10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x        Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2012

or

o        Transition Report pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the transition period from         to         

__________________

Commission File Number: 001-09972

HOOPER HOLMES, INC.

(Exact name of registrant as specified in its charter)

New York	22-1659359
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
170 Mt. Airy Road, Basking Ridge, NJ	07920
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code:   (908) 766-5000

Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated

filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer o Non-accelerated Filer o Smaller Reporting Company x

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares outstanding of the Registrant's common stock as of July 31, 2012 was:

Common Stock, $.04 par value - 69,699,587 shares

HOOPER HOLMES, INC. AND SUBSIDIARIES

INDEX

			Page No.
PART I –	Financial Information
	ITEM 1 –	Financial Statements (unaudited)
		Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011	1
		Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2012 and 2011	2
		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011	3
		Notes to Unaudited Consolidated Financial Statements	4
	ITEM 2 –	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
	ITEM 3 –	Quantitative and Qualitative Disclosures About Market Risk	26
	ITEM 4 –	Controls and Procedures	27
PART II –	Other Information
	ITEM 1 –	Legal Proceedings	28
	ITEM 1A –	Risk Factors	28
	ITEM 2 –	Unregistered Sales of Equity Securities and Use of Proceeds	28
	ITEM 3 –	Defaults Upon Senior Securities	28
	ITEM 4 –	Mine Safety Disclosures	28
	ITEM 5 –	Other Information	28
	ITEM 6 –	Exhibits	29
		Signatures	30

PART I - Financial Information

Item 1. Financial Statements (unaudited)

Hooper Holmes, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

	June 30, 2012				December 31, 2011
ASSETS (Note 8)
Current assets:
Cash and cash equivalents		$	11,443			$	16,917
Accounts receivable, net of allowance for doubtful accounts of
$513 and $525 at June 30, 2012 and December 31, 2011,
respectively		16,996				18,387
Inventories		2,844				2,226
Other current assets		1,223				2,140
Total current assets		32,506				39,670
Property, plant and equipment at cost		50,105				54,333
Less: Accumulated depreciation and amortization		36,990				41,281
Property, plant and equipment, net		13,115				13,052
Intangible assets, net		44				195
Other assets		335				364
Total assets		$	46,000			$	53,281
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	5,680			$	5,174
Accrued expenses		6,616				6,173
Total current liabilities		12,296				11,347
Other long-term liabilities		1,292				1,185
Commitments and contingencies (Note 9)
Stockholders' Equity:
Common stock, par value $.04 per share; authorized 240,000,000 shares, issued 69,708,982 shares and 69,678,982 shares at June 30, 2012 and December 31, 2011, respectively. Outstanding: 69,699,587 shares and 69,669,587 shares at June 30, 2012 and December 31, 2011, respectively.		2,788				2,787
Additional paid-in capital		149,169				148,839
Accumulated deficit		(119,474		)		(110,806		)
		32,483				40,820
Less: Treasury stock, at cost; 9,395 shares as of June 30, 2012 and December 31, 2011		(71		)		(71		)
Total stockholders' equity		32,412				40,749
Total liabilities and stockholders' equity		$	46,000			$	53,281
See accompanying notes to consolidated financial statements.

1

Hooper Holmes, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Revenues	$	35,401		$	37,928		$	74,193		$	78,505
Cost of operations	28,317			28,864			58,090			58,472
Gross profit	7,084			9,064			16,103			20,033
Selling, general and administrative expenses	11,033			10,556			22,486			21,436
Restructuring charges	1,575			38			2,192			94
Operating loss from continuing operations	(5,524		)	(1,530		)	(8,575		)	(1,497		)
Other income (expense):
Interest expense	(2		)	(5		)	(6		)	(9		)
Interest income	7			18			16			36
Other expense, net	(73		)	(78		)	(145		)	(159		)
	(68		)	(65		)	(135		)	(132		)
Loss from continuing operations before income taxes	(5,592		)	(1,595		)	(8,710		)	(1,629		)
Income tax expense	3			26			23			49
Loss from continuing operations	(5,595		)	(1,621		)	(8,733		)	(1,678		)
Discontinued operations:
Gain on sale of subsidiary	65			—			65			—
Net loss	$	(5,530	)	$	(1,621	)	$	(8,668	)	$	(1,678	)
Basic and diluted loss per share:
Continuing operations
Basic	$	(0.08	)	$	(0.02	)	$	(0.13	)	$	(0.02	)
Diluted	$	(0.08	)	$	(0.02	)	$	(0.13	)	$	(0.02	)
Discontinued operations
Basic	$	—		$	—		$	—		$	—
Diluted	$	—		$	—		$	—		$	—
Net loss
Basic	$	(0.08	)	$	(0.02	)	$	(0.12	)	$	(0.02	)
Diluted	$	(0.08	)	$	(0.02	)	$	(0.12	)	$	(0.02	)
Weighted average number of shares - Basic	69,679,477			69,599,477			69,674,532			69,594,559
Weighted average number of shares - Diluted	69,679,477			69,599,477			69,674,532			69,594,559
See accompanying notes to consolidated financial statements.

2

Hooper Holmes, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Six Months Ended June 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(8,668	)	$	(1,678	)
Income from discontinued operation, net of income taxes	65			—
Loss from continuing operations	(8,733		)	(1,678		)
Adjustments to reconcile loss from continuing operations to net cash (used in)
provided by operating activities of continuing operations:
Depreciation	1,972			1,629
Amortization	151			180
Provision for bad debt expense	37			(16		)
Share-based compensation expense	331			257
Loss on disposal and impairment of fixed assets	211			11
Change in assets and liabilities:
Accounts receivable	1,354			1,719
Inventories	(618		)	(250		)
Other assets	1,047			344
Accounts payable, accrued expenses and other long-term liabilities	998			(577		)
Net cash (used in) provided by operating activities of continuing operations	(3,250		)	1,619
Cash flows from investing activities:
Capital expenditures	(2,030		)	(1,883		)
Proceeds from sale of fixed assets	51			—
Net cash used in investing activities of continuing operations	(1,979		)	(1,883		)
Cash flows from financing activities:
Reduction in capital lease obligations	(144		)	(153		)
Debt financing fees	(101		)	(101		)
Net cash used in financing activities of continuing operations	(245		)	(254		)
Net decrease in cash and cash equivalents	(5,474		)	(518		)
Cash and cash equivalents at beginning of period	16,917			21,391
Cash and cash equivalents at end of period	$	11,443		$	20,873
Supplemental disclosure of non-cash investing activities:
Fixed assets vouchered but not paid	$	570		$	558
Fixed assets acquired by capital lease	$	—		$	211
Supplemental disclosure of cash paid during period for:
Income taxes	$	40		$	52
See accompanying notes to consolidated financial statements.

3

Hooper Holmes, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

June 30, 2012

Note 1: Basis of Presentation

a) Hooper Holmes, Inc. and its subsidiaries (“Hooper Holmes” or the "Company”) provide health risk assessment services to the life insurance and health industries.  The Company operates in one reportable operating segment and provides paramedical and medical examinations, personal health interviews and record collection, and laboratory testing, which help life insurance companies evaluate the risks associated with underwriting policies.  The Company also conducts wellness screenings for wellness companies, disease management organizations and health plans.

The Company's core activities consist of arranging for paramedical examinations on behalf of insurance carriers, primarily in connection with such carriers’ processing and evaluation of the risks associated with underwriting insurance policies - mainly life insurance policies. As a provider of health risk assessment services to the insurance industry, the Company's business is subject to seasonality, with third quarter sales typically dropping below the other quarters due to the decline in activity typically experienced by the insurance industry during the summer months.

b) The unaudited interim consolidated financial statements of the Company have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2011 Annual Report on Form 10-K, filed with the SEC on March 9, 2012.

Financial statements prepared in accordance with U.S. GAAP require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and other disclosures. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of the Company's management, necessary for a fair statement of results for the interim periods presented.

The results of operations for the three and six month periods ended June 30, 2012 and 2011 are not necessarily indicative of the results to be expected for any other interim period or the full year. See “Management's Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

Note 2: Loss Per Share

Basic loss per share is calculated by dividing net loss by the weighted average common shares outstanding during the period. Diluted loss per share is calculated by dividing net loss by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents.

The Company's net loss and weighted average shares outstanding used for computing diluted loss per share were the same as that used for computing basic loss per share for the three and six month periods ended June 30, 2012 and 2011 because the inclusion of common stock equivalents would have been antidilutive. Outstanding stock options to purchase approximately 3,736,000 and 3,678,000 shares of the Company's common stock were excluded from the calculation of diluted loss per share for the three and six month periods ended June 30, 2012, respectively, and approximately 3,675,000 and 3,592,000 shares for the three and six month periods ended June 30, 2011, respectively, because their exercise prices exceeded the average market price of the Company's common stock for such periods and, therefore, were antidilutive.

4

Note 3: Share-Based Compensation

EmployeeShare-Based Compensation Plans - On May 29, 2008, the Company's shareholders approved the 2008 Omnibus Employee Incentive Plan (the “2008 Plan”) providing for the grant of stock options, stock appreciation rights, non-vested stock and performance shares. The 2008 Plan provides for the issuance of an aggregate of 5,000,000 shares. As of June 30, 2012, approximately 940,000 shares remain available for grant under the 2008 Plan.

On May 24, 2011, the Company's shareholders approved the 2011 Omnibus Employee Incentive Plan (the "2011 Plan") providing for the grant of stock options and non-vested stock awards. The 2011 Plan provides for the issuance of an aggregate of 1,500,000 shares. As of June 30, 2012, approximately 1,425,000 shares remain available for grant under the 2011 Plan.

Options under the 2008 and 2011 Plans are granted at fair value on the date of grant, are exercisable in accordance with a vesting schedule specified in the grant agreement, and have contractual lives of 10 years from the date of grant. Options to purchase 500,000 of the Company's stock granted to certain executives of the Company in December 2010 vest 50% on each of the first and second anniversaries of the grant. Options to purchase 530,000 of the Company's stock granted to certain executives of the Company in July 2011 vest one-third on each of the first, second and third anniversaries of the grant. Options to purchase 150,000 of the Company's stock granted to a certain executive of the Company in the fourth quarter of 2011 vest one-fourth on each of the first, second, third and fourth anniversaries of the grant. All other options granted by the Company vest 25% on each of the second through fifth anniversaries of the grant.

During the three and six month periods ended June 30, 2012, no options for the purchase of shares were granted under the 2008 and 2011 Plans. During the three and six month periods ended June 30, 2011, options for the purchase of 0 and 150,000 shares, respectively, were granted under the 2008 Plan. The fair value of the stock options granted during the six month period ended June 30, 2011 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Expected life (years)	5.4
Expected volatility	92.2	%
Expected dividend yield	—
Risk-free interest rate	2.0	%
Weighted average fair value of options
granted during the period	$0.54

The following table summarizes stock option activity for the six month period ended June 30, 2012:

	Number of Shares		Weighted Average Exercise Price Per Share	Weighted Average remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding balance at December 31, 2011	5,988,500		$1.68
Granted	—		—
Exercised	—		—
Expired	(500,950	)	1.75
Forfeited	(326,250	)	0.90
Outstanding balance at June 30, 2012	5,161,300		$1.73	6.2	$94
Options exercisable at June 30, 2012	2,310,050		$2.86	4.2	$26

The aggregate intrinsic value disclosed in the table above represents the difference between the Company's closing stock price on the last trading day of the quarter ended June 30, 2012 and the exercise price, multiplied by the number of in-the-money stock options.

No stock options were exercised during either of the six month periods ended June 30, 2012 and 2011. Options for the purchase of 58,750 shares of common stock vested during the six month period ended June 30, 2012, and the aggregate fair value at grant date of these options was $0.03 million. As of June 30, 2012, there was approximately $0.7 million of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 2.3 years.

5

In July 2009, an aggregate of 500,000 shares of non-vested stock were granted under the 2008 Plan. The shares vest as follows: 25% after two years and 25% on each of the next three anniversary dates thereafter. As of June 30, 2012, an aggregate of 300,000 shares of such non-vested stock were forfeited and 50,000 were vested. In July 2011, an aggregate of 305,000 shares of non-vested stock were granted under the 2008 Plan. As of June 30, 2012, an aggregate of 45,000 shares of such non-vested stock were forfeited. The shares vest as follows: 33% on each of the first and second anniversary dates and 34% on the third anniversary. As of June 30, 2012, there was approximately $0.2 million of total unrecognized compensation cost related to non-vested stock awards. The cost is expected to be recognized over a weighted average period of 2.1 years.

Employee Stock Purchase Plan - In February 2011, under the Stock Purchase Plan (2004) of Hooper Holmes, Inc. (the "2004 Plan"), purchase rights for approximately 280,800 shares of the Company's stock were granted to eligible participating employees with an aggregate grant date fair value of $0.05 million, based on the Black-Scholes pricing model. This offering period concluded in March 2012 and, in accordance with the 2004 Plan's automatic termination provision, no shares were issued. In February 2012, under the 2004 Plan, purchase rights for approximately 273,000 shares were granted with an aggregate fair value of $0.05 million, based on the Black-Scholes option pricing model. The February 2012 offering period will conclude in March 2013.

Other Stock Awards - On May 30, 2007, the Company's shareholders approved the Hooper Holmes, Inc. 2007 Non-Employee Director Restricted Stock Plan (the “2007 Plan”), which provides for the automatic grant, on an annual basis for 10 years, of shares of the Company's stock to the Company's non-employee directors. The total number of shares that may be awarded under the 2007 Plan is 600,000. As of June 30, 2012, there remain available for grant approximately 390,000 shares under the 2007 Plan. Effective June 1, 2007, each non-employee member of the Board of Directors other than the non-executive chair receives 5,000 shares annually and the non-executive chair receives 10,000 shares annually of the Company's stock, with such shares vesting immediately upon issuance. The Company believes that the shares awarded under the 2007 Plan are “restricted securities”, as defined in SEC Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"). The Company filed a Registration Statement on Form S-8 with respect to the 2007 Plan on April 16, 2008. The directors who receive shares under the 2007 Plan are "affiliates" as defined in Rule 144 under the Securities Act and thus remain subject to the applicable provisions of Rule 144. In addition, the terms of the awards (whether or not restricted) specify that the shares may not be sold or transferred by the recipient until the director ceases to serve on the Board or, if at that time the director has not served on the Board for at least four years, on the fourth anniversary of the date the director first became a Board member. During the six month periods ended June 30, 2012 and 2011, shares awarded under the 2007 Plan totaled 30,000 and 30,000, respectively.

