31, 2004. Highlights for the fiscal year were:
o Total revenue increased 66.6% over the prior year to $52.5 million;
o Health improvement services revenue increased 171.3% to $2.3 million;
and
o Positive net earnings applicable to common shareholders of $1.6 million
compared to a net loss of $27 thousand in 2003.
"2004 was an important year for the maturation of our company," said Jerry
Noyce, President and Chief Executive Officer. "During 2004, we completed the
integration of our acquisition of the Health and Fitness Services Business of
Johnson & Johnson Healthcare Systems Inc. Prior to the acquisition, we were
noted for being the largest provider of corporate fitness management services,
and Johnson & Johnson was noted as a leading provider of employee health and
wellness management services. As a result of combining the best practices,
programs and people of both companies, we are uniquely positioned to meet the
growing demands of major corporations to provide solutions to address employee
health issues and rising corporate healthcare costs."
Noyce also noted that the Company made significant progress in a number of other
areas during 2004, including:
o The number of sites managed by HFC grew to 403 at the end of 2004, up
from 386 at the end of 2003.
o Working capital increased $1,700,652 to $3,955,534 for 2004, compared
to $2,254,882 for 2003.
o Long-term debt decreased $2,737,253 to $1,612,759 for 2004, from
$4,350,012 for 2003. In December 2004, the Company prepaid a 12%,
$2,000,000 Secured Senior Subordinated Note.
FOURTH QUARTER PERFORMANCE
For the fourth quarter of 2004, revenue increased $4,721,342, or 53.8% to
13,504,239, from $8,782,897 for the same period in 2003. Of this increase,
$4,283,817 is primarily attributable to management services revenue acquired in
connection with the Company's December 2003 acquisition of the Health and
Fitness Services Business of Johnson & Johnson Healthcare Systems Inc, as well
as growth in management services revenue from new 2004 contracts. The Company
also saw revenue from its health improvement program services grow $437,525 to
$725,444 for the fourth quarter of 2004, from $287,919 for the same period in
2003.
For the fourth quarter of 2004, the Company reported net earnings applicable to
common shareholders of $314,995, compared to a net loss applicable to common
shareholders of $600,353 for the same period in 2003. This positive change of
$915,348 is primarily attributable to a $643,635 increase in operating income, a
$104,541 decrease in income tax expense and the difference in one-time charges
between 2004 and 2003. With respect to one-time charges, the Company incurred
non-cash dividend expense of $659,930 in the fourth quarter of 2003 on preferred
stock the Company issued to finance its Johnson & Johnson acquisition. In
December 2004, the Company incurred a one-time charge to interest expense of
$474,669, of which $394,669 was non-cash, related to the prepayment of a
$2,000,000 Secured Senior Subordinated Note.
Net earnings per diluted share were $0.02 for the fourth quarter of 2004,
compared with a net loss per diluted share of $0.05 for the same period in 2003.
YEAR-END PERFORMANCE
For 2004, revenue increased $20,975,846, or 66.6% to $52,454,668, from
$31,478,822 for 2003. Of this increase, $19,494,200 is primarily attributable to
acquired management services revenue, growth in management services revenue from
new 2004 contracts and higher consulting revenue. The remaining increase in
revenue is attributable to the Company's health improvement program services,
which grew $1,481,646 to $2,346,726 in 2004, from $865,080 in 2003.
For 2004, the Company also reported net earnings applicable to common
shareholders of $1,587,620, compared to a net loss applicable to common
shareholders of $27,254 for 2003. This positive change of $1,614,874 is
primarily attributable to a $2,172,500 increase in operating income between 2004
and 2003. However, the full effect of this increase in operating income was not
fully realized due primarily to higher interest and income tax expenses, and the
difference in one-time charges between 2004 and 2003.
Net earnings per diluted share were $0.10 for 2004, compared with a net loss per
diluted share of $0.00 for 2003.
ABOUT THE COMPANY
Health Fitness Corporation is the leading provider of results-oriented health
improvement management services to corporations, hospitals, universities and
communities. Serving clients since 1975, the Company provides fitness and health
improvement services at more than 400 sites across the U.S. and Canada. For more
information about Health Fitness Corporation, go to www.hfit.com
FORWARD-LOOKING STATEMENTS
Certain statements in this release that are not historical facts, including,
without limitation, those relating to management's belief that the Company is
uniquely positioned to meet the growing demands of major corporations to provide
solutions to address employee health issues and rising corporate healthcare
costs, are forward-looking statements that involve risks and uncertainties. Such
statements are based upon the current beliefs and expectations of our
management. Actual results may vary materially from those contained in
forward-looking statements based on a number of factors including, without
limitation, our inability to meet the growing demands of major corporations and
other factors disclosed from time to time in our filings with the U.S.
