Exhibit 99.1
Healthaxis Announces Third Quarter 2003 Financial Results;
Revenues up 10 Percent from Third Quarter 2002;
Operating Expenses down 13 Percent; EBITDA Positive
IRVING, Texas--(BUSINESS WIRE)--Nov. 4, 2003--Healthaxis Inc.
(Nasdaq:HAXS), an innovative provider of technology enhanced business process
services, including claims and benefit administration applications, web-enabled
software solutions and outsourced claims related services for commercial and
government health benefit administrators and health insurance payers, reported
financial results today for the three and the nine months ended September 30,
2003.
Third Quarter 2003 and Nine Months Highlights(a)
-- Revenues for the quarter were $5.4 million. This is a 10
percent increase compared to revenues of $4.9 million for
third quarter of 2002. For the first nine months of 2003,
revenues were $16.1 million, a 9 percent improvement compared
to $14.7 million for the first nine months of 2002.
-- Third quarter and nine month GAAP operating expenses were 13
percent lower than the respective periods of 2002. GAAP
operating expenses were $6.1 million for the third quarter and
$19.2 million for the first nine months. General and
administrative expenses declined $338,000 to approximately
$800,000 for the third quarter year-over-year, and declined
$195,000 to $2.6 million for the first nine months of the year
compared to the first nine months of 2002. The continued
decline in operating expenses was due to cost controls put in
place during both 2002 and 2003.
-- Cash operating expenses totaled $5.3 million for the third
quarter of 2003, down approximately 12 percent from $6.0
million for the same period last year. Cash expenses were 14
percent lower at $16.5 million for the first nine months of
2003 compared to $19.1 million for the same period a year ago.
Depreciation and amortization declined 22 percent from
$648,000 to $506,000 for the third quarter of 2003 compared to
2002 and were down 23 percent for the first nine months of
2003 compared to 2002.
-- EBITDA (defined as revenue less cash operating expenses) was
$41,000 for the third quarter of 2003, compared to an EBITDA
loss of $1.2 million for the same quarter of 2002. The EBITDA
loss for the first nine months of 2003 was $465,000, down from
a $4.4 million EBITDA loss for the same period last year.
Improved revenues and lower expenses in 2003 provided the
improved results for both comparative periods.
-- The GAAP loss from continuing operations for the 2003 third
quarter was $794,000 compared to a profit of $14.1 million in
the third quarter of 2002. As previously reported, the third
quarter of 2002 included a one-time gain of $16.4 million
created by the exchange of long-term debt for preferred stock
and cash. Subtracting the one-time gain from the third quarter
2002 profit of $14.1 million results in a non-GAAP loss of
$2.2 million from continuing operations for that period.
-- The net loss for the 2003 third quarter was $794,000, or
($0.22) per share, compared to a $14.2 million profit, or
$2.63 per share in the third quarter of 2002, which included
the one-time gain. Without the one time gain, the third
quarter of 2002 would have reflected a loss of $2.2 million,
or ($0.43) per share. The net loss for the first nine months
of 2003 was $3.1 million, compared to a net loss of $722,000
for the first nine months of 2002, including the one-time
gain. Without the gain, the 2002 net loss for the first nine
months would have been $17.1 million, or ($3.21) per share.
-- Cash at September 30, 2003 totaled $8.4 million, compared to
$10.3 million at the end of the second quarter. The major uses
of cash were dividend payments to the shareholders of the
Series A Convertible Preferred Stock and the $500,000 initial
payment to UICI for the repurchase of Healthaxis securities.
-- During the third quarter of 2003, the company announced the
approval of its continued listing on the NASDAQ SmallCap
Market. The company effected a 1 for 10 reverse stock split
during the quarter.
-- As also previously announced, the company repurchased all of
its outstanding securities held by UICI on September 30, 2003,
which included 48.3 percent of the company's outstanding
common stock.
-- During the third quarter of 2003, the company achieved several
significant sales. Healthaxis entered into a series of
long-term contracts with AAG Benefit Plan Administrators, and
one of its major clients, for a full suite of ASP and BPO
service solutions through the year 2009. The company also
signed a three-year contract with Magellan Behavioral Health
for claims software and BPO services. Another large
third-party administrator committed to enter into a contract
for the company's claims software and business process
services.
-- During the quarter, Affiliated Computer Services (ACS)
notified Healthaxis that the Georgia Department of Community
Health had terminated portions of its contract with ACS, which
included the work subcontracted to Healthaxis. As a result,
ACS requested that Healthaxis cease work on this project.
Healthaxis is entitled to payment for all services rendered
through the date of project cessation, according to the terms
of its subcontract with ACS. Accordingly, in the third
quarter, the company recognized $550,000 of revenue that had
been previously deferred in accordance with the completed
contract method of accounting. In the fourth quarter of 2003,
the company expects to bill ACS an additional amount for work
completed. This amount cannot be estimated at this time.