The Company recorded $0.2 million and $0.3 million of share-based compensation expense in selling, general and administrative expenses for the three and six month periods ended June 30, 2012, respectively, and $0.2 million and $0.3 million for the three and six month periods ended June 30, 2011, respectively, related to stock options, non-vested stock, restricted stock awards and the 2004 Plan.

Note 4: Discontinued Operations

In June 2008, the Company sold substantially all of the assets and liabilities of its Claims Evaluation Division (“CED”) operating segment. In connection with the sale of the CED, the Company has been released as the primary obligor for certain lease obligations acquired but remains secondarily liable in the event the buyer defaults. The Company reduced the reserve for this liability by $0.07 million and reported the corresponding gain in discontinued operations for the three and six months ended June 30, 2012. At June 30, 2012, the Company maintained a liability of $0.1 million for this lease obligation. The guarantee is provided for the term of the lease, which expires in July 2015. As of June 30, 2012, the maximum potential amount of future payments under the guarantee is $0.3 million.

6

Note 5: Intangible Assets

The following table presents certain information regarding the Company's intangible assets as of June 30, 2012 and December 31, 2011.

	Weighted
	Average	Gross
	Useful Life	Carrying		Accumulated		Net
(dollars in thousands)	(years)	Amount		Amortization		Balance
At June 30, 2012:
Customer relationships	9.7	$	12,502	$	12,497	$	5
Trade names	15.7	487		448		39
		$	12,989	$	12,945	$	44
At December 31, 2011:
Customer relationships	9.7	$	12,502	$	12,360	$	142
Trade names	15.7	487		434		53
		$	12,989	$	12,794	$	195

The aggregate intangible amortization expense for the six month periods ended June 30, 2012 and 2011 was approximately $0.2 million and $0.2 million, respectively. The estimated intangible amortization expense for the remainder of 2012 is $0.02 million.

Note 6: Inventories

Included in inventories at June 30, 2012 and December 31, 2011 are $1.8 million and $1.4 million, respectively, of finished goods and $1.0 million and $0.8 million, respectively, of components.

Note 7: Restructuring

During the three and six month periods ended June 30, 2012, the Company recorded restructuring charges totaling $1.6 million and $2.2 million, respectively. The restructuring charges consisted of employee severance and branch office closure costs. The restructuring charge for the three and six month periods ended June 30, 2012 includes $0.2 million related to the impairment of fixed assets for the closed branch offices. For the three and six month periods ended June 30, 2012, employee severance totaled $0.5 million and $1.1 million, respectively, and branch office closure costs totaled $1.1 million and $1.1 million, respectively. These restructuring charges relate to the Company's deployment of a new Portamedic service delivery model.

Following is a summary of the 2012 restructuring charges:

(In millions)	Charges	Impairment Recorded in PP&E			Payments		Balance at June 30, 2012
Severance	$1.1		$	—		$0.7		$0.4
Lease/Branch closure obligation	1.1		0.2			—		0.9
	$2.2		$	0.2		$0.7		$1.3

During the three and six month periods ended June 30, 2011, the Company recorded restructuring charges totaling $0.04 million and $0.1 million, respectively, which consisted of severance and branch office closure costs. During the six month period ended June 30, 2011, the severance and branch office closure costs were associated with the Company's Portamedic and Heritage Labs service lines. As of June 30, 2011, all payments relating to this restructuring were complete.

At June 30, 2012, $1.1 million of restructuring charges are recorded in accrued expenses in the accompanying consolidated balance sheet. Cash payments related to the above described restructuring charges are expected to be completed within the next twelve months, except for certain long-term branch office closure costs of $0.2 million, which are recorded in other long-term liabilities as of June 30, 2012.

7

Note 8: Loan and Security Agreement

On March 9, 2009, the Company entered into a three year Loan and Security Agreement (as amended, the “Loan and Security Agreement”) with TD Bank, N.A. (“TD Bank”).

On December 1, 2010, the Company entered into the First Amendment and Modification to Loan and Security Agreement (the "First Amendment") with TD Bank. Under the First Amendment, the Company has the ability, on or prior to the second anniversary of the First Amendment, and subject to a determination by the Company's Board of Directors authorizing such a transaction, to repurchase up to $5 million of its capital stock out of Qualified Cash (as such term is defined in the First Amendment), provided no Default or Event of Default (as such terms are defined in the Loan and Security Agreement) shall have otherwise occurred. In addition, under the First Amendment, the maturity date of the Loan and Security Agreement has been extended by one year (to March 8, 2013 from March 8, 2012) and, commencing March 8, 2012 and at all times thereafter, the unused line fee (usage fee) under the Loan and Security Agreement was reduced from one percent (1%) per annum to one-half of one percent (1/2%) per annum, in each case on the difference between $15 million and the sum of the average daily outstanding principal balance of cash advances under the revolving credit line and the average daily aggregate undrawn portion of all outstanding letters of credit for the preceding month.

On February 25, 2011, the Company entered into the Second Amendment and Modification to Loan and Security Agreement (the "Second Amendment"). Under the Second Amendment, the maximum aggregate future purchase money indebtedness and capitalized lease obligations of the Company in respect of specific items of equipment was increased to $2.0 million from $0.25 million effective December 31, 2010. The Second Amendment also contains other customary representations, warranties, covenants and terms and conditions.

On February 29, 2012, the Company entered into the Third Amendment and Modification to Loan and Security Agreement (the "Third Amendment"). Under the Third Amendment, the Company is obligated to maintain a Fixed Charge Coverage Ratio on a rolling 12 month basis of not less than 1.1 to 1.0 as of any fiscal quarter ending after September 30, 2011 if, for any one or more day(s) following any such fiscal quarter end, (a) the outstanding balance of cash advances under the Loan and Security Agreement is greater than $0 and (b) the amount of the Company's cash on deposit with TD Bank is less than $6 million. The Third Amendment also contains other customary representations, warranties, covenants and terms and conditions.

The Loan and Security Agreement (as amended) provides the Company with a revolving line of credit, the proceeds of which are to be used for general working capital purposes.  Under the terms of the Loan and Security Agreement, TD Bank has agreed to make revolving credit loans to the Company in an aggregate principal amount at any one time outstanding which, when combined with the aggregate undrawn amount of all unexpired letters of credit, does not exceed 85% of “Eligible Receivables” (as that term is defined in the Loan and Security Agreement), provided that in no event can the aggregate amount of the revolving credit loans and letters of credit outstanding at any time exceed $15 million.  The maximum aggregate face amount of letters of credit that may be outstanding at any time may not exceed $1.5 million.

Borrowings of revolving credit loans shall take the form of LIBOR rate advances with the applicable interest rate being the LIBOR rate, plus 3.5% per annum.

Through March 7, 2012, the Company was obligated to pay, on a monthly basis in arrears, an unused line fee (usage fee) equal to 1% per annum on the difference between $15 million and the average daily outstanding principal balance of cash advances under the revolving credit line plus the average daily aggregate undrawn portion of all outstanding letters of credit for the preceding month.  Effective March 8, 2012, the usage fee is one-half of one percent (1/2%) per annum. In addition, the Company is required to pay an annual loan fee of $0.1 million.  During the three and six month periods ended June 30, 2012, the Company incurred unused line fees of $0.02 million and $0.06 million, respectively. During the three and six month periods ended June 30, 2011 the Company incurred unused line fees of $0.04 million and $0.07 million, respectively.

In December 2009, the Company opened a $0.1 million TD VISA credit card account to be used by Hooper Holmes Services medical records retrieval service line. The credit card reduced the Company’s borrowing capacity under its revolving line of credit.  As of June 30, 2012, the Company’s borrowing capacity under the revolving line of credit totaled $12.9 million (which is 85% of Eligible Receivables) and there were no outstanding borrowings.

8

The revolving credit loans are payable in full, together with all accrued and unpaid interest, on the earlier of March 8, 2013 or the date of termination of the loan commitments, termination being one of the actions TD Bank may take upon the occurrence of an Event of Default.  The Company may prepay any revolving credit loan, in whole or in part without penalty, with the amount of such prepayment available to be reborrowed, subject to compliance with the terms and conditions of the Loan and Security Agreement (as amended).  The Company may also terminate the Loan and Security Agreement, provided that on the date of such termination all of its obligations are paid in full.  The Company is subject to a fee equal to $0.1 million upon early termination of the Loan and Security Agreement.

As security for the Company’s full and timely payment and other obligations under the Loan and Security Agreement, the Company granted TD Bank a security interest in all existing and after-acquired property of the Company and its subsidiary guarantors, including its receivables (which are subject to a lockbox account arrangement), inventory and equipment.  As further security, the Company granted TD Bank a mortgage lien encumbering the Company’s corporate headquarters.  The aforementioned security interest and mortgage lien are collectively referred to herein as the “Collateral”.

Pursuant to the terms of the Loan and Security Agreement, TD Bank, in its sole discretion based upon its reasonable credit judgment, may (A) establish and change reserves required against Eligible Receivables, (B) change the advance rate against Eligible Receivables or the fair market value of the Company’s corporate headquarters, and (C) impose additional restrictions on the standards of eligibility for Eligible Receivables, any of which could reduce the aggregate amount of indebtedness that may be incurred under the Loan and Security Agreement.

The Loan and Security Agreement contains covenants that, among other things, restrict the Company’s ability, and that of its subsidiaries, to:

• pay any dividends or distributions on, or redeem or retire any shares of any class of its capital stock or other equity interests;

• incur additional indebtedness;

• sell or otherwise dispose of any of its assets, other than in the ordinary course of business;

• create liens on its assets;

• enter into any sale and leaseback transactions; and

• enter into transactions with any of its affiliates on other than an arm’s-length or no less favorable basis.

The Loan and Security Agreement contains a financial covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Loan and Security Agreement), and as amended under the Third Amendment noted above, measured on a rolling 12 month basis of not less that 1.1 to 1.0 as of any fiscal quarter ending after September 30, 2011 if, for any one or more day(s) following any such fiscal quarter end, (a) the outstanding balance of cash advances under the Loan and Security Agreement is greater than $0 and (b) the amount of the Company's cash on deposit with TD Bank is less than $6 million. As of June 30, 2012, both because the Company's cash on deposit with TD Bank exceeded $6 million and the Company's outstanding balance of cash advances under the Loan and Security Agreement was $0, compliance with the Fixed Charge Coverage Ratio is not applicable. However, if this covenant did apply, the Fixed Charge Coverage Ratio measured as specified in the Loan and Security Agreement as of June 30, 2012 was (13.6) to 1. As such, the Company would fail this financial covenant and therefore would have no borrowing capability under the terms of its Loan and Security Agreement.

The failure of the Company or that of any subsidiary guarantor to comply with any of the covenants or the breach of any of its or their representations and warranties, contained in the Loan and Security Agreement, constitutes an Event of Default under the agreement.  In addition, the Loan and Security Agreement provides that “Events of Default” include the occurrence or failure of any event or condition that, in TD Bank’s sole judgment, could have a material adverse effect (i) on the business, operations, assets, management, liabilities or condition of the Company, (ii) in the value of or the perfection or priority of TD Bank’s lien upon the Collateral, or (iii) on the ability of the Company and its subsidiary guarantors to perform under the Loan and Security Agreement.

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If revenues continue to decline compared to the prior year, operating losses may continue to occur, the Company may be required to take additional actions to further reduce costs and capital spending, and restructure operations.  This would also reduce the Company's cash reserves. Furthermore, there is no guarantee that the Company's current and future cost reduction actions will generate the cost savings necessary to offset declining revenues.  During the second quarter of 2012, the Company restructured its Portamedic service line's delivery model. The restructure resulted in, among other things, the closure of branch offices, headcount reductions, the elimination of both fixed and variable costs and the consolidation of certain services into centralized customer service centers. If the Company does not achieve the cost reductions expected from this restructure and/or if revenues continue to decline at levels similar to or worse than that experienced in 2011, the Company may continue to fail to satisfy the financial covenant contained in the Loan and Security Agreement and therefore would be prohibited from borrowing under the Loan and Security Agreement.  Further, as defined in the Loan and Security Agreement, TD Bank may at its sole discretion request additional security, reduce availability or determine if negative events are Events of Default. These and other factors would adversely affect the Company's liquidity and its ability to generate profits in the future.

Note 9: Commitments and Contingencies

The Company has employment retention or change in control agreements with the executive officers of the Company for a one year period from the date a change in control occurs as defined in the agreements.

On July 11, 2003, the Company received a determination from the Internal Revenue Service that one individual the Company contracted with as an independent contractor, should have been classified as an employee in 2002. This ruling also applied to any other individuals engaged by the Company under similar circumstances. The ruling stated that the Company may not be subject to adverse consequences as the Company may be entitled to relief under applicable tax laws (Section 530 of the Revenue Act of 1978). Management believes that the Company qualifies for relief under Section 530. To date, the Company has not received any further communication from the Internal Revenue Service.

In the past, some state agencies have claimed that the Company improperly classified its health professionals as independent contractors for purposes of state unemployment and/or worker's compensation tax laws and that the Company was therefore liable for taxes in arrears, or for penalties for failure to comply with their interpretation of the laws.  There are no assurances that the Company will not be subject to similar claims in other states in the future.

Note 10: Litigation

On April 23, 2012, a complaint was filed against the Company in U.S. District Court for the District of New Jersey alleging, among other things, that the Company had failed to pay overtime compensation to certain employees as required by federal law. On May 24, 2012, a related complaint was filed against the Company in the same court alleging, among other things, that the Company failed to pay overtime compensation to certain independent contractor examiners who, the complaint alleges, should be treated as employees for purposes of federal law. The complaints seek award of an unspecified amount of allegedly unpaid overtime wages to certain examiners. The Company believes the allegations in the cases are without merit, has filed answers in both cases denying the substantive allegations therein, and intends to defend the cases vigorously.

The Company is a party to a number of other legal actions arising in the ordinary course of its business. In the opinion of management, the Company has substantial legal defenses and/or insurance coverage with respect to all of its pending legal actions. Accordingly, none of these actions is expected to have a material adverse effect on the Company’s liquidity, its consolidated results of operations or its consolidated financial position.

Note 11: Income Taxes

The Company recorded tax expense of $0.00 million and $0.02 million for the three and six month periods ended June 30, 2012, respectively, reflecting a state tax liability to one state. The Company recorded tax expense of $0.03 million and $0.05 million for the three and six month periods ended June 30, 2011, respectively, reflecting certain state tax liabilities. No amounts were recorded for unrecognized tax benefits or for the payment of interest and penalties during the three and six month periods ended June 30, 2012 and 2011. No federal or state tax benefits were recorded relating to the current year loss, as the Company continues to believe that a full valuation allowance is required on its net deferred tax assets.

