EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1


 
Exhibit 99.1
 
News Release
170 Mt. Airy Road
Basking Ridge, NJ 07920

Hooper Holmes
James Calver
Chief Executive Officer
(908) 766-5000
Financial Dynamics
Investors: Jonathan Birt
Media: Sean Leous
212-850-5600


HOOPER HOLMES ANNOUNCES THIRD QUARTER 2006 RESULTS
RECORDS NON-CASH IMPAIRMENT CHARGE


BASKING RIDGE, NJ, November 14, 2006, Hooper Holmes, Inc. (AMEX:HH) today announced financial results for the third quarter and nine months ended September 30, 2006.

For the three months ended September 30, 2006, total revenues decreased 9% to $70.2 million compared to $77.4 million in the third quarter 2005. The Company incurred a net loss of $42.0 million or $(0.63) per share compared to a net loss of $2.4 million or $(0.04) per share in the third quarter 2005. The net loss for the third quarter 2006 includes a non-cash charge of $31.8 million related to an increase in the valuation allowance for deferred tax assets and a charge of approximately $6.8 million pertaining to restructuring and other charges. Third quarter 2005 results included approximately $4.6 million in restructuring and other charges.

For the first nine months of 2006, total revenues were $222.7 million compared to $243.8 million in the comparable period of 2005, a decrease of 9%. The Company’s net loss for the first nine months of 2006 totaled $43.8 million, or $(0.66) per share, compared to net income of $2.7 million, or $0.04 per diluted share, in the comparable period of 2005. The net loss for the first nine months of 2006 includes a non-cash charge of $31.8 million related to an increase in the valuation allowance for deferred tax assets. Restructuring and other charges included in these results are $8.6 million and $5.7 million for the first nine months of 2006 and 2005, respectively.

Third Quarter 2006 Results by Division

Health Information Division (HID)
The HID reported a decline in third quarter revenues to $62.5 million compared to $68.2 million in 2005, due primarily to continued weakness in the Company’s core paramedical business.
 
·  
Portamedic revenues decreased 8% to $36.9 million, compared to $40.2 million in the third quarter 2005. The decrease is a result of fewer paramedical exams being completed during the quarter, primarily attributable to the overall decline in life insurance application activity.
 
·  
Infolink reported revenues of $7.7 million, a decrease of 3% compared to $7.9 million in the third quarter of 2005. The decrease reflects fewer Attending Physician Statement (APS) orders, partially offset by an increase in tele-interviewing revenue.
 
·  
Medicals Direct Group revenues were down 11% to $9.6 million compared to $10.9 million in the same period of 2005. The decrease is primarily due to a decline in our medical screenings and underwriting revenue. The decline is partially attributable to a weaker UK housing market, among other factors, resulting in fewer life insurance policies, which are customarily purchased in conjunction with home mortgages.
 
·  
Heritage Labs revenues fell 8% to $4.3 million compared to $4.7 million in the same period of 2005, reflecting fewer units being tested.
 
·  
Mid-America Agency Services (MAAS) reported revenues of $4.0 million, a decline of $0.5 million compared to the third quarter of 2005, the result of a reduction in life insurance applications.

Claims Evaluation Division (CED)
The CED reported third quarter revenues of $7.7 million, down 17% compared to $9.2 million in the third quarter 2005. The decrease was primarily a result of fewer independent medical exams and peer review services ordered by our current customers.

James Calver, Chief Executive Officer of Hooper Holmes, commented, “Our third quarter results, along with our strategic review findings, underscore our need to implement change at Hooper Holmes. We remain optimistic that we have laid the groundwork for a recovery in our business through the implementation of the Strategic Review announced last week. This is focused on reducing our cost base, restoring growth in the core businesses, maximizing use of our existing assets, and seeking opportunities in new areas of business. We believe this is the right approach to improve our financial performance, position Hooper Holmes for long-term growth and create value for shareholders.”

On November 10, 2006, the Company held a conference call to present the findings of their recently completed strategic review. To summarize, management has developed plans which, when fully implemented, are expected to result in approximately $17.5 million of additional operating income on an annual basis. An online archive of the call is available on the Company’s website located at http://www.hooperholmes.com.

Hooper Holmes, Inc. provides outsourced risk assessment services, including underwriting and claims information to the life, health, automobile, and workers’ compensation insurance industries. The Company provides these health information services through over 250 locations nationwide and in the United Kingdom.

