Exhibit 99.1
Healthaxis Announces Fourth Quarter and Full Year 2004 Financial Results
IRVING, Texas--(BUSINESS WIRE)--March 30, 2005--
Revenues Improve, Operating Loss Decreases from Prior Quarter;
Loss of $0.34 and $1.99 Per Share Respectively; Foundation for Growth
Established
Healthaxis Inc. (Nasdaq:HAXS), an innovative provider of
technology-enhanced, integrated business process solutions and
services, including claims and benefit administration applications,
web-enabled software solutions and outsourced claims related services
for health benefit administrators and health insurance claims
processors, reported financial results today for the three months
ended December 31, 2004 and for the full year.
Fourth Quarter and Full Year 2004 Financial Highlights(a)
-- Revenues for the fourth quarter were $4.1 million, up 3% from
the $3.9 million in the previous quarter and down from the
$4.8 million realized in the fourth quarter of 2003. Revenues
for the full year were $16.2 million, compared to $20.9
million in 2003. The decline in revenues from 2004 is
attributable to several factors, the most significant of which
was the conclusion of work on the Company's two state projects
in 2003. These projects involved the development of benefit
administration platforms. Having strategically moved the
company toward becoming principally a BPO Services company,
these types of contracts are no longer performed by the
company. These contracts generated no revenues in 2004 and
accounted for $1.8 million of the full-year difference.
Recurring per employee per month (PEPM) revenues declined
compared to comparative periods, principally as a result of
one customer completing a multi-year run-off from Healthaxis
systems, which began in 2000.
-- The company recorded an increase in base lives in the fourth
quarter compared to the third and second quarters of 2004. For
the full year, per employee per month fees, transaction fees,
data capture fees and print fees were down compared to 2003,
primarily due to a lower total number of covered lives and
lower claims volume in some of the company's on-going TPA
customers, on an annualized comparison.
-- Fourth quarter GAAP operating expenses were $5.1 million, down
3% from the prior quarter and down 15% from $6.0 million in
the fourth quarter of 2003. GAAP operating expenses for the
year were $ 21.9 million, down 13 percent, compared to $ 25.1
million in 2003. The 2004 cost reductions include the effect
of substantial increases in sales and marketing expenses,
continued investment in improving the company's service
capabilities, and expanding the functionality of the company's
claims clean-up and "smart editing" capabilities.
Approximately $1.7 million of the year-over-year decline in
expenses was related to termination of contract labor paid to
the company's development partner and internal costs related
to the state contracts. An additional $816,000 was related to
lower amortization and depreciation expense. The remaining
expense reduction was due primarily to lower vendor costs
associated with the reduction in transaction revenues, as well
as lower costs for salary, benefits, travel and other
personnel related expenses, partially offset by a $468,000
one-time legal and accounting expense related to the preferred
stock conversion transaction approved by shareholders on June
30, 2004.
-- The operating loss of $991,000 for the fourth quarter compares
to an operating loss of $1.3 million in the prior quarter and
a loss of $1.2 million in the fourth quarter of 2003. The
operating loss for the year of $5.7 million compares to a $4.3
million loss for 2003; the principal reason for the higher
loss was the $4.7 million reduction in revenues for the year
as the company completed its strategic realignment.
-- EBITDA (defined as revenue less cash operating expenses) was a
loss of $335,000 for the fourth quarter, compared to a loss of
$352,000 for the fourth quarter of 2003. The 2004 EBITDA loss
was $3.1 million, compared to a loss of $818,000 for 2003. The
decrease in revenues from 2003 to 2004 exceeded the Company's
reduction of cash operating expenses due to support and
maintenance requirements of the company's existing customers,
the build-up of the sales force and marketing initiatives. Our
legal and accounting expenses related to the closing of the
preferred stock transaction in June 2004, as well as our
settlement with the State of Washington in March 2004, also
contributed to the increased EBITDA loss during 2004. The
attached financial table provides a reconciliation of EBITDA
to the GAAP operating loss.
-- The net loss attributable to common shareholders for the
fourth quarter of 2004 was $1.1 million, or $0.34 per share.
This compares to losses attributable to common shareholders of
$1.3 million, or $0.48 per share for the third quarter of
2004, and $1.3 million, or $0.46 per share, for the fourth
quarter of 2003. The loss for the year was $5.7 million, or
$1.99 per share compared to a loss of $5.0 million or $1.05
per share a year ago. The number of weighted average common
shares outstanding was significantly lower in 2004 than 2003 -
2,856,532 shares compared to 4,699,244 shares in 2003, due to
the Company's September 30, 2003 repurchase and subsequent
retirement of 48 percent of the outstanding common stock
previously held by UICI.
-- Cash at December 31, 2004 totaled $3.9 million, compared to
$4.4 million at September 30, 2004 and $7.9 million at
December 31, 2003. The major uses of cash during 2004 were
$2.2 million used in operations, $891,000 used in investing
activities (such as software development, contract start-up
and purchases of property, plant and software), and $841,000
related to financing activities. The financing activities
consisted of the final $223,000 preferred stock dividend paid
in January 2004 and $618,000 in scheduled debt service on the
note payable to UICI in 2004.