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In July 2008, the Company received notification from the Internal Revenue Service that it had completed its audits of the Company's tax returns for the years 2001 through 2006 with no adjustments. State income tax returns for the year 2007 and forward are subject to examination.

As of June 30, 2012, the Company has U.S. federal and state net operating loss carryforwards of approximately $96.8 million and $96.0 million, respectively. The net operating loss carryforwards, if unutilized, will expire in the years 2012 through 2031.

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ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations

In this Report, the terms “Hooper Holmes,” “Company,” “we,” “us” and “our” refer to Hooper Holmes, Inc. and its subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Report") contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including, but not limited to, statements about our plans, strategies and prospects. When used in this Report, the words “expects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “could,” “will,” “may” and similar expressions are intended to identify forward-looking statements.  These are statements that relate to future periods and include statements as to our operating results, revenues, sources of revenues, cost of revenues, gross margins, operating and net profits/losses, our new IT systems, for our new Portamedic delivery model and changes in certain service line offerings.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expected. These risks and uncertainties include, but are not limited to, risks related to customer concerns about our financial health, our liquidity, declines in our business, our competition, and our ability to successfully implement the restructure of our Portamedic operations and other cost reduction initiatives. The section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 entitled “Risk Factors” and similar discussions in our other filings with the Securities and Exchange Commission (“SEC”) discuss these and other important risks that may affect our business, results of operations, cash flows and financial condition. Investors should consider these factors before deciding to make or maintain an investment in our securities. The forward-looking statements included in this Report are based on information available to us as of the date of this Report. We expressly disclaim any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.

Overview

Our Company was founded in 1899. We are a publicly-traded New York corporation whose shares of common stock are listed on the NYSE Amex Stock Exchange.  Our corporate headquarters are located in Basking Ridge, New Jersey. Over the last 40 years, our business focus has been on providing health risk assessment services.  We are currently engaged in the following service lines:

• Portamedic – performs paramedical and medical examinations of individuals, primarily on behalf of insurance companies in connection with the offering or rating of insurance coverage (mainly life insurance), along with medical examinations of health plan participants in order to provide medical information on plan members to the plan sponsors;

• Heritage Labs – performs tests of blood, urine and oral fluid specimens, primarily generated in connection with the paramedical exams and wellness screenings performed by our Portamedic and Health & Wellness service lines, respectively, and assembles and sells specimen collection kits;

• Health & Wellness – performs risk assessment and risk management services, including biometric screenings, health risk assessments and onsite wellness coaching for health and care management companies, including wellness companies, disease management organizations, clinical research organizations, health plans and others; and

• Hooper Holmes Services – provides telephone interviews of insurance candidates, retrieval of medical records and inspections, risk management solutions and underwriting services for simplified issue products and products requiring full underwriting.

Our Portamedic paramedical examination services accounted for 68.8% and 70.6% of revenues for the three month periods endedJune 30, 2012 and 2011, respectively, and 68.8% and 70.6% of revenues for the six month periods endedJune 30, 2012 and 2011, respectively. As a provider of health risk assessment services to the insurance industry, our business is subject to seasonality, with third quarter sales typically dropping below the other quarters due to the decline in activity typically experienced by the insurance industry during the summer months.

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Restructure of Portamedic Operations

In June 2012,we announced our new model for delivering paramedical exams in our Portamedic service line. Our Portamedic service line has been reorganized into 14 regions, with a leader and customer service team assigned to each. In addition, a new team of 14 Health Professional Managers has been formed to recruit, educate and mentor our national examiner network, and to enhance examiners' professional development.

Over 100 local administrative offices have been replaced by 60 integrated customer service centers strategically located across the 14 regions. Administrative functions such as imaging and billing have been centralized. In addition, every job in our Portamedic service line from senior management to customer service representative has a new position description tied to quality measures that we believe directly align with customer expectations.

These changes comprise a large-scale operational transformation designed to give Hooper Holmes the competitive advantages of faster and more accurate service delivery and lower operating costs. The strategy was enabled by capital investments of approximately $5 million in 2011 to develop five new technology systems. These new systems, now deployed, include a new workflow system for Portamedic operations, known as PartnerLink; ePortamedic.com, a new ordering and status website for insurance agents that diagnoses service requirements based on insurance company rules; a new Life Application Processing Platform that makes it easier for financial advisors and brokers to sell more life insurance; the latest version of our iParamed e-Exam, which allows electronic exams to be completed even in areas with poor wireless connections; and a new direct-to-examiner inventory and tracking system for laboratory testing kits.

We believe that this restructuring and capital investment will address the concerns of our customers related to the paramed industry, which include inconsistent service, delays and scheduling issues.

Highlights for the Three and Six Month Periods Ended June 30, 2012

The Company

Financial Results for the Three Month Period Ended June 30, 2012

For the three month period ended June 30, 2012, consolidated revenues totaled $35.4 million, a 6.7% decline from the corresponding prior year period. Our gross profit totaled $7.1 million for the three month period ended June 30, 2012 versus $9.1 million in the comparable period of the prior year. Our gross profit percentage was 20.0% for the three month period ended June 30, 2012, representing a significant decline from the gross profit percentage of 23.9% for the three month period ended June 30, 2011, primarily attributable to gross profit declines in our Portamedic service line.

SG&A expenses were $11.0 million in the three month period ended June 30, 2012, an increase of $0.5 million, or 4.5%, in comparison to the three month period ended June 30, 2011. During the three month period ended June 30, 2012, restructuring charges totaled $1.6 million, primarily consisting of severance and branch office closure costs related to our Portamedic service line as discussed above. Results for the three month period ended June 30, 2011 included restructuring charges totaling $0.04 million, consisting primarily of severance costs related to our Portamedic service line.

Our operating loss from continuing operations for the three month period ended June 30, 2012 was $5.5 million compared to a $1.5 million loss for the comparable prior year period.

For the three month period ended June 30, 2012, we incurred a net loss from continuing operations of $5.6 million, or $0.08 per share on both a basic and diluted basis, compared to net loss of $1.6 million, or $0.02 per share on both a basic and diluted basis, for the comparable prior year period.

Financial Results for the Six Month Period Ended June 30, 2012

For the six month period ended June 30, 2012, consolidated revenues totaled $74.2 million, a 5.5% decline from the corresponding prior year period. Our gross profit totaled $16.1 million for the six month period ended June 30, 2012 versus $20.0 million in the comparable period of the prior year. Our gross profit percentage was 21.7% for the six month period ended June 30, 2012, representing a significant decline from the gross profit percentage of 25.5% for the six month period ended June 30, 2011.

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SG&A expenses were $22.5 million in the six month period ended June 30, 2012, an increase of $1.1 million, or 4.9%, in comparison to the six month period ended June 30, 2011. During the six month period ended June 30, 2012, restructuring charges totaled $2.2 million, primarily consisting of severance and branch closure costs related to our Portamedic service line as discussed above. Results for the six month period ended June 30, 2011 included restructuring charges totaling $0.1 million, primarily consisting of severance and branch office closure costs related to our Portamedic and Heritage Labs service lines.

Our operating loss from continuing operations for the six month period ended June 30, 2012 was $8.6 million compared to a $1.5 million loss for the comparable prior year period.

For the six month period ended June 30, 2012, we incurred a net loss from continuing operations of $8.7 million, or $0.13 per share on both a basic and diluted basis, compared to a net loss of $1.7 million, or $0.02 per share on both a basic and diluted basis, for the comparable prior year period.

For the remainder of 2012, we expect to continue improving our processes and organization structure and focusing on customer channels including brokers, direct marketers, insurance agents and health care companies. We made significant capital investments and operating improvements that have transformed the way we deliver services, improving our competitive position and lowering our cost structure, which should enable profitable growth by the end of this year.

Portamedic

In the quarter ended June 30, 2012, Portamedic revenues decreased approximately 9.1% in comparison to the prior year period. Our revenue decline is primarily attributable to a decline in completed examinations in the second quarter 2012 of 8.0% and a 1.9% reduction in the average revenue per paramedical examination, compared to the second quarter of 2011. We continue to believe that achieving acceptable profitability levels will require top-line revenue growth, including the reversal of past revenue declines. Although we have contracts or billing approvals with over 90% of the insurance carriers in the marketplace, the number of paramedical examinations we complete on life insurance applicants continues to decline. The rate of decline in completed examinations was 8.0% in the second quarter of 2012, which is a higher rate of decline than the first quarter of 2012. The second quarter 2012 number of completed examinations was negatively impacted by implementation issues regarding our new IT system for processing Portamedic customer orders, including system and user-training conversion issues, which have been identified and corrected.

The market for Portamedic's services has been negatively affected by both declining numbers of life insurance applications requiring paramed exams and steady price pressure on Portamedic and its competitors.   According to LIMRA's U.S. Individual Life Insurance Sales Trends, 1975 - 2010, there were approximately 9.3 million applications for life insurance completed in the United States in 2010, compared to approximately 17 million applications in 1985.  We believe that the market continues to offer opportunities to a company that can sell its services effectively and distinguish itself from its competitors.

During the past several fiscal quarters, we have taken the following steps to increase our market share and improve top-line revenue:

• In the second quarter of 2012, we deployed our new Portamedic service delivery model. The introduction of this new program, which generated $1.6 million in restructure charges during the second quarter of 2012, is expected to enhance our ability to provide faster and more accurate service delivery at lower operating costs.

• In June 2012, we created the position of Vice-President of Portamedic Provider Relations. This position will be dedicated to building our network of health professionals for not only our Portamedic service line, but also our Health and Wellness service line.

• In the second quarter of 2012, we established a team of 14 Health Professional Managers whose functions will be to recruit, educate and mentor our national health professional network.

• In March 2012, we entered into an agreement with a national insurance brokerage firm to provide efficient data acquisition and processing solutions. Using the full breadth of our service capabilities, we expect to improve this brokerage's insurance e-application process.

• We promoted and hired new field sales managers during the second quarter of 2012. We introduced new field sales and regional operations incentive compensation plans and performance measurement systems, while implementing a new Customer Relationship Management system for our sales teams.

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• We completed development of a new Portamedic web portal to make it easier for customers to order our services.

• In the first half of 2012, we continued to make capital investments which will enable us to improve our current Portamedic service delivery model and provide greater operational performance and service quality, while reducing operating costs in our current branch office structure.

• We implemented a new warehouse management and inventory control system to reduce costs and improve efficiencies in distributing lab kits to our health professionals.

• We expanded our iParamed e-Exam platform, deploying over 1,000 iParamed-equipped netbooks to health professionals in all 50 states and the District of Columbia.

• In the second quarter of 2012, we completed the rollout of our new IT system for processing Portamedic customer orders (known as "Partnerlink"), which is expected to improve customer service, while lowering future operating costs. As of June 30, 2012, the total cost of the system, including implementation and training costs, totaled approximately $5.1 million of which $1.2 million was incurred in the six month period ended June 30, 2012. During the remainder of 2012, we expect to spend an additional $0.5 million primarily for system enhancements, and additional training and implementation costs.

• In 2011, we successfully completed our annual SOC II engagement (formerly SAS 70 Type II), a third-party review of our IT processes and procedures for handling customer data. We believe this review gives customers confidence in our information controls, information security and technology management processes.

We believe that the steps we are taking to improve our selling ability, and the quality and speed of our services, will enable us to reduce the rate of decline experienced in the last several years.  

Heritage Labs

Heritage Labs services consist principally of performing tests of blood, urine and oral fluid specimens and the assembly and sale of kits used in the collection and transportation of such specimens to its lab facility. Heritage Labs revenues in the second quarter of 2012 was $3.3 million, a decrease of 7.1% as compared to the prior year period primarily due to decreased revenue from two of our larger lab kit assembly customers. In the second quarter of 2012, approximately 60% of Heritage Labs revenue came from lab testing and 40% came from the sale of specimen kits.

Most of Heritage Labs revenue originates from paramedical exam companies (including Portamedic), and therefore Heritage Labs is affected by the same negative market trends affecting Portamedic, namely the decline in the number of life insurance applications requiring paramed exams. In response, Heritage Labs has taken the following steps to attempt to expand its market share and increase revenues:

• We have developed a "risk score" methodology to help our insurance clients better understand the mortality implications between and among interactions of multiple tests related to specific disease states. We believe that the mortality data we are providing are unique and more complex than the data being provided by our competitors. We have shared our risk score data set and design approach with major re-insurers to validate our methodology to risk scoring. Our objective has been to assist our clients in their ability to develop new insurance products and establish more accurate premium rating or pricing techniques using the lab mortality data that we have developed.

• We have developed sales initiatives designed to increase the number of paramedical examinations completed by our Portamedic service line that generate lab testing orders for Heritage Labs. We have also developed sales initiatives designed to increase the volume of lab test orders for Heritage Labs that are not generated by Portamedic exams.

While we intend for these measures to increase our market share and revenues, there can be no assurance we will achieve those results. We believe that, as a result of the initiatives noted above, along with Portamedic revenue improvements, we may achieve future growth at Heritage Labs.  

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Health & Wellness

Health & Wellness revenues in the second quarter of 2012 were $3.8 million, an increase of $1.3 million, or 50.5%, from the prior year period, primarily attributable to an increased number of health screenings performed. In the second quarter of 2012, Health & Wellness performed approximately 70,000 health screenings, compared to 45,000 health screenings in the prior year period. During the second quarter of 2012, we provided our services to 40 health management companies. We have conducted screening events in every state in the U.S. as well as the District of Columbia and Puerto Rico. To date, we have certified approximately 3,200 of the examiners in our network to be “wellness certified” examiners. Approximately 55% of these certified health professionals also perform services for our Portamedic service line.

Health & Wellness services include event scheduling, provision and fulfillment of all supplies (e.g., examination kits, blood pressure cuffs, stadiometers, scales, centrifuges, lab coats, bandages, etc.) at screening events, event management, biometric screenings (height, weight, body mass index, hip, waist, neck, pulse, blood pressure), blood draws via venipuncture or finger stick, lab testing, participant and aggregate reporting, data processing and data transmission.  Heritage Labs does all of the testing on the venipuncture samples we collect at health and wellness screenings.  

We believe the market for health and wellness is likely to grow over the next three to five years, and that we are well positioned to increase revenues from our biometric screening and coaching services. Several recent milestones expected to grow revenues include:

• We announced that Hooper Holmes had been chosen to collect biological samples for the largest government study of tobacco use ever conducted in the United States. This five year study, which begins in the second half of 2012, will draw upon our strengths, including our national network of local health professionals and Heritage Labs' kit manufacturing. We were chosen for this work by Westat, a leading research and statistical survey organization.