-- With regard to the State of Washington Health Care Authority
contract, during the third quarter the company elected to
assign significant additional resources to the project. As
previously disclosed, the company uses the percentage of
completion method of accounting for this contract. Due to the
uncertainty of the percentage profit in the contract, the
company had previously recognized revenue only to the extent
that it had incurred costs. The Company now believes that,
with the application of additional resources, its costs will
exceed revenue by approximately $128,000 under the fixed fee
arrangement with the State. The Company recorded this
estimated loss in the third quarter. In accordance with
contract accounting rules, the Company has unbilled
receivables for this project totaling $961,000 at September
30, 2003.
Commenting on the results for the third quarter and the first nine
months of 2003, James McLane, the company's chairman and CEO, said:
"Our results for the first nine months of this year represent the
success of our efforts to improve efficiency in the delivery of
services to our customers, while moving the company into markets
positioned for future growth. We are very focused on becoming a market
leading, technology enabled business process services company for
health benefit administrators and health insurance payers. We are
taking steps to expand our services and capabilities surrounding the
payment of a health insurance claim."
Continuing, McLane said: "We continue to demonstrate the value of
our platforms and services in terms of cost savings and service
improvement to our customers and prospects, as demonstrated by the
three major commitments during the quarter. These agreements represent
the increased focus of the company on the services element we offer,
which are based on our proprietary software platforms. Our flexibility
in matching our technology and service capabilities to meet specific
customer's needs allows us to add value in targeted ways to maximize
our customers' return on capital and people."
Finally, Mr. McLane said: "While we continue to show
year-over-year improvement in our operations and profitability, future
improvements will continue to be affected by the timing and delivery
of some of our large contracts, and, as is customary in our business,
our customers' schedules and transaction volumes. As pointed out in
the second quarter, revenue and profit recognition are dependent upon
satisfactory contract completion and achievement of expected
profitability targets in the contracts. We do expect the potential for
expansion of our BPO services volume, the operating efficiency
continually being imbedded in our operating infrastructure, and our
focus on strategic initiatives which expand the company's scale and
scope in business process services to enhance our future prospects."
(a) The financial results reported in this release contain both
measures of GAAP and Non-GAAP financial information, as defined in
Regulation G adopted by the Securities and Exchange Commission.
Accordingly, all such non-GAAP financial measures that are presented
are also set forth on the tables attached to this press release and
are both compared to, and reconciled with, the most directly
comparable financial measure calculated and presented in accordance
with GAAP. Management believes that these non-GAAP financial measures
are useful in monitoring basic cash flow generated and used in the
company's core operating activities, and in monitoring the effects of
changes made by management in the Company's operations across
different time periods. These non-GAAP factors alone are insufficient
to measure all of the company's operating characteristics and should
be used in conjunction with GAAP measures to evaluate total operating
performance.
Healthaxis management will host a conference call on Wednesday,
November 5, 2003 to review results and answer questions. The
conference call will be held at 1:00 P.M. Central Time. Investors
wishing to participate should call 888-280-8771 and request the
Healthaxis Third Quarter Earnings Call. Please plan on calling in at
least 10 minutes prior to the scheduled start.
A replay will be available, beginning approximately 2 hours after
the live call is completed, until November 18, 2003 at 888-509-0081.
A Webcast is also being distributed over CCBN's Investor
Distribution Network to both institutional and individual investors.
Investors can listen to the call through the company's Website
www.healthaxis.com or CCBN's individual investor center at
www.companyboardroom.com or by visiting any of the investor sites in
CCBN's Individual Investor Network. Institutional investors can access
the call via CCBN's password-protected event management site,
StreetEvents at www.streetevents.com.
About Healthaxis Inc.
Healthaxis (Nasdaq:HAXS) provides to health benefit administration
companies technology enhanced solutions to reduce their administrative
costs, enhance their customer service and improve their profitability.
These HIPAA compliant Business Process Outsourcing (BPO) services
include a range of outsourced claim flow solutions beginning with full
front-end services, such as imaging and data capture, through ASP
based claims and administration systems that streamline claims
processing. For information on Healthaxis products and services, call
(800) 519-0679 or visit www.healthaxis.com. For investor information,
call (972) 458-8000.
Forward-looking statements:
Statements that are not purely historical facts, including without
limitation statements about anticipated or expected future revenue and
performance, constitute forward-looking statements within the meaning
of Section 27A of the Securities and Exchange Act of 1934, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are subject to known and unknown
risks, uncertainties and other factors, which may cause actual results
to be materially different from those contemplated by the
forward-looking statements. Such factors include without limitation
the risks and uncertainties identified in our documents filed with, or
furnished to, the Securities and Exchange Commission, including those
identified under the caption "Business-Risk Factors" in our Form 10-K
for the year ended December 31, 2002. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Readers are
cautioned not to place undue reliance on forward-looking statements.