Certain information contained herein includes information that is forward-looking. The matters referred to in forward-looking statements may be affected by the risks and uncertainties involving the Company’s business. These forward-looking statements are qualified in their entirety by cautionary statements contained in the Company’s Securities and Exchange Commission filings. The Company disclaims any obligation to update these forward-looking statements.

-TABLES FOLLOW-


1


HOOPER HOLMES INC.
  
2006 CONSOLIDATED STATEMENTS OF INCOME
  
(unaudited: in thousands, except share data)
  
                       
                       
                       
                       
                       
   
 Three Months ended September 30,
 
 Nine Months ended September 30,
 
   
 2006
  
 2005
  
 2006
  
 2005
  
                           
Revenues
  
$
70,216
 
$
77,429
 
$
222,655
 
$
243,847
 
Cost of operations
    
54,007
   
58,608
   
169,179
   
178,170
 
Gross profit
    
16,209
   
18,821
   
53,476
   
65,677
 
Selling, general and administrative expenses
    
19,332
   
18,220
   
57,876
   
55,163
 
Restructuring and other charges
    
6,817
   
4,609
   
8,550
   
5,650
 
Operating income (loss)
    
(9,940
)
  
(4,008
)
  
(12,950
)
  
4,864
 
Other income (expense):
                  
Interest expense
    
(132
)
  
(119
)
  
(319
)
  
(411
)
Interest income
    
51
   
83
    
136
   
206
 
Other expense, net
    
(102
)
  
(126
)
  
(305
)
  
(353
)
 
    
(183
)
  
(162
)
  
(488
)
  
(558
)
Income (loss) before income taxes
   
(10,123
)
  
(4,170
)
  
(13,438
)
  
4,306
 
                           
Income tax (benefit) provision
    
31,835
    
(1,734
)
  
30,336
    
1,618
 
                           
Net income (loss)
  
$
(41,958
)
$
(2,436
)
$
(43,774
)
$
2,688
 
 
                  
Earnings (loss) per share:
                          
Basic
  
$
(0.63
)
$
(0.04
)
$
(0.66
)
$
0.04
 
Diluted
  
$
(0.63
)
$
(0.04
)
$
(0.66
)
$
0.04
 
                   
Weighted average number of shares:
                         
Basic
    
66,972,197
    
65,527,594
    
66,488,603
    
65,351,112
  
Diluted
    
66,972,197
    
65,527,594
    
66,488,603
    
66,080,614
  



2


 
Consolidated Balance Sheets
  
(unaudited; in thousands except share data)
  
             
   
September 30, 2006
  
December 31, 2005
  
ASSETS
            
Current assets:
              
Cash and cash equivalents
  
$
6,816
  
$
11,683
  
Marketable securities
    
-
    
383
  
Accounts receivable, net
    
40,656
    
42,121
  
Deferred income taxes
    
-
    
1,295
  
Income tax receivable
    
2,614
    
5,612
  
Other current assets
    
4,799
    
4,907
  
 Total current assets
    
54,885
    
66,001
  
               
Property, plant and equipment, at cost
    
45,500
    
40,563
  
Less: Accumulated depreciation and amortization
    
29,967
    
27,085
  
 Property, plant and equipment, net
    
15,533
    
13,478
  
               
Goodwill
    
41,645
    
40,038
  
Intangible assets, net
    
10,964
    
12,203
  
Deferred income taxes
    
-
    
30,269
  
Other assets
    
781
    
342
  
 Total assets
  
$
123,808
  
$
162,331
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
 Current maturities of long-term debt
  
$
-
  
$
1,000
  
 Accounts payable
    
11,646
    
13,706
  
 Accrued expenses
    
21,527
    
17,523
  
 Total current liabilities
    
33,173
    
32,229
  
               
Other long term liabilities
    
1,187
    
1,200
  
Commitments and Contingencies
              
Stockholders' equity:
              
Common stock, par value $.04 per share; authorized 240,000,000
    
2,706
    
2,700
  
 shares, issued 67,651,674 shares and 67,499,074 shares
             
 as of September 30, 2006 and December 31, 2005, respectively
              
Additional paid-in capital
    
114,549
    
121,278
  
Accumulated other comprehensive income
    
1,464
    
354
  
Retained earnings (deficit)
    
(29,200
)
  
14,574
  
     
89,519
    
138,906
  
Less: Treasury stock at cost (9,395 shares and 1,328,795 shares
              
as of September 30, 2006 and December 31, 2005, respectively
    
71
    
10,004
  
Total stockholders' equity
    
89,448
    
128,902
  
 Total liabilities and stockholders' equity
  
$
123,808
  
$
162,331