• In October 2011, we appointed Susheel Jain as our new Senior Vice President of Healthcare. Mr. Jain joined us from WellPoint, one of the largest health benefits companies in the country, where he was responsible for developing new care management services, including integrated wellness and incentive solutions. In the first half of 2012, we also added three new sales positions, along with new operations and account manager positions.

We believe that we are well-positioned to capture a significant share of the health and care management market given our Company’s unique set of assets, including Heritage Labs, our proprietary Health & Wellness IT system, and our network of certified health professionals.   However, the success of Health & Wellness will depend in part upon the yet-to-be-proven benefits of health and care management initiatives to the employers and others who sponsor them.  

Hooper Holmes Services

Hooper Holmes Services revenues for the second quarter 2012 were $4.4 million, a decrease of 19.7% in comparison to the prior year period.

APS retrieval and PIL revenues totaled $1.9 million in the second quarter of 2012, a decrease of 26.0% in comparison with the prior year period. This decrease in revenue is primarily due to a decline in the number of APS/PIL units performed during the second quarter of 2012 compared to the prior year period. Revenues from Consumer Services totaled $1.0 million in the second quarter of 2012, a decline of 17.0% as compared to the prior year period. Second quarter 2012 revenue from our underwriting services decreased 12.8%, as compared to the prior year period.

Key Financial and Other Metrics Monitored by Management

In our periodic reports filed with the SEC, we provide certain financial information and metrics about our service lines and information that our management uses in evaluating our performance and financial condition. Our objective in providing this information is to help our shareholders and investors generally understand our overall performance and assess the profitability of our service lines, and our prospects for future net cash flows.

In the second quarter of 2012, the metrics which we monitored included:

• the number of paramedical examinations performed by Portamedic;

• the average revenue per paramedical examination;

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• time service performance by geographic territory, from examination order to completion;

• the number of cases scheduled by our centralized Portamedic exam scheduling center;

• the number of completed life insurance applications as tracked by LIMRA (a life insurance industry research organization);

• the number of health screenings completed by Health & Wellness;

• the number of tele-interviewing/underwriting reports we generate;

• the number of specimens tested by Heritage Labs;

• the average revenue per specimen tested;

• budget to actual performance at the branch level as well as in the aggregate; and

• customer and product line margins.

Certain of the above-cited metrics are discussed in the comparative discussion and analysis of our results of operations that follows.

Results of Operations

Comparative Discussion and Analysis of Results of Operations for the three and six month periods ended June 30, 2012 and 2011

The table below sets forth our revenue by service line for the periods indicated.

(in thousands)	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2012			2011			% Change		2012			2011			% Change
Portamedic	$	24,348		$	26,772		(9.1	)%	$	51,014		$	55,390		(7.9	)%
Heritage Labs	3,285			3,536			(7.1	)%	6,990			7,167			(2.5	)%
Health & Wellness	3,844			2,554			50.5	%	7,911			5,970			32.5	%
Hooper Holmes Services	4,430			5,516			(19.7	)%	9,390			10,987			(14.5	)%
Subtotal	35,907			38,378					75,305			79,514
Intercompany eliminations(a)	(506		)	(450		)			(1,112		)	(1,009		)
Total	$	35,401		$	37,928		(6.7	)%	$	74,193		$	78,505		(5.5	)%

(a) represents intercompany sales from Heritage Labs to Portamedic

Revenues

Consolidated revenues for the three month period ended June 30, 2012 were $35.4 million, a decline of $2.5 million, or 6.7%, from the prior year period. For the six month period ended June 30, 2012, our consolidated revenues were $74.2 million compared to $78.5 million in the corresponding period of the prior year.

Portamedic

Portamedic revenues in the second quarter of 2012 were $24.3 million, a decrease of $2.4 million, or 9.1%, compared to the prior year period. For the six month period ended June 30, 2012, revenue decreased to $51.0 million compared to $55.4 million for the same period of the prior year, or 7.9%. The decline in Portamedic revenues reflects the net impact of:

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• a decrease in paramedical examinations performed in the second quarter of 2012 of approximately 8.0% (287,000 in the second quarter of 2012, or 4,481 per day, vs. 312,000 in the second quarter of 2011, or 4,873 per day), and in the six month period ended June 30, 2012 of approximately 6.4% (604,000 in the six month period ended June 30, 2012, or 4,719 per day, vs. 645,000 in the six month period ended June 30, 2011, or 5,038 per day); and

• a decrease in average revenue per paramedical examination in the second quarter of 2012 of approximately 1.9% as compared to the second quarter of 2011 ($84.60 in the second quarter of 2012 vs. $86.27 in the second quarter of 2011), and in the six month period ended June 30, 2012, a decrease in average revenue per paramedical examination of approximately 2.2% ($84.07 in the six month period ended June 30, 2012 vs. $85.92 in the six month period ended June 30, 2011).

The reduction in Portamedic revenue in the second quarter 2012 and six months ended June 30, 2012 was due to, among other things, implementation issues regarding our new IT system for processing Portamedic customer orders, including system and user-training conversion issues, as well as a continued weak economy and a reduction in life insurance applications requiring a paramedical exam, and steady pricing pressure in our Portamedic service line. The number of Portamedic examinations declined 8.0% in the second quarter of 2012 and 6.4% in the six months ended June 30, 2012 compared to the comparable prior year periods. Examinations declined 6.5% in 2011 compared to 2010.

Heritage Labs

Heritage Labs revenues in the second quarter of 2012 were $3.3 million, a decrease of $0.3 million, or 7.1%, compared to the prior year period. For the six month period ended June 30, 2012, revenue decreased to $7.0 million compared to $7.2 million for the same period of the prior year, or 2.5%. These decreases in revenue are primarily due to a decline in our lab kit assembly services.

During the second quarter of 2012, revenue from lab testing (approximately 60% of total Heritage Labs revenue in the second quarter of 2012) decreased 2.1% in comparison to the prior year period. For the six month period ended June 30, 2012, revenue from lab testing decreased 2.1% in comparison to the prior year period. Heritage Labs tested 6.4% fewer specimens compared to the prior year period (117,000 in the second quarter of 2012 vs. 125,000 in the second quarter of 2011), and 6.5% fewer specimens in the first six months of 2012 compared to the same period in 2011 (246,000 vs. 263,000). Heritage Labs average revenue per specimen tested increased in the second quarter of 2012 compared to the prior year period ($16.82 in the second quarter of 2012 vs. $16.13 in the second quarter of 2011), and in the first six months of 2012 compared to the same period in 2011 ($16.77 in the six month period ended June 30, 2012 vs. $16.04 in the six month period ended June 30, 2011). Approximately 59% of this increase in average revenue per specimen tested was due to service price increases, and the remaining increase was the result of increased shipping costs passed on to our customers.

Revenue from lab kit assembly (approximately 40% of Heritage Labs revenue in the kits in the second quarter of 2012) decreased 13.8% to $1.3 million, compared to the prior year period. This decrease is primarily due to decreased revenue from two of our larger lab kit assembly customers. For the six month period ended June 30, 2012, lab kit revenue was $2.9 million, and basically flat in comparison to the prior year prior year.

Approximately 65% of total specimens tested by Heritage Labs originate from a Portamedic paramedical exam or a Health & Wellness screening.

Health & Wellness

Health & Wellness revenues in the second quarter of 2012 were $3.8 million, an increase of $1.3 million, or 50.5%, compared to the prior year period. For the six month periods ended June 30, 2012 and 2011, revenues totaled $7.9 million and $6.0 million, respectively. Our revenue increase in the three and six month periods ended June 30, 2012, as compared to the prior year periods, is primarily attributable to the increased number of screenings performed by Health & Wellness.

For the three months ended June 30, 2012, health screenings performed by Health & Wellness increased 55.6% (70,000 in the second quarter of 2012 vs. 45,000 in the second quarter of 2011), and 31.8% more health screenings during the six month period ended June 30, 2012 compared to the same period in 2011 (145,000 vs. 110,000).

During the second quarter of 2012, we provided our services to 40 health management companies. To date, we have certified approximately 3,200 of the examiners in our network to be “wellness certified” examiners.

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Hooper Holmes Services

Hooper Holmes Services revenues for the second quarter of 2012 were $4.4 million, a decrease of 19.7% from the prior year period. For the six month periods ended June 30, 2012 and 2011, revenues totaled $9.4 million and $11.0 million, respectively.

Health Information Services revenue totaled $2.5 million in the second quarter of 2012, a decrease of $0.7 million, or 23.0%, compared to the prior year period, and decreased 16.1% to $5.3 million in the six months ended June 30, 2012 as compared to the prior year period. Revenue from our APS retrieval and PIL decreased 26.0% to $1.9 million in the second quarter of 2012 as compared to the prior year period primarily due to a decrease of 27.3% in the number of units performed during the second quarter 2012 as compared to the prior year period. The decrease in revenue due to the decline in units was offset, to some extent, by a 1.8% increase in the average price per unit in the second quarter 2012 as compared to the prior year period. During the six month period ended June 30, 2012, revenue from our APS retrieval and PIL totaled $4.2 million, a decrease of 18.7% in comparison to the prior year period. The decline in revenue is primarily due to a 20.3% decrease in the number of units performed during the six months ended June 30, 2012. The decrease in revenue due to the decline in units was partially offset by a 2.0% increase in the average price per unit in the six months ended June 30, 2012 as compared to the prior year period. Inspection and Motor Vehicle Report ("MVR") reporting revenue totaled $0.6 million in the second quarter of 2012, a decrease of 10.3% from the prior year period. For the six month period ended June 30, 2012, inspection and MVR reporting revenue declined 4.3% to $1.1 million as compared to the prior year period.

Consumer Services includes our tele-underwriting/interviewing services. Revenues from Consumer Services for the second quarter of 2012 decreased 17.0% to $1.0 million as compared to the prior year period. The decrease in revenue is primarily due to a decline in the number of tele-underwriting/interviewing units completed of 18.7% as compared to the second quarter 2011.The decrease in revenue due to the decline in units was offset, to some extent, by a 2.1% increase in the average price per unit in the second quarter 2012 as compared to the prior year period. For the six month period ended June 30, 2012, revenues decreased 16.4% to $2.1 million as compared to the prior year period. The decrease in revenue is primarily due to a decline in the number of tele-underwriting/interviewing units completed of 17.4% as compared to the six month period ended June 30, 2011. The decrease in revenue due to the decline in units was offset, to some extent, by a 1.2% increase in the average price per unit in the six month period ended June 30, 2012 as compared to the prior year period.

Health Risk Analytics includes our risk management and underwriting services. Revenues decreased 12.8% in the second quarter of 2012 to $0.9 million compared to the prior year period. For the six month period ended June 30, 2012, revenues decreased 7.7% to $2.0 million compared to the prior year period. The decline in revenue for the three and six months ended June 30, 2012 is primarily due to a decline in revenue from one of our larger customers.

Cost of Operations

Consolidated cost of operations was $28.3 million for the second quarter of 2012, compared to $28.9 million for the prior year period. For the six months ended June 30, 2012, cost of operations was $58.1 million compared to $58.5 million for the six months ended June 30, 2011. The following table shows cost of operations as a percentage of revenues for the corresponding service lines.

(in thousands)	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2012			As a % of Revenues		2011			As a % of Revenues		2012			As a % of Revenues		2011			As a % of Revenues
Portamedic/Health & Wellness	$	23,017		81.6	%	$	22,775		77.7	%	$	47,095		79.9	%	$	46,484		75.8	%
Heritage Labs	2,181			66.4	%	2,413			68.2	%	4,609			65.9	%	4,759			66.4	%
Hooper Holmes Services	3,598			81.2	%	4,126			74.8	%	7,471			79.6	%	8,242			75.0	%
Subtotal	28,796					29,314					59,175					59,485
Intercompany eliminations (a)	(479		)			(450		)			(1,085		)			(1,013		)
Total	$	28,317		80.0	%	$	28,864		76.1	%	$	58,090		78.3	%	$	58,472		74.5	%

(a) represents intercompany cost of operations pertaining to sales from Heritage Labs to Portamedic

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Consolidated cost of operations as a percentage of revenues increased to 80.0% and 78.3% for the three and six month periods ended June 30, 2012, respectively, compared to the prior year period.

The increase in cost of operations as a percentage of revenues is due to Portamedic revenues declining at a rate greater than its associated costs, as a significant percentage of costs in this service line are fixed and therefore, did not decrease as revenues declined. The new Portamedic service delivery model deployed during the second quarter of 2012 is expected to lower the Portamedic cost of operations, while improving customer service.

Portamedic costs of operations was also impacted by the investments we made in this service line during 2011, largely our investment in the deployment and operating costs of netbooks used in the iParamed service offering. Additionally, Portamedic cost of operations was impacted by increased health professional fees due to the Company's efforts to attract and retain quality health professionals and was negatively impacted by the decline in the average revenue per examination as a significant percentage of our health professionals' earnings are a fixed-fee per exam pay arrangement.

Heritage Labs cost of operations decreased as a percentage of revenues to 66.4% for the three months ended June 30, 2012 as compared to the prior year period. This decrease is due to product mix associated with our lab kit assembly service line and lower shipping costs.

Hooper Holmes Services cost of operations increased as a percentage of revenues to 81.2% and 79.6% for the three and six month periods ended June 30, 2012, respectively, compared to the prior year period. This increase is due to revenues declining at a rate greater than its associated costs, a significant component of which are fixed.

Selling, General and Administrative Expenses

(in thousands)	For the Three Months Ended June 30,				Increase		For the Six Months Ended June 30,				Increase
	2012		2011		2012 vs. 2011		2012		2011		2012 vs. 2011
Selling, general and administrative expenses	$	11,033	$	10,556	$	477	$	22,486	$	21,436	$	1,050

Consolidated SG&A expenses for the three month period ended June 30, 2012 increased $0.5 million compared to the prior year period. The increase is primarily attributable to increases of:

• Administrative and sales salaries and expenses associated with our Health & Wellness service line totaling $0.3 million;

• IT salaries, and implementation and training costs for our new Portamedic order processing system, totaling $0.3 million;

• Health insurance costs and other employee benefit costs totaling $0.3 million;

• Depreciation expense associated with our new Portamedic order processing system totaling $0.2 million; and

• Salaries associated with the expansion of our Strategic Development Department totaling $0.1 million.

These increases in SG&A were offset by reduced:

• Incentive compensation expense totaling $0.1 million;    

• Administrative salaries and expenses due to headcount reductions at Heritage Labs totaling $0.1 million;

• Sales salaries totaling $0.1 million;

• General insurance costs and employee paid time off accrual totaling $0.2 million; and

• Executive salaries, expenses and recruiting costs totaling $0.2 million.