Review and Outlook
Commenting on 2004 results, James W. McLane, the Company's
Chairman and Chief Executive Officer said: "We achieved many of our
2004 objectives, except for the all important one of growing our
revenues. We clearly established a strong foundation for future
growth. We aligned our expenses more closely with our revenues; we
added several new customers that will contribute to company revenues
in 2005, despite the recent termination of our previously announced
contract with CBCA, Inc. due to our collective inability to achieve a
mutually satisfactory implementation project plan; we strengthened our
alliances with PPO networks, out-of network repricing companies and
other companies in the health insurance claims processing space; we
added data mining and reporting and smart claims editing capabilities
to our services; we extended the contract of another of our largest
customers to 2009; we substantially modified the terms of our
outstanding preferred stock; we transitioned the company from being a
software development company with three separate product lines to
being an integrated technology enhanced business process services
company, which surrounds and supports the origination and processing
of a health insurance claim; we adjusted and strengthened our sales
force; and we appointed John Carradine as President and Chief
Operating Officer of the company. We also laid the groundwork for a
substantial cash infusion into the company for organic and strategic
growth, which was announced in February of this year."
McLane went on to say: "We are focused on six growth strategies as
we enter 2005:
-- To grow our business with our existing customers by delivering
quality results; by providing assistance with their
contracting of new employee groups; and by continually
developing new product and service offerings which address the
areas of most concern to them in their markets;
-- To add several new customers by continuing to strengthen our
sales force, under its new leadership, as well as our
distribution channels, and by continuing to modularize the
deep functionality residing within our claims and admin
systems;
-- To broaden our capabilities by augmenting our on-shore and
near-shore capabilities with lower cost off-shore capabilities
that offer measurable quality results;
-- To grow strategically to gain scale and enhance profitability
through the acquisition of, or merger with, companies which
provide complementary solutions and services;
-- To strengthen our capital structure and achieve profitability;
-- To solidify Healthaxis as a company of choice for its
employees through our value system, incentive programs and
environment of challenge, growth, opportunity, accountability
and team-play."
Continuing, McLane said: "We are taking, and we will continue to
take, the steps we believe are necessary to achieve these objectives,
including closing of the financing transaction and remote resourcing
arrangement we announced in February. As I said at that time, we
believe that Healthaxis is now situated as one of the strongest
competitors in the Healthcare BPO services marketplace. We look
forward to taking advantage of our opportunities, and growing our
revenues."
About Healthaxis Inc.
Healthaxis (Nasdaq:HAXS) is a leading technology enhanced provider
of fully integrated business process outsourcing and claims and
administration solutions and services for health benefit
administrators and health insurance claims processors. For information
on Healthaxis products and services, call 800-519-0679 or visit
www.healthaxis.com. For investor information, call 972-458-8000.
(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.
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 most
recently filed Form 10-K. 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
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data) (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $4,077 $4,785 $16,162 $20,851
Expenses:
Cost of revenues 3,701 4,704 15,905 19,573
Sales and marketing 464 186 1,475 948
General and
administrative 651 748 3,489 3,298
Research and development -- -- -- 30
Restructuring and
impairment charges -- -- -- --
Amortization of
intangibles 252 324 1,032 1,296
---------- ---------- ---------- ----------
Total operating expenses 5,068 5,962 21,901 25,145
---------- ---------- ---------- ----------
Operating loss (991) (1,177) (5,739) (4,294)
Interest and other income
(expense), net (84) 13 (219) 30
---------- ---------- ---------- ----------
Net loss (1,075) (1,164) (5,958) (4,264)
Preferred stock
contributions (dividend) -- (104) 261 (690)
---------- ---------- ---------- ----------
Net loss attributable to
common shareholders $(1,075) $(1,268) $(5,697) $(4,954)
========== ========== ========== ==========
Net loss per share of
common stock (basic and
diluted) $(0.34) $(0.46) $(1.99) $(1.05)
========== ========== ========== ==========
Weighted average common
shares used in computing
loss per share
Basic and diluted 3,118,834 2,767,088 2,856,532 4,699,244
GAAP / Non-GAAP Comparison
and Reconciliation Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $4,077 $4,785 $16,162 $20,851
Cash expenses:
Cost of revenues 3,311 4,223 14,340 17,492
Sales and marketing 458 179 1,453 919
General and
administrative 643 735 3,449 3,236
Research and development -- -- -- 22
---------- ---------- ---------- ----------
Cash operating expenses 4,412 5,137 19,242 21,669
---------- ---------- ---------- ----------
Non-cash operating
expenses:
Operating depreciation &
amortization 396 493 1,594 2,146
Stock based compensation 8 8 33 34
Amortization of
acquisition intangibles 252 324 1,032 1,296
---------- ---------- ---------- ----------
Total GAAP operating
expenses 5,068 5,962 21,901 25,145
---------- ---------- ---------- ----------
EBITDA (Revenues less cash
operating expenses) (335) (352) (3,080) (818)
---------- ---------- ---------- ----------
Operating loss (EBITDA
less non-cash operating
expenses) (991) (1,177) (5,739) (4,294)
Interest and other income
(expense), net (84) 13 (219) 30
---------- ---------- ---------- ----------
Net loss $(1,075) $(1,164) $(5,958) $(4,264)
========== ========== ========== ==========
Healthaxis Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data) (Unaudited)
Dec. 31, Dec. 31,
2004 2003
-------- --------
Assets
Cash and cash equivalents $3,930 $7,887
Accounts receivable, net 2,368 3,077
Other current assets 635 729
-------- --------
Current assets 6,933 11,693
Property, equipment and software, net 966 1,238
Goodwill 11,276 11,276
Other assets 1,506 2,907
-------- --------
Total assets $20,681 $27,114
======== ========
Liabilities and stockholders' equity
Current liabilities $3,607 $3,380
Long-term debt 2,041 2,697
Other long-term liabilities 2,211 2,290
Stockholders' equity 12,822 18,747
-------- --------
Total liabilities and stockholders' equity $20,681 $27,114
======== ========
CONTACT: Halliburton Investor Relations
Matt Kreps, 972-458-8000
mkreps@halliburtonir.com