Securities and Exchange Commission. Investors should take such risks into
account when making investment decisions. Shareholders and other readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. We undertake no obligation to
update any forward-looking statements.
Final Tables Follow
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ending Years Ending
12/31/04 12/31/03 12/31/04 12/31/03
-------------------------- -------------------------
Unaudited Unaudited
REVENUE $13,504,239 $8,782,897 $52,454,668 $31,478,822
COSTS OF REVENUE 9,921,400 6,949,009 38,995,451 24,943,625
-------------------------- -------------------------
GROSS PROFIT 3,582,839 1,833,888 13,459,217 6,535,197
OPERATING EXPENSES
Salaries 1,419,443 837,100 5,600,203 3,244,639
Selling, general, and administrative 1,001,964 625,380 3,440,134 1,849,317
Amortization of acquired intangible assets 219,583 73,194 878,333 73,194
-------------------------- -------------------------
Total operating expenses 2,640,990 1,535,674 9,918,670 5,167,150
-------------------------- -------------------------
OPERATING INCOME 941,849 298,214 3,540,547 1,368,047
OTHER INCOME (EXPENSE)
Interest expense (84,873) (121,443) (465,571) (204,430)
Interest cost - early debt repayment costs (474,669) -- (474,669) --
Other, net (656) 32,403 1,642 (2,405)
-------------------------- -------------------------
EARNINGS BEFORE INCOME TAXES
381,651 209,174 2,601,949 1,161,212
INCOME TAX EXPENSE 45,056 149,597 927,929 528,536
-------------------------- -------------------------
NET EARNINGS 336,595 59,577 1,674,020 632,676
Deemed dividend to preferred shareholders -- 656,096 -- 656,096
Dividend to preferred shareholders 21,600 3,834 86,400 3,834
-------------------------- -------------------------
NET EARNINGS (LOSS) APPLICABLE TO COMMON SHAREHOLDERS $ 314,995 $ (600,353) $ 1,587,620 (27,254)
========================== =========================
NET EARNINGS PER COMMON SHARE
Basic $ 0.03 $ (0.05) 0.13 0.00
Diluted 0.02 (0.05) 0.10 0.00
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 12,566,735 12,356,315 12,503,345 12,332,363
Diluted 16,349,043 12,356,315 16,151,017 12,332,363
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
2004 2003
--------------- -------------
ASSETS
CURRENT ASSETS
Cash $ 241,302 $ 281,294
Trade and other accounts receivable, less allowances of $211,000 and
$131,000 at December 31, 2004 and 2003 8,147,430 5,218,224
Prepaid expenses and other 213,954 187,347
Deferred tax assets 1,660,100 850,300
-------------- -------------
Total current assets 10,262,786 6,537,165
PROPERTY AND EQUIPMENT, net 150,308 177,217
OTHER ASSETS
Goodwill 9,022,501 8,725,574
Customer contracts, less accumulated amortization of $875,700 and
$67,400 at December 31, 2004 and 2003 854,306 1,662,639
Trademark, less accumulated amortization of $75,800 and $5,800 at
December 31, 2004 and 2003 274,167 344,166
Other intangible assets, less accumulated amortization of $81,300 and
$4,200 at December 31, 2004 and 2003 61,493 138,582
Cash held in escrow -- 471,999
Deferred tax assets 221,400 1,686,301
Other 87,015 64,458
-------------- -------------
$ 20,933,976 $ 19,808,101
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable 840,155 569,730
Accrued salaries, wages, and payroll taxes 2,768,734 1,607,157
Other accrued liabilities 495,770 450,255
Accrued self funded insurance 225,500 228,084
Deferred revenue 1,977,093 1,427,057
-------------- -------------
Total current liabilities 6,307,252 4,282,283
LONG-TERM OBLIGATIONS 1,612,759 4,350,012
COMMITMENTS AND CONTINGENCIES -- --
PREFERRED STOCK, $0.01 par value; 10,000,000 shares authorized, 1,063,945
and 1,003,833 shares issued and outstanding at December 31, 2004 and
2003 1,530,232 1,443,833
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 50,000,000 shares authorized;
12,582,170 and 12,357,334 shares issued and outstanding at December
31, 2004 and 2003 125,822 123,573
Additional paid-in capital 17,836,675 17,671,536
Accumulated comprehensive income from foreign currency translation 2,459 5,707
Accumulated deficit (6,481,223) (8,068,843)
-------------- -------------
11,483,733 9,731,973
-------------- -------------
$ 20,933,976 $ 19,808,101
============== =============