Consolidated SG&A expenses for the six month period ended June 30, 2012 increased $1.1 million compared to the prior year period. This increase is primarily attributable to increases of:

• Administrative and sales salaries and expenses associated with our Health & Wellness service line totaling $0.3 million;

• IT salaries, and implementation and training costs for our new Portamedic order processing system, totaling $0.9 million;

• Health insurance costs and other employee benefit costs totaling $0.4 million;

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• Depreciation expense associated with our new Portamedic order processing system totaling $0.4 million;

• Salaries associated with the expansion of our Strategic Development Department totaling $0.2 million; and

• Sales salaries totaling $0.1 million.

These increases in SG&A were offset by reduced:

• Incentive compensation expense totaling $0.3 million;    

• Administrative salaries and expenses due to headcount reductions at Heritage Labs totaling $0.3 million;

• General insurance costs and employee paid time off accrual totaling $0.2 million; and

• Executive salaries, expenses and recruiting costs totaling $0.4 million.

Restructuring

For the three and six month periods ended June 30, 2012, we recorded restructuring charges of $1.6 million and $2.2 million, respectively. These charges were primarily associated with our Portamedic service line as discussed in the above section "Restructure of Portamedic Operations". Restructuring charges for the three and six month periods ended June 30, 2011 were $0.04 million and $0.1 million, respectively, and consisted primarily of severance and branch office closure costs related to our Portamedic and Heritage Labs service lines.

Operating Loss from Continuing Operations

Our consolidated operating loss from continuing operations for the three month period ended June 30, 2012 was $5.5 million, or 15.6% of consolidated revenues, compared to a consolidated operating loss from continuing operations for the three month period ended June 30, 2011 of $1.5 million, or 4.0% of consolidated revenues. For the six month period ended June 30, 2012, our consolidated operating loss from continuing operations was $8.6 million, or 11.6% of consolidated revenues, compared to a consolidated operating loss from continuing operations for the six month period ended June 30, 2011 of $1.5 million, or 1.9% of consolidated revenues.

Other Income (Expense)

Interest income for the three month period ended June 30, 2012 was $0.01 million compared to $0.02 million for the prior year period. For the six month period ended June 30, 2012, interest income was $0.02 million compared to $0.04 million for the prior year period. The decrease for the three and and six month periods ended June 30, 2012 is primarily due to lower cash balances.

Other expense, net for the three and six months ended June 30, 2012 was $0.1 million and $0.1 million, respectively, and consisted primarily of bank credit facility fees. For the three and six month periods ended June 30, 2011 other expense, net was $0.1 million and $0.2 million, respectively, and also consisted primarily of bank credit facility fees.

Income Taxes

We recorded a net tax expense of $0.00 million and $0.02 million for the three and six month periods ended June 30, 2012, respectively. For the three and six month periods ended June 30, 2011, we recorded a net tax expense of $0.03 million and $0.05 million, respectively. These 2012 and 2011 charges reflect certain state tax liabilities. No federal or state tax benefits were recorded relating to the current or prior year loss, as we continue to believe that a full valuation allowance is required on our net deferred tax assets.

Loss from Continuing Operations

Loss from continuing operations for the three month period ended June 30, 2012 was $5.6 million, or $0.08 per share on both a basic and diluted basis, compared to a loss of $1.6 million, or $0.02 per share on both a basic and diluted basis, in the same period of the prior year. Loss from continuing operations for the six month period ended June 30, 2012 was $8.7 million, or $0.13 per share on both a basic and diluted basis, compared to a loss of $1.7 million, or $0.02 per share on both a basic and diluted basis, in the same period of the prior year.

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Discontinued Operations

In June 2008, we sold substantially all of the assets and liabilities of our Claims Evaluation Division (“CED”) operating segment. In connection with the sale of the CED, we were released as the primary obligor for certain lease obligations acquired but remain secondarily liable in the event the buyer defaults. We reduced the reserve for this liability by $0.07 million and reported the corresponding gain in discontinued operations for the three and six months ended June 30, 2012. At June 30, 2012, we maintained a liability of $0.1 million for this lease obligation. The guarantee is provided for the term of the lease, which expires in July 2015. As of June 30, 2012, the maximum potential amount of future payments under the guarantee is $0.3 million.

Liquidity and Capital Resources

As of June 30, 2012, our primary sources of liquidity are our holdings of cash and cash equivalents, and revolving line of credit.At June 30, 2012 and December 31, 2011, our working capital was $20.2 million and $28.3 million, respectively. Our current ratio as of June 30, 2012 and December 31, 2011 was 2.6 to 1 and 3.5 to 1, respectively. Significant uses affecting our cash flows for the six month period ended June 30, 2012 include:

• a net loss of $8.7 million from continuing operations, including non-cash charges of $2.1 million in depreciation and amortization expense, $0.3 million in share-based compensation expense, and a loss on disposal and impairment of fixed assets of $0.2 million;

• capital expenditures of $2.0 million; and

• an increase in inventory of $0.6 million.

These uses of cash were partially offset by:

• a decrease in accounts receivable of $1.4 million;

• a combined net increase in accounts payable, accrued expense and other long-term liabilities (including restructuring payments related to employee severance of $0.7 million) of $1.0 million; and

• a decrease in other assets of $1.0 million.

Loan and Security Agreement

On March 9, 2009, we entered into a three year Loan and Security Agreement (as amended, the “Loan and Security Agreement”) with TD Bank, N.A. (“TD Bank”).

On December 1, 2010, we entered into the First Amendment and Modification to Loan and Security Agreement (the "First Amendment") with TD Bank. Under the First Amendment, the Company has the ability, on or prior to the second anniversary of the First Amendment, and subject to a determination by our Board of Directors authorizing such a transaction, to repurchase up to $5 million of its capital stock out of Qualified Cash (as such term is defined in the First Amendment), provided no Default or Event of Default (as such terms are defined in the Loan and Security Agreement) shall have otherwise occurred. In addition, under the First Amendment, the maturity date of the Loan and Security Agreement has been extended by one year (to March 8, 2013 from March 8, 2012) and, commencing March 8, 2012 and at all times thereafter, the unused line fee (usage fee) under the Loan and Security Agreement was reduced from one percent (1%) per annum to one-half of one percent (1/2%) per annum, in each case on the difference between $15 million and the sum of the average daily outstanding principal balance of cash advances under the revolving credit line and the average daily aggregate undrawn portion of all outstanding letters of credit for the preceding month.

On February 25, 2011, we entered into the Second Amendment and Modification to Loan and Security Agreement (the "Second Amendment"). Under the Second Amendment, the maximum aggregate of our future purchase money indebtedness and capitalized lease obligations in respect of specific items of equipment was increased to $2.0 million from $0.25 million effective December 31, 2010. The Second Amendment also contains other customary representations, warranties, covenants and terms and conditions.

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On February 29, 2012, we entered into the Third Amendment and Modification to Loan and Security Agreement (the "Third Amendment"). Under the Third Amendment, we are obligated to maintain a Fixed Charge Coverage Ratio on a rolling 12 month basis of not less than 1.1 to 1.0 as of any fiscal quarter ending after September 30, 2011 if, for any one or more day(s) following any such fiscal quarter end, (a) the outstanding balance of cash advances under the Loan and Security Agreement is greater than $0 and (b) the amount of our cash on deposit with TD Bank is less than $6.0 million. The Third Amendment also contains other customary representations, warranties, covenants and terms and conditions.

The Loan and Security Agreement (as amended) provides us with a revolving line of credit, the proceeds of which are to be used for general working capital purposes.  Under the terms of the Loan and Security Agreement, TD Bank has agreed to make revolving credit loans to us in an aggregate principal amount at any one time outstanding which, when combined with the aggregate undrawn amount of all unexpired letters of credit, does not exceed 85% of “Eligible Receivables” (as that term is defined in the Loan and Security Agreement), provided that in no event can the aggregate amount of the revolving credit loans and letters of credit outstanding at any time exceed $15 million.  The maximum aggregate face amount of letters of credit that may be outstanding at any time may not exceed $1.5 million.

Borrowings of revolving credit loans shall take the form of LIBOR rate advances with the applicable interest rate being the LIBOR rate, plus 3.5% per annum.

Through March 7, 2012, we were obligated to pay, on a monthly basis in arrears, an unused line fee (usage fee) equal to 1% per annum on the difference between $15 million and the average daily outstanding principal balance of cash advances under the revolving credit line plus the average daily aggregate undrawn portion of all outstanding letters of credit for the preceding month.  Effective March 8, 2012, the usage fee is one-half of one percent (1/2%) per annum. In addition, we are required to pay an annual loan fee of $0.1 million.  During the three and six months ended June 30, 2012, we incurred unused line fees of $0.02 million and $0.06 million, respectively. During the three and six months ended June 30, 2011, we incurred unused line fees of $0.04 million and $0.07 million, respectively.

In December 2009, we opened a $0.1 million TD VISA credit card account to be used by Hooper Holmes Services medical records retrieval service line. The credit card reduced our borrowing capacity under our revolving line of credit.  As of June 30, 2012, our borrowing capacity under the revolving line of credit totaled $12.9 million (which is 85% of Eligible Receivables) and there were no outstanding borrowings.

The revolving credit loans are payable in full, together with all accrued and unpaid interest, on the earlier of March 8, 2013 or the date of termination of the loan commitments, termination being one of the actions TD Bank may take upon the occurrence of an Event of Default.  We may prepay any revolving credit loan, in whole or in part without penalty, with the amount of such prepayment available to be reborrowed, subject to compliance with the terms and conditions of the Loan and Security Agreement (as amended).  We may also terminate the Loan and Security Agreement, provided that on the date of such termination all of its obligations are paid in full.  We are subject to a fee equal to $0.1 million upon early termination of the Loan and Security Agreement.

As security for our full and timely payment and other obligations under the Loan and Security Agreement, we granted TD Bank a security interest in all of our existing and after-acquired property and our subsidiary guarantors, including our receivables (which are subject to a lockbox account arrangement), inventory and equipment.  As further security, we granted TD Bank a mortgage lien encumbering our corporate headquarters.  The aforementioned security interest and mortgage lien are collectively referred to herein as the “Collateral”.

Pursuant to the terms of the Loan and Security Agreement, TD Bank, in its sole discretion based upon its reasonable credit judgment, may (A) establish and change reserves required against Eligible Receivables, (B) change the advance rate against Eligible Receivables or the fair market value of our corporate headquarters, and (C) impose additional restrictions on the standards of eligibility for Eligible Receivables, any of which could reduce the aggregate amount of indebtedness that may be incurred under the Loan and Security Agreement.

The Loan and Security Agreement contains covenants that, among other things, restrict our ability, and that of our subsidiaries, to:

• pay any dividends or distributions on, or redeem or retire any shares of any class of our capital stock or other equity interests;

• incur additional indebtedness;

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• sell or otherwise dispose of any of our assets, other than in the ordinary course of business;

• create liens on our assets;

• enter into any sale and leaseback transactions; and

• enter into transactions with any of our affiliates on other than an arm’s-length or no less favorable basis.

The Loan and Security Agreement contains a financial covenant that requires us to maintain a Fixed Charge Coverage Ratio (as defined in the Loan and Security Agreement), and as amended under the Third Amendment noted above, measured on a rolling 12 month basis of not less that 1.1 to 1.0 as of any fiscal quarter ending after September 30, 2011 if, for any one or more day(s) following any such fiscal quarter end, (a) the outstanding balance of cash advances under the Loan and Security Agreement is greater than $0 and (b) the amount of our cash on deposit with TD Bank is less than $6.0 million.  As of June 30, 2012, both because our cash on deposit with TD Bank exceeded $6.0 million and our outstanding balance of cash advances under the Loan and Security Agreement was $0, compliance with the Fixed Charge Coverage Ratio is not applicable. However, if this covenant did apply, our Fixed Charge Coverage Ratio measured as specified in the Loan and Security Agreement as of June 30, 2012 was (13.6) to 1. As such, we would fail this financial covenant and therefore would have no borrowing capability under the terms of our Loan and Security Agreement.

Our failure or that of any subsidiary guarantor to comply with any of the covenants or the breach of any of our or their representations and warranties, contained in the Loan and Security Agreement, constitutes an Event of Default under the agreement.  In addition, the Loan and Security Agreement provides that “Events of Default” include the occurrence or failure of any event or condition that, in TD Bank’s sole judgment, could have a material adverse effect (i) on the our business, operations, assets, management, liabilities or condition, (ii) in the value of or the perfection or priority of TD Bank’s lien upon the Collateral, or (iii) on our ability and our subsidiary guarantors to perform under the Loan and Security Agreement.

If revenues continue to decline compared to the prior year, operating losses may continue to occur, we may be required to take additional actions to further reduce costs and capital spending, and restructure operations.  This would also reduce our cash reserves. Furthermore, there is no guarantee that our current and future cost reduction actions will generate the cost savings necessary to offset declining revenues.  During the second quarter of 2012, we restructured our Portamedic service line's delivery model. The restructure resulted in, among other things, the closure of branch offices, headcount reductions, the elimination of both fixed and variable costs and the consolidation of certain services into centralized customer service centers. If we do not achieve the cost reductions expected from this restructure and/or if revenues continue to decline at levels similar to or worse than that experienced in 2011, we may fail to satisfy the financial covenant contained in the Loan and Security Agreement and therefore would be prohibited from borrowing under the Loan and Security Agreement.  Further, as defined in the Loan and Security Agreement, TD Bank may at its sole discretion request additional security, reduce availability or determine if negative events are Events of Default. These and other factors would adversely affect our liquidity and our ability to generate profits in the future.

Based on our anticipated level of future revenues, the cost reduction initiatives implemented to date, our existing cash, cash equivalents and unused borrowing capacity, we believe we have sufficient funds to meet our cash needs through June 30, 2013.

Cash Flows from Operating Activities

For the six month periods ended June 30, 2012, net cash used in operating activities of continuing operations was $3.3 million, compared to net cash provided by operating activities of continuing operations of $1.6 million in the prior year period.

The net cash used in operating activities of continuing operations for the six month period ended June 30, 2012 of $3.3 million reflects a loss of $8.7 million from continuing operations and non-cash charges of $2.1 million of depreciation and amortization, $0.3 million of share-based compensation expense, and a loss on disposal and impairment of fixed assets of $0.2 million. Changes in working capital included:

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• a decrease in accounts receivable of $1.4 million. Our consolidated days sales outstanding (“DSO”), measured on a rolling 90-day basis, was 43.1 days at June 30, 2012, compared to 40.5 days at December 31, 2011 and 42.2 days at June 30, 2011. Historically, our accounts receivable balances and our DSO are at their lowest point in December as many of our customers utilize the remainder of their operating budgets before their year-end budget close-out. Historically, we experience an increase in DSO in the first quarter of each year, in comparison to the prior year-end and we experience a decrease in the second quarter of each year compared to the first quarter of the same year. We expect that the third quarter of 2012, will follow historical trends and will increase compared to the second quarter of 2012. As has historically been the case, we believe our DSO will again be at its lowest point of the year by December 2012. Our consolidated allowance for doubtful accounts, which includes a reserve for revenue reductions, declined approximately $0.01 million since December 31, 2011, resulting from net write-offs;

• a combined net increase in accounts payable, accrued expenses and other long-term liabilities of $1.0 million;

• an increase in inventories of $0.6 million; and

• a decrease in other assets of $1.0 million.