Healthaxis Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---------- ---------- --------------------
Revenue $5,352 $4,850 $16,066 $14,730
Expenses:
Cost of revenues 4,797 4,926 14,869 16,373
Sales and marketing 224 617 762 1,626
General and administrative 804 1,142 2,550 2,745
Research and development - 78 30 318
Amortization of Intangibles 324 323 972 976
---------- ---------- --------------------
Total operating expenses 6,149 7,086 19,183 22,038
---------- ---------- --------------------
Operating loss (797) (2,236) (3,117) (7,308)
Gain on extinguishment of
debt - 16,388 - 16,388
Interest and other income
(expense), net 3 (8) 17 (414)
---------- ---------- --------------------
Income (loss) from
continuing operations (794) 14,144 (3,100) 8,666
Loss on disposal of
discontinued operations - - - (3,564)
Gain from discontinued
operations (a) - 34 - 850
---------- ---------- --------------------
Net income (loss) before
cumulative effect of
accounting change (794) 14,178 (3,100) 5,952
Cumulative effect of
accounting change - - - (6,674)
---------- ---------- --------------------
Net income (loss) $(794) $14,178 $(3,100) $(722)
========== ========== ====================
Income (loss) per share of
common stock (basic)
Continuing operations $(0.22) $2.62 $(0.69) $1.60
Discontinued operations $- 0.01 $- $(0.51)
Cumulative effect charge $- $- $- $(1.24)
---------- ---------- --------------------
Net income (loss) per share
of common stock $(0.22) $2.63 $(0.69) $(0.15)
========== ========== ====================
Income (loss) per share of
common stock (diluted)
Continuing operations $(0.22) $2.34 $(0.69) $1.55
Discontinued operations $- $0.01 $- $(0.47)
Cumulative effect charge $- $- $- $(1.15)
---------- ---------- --------------------
Net income (loss) per share
of common stock $(0.22) $2.35 $(0.69) $(0.07)
========== ========== ====================
Weighted average common
shares used in computing
income (loss) per share
Basic 5,325,794 5,365,812 5,350,373 5,359,230
Diluted 5,325,794 6,062,381 5,350,373 5,796,674
(a) As of the second quarter of 2002, the Company began reporting its
historical results of operations from the terminated UICI Technical
Services Agreement as a net amount in "Gain from discontinued
operations"
Healthaxis Inc. and Subsidiaries
Consolidated Statements of Operations
GAAP / Non-GAAP Comparison and Reconciliation
(In thousands, except share and per share data) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---------- --------- ----------- --------
Revenue $5,352 $4,850 $16,066 $14,730
Expenses:
Cost of revenues 4,304 4,298 13,268 13,512
Sales and marketing 217 583 740 1,503
General and
administrative 790 1,086 2,501 3,835
Research and
development - 61 22 288
---------- --------- ----------- --------
Cash operating expenses 5,311 6,028 16,531 19,138
---------- --------- ----------- --------
Non-cash operating expenses:
Operating depreciation
& amortization 506 648 1,654 2,153
Stock based
compensation 8 87 26 401
Amortization of
acquisition
intangibles 324 323 972 976
Severance expenses - - - (1,345)
Restructuring and
impairment charges - - - 715
---------- --------- ----------- --------
Total GAAP operating
expenses 6,149 7,086 19,183 22,038
---------- --------- ----------- --------
EBITDA (Revenue less cash
operating expenses) 41 (1,178) (465) (4,408)
---------- --------- ----------- --------
GAAP operating loss (EBITDA
less non-cash operating
expenses) (797) (2,236) (3,117) (7,308)
---------- --------- ----------- --------
Gain on extinguishment of
debt - 16,388 16,388
Interest and other income
(expense), net 3 (8) 17 (414)
---------- --------- ----------- --------
Income (loss) from
continuing operations (794) 14,144 (3,100) 8,666
Loss on disposal of
discontinued operations - - - (3,564)
Gain from discontinued
operations - 34 - 850
---------- --------- ----------- --------
Net income (loss) before
cumulative effect of
accounting change (794) 14,178 (3,100) 5,952
Cumulative effect of
accounting change - - - (6,674)
---------- --------- ----------- --------
Net income (loss) $(794) $14,178 $(3,100) $(722)
========== ========= =========== ========
Healthaxis Inc. and Subsidiaries
Unaudited Consolidated Condensed Balance Sheets
(In thousands)(Unaudited)
September 30, December 31,
2003 2002
Assets
Cash and cash equivalents $8,350 $11,380
Accounts receivable, net 3,349 3,346
Other current assets 1,809 1,171
--------------- ----------------
13,508 15,897
Property & Equipment, net 1,293 1,462
Goodwill 11,276 11,276
Other assets 3,486 5,022
--------------- ----------------
Total assets $29,563 $33,657
=============== ================
Liabilities and stockholders' equity
Current liabilities $4,414 $3,998
Long-term debt 2,877 -
Other long-term liabilities 2,265 2,051
Stockholders' equity 20,007 27,608
--------------- ----------------
Total liabilities and stockholders'
equity $29,563 $33,657
=============== ================
CONTACT: Halliburton Investor Relations
Investor Contact
Matt Kreps, 972-458-8000
mkreps@halliburtonir.com