The net cash provided by operating activities of continuing operations for the six month period ended June 30, 2011 of $1.6 million reflects a loss of $1.7 million from continuing operations, including non-cash charges of $1.8 million of depreciation and amortization, and $0.3 million of share-based compensation expense. Changes in working also capital included:

• a decrease in accounts receivable of $1.7 million. Our consolidated DSO, measured on a rolling 90-day basis, was 42.2 days at June 30, 2011, compared to 40.4 days at December 31, 2010 and 44.5 days at June 30, 2010. Our consolidated allowance for doubtful accounts, which includes a reserve for revenue reductions, declined approximately $0.3 million since December 31, 2010, of which $0.0 million and $0.1 million was credited to revenue during the three and six month periods ended June 30, 2011, respectively;

• a combined net decrease in accounts payable, accrued expenses and other long-term liabilities of $0.6 million; and

• a decrease in other assets of $0.3 million.

Cash Flows used in Investing Activities

For the six month period ended June 30, 2012, we used $2.0 million in net cash for investing activities of continuing operations primarily for capital expenditures primarily related to the development of an IT system for processing customer orders, our new inventory management system and new Heritage Lab specimen analyzing equipment. For the six month period ended June 30, 2011, we used $1.9 million in net cash for investing activities of continuing operations primarily for capital expenditures primarily related to the development of our new IT system for processing customer orders and new iParamed technology platform.

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Cash Flows used in Financing Activities

The net cash used in financing activities of continuing operations for the six month periods ended June 30, 2012 and 2011 of $0.2 million and $0.3 million represents costs associated with our Loan and Security Agreement with TD Bankand a reduction in capital lease obligations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Share Repurchases

We did not purchase any shares of our common stock during the six month periods ended June 30, 2012 and 2011.

Dividends

No dividends were paid during the six month periods ended June 30, 2012 and 2011. We are restricted from declaring or making any dividend payments or other distributions of assets with respect to any class of our equity securities under the terms of the Loan and Security Agreement with TD Bank.

Contractual Obligations

As of June 30, 2012, there have been no material changes in contractual obligations as disclosed in Item 7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, under the caption “Contractual Obligations”.

Inflation

Inflation has not had, nor is it expected to have, a material impact on our consolidated financial results.

Critical Accounting Policies

There were no changes to our critical accounting policies during the six month period ended June 30, 2012. Such policies are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate risk primarily through our borrowing activities, which are described in Note 8 to the unaudited interim consolidated financial statements and Item 2 of Part I included in this Report. Our credit facility is based on variable rates and is therefore subject to interest rate fluctuations. Accordingly, our interest expense will vary as a result of interest rate changes and the level of any outstanding borrowings. As of June 30, 2012, there were no borrowings outstanding.

As of June 30, 2012, we have determined that there was no material market risk exposure to our consolidated financial position, results of operations or cash flows as of such date.

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ITEM 4 Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and Chief Financial Officer, with the assistance of our disclosure committee, have conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2012. The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports the Company files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2012, the Company's disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting

There has been no change to our internal control over financial reporting during the quarter ended June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - Other Information

ITEM 1 Legal Proceedings

On April 23, 2012, a complaint was filed against the Company in U.S. District Court for the District of New Jersey alleging, among other things, that the Company had failed to pay overtime compensation to certain employees as required by federal law. On May 24, 2012, a related complaint was filed against the Company in the same court alleging, among other things, that the Company failed to pay overtime compensation to certain independent contractor examiners who, the complaint alleges, should be treated as employees for purposes of federal law. The complaints seek award of an unspecified amount of allegedly unpaid overtime wages to certain examiners. The Company believes the allegations in the cases are without merit, has filed answers in both cases denying the substantive allegations therein, and intends to defend the cases vigorously.

The Company is a party to a number of other legal actions arising in the ordinary course of its business.  In the opinion of management, the Company has substantial legal defenses and/or insurance coverage with respect to all of its pending legal matters.  Accordingly, none of these actions is expected to have a material adverse effect on the Company's liquidity, its consolidated results of operations or its consolidated financial position.

ITEM 1A Risk Factors

Readers should carefully consider, in connection with the other information in this Report, the risk factors disclosed in Item 1A. “Risk Factors” in our 2011 Annual Report on Form 10-K. There are no material changes to such risk factors.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales or repurchases of equity securities during the fiscal quarter ended June 30, 2012.

ITEM 3 Defaults Upon Senior Securities

There were no defaults upon senior securities during the fiscal quarter ended June 30, 2012.

ITEM 4 Mine Safety Disclosure

Not applicable.

ITEM 5 Other Information

None

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ITEM 6 Exhibits

Exhibit No.	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Label Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

* Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are not to be deemed "filed" or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, and are not to be deemed "filed" for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections, except as shall be expressly set forth by specific reference in such filing.

29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Hooper Holmes, Inc.

Dated: August 10, 2012

By: /s/ Ransom J. Parker

Ransom J. Parker

Chief Executive Officer and President

(Principal Executive Officer)

By: /s/ Michael J. Shea

Michael J. Shea

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

30

EX-31.1

EXHIBIT 31.1CERTIFICATIONS

I, Ransom J. Parker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hooper Holmes Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Ransom J. Parker

---------------------------------------------

Ransom J. Parker

Chief Executive Officer and President

August 10, 2012

EX-31.2

EXHIBIT 31.2 CERTIFICATIONS

I, Michael J. Shea, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hooper Holmes Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Michael J. Shea

---------------------------------------------

Michael J. Shea

Senior Vice-President, and Chief Financial and Accounting Officer

August 10, 2012

EX-32.1

EXHIBIT 32.1 CERTIFICATIONS

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Ransom J. Parker, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, the Quarterly Report of Hooper Holmes, Inc., on Form 10-Q for the quarter ended June 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Hooper Holmes, Inc.

Dated: August 10, 2012

/s/ Ransom J. Parker

__________________________

Ransom J. Parker

Chief Executive Officer and President

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to Hooper Holmes, Inc. and will be retained by Hooper Holmes, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2 CERTIFICATIONS

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Shea, Senior Vice-President and Chief Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, the Quarterly Report of Hooper Holmes, Inc., on Form 10-Q for the quarter ended June 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Hooper Holmes, Inc.

Dated: August 10, 2012

/s/ Michael J. Shea

__________________________

Michael J. Shea

Senior Vice President and Chief Financial and Accounting Officer

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to Hooper Holmes, Inc. and will be retained by Hooper Holmes, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Share-Based Compensation Award Activity (Details) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended				1 Months Ended		12 Months Ended	36 Months Ended	6 Months Ended					6 Months Ended
	Mar. 31, 2012	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Feb. 29, 2012	Feb. 28, 2011	Jul. 31, 2011 2008 Plan [Member]	Jul. 31, 2009 2008 Plan [Member]	Jun. 30, 2012 2008 Plan [Member]	Jun. 30, 2012 2008 Plan [Member]	Jun. 30, 2012 Director Stock Plan [Member]	Jun. 30, 2011 Director Stock Plan [Member]	Jun. 30, 2012 Employee Stock Option [Member]	Jun. 30, 2012 July 2009 Non-vested Stock Award [Member]	Jun. 30, 2012 July 2011 Non-vested Stock Award [Member]	Jun. 30, 2012 Non-Vested Stock Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award
Stock Issued During Period, Shares, Employee Stock Purchase Plans	0
Options vested in period				58,750
Aggregate fair value of options vested in period				$ 30,000
Unrecognized comprenation cost related to stock options														700,000
Weighted average period for recognition of compensation cost														2 years 4 months 2 days			2 years 0 months 29 days
Compensation expense allocated to selling, general and administrative expenses		200,000	200,000	300,000	300,000
Non-vested Stock Awards
Aggregate shares granted								305,000	500,000			30,000	30,000
Aggregate shares of non-vested stock forfeited										45,000	300,000
Aggregate shares that vested in the period											50,000
Vesting Schedule for Equity Grants Other than Options
Vesting percentage, year one															0.00%	33.00%
Vesting percentage, year two															25.00%	33.00%
Vesting percentage, year three															25.00%	34.00%
Vesting percentage, year four															25.00%
Vesting percentage, year five															25.00%
Unrecognized compensation cost										200,000	200,000
ESPP
Stock Allocated During Period, Shares, Employee Stock Purchase Plan						273,000	280,800
Aggregate Grant-Date Fair Value, Employee Stock Purchase Plan						$ 50,000	$ 50,000
Other Stock Awards
Term over which grants will occur												10 years
Number of shares authorized under the Plan										5,000,000	5,000,000	600,000
Remaining shares available for grant under the plan										940,000	940,000	390,000
Number of shares awarded annually to non-employee board members other than the non-executive chair												5,000
Number of shares awarded annually to non-executive chair of the board of directors												10,000

XML

Discontinued Operations

6 Months Ended

Jun. 30, 2012

Discontinued Operations [Abstract]

Discontinued Operations

Discontinued Operations

In June 2008, the Company sold substantially all of the assets and liabilities of its Claims Evaluation Division (“CED”) operating segment. In connection with the sale of the CED, the Company has been released as the primary obligor for certain lease obligations acquired but remains secondarily liable in the event the buyer defaults. The Company reduced the reserve for this liability by $0.07 million and reported the corresponding gain in discontinued operations for the three and six months ended June 30, 2012. At June 30, 2012, the Company maintained a liability of $0.1 million for this lease obligation. The guarantee is provided for the term of the lease, which expires in July 2015. As of June 30, 2012, the maximum potential amount of future payments under the guarantee is $0.3 million.

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Restructuring (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Restructuring Cost and Reserve
Restructuring charges	$ 1,575,000	$ 38,000	$ 2,192,000	$ 94,000
Payments			700,000
Restructuring Reserve	1,300,000		1,300,000
Restructuring Reserve, Current	1,100,000		1,100,000
Restructuring Reserve, Noncurrent	200,000		200,000
Employee Severance [Member]
Restructuring Cost and Reserve
Restructuring charges	500,000		1,100,000
Payments			700,000
Restructuring Reserve	400,000		400,000
Facility Closing [Member]
Restructuring Cost and Reserve
Restructuring charges	1,100,000		1,100,000
Impairment of Fixed Assets	200,000		200,000
Payments			0
Restructuring Reserve	$ 900,000		$ 900,000

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Inventories (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventories [Abstract]
Finished Goods, Gross	$ 1.8	$ 1.4
Raw Materials, Gross	$ 1.0	$ 0.8

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Loan and Security Agreement (Details) (USD $)	2 Months Ended	3 Months Ended		4 Months Ended	6 Months Ended
	Mar. 07, 2012	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2010
Line of Credit Facility [Abstract]
Capital Stock Repurchase Maximum					$ 5,000,000
Unused Capacity, Commitment Fee Percentage	1.00%			0.50%
Maximum Borrowing Capacity		15,000,000		15,000,000	15,000,000
Equipment Acquisitions, Contractual Maximum		2,000,000		2,000,000	2,000,000		250,000
Fixed Charge Coverage Ratio, contractual minimum		1.1		1.1	1.1
Outstanding Balance Maximum, Fixed Charge Coverage Ratio Applicability		0		0	0
Cash on Deposit Minimum, Fixed Charge Coverage Ratio Applicability		6,000,000		6,000,000	6,000,000
Loan Maximum Defined, Based on Eligible Receivable		85.00%		85.00%	85.00%
Letters of Credit, Maximum		1,500,000		1,500,000	1,500,000
Interest Rate in Excess of LIBOR		3.50%		3.50%	3.50%
Annual Fee					100,000
Commitment Fee Amount		20,000	40,000		60,000	70,000
Credit Card Availability		100,000		100,000	100,000
Remaining Borrowing Capacity		12,900,000		12,900,000	12,900,000
Early Termination fee					$ 100,000
Fixed Charge Coverage Ratio		(13.6)		(13.6)	(13.6)

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Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income tax expense	$ 3,000	$ 26,000	$ 23,000	$ 49,000
Internal Revenue Service (IRS) [Member]
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration	96,800,000		96,800,000
State and Local Jurisdiction [Member]
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration	$ 96,000,000		$ 96,000,000

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Share-Based Compensation

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Share-Based Compensation

Share-Based Compensation

EmployeeShare-Based Compensation Plans - On May 29, 2008, the Company's shareholders approved the 2008 Omnibus Employee Incentive Plan (the “2008 Plan”) providing for the grant of stock options, stock appreciation rights, non-vested stock and performance shares. The 2008 Plan provides for the issuance of an aggregate of 5,000,000 shares. As of June 30, 2012, approximately 940,000 shares remain available for grant under the 2008 Plan.

On May 24, 2011, the Company's shareholders approved the 2011 Omnibus Employee Incentive Plan (the "2011 Plan") providing for the grant of stock options and non-vested stock awards. The 2011 Plan provides for the issuance of an aggregate of 1,500,000 shares. As of June 30, 2012, approximately 1,425,000 shares remain available for grant under the 2011 Plan.

Options under the 2008 and 2011 Plans are granted at fair value on the date of grant, are exercisable in accordance with a vesting schedule specified in the grant agreement, and have contractual lives of 10 years from the date of grant. Options to purchase 500,000 of the Company's stock granted to certain executives of the Company in December 2010 vest 50% on each of the first and second anniversaries of the grant. Options to purchase 530,000 of the Company's stock granted to certain executives of the Company in July 2011 vest one-third on each of the first, second and third anniversaries of the grant. Options to purchase 150,000 of the Company's stock granted to a certain executive of the Company in the fourth quarter of 2011 vest one-fourth on each of the first, second, third and fourth anniversaries of the grant. All other options granted by the Company vest 25% on each of the second through fifth anniversaries of the grant.

During the three and six month periods ended June 30, 2012, no options for the purchase of shares were granted under the 2008 and 2011 Plans. During the three and six month periods ended June 30, 2011, options for the purchase of 0 and 150,000 shares, respectively, were granted under the 2008 Plan. The fair value of the stock options granted during the six month period ended June 30, 2011 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Expected life (years)	5.4
Expected volatility	92.2	%
Expected dividend yield	—
Risk-free interest rate	2.0	%
Weighted average fair value of options
granted during the period	$0.54

The following table summarizes stock option activity for the six month period ended June 30, 2012:

	Number of Shares		Weighted Average Exercise Price Per Share	Weighted Average remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding balance at December 31, 2011	5,988,500		$1.68
Granted	—		—
Exercised	—		—
Expired	(500,950	)	1.75
Forfeited	(326,250	)	0.90
Outstanding balance at June 30, 2012	5,161,300		$1.73	6.2	$94
Options exercisable at June 30, 2012	2,310,050		$2.86	4.2	$26

The aggregate intrinsic value disclosed in the table above represents the difference between the Company's closing stock price on the last trading day of the quarter ended June 30, 2012 and the exercise price, multiplied by the number of in-the-money stock options.

No stock options were exercised during either of the six month periods ended June 30, 2012 and 2011. Options for the purchase of 58,750 shares of common stock vested during the six month period ended June 30, 2012, and the aggregate fair value at grant date of these options was $0.03 million. As of June 30, 2012, there was approximately $0.7 million of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 2.3 years.

In July 2009, an aggregate of 500,000 shares of non-vested stock were granted under the 2008 Plan. The shares vest as follows: 25% after two years and 25% on each of the next three anniversary dates thereafter. As of June 30, 2012, an aggregate of 300,000 shares of such non-vested stock were forfeited and 50,000 were vested. In July 2011, an aggregate of 305,000 shares of non-vested stock were granted under the 2008 Plan. As of June 30, 2012, an aggregate of 45,000 shares of such non-vested stock were forfeited. The shares vest as follows: 33% on each of the first and second anniversary dates and 34% on the third anniversary. As of June 30, 2012, there was approximately $0.2 million of total unrecognized compensation cost related to non-vested stock awards. The cost is expected to be recognized over a weighted average period of 2.1 years.

Employee Stock Purchase Plan - In February 2011, under the Stock Purchase Plan (2004) of Hooper Holmes, Inc. (the "2004 Plan"), purchase rights for approximately 280,800 shares of the Company's stock were granted to eligible participating employees with an aggregate grant date fair value of $0.05 million, based on the Black-Scholes pricing model. This offering period concluded in March 2012 and, in accordance with the 2004 Plan's automatic termination provision, no shares were issued. In February 2012, under the 2004 Plan, purchase rights for approximately 273,000 shares were granted with an aggregate fair value of $0.05 million, based on the Black-Scholes option pricing model. The February 2012 offering period will conclude in March 2013.

Other Stock Awards - On May 30, 2007, the Company's shareholders approved the Hooper Holmes, Inc. 2007 Non-Employee Director Restricted Stock Plan (the “2007 Plan”), which provides for the automatic grant, on an annual basis for 10 years, of shares of the Company's stock to the Company's non-employee directors. The total number of shares that may be awarded under the 2007 Plan is 600,000. As of June 30, 2012, there remain available for grant approximately 390,000 shares under the 2007 Plan. Effective June 1, 2007, each non-employee member of the Board of Directors other than the non-executive chair receives 5,000 shares annually and the non-executive chair receives 10,000 shares annually of the Company's stock, with such shares vesting immediately upon issuance. The Company believes that the shares awarded under the 2007 Plan are “restricted securities”, as defined in SEC Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"). The Company filed a Registration Statement on Form S-8 with respect to the 2007 Plan on April 16, 2008. The directors who receive shares under the 2007 Plan are "affiliates" as defined in Rule 144 under the Securities Act and thus remain subject to the applicable provisions of Rule 144. In addition, the terms of the awards (whether or not restricted) specify that the shares may not be sold or transferred by the recipient until the director ceases to serve on the Board or, if at that time the director has not served on the Board for at least four years, on the fourth anniversary of the date the director first became a Board member. During the six month periods ended June 30, 2012 and 2011, shares awarded under the 2007 Plan totaled 30,000 and 30,000, respectively.

The Company recorded $0.2 million and $0.3 million of share-based compensation expense in selling, general and administrative expenses for the three and six month periods ended June 30, 2012, respectively, and $0.2 million and $0.3 million for the three and six month periods ended June 30, 2011, respectively, related to stock options, non-vested stock, restricted stock awards and the 2004 Plan.

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Consolidated Balance Sheets (unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS (Note 8)
Cash and cash equivalents	$ 11,443	$ 16,917
Accounts receivable, net of allowance for doubtful accounts of $513 and $525 at June 30, 2012 and December 31, 2011, respectively	16,996	18,387
Inventories	2,844	2,226
Other current assets	1,223	2,140
Total current assets	32,506	39,670
Property, plant and equipment at cost	50,105	54,333
Less: Accumulated depreciation and amortization	36,990	41,281
Property, plant and equipment, net	13,115	13,052
Intangible assets, net	44	195
Other assets	335	364
Total assets	46,000	53,281
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	5,680	5,174
Accrued expenses	6,616	6,173
Total current liabilities	12,296	11,347
Other long-term liabilities	1,292	1,185
Commitments and contingencies (Note 9)
Stockholders' Equity:
Common stock, par value $.04 per share; authorized 240,000,000 shares, issued 69,708,982 shares and 69,678,982 shares as of June 30, 2012 and December 31, 2011, respectively. Outstanding: 69,699,587 shares and 69,669,587 shares at June 30, 2012 and December 31, 2011, respectively.	2,788	2,787
Additional paid-in capital	149,169	148,839
Accumulated deficit	(119,474)	(110,806)
Stockholders' equity before treasury stock	32,483	40,820
Less: Treasury stock, at cost; 9,395 shares as of June 30, 2012 and December 31, 2011	(71)	(71)
Total stockholders' equity	32,412	40,749
Total liabilities and stockholders' equity	$ 46,000	$ 53,281

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation

a) Hooper Holmes, Inc. and its subsidiaries (“Hooper Holmes” or the "Company”) provide health risk assessment services to the life insurance and health industries.  The Company operates in one reportable operating segment and provides paramedical and medical examinations, personal health interviews and record collection, and laboratory testing, which help life insurance companies evaluate the risks associated with underwriting policies.  The Company also conducts wellness screenings for wellness companies, disease management organizations and health plans.

The Company's core activities consist of arranging for paramedical examinations on behalf of insurance carriers, primarily in connection with such carriers’ processing and evaluation of the risks associated with underwriting insurance policies - mainly life insurance policies. As a provider of health risk assessment services to the insurance industry, the Company's business is subject to seasonality, with third quarter sales typically dropping below the other quarters due to the decline in activity typically experienced by the insurance industry during the summer months.

b) The unaudited interim consolidated financial statements of the Company have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2011 Annual Report on Form 10-K, filed with the SEC on March 9, 2012.

Financial statements prepared in accordance with U.S. GAAP require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and other disclosures. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of the Company's management, necessary for a fair statement of results for the interim periods presented.

The results of operations for the three and six month periods ended June 30, 2012 and 2011 are not necessarily indicative of the results to be expected for any other interim period or the full year. See “Management's Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

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Loss Per Share (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Loss Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3,736,000	3,675,000	3,678,000	3,592,000

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Share-Based Compensation Option Roll-Forward (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2011	Dec. 31, 2011	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Stock Option Activity [Roll Forward]
Outstanding balance (options) at December 31, 2011				5,988,500
Granted (options)	530,000	150,000	0	0	150,000
Exercised (options)				0	0
Expired (options)				(500,950)
Forfeited (options)				(326,250)
Outstanding balance (options) at June 30, 2012		5,988,500		5,161,300
Outstanding balance (price) at December 31, 2011				$ 1.68
Granted (price)				$ 0	$ 0.54
Exercised (price)				$ 0
Expired (price)				$ 1.75
Forfeited (price)				$ 0.90
Outstanding balance (price) at June 30, 2012		$ 1.68		$ 1.73
Weighted Average Remaining Contractual Life, options outstanding				6 years 2 months 12 days
Aggregate Intrinsic Value (in thousands), optons outstanding				$ 94
Number of options exercisable at June 30, 2012				2,310,050
Weighted average exercise price of options exercisable at June 30, 2012				$ 2.86
Weighted Average Remaining Contractual Life, options exercisable				4 years 1 month 24 days
Aggregate Intrinsic Value (in thousands), options exercisable				$ 26

XML

Loss Per Share

6 Months Ended

Jun. 30, 2012

Loss Per Share [Abstract]

Loss Per Share

Loss Per Share

Basic loss per share is calculated by dividing net loss by the weighted average common shares outstanding during the period. Diluted loss per share is calculated by dividing net loss by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents.

The Company's net loss and weighted average shares outstanding used for computing diluted loss per share were the same as that used for computing basic loss per share for the three and six month periods ended June 30, 2012 and 2011 because the inclusion of common stock equivalents would have been antidilutive. Outstanding stock options to purchase approximately 3,736,000 and 3,678,000 shares of the Company's common stock were excluded from the calculation of diluted loss per share for the three and six month periods ended June 30, 2012, respectively, and approximately 3,675,000 and 3,592,000 shares for the three and six month periods ended June 30, 2011, respectively, because their exercise prices exceeded the average market price of the Company's common stock for such periods and, therefore, were antidilutive.

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Parenthetical - Balance Sheet (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Allowance for doubtful accounts	$ 513	$ 525
Common stock, par value	$ 0.04	$ 0.04
Common stock, shares authorized	240,000,000	240,000,000
Common stock, shares issued	69,708,982	69,678,982
Entity Common Stock, Shares Outstanding	69,699,587	69,669,587
Treasury stock, number of shares	9,395	9,395

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2011 Annual Report on Form 10-K, filed with the SEC on March 9, 2012.

Financial statements prepared in accordance with U.S. GAAP require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and other disclosures. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of the Company's management, necessary for a fair statement of results for the interim periods presented

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DEI Document	6 Months Ended
	Jun. 30, 2012	Jul. 31, 2012
Entity Information [Line Items]
Entity Registrant Name	HOOPER HOLMES INC
Entity Central Index Key	0000741815
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		69,699,587

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Share-Based Compensation (Policies)

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Share-based Compensation

The fair value of the stock options granted during the six month period ended June 30, 2011 was estimated on the date of grant using the Black-Scholes option pricing model

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Consolidated Statements of Operations (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues	$ 35,401	$ 37,928	$ 74,193	$ 78,505
Cost of operations	28,317	28,864	58,090	58,472
Gross profit	7,084	9,064	16,103	20,033
Selling, general and administrative expenses	11,033	10,556	22,486	21,436
Restructuring charges	1,575	38	2,192	94
Operating loss from continuing operations	(5,524)	(1,530)	(8,575)	(1,497)
Other income (expense):
Interest expense	(2)	(5)	(6)	(9)
Interest income	7	18	16	36
Other expense, net	(73)	(78)	(145)	(159)
Other income (expense)	(68)	(65)	(135)	(132)
Loss from continuing operations before income taxes	(5,592)	(1,595)	(8,710)	(1,629)
Income tax expense	3	26	23	49
Loss from continuing operations	(5,595)	(1,621)	(8,733)	(1,678)
Discontinued operations, gain on sale of subsidiary	65	0	65	0
Net loss	$ (5,530)	$ (1,621)	$ (8,668)	$ (1,678)
Basic and diluted loss per share:
Continuing operations, basic	$ (0.08)	$ (0.02)	$ (0.13)	$ (0.02)
Continuing operations, diluted	$ (0.08)	$ (0.02)	$ (0.13)	$ (0.02)
Discontinued operations, basic	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Discontinued operations, diluted	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Net loss, basic	$ (0.08)	$ (0.02)	$ (0.12)	$ (0.02)
Net loss, diluted	$ (0.08)	$ (0.02)	$ (0.12)	$ (0.02)
Weighted average number of shares - Basic	69,679,477	69,599,477	69,674,532	69,594,559
Weighted average number of shares - Diluted	69,679,477	69,599,477	69,674,532	69,594,559

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Restructuring

6 Months Ended

Jun. 30, 2012

Restructuring [Abstract]

Restructuring

Restructuring

During the three and six month periods ended June 30, 2012, the Company recorded restructuring charges totaling $1.6 million and $2.2 million, respectively. The restructuring charges consisted of employee severance and branch office closure costs. The restructuring charge for the three and six month periods ended June 30, 2012 includes $0.2 million related to the impairment of fixed assets for the closed branch offices. For the three and six month periods ended June 30, 2012, employee severance totaled $0.5 million and $1.1 million, respectively, and branch office closure costs totaled $1.1 million and $1.1 million, respectively. These restructuring charges relate to the Company's deployment of a new Portamedic service delivery model.

Following is a summary of the 2012 restructuring charges:

(In millions)	Charges	Impairment Recorded in PP&E			Payments		Balance at June 30, 2012
Severance	$1.1		$	—		$0.7		$0.4
Lease/Branch closure obligation	1.1		0.2			—		0.9
	$2.2		$	0.2		$0.7		$1.3

During the three and six month periods ended June 30, 2011, the Company recorded restructuring charges totaling $0.04 million and $0.1 million, respectively, which consisted of severance and branch office closure costs. During the six month period ended June 30, 2011, the severance and branch office closure costs were associated with the Company's Portamedic and Heritage Labs service lines. As of June 30, 2011, all payments relating to this restructuring were complete.

At June 30, 2012, $1.1 million of restructuring charges are recorded in accrued expenses in the accompanying consolidated balance sheet. Cash payments related to the above described restructuring charges are expected to be completed within the next twelve months, except for certain long-term branch office closure costs of $0.2 million, which are recorded in other long-term liabilities as of June 30, 2012.

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Inventories

6 Months Ended

Jun. 30, 2012

Inventories [Abstract]

Inventories

Inventories

Included in inventories at June 30, 2012 and December 31, 2011 are $1.8 million and $1.4 million, respectively, of finished goods and $1.0 million and $0.8 million, respectively, of components.

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Share-Based Compensation Plan information (Details) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended						1 Months Ended
	Jul. 31, 2011	Dec. 31, 2011	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 2008 Plan [Member]	Jun. 30, 2012 2011 Plan [Member]	Jun. 30, 2012 Director Stock Plan [Member]	Jun. 30, 2012 July 2011 Non-vested Stock Award [Member]	Dec. 31, 2010 December 2010 Stock Option Award [Member]	Jun. 30, 2012 December 2010 Stock Option Award [Member]	Jun. 30, 2012 July 2011 Stock Option Award [Member]	Jun. 30, 2012 July 2009 Non-vested Stock Award [Member]	Jun. 30, 2012 Fourth Quarter 2011 Stock Option Award [Member]	Jun. 30, 2012 All Other Stock Option Awards [Member]
Number of shares authorized under the Plan						5,000,000	1,500,000	600,000
Remaining shares available for grant under the plan						940,000	1,425,000	390,000
Contractual life of stock options and other awards under share-based compensation plans						10 years	10 years
Options granted in the period	530,000	150,000	0	0	150,000					500,000
Option Vesting Schedule
Vesting percentage, year one									33.00%		50.00%	33.00%	0.00%	25.00%	0.00%
Vesting percentage, year two									33.00%		50.00%	33.00%	25.00%	25.00%	25.00%
Vesting percentage, year three									34.00%			34.00%	25.00%	25.00%	25.00%
Vesting percentage, year four													25.00%	25.00%	25.00%
Vesting percentage, year five													25.00%		25.00%
Black-Scholes Assumptions
Expected life (years)					5 years 4 months 24 days
Expected volatility					92.20%
Expected dividend yield					$ 0
Risk-free interest rate					2.00%
Weighted average fair value of options granted during the period				$ 0	$ 0.54

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of the stock options granted during the six month period ended June 30, 2011 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Expected life (years)	5.4
Expected volatility	92.2	%
Expected dividend yield	—
Risk-free interest rate	2.0	%
Weighted average fair value of options
granted during the period	$0.54

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes stock option activity for the six month period ended June 30, 2012:

	Number of Shares		Weighted Average Exercise Price Per Share	Weighted Average remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding balance at December 31, 2011	5,988,500		$1.68
Granted	—		—
Exercised	—		—
Expired	(500,950	)	1.75
Forfeited	(326,250	)	0.90
Outstanding balance at June 30, 2012	5,161,300		$1.73	6.2	$94
Options exercisable at June 30, 2012	2,310,050		$2.86	4.2	$26

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Litigation

6 Months Ended

Jun. 30, 2012

Litigation [Abstract]

Litigation

Litigation

On April 23, 2012, a complaint was filed against the Company in U.S. District Court for the District of New Jersey alleging, among other things, that the Company had failed to pay overtime compensation to certain employees as required by federal law. On May 24, 2012, a related complaint was filed against the Company in the same court alleging, among other things, that the Company failed to pay overtime compensation to certain independent contractor examiners who, the complaint alleges, should be treated as employees for purposes of federal law. The complaints seek award of an unspecified amount of allegedly unpaid overtime wages to certain examiners. The Company believes the allegations in the cases are without merit, has filed answers in both cases denying the substantive allegations therein, and intends to defend the cases vigorously.

The Company is a party to a number of other legal actions arising in the ordinary course of its business. In the opinion of management, the Company has substantial legal defenses and/or insurance coverage with respect to all of its pending legal actions. Accordingly, none of these actions is expected to have a material adverse effect on the Company’s liquidity, its consolidated results of operations or its consolidated financial position.

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Loan and Security Agreement

6 Months Ended

Jun. 30, 2012

Loan and Security Agreement [Abstract]

Loan and Security Agreement

Loan and Security Agreement

On March 9, 2009, the Company entered into a three year Loan and Security Agreement (as amended, the “Loan and Security Agreement”) with TD Bank, N.A. (“TD Bank”).

On December 1, 2010, the Company entered into the First Amendment and Modification to Loan and Security Agreement (the "First Amendment") with TD Bank. Under the First Amendment, the Company has the ability, on or prior to the second anniversary of the First Amendment, and subject to a determination by the Company's Board of Directors authorizing such a transaction, to repurchase up to $5 million of its capital stock out of Qualified Cash (as such term is defined in the First Amendment), provided no Default or Event of Default (as such terms are defined in the Loan and Security Agreement) shall have otherwise occurred. In addition, under the First Amendment, the maturity date of the Loan and Security Agreement has been extended by one year (to March 8, 2013 from March 8, 2012) and, commencing March 8, 2012 and at all times thereafter, the unused line fee (usage fee) under the Loan and Security Agreement was reduced from one percent (1%) per annum to one-half of one percent (1/2%) per annum, in each case on the difference between $15 million and the sum of the average daily outstanding principal balance of cash advances under the revolving credit line and the average daily aggregate undrawn portion of all outstanding letters of credit for the preceding month.

On February 25, 2011, the Company entered into the Second Amendment and Modification to Loan and Security Agreement (the "Second Amendment"). Under the Second Amendment, the maximum aggregate future purchase money indebtedness and capitalized lease obligations of the Company in respect of specific items of equipment was increased to $2.0 million from $0.25 million effective December 31, 2010. The Second Amendment also contains other customary representations, warranties, covenants and terms and conditions.

On February 29, 2012, the Company entered into the Third Amendment and Modification to Loan and Security Agreement (the "Third Amendment"). Under the Third Amendment, the Company is obligated to maintain a Fixed Charge Coverage Ratio on a rolling 12 month basis of not less than 1.1 to 1.0 as of any fiscal quarter ending after September 30, 2011 if, for any one or more day(s) following any such fiscal quarter end, (a) the outstanding balance of cash advances under the Loan and Security Agreement is greater than $0 and (b) the amount of the Company's cash on deposit with TD Bank is less than $6 million. The Third Amendment also contains other customary representations, warranties, covenants and terms and conditions.

The Loan and Security Agreement (as amended) provides the Company with a revolving line of credit, the proceeds of which are to be used for general working capital purposes.  Under the terms of the Loan and Security Agreement, TD Bank has agreed to make revolving credit loans to the Company in an aggregate principal amount at any one time outstanding which, when combined with the aggregate undrawn amount of all unexpired letters of credit, does not exceed 85% of “Eligible Receivables” (as that term is defined in the Loan and Security Agreement), provided that in no event can the aggregate amount of the revolving credit loans and letters of credit outstanding at any time exceed $15 million.  The maximum aggregate face amount of letters of credit that may be outstanding at any time may not exceed $1.5 million.

Borrowings of revolving credit loans shall take the form of LIBOR rate advances with the applicable interest rate being the LIBOR rate, plus 3.5% per annum.

Through March 7, 2012, the Company was obligated to pay, on a monthly basis in arrears, an unused line fee (usage fee) equal to 1% per annum on the difference between $15 million and the average daily outstanding principal balance of cash advances under the revolving credit line plus the average daily aggregate undrawn portion of all outstanding letters of credit for the preceding month.  Effective March 8, 2012, the usage fee is one-half of one percent (1/2%) per annum. In addition, the Company is required to pay an annual loan fee of $0.1 million.  During the three and six month periods ended June 30, 2012, the Company incurred unused line fees of $0.02 million and $0.06 million, respectively. During the three and six month periods ended June 30, 2011 the Company incurred unused line fees of $0.04 million and $0.07 million, respectively.

In December 2009, the Company opened a $0.1 million TD VISA credit card account to be used by Hooper Holmes Services medical records retrieval service line. The credit card reduced the Company’s borrowing capacity under its revolving line of credit.  As of June 30, 2012, the Company’s borrowing capacity under the revolving line of credit totaled $12.9 million (which is 85% of Eligible Receivables) and there were no outstanding borrowings.

The revolving credit loans are payable in full, together with all accrued and unpaid interest, on the earlier of March 8, 2013 or the date of termination of the loan commitments, termination being one of the actions TD Bank may take upon the occurrence of an Event of Default.  The Company may prepay any revolving credit loan, in whole or in part without penalty, with the amount of such prepayment available to be reborrowed, subject to compliance with the terms and conditions of the Loan and Security Agreement (as amended).  The Company may also terminate the Loan and Security Agreement, provided that on the date of such termination all of its obligations are paid in full.  The Company is subject to a fee equal to $0.1 million upon early termination of the Loan and Security Agreement.

As security for the Company’s full and timely payment and other obligations under the Loan and Security Agreement, the Company granted TD Bank a security interest in all existing and after-acquired property of the Company and its subsidiary guarantors, including its receivables (which are subject to a lockbox account arrangement), inventory and equipment.  As further security, the Company granted TD Bank a mortgage lien encumbering the Company’s corporate headquarters.  The aforementioned security interest and mortgage lien are collectively referred to herein as the “Collateral”.

Pursuant to the terms of the Loan and Security Agreement, TD Bank, in its sole discretion based upon its reasonable credit judgment, may (A) establish and change reserves required against Eligible Receivables, (B) change the advance rate against Eligible Receivables or the fair market value of the Company’s corporate headquarters, and (C) impose additional restrictions on the standards of eligibility for Eligible Receivables, any of which could reduce the aggregate amount of indebtedness that may be incurred under the Loan and Security Agreement.

The Loan and Security Agreement contains covenants that, among other things, restrict the Company’s ability, and that of its subsidiaries, to:

• pay any dividends or distributions on, or redeem or retire any shares of any class of its capital stock or other equity interests;

• incur additional indebtedness;

• sell or otherwise dispose of any of its assets, other than in the ordinary course of business;

• create liens on its assets;

• enter into any sale and leaseback transactions; and

• enter into transactions with any of its affiliates on other than an arm’s-length or no less favorable basis.

The Loan and Security Agreement contains a financial covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Loan and Security Agreement), and as amended under the Third Amendment noted above, measured on a rolling 12 month basis of not less that 1.1 to 1.0 as of any fiscal quarter ending after September 30, 2011 if, for any one or more day(s) following any such fiscal quarter end, (a) the outstanding balance of cash advances under the Loan and Security Agreement is greater than $0 and (b) the amount of the Company's cash on deposit with TD Bank is less than $6 million. As of June 30, 2012, both because the Company's cash on deposit with TD Bank exceeded $6 million and the Company's outstanding balance of cash advances under the Loan and Security Agreement was $0, compliance with the Fixed Charge Coverage Ratio is not applicable. However, if this covenant did apply, the Fixed Charge Coverage Ratio measured as specified in the Loan and Security Agreement as of June 30, 2012 was (13.6) to 1. As such, the Company would fail this financial covenant and therefore would have no borrowing capability under the terms of its Loan and Security Agreement.

The failure of the Company or that of any subsidiary guarantor to comply with any of the covenants or the breach of any of its or their representations and warranties, contained in the Loan and Security Agreement, constitutes an Event of Default under the agreement.  In addition, the Loan and Security Agreement provides that “Events of Default” include the occurrence or failure of any event or condition that, in TD Bank’s sole judgment, could have a material adverse effect (i) on the business, operations, assets, management, liabilities or condition of the Company, (ii) in the value of or the perfection or priority of TD Bank’s lien upon the Collateral, or (iii) on the ability of the Company and its subsidiary guarantors to perform under the Loan and Security Agreement.

If revenues continue to decline compared to the prior year, operating losses may continue to occur, the Company may be required to take additional actions to further reduce costs and capital spending, and restructure operations.  This would also reduce the Company's cash reserves. Furthermore, there is no guarantee that the Company's current and future cost reduction actions will generate the cost savings necessary to offset declining revenues.  During the second quarter of 2012, the Company restructured its Portamedic service line's delivery model. The restructure resulted in, among other things, the closure of branch offices, headcount reductions, the elimination of both fixed and variable costs and the consolidation of certain services into centralized customer service centers. If the Company does not achieve the cost reductions expected from this restructure and/or if revenues continue to decline at levels similar to or worse than that experienced in 2011, the Company may continue to fail to satisfy the financial covenant contained in the Loan and Security Agreement and therefore would be prohibited from borrowing under the Loan and Security Agreement.  Further, as defined in the Loan and Security Agreement, TD Bank may at its sole discretion request additional security, reduce availability or determine if negative events are Events of Default. These and other factors would adversely affect the Company's liquidity and its ability to generate profits in the future.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company has employment retention or change in control agreements with the executive officers of the Company for a one year period from the date a change in control occurs as defined in the agreements.

On July 11, 2003, the Company received a determination from the Internal Revenue Service that one individual the Company contracted with as an independent contractor, should have been classified as an employee in 2002. This ruling also applied to any other individuals engaged by the Company under similar circumstances. The ruling stated that the Company may not be subject to adverse consequences as the Company may be entitled to relief under applicable tax laws (Section 530 of the Revenue Act of 1978). Management believes that the Company qualifies for relief under Section 530. To date, the Company has not received any further communication from the Internal Revenue Service.

In the past, some state agencies have claimed that the Company improperly classified its health professionals as independent contractors for purposes of state unemployment and/or worker's compensation tax laws and that the Company was therefore liable for taxes in arrears, or for penalties for failure to comply with their interpretation of the laws.  There are no assurances that the Company will not be subject to similar claims in other states in the future.

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

Income Taxes

The Company recorded tax expense of $0.00 million and $0.02 million for the three and six month periods ended June 30, 2012, respectively, reflecting a state tax liability to one state. The Company recorded tax expense of $0.03 million and $0.05 million for the three and six month periods ended June 30, 2011, respectively, reflecting certain state tax liabilities. No amounts were recorded for unrecognized tax benefits or for the payment of interest and penalties during the three and six month periods ended June 30, 2012 and 2011. No federal or state tax benefits were recorded relating to the current year loss, as the Company continues to believe that a full valuation allowance is required on its net deferred tax assets.

In July 2008, the Company received notification from the Internal Revenue Service that it had completed its audits of the Company's tax returns for the years 2001 through 2006 with no adjustments. State income tax returns for the year 2007 and forward are subject to examination.

As of June 30, 2012, the Company has U.S. federal and state net operating loss carryforwards of approximately $96.8 million and $96.0 million, respectively. The net operating loss carryforwards, if unutilized, will expire in the years 2012 through 2031.

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2012

Restructuring [Abstract]

Schedule of Restructuring Reserve by Type of Cost

Following is a summary of the 2012 restructuring charges:

(In millions)	Charges	Impairment Recorded in PP&E			Payments		Balance at June 30, 2012
Severance	$1.1		$	—		$0.7		$0.4
Lease/Branch closure obligation	1.1		0.2			—		0.9
	$2.2		$	0.2		$0.7		$1.3

During the three and six month periods ended June 30, 2011, the Company recorded restructuring charges totaling $0.04 million and $0.1 million, respectively, which consisted of severance and branch office closure costs. During the six month period ended June 30, 2011, the severance and branch office closure costs were associated with the Company's Portamedic and Heritage Labs service lines. As of June 30, 2011, all payments relating to this restructuring were complete.

At June 30, 2012, $1.1 million of restructuring charges are recorded in accrued expenses in the accompanying consolidated balance sheet. Cash payments related to the above described restructuring charges are expected to be completed within the next twelve months, except for certain long-term branch office closure costs of $0.2 million, which are recorded in other long-term liabilities as of June 30, 2012.

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Discontinued Operations (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Discontinued Operations [Abstract]
Gain on sale of subsidiary	$ (0.07)
Amounts of Material Contingent Liabilities Remaining	0.1
Maximum Lease Obligation	$ 0.3

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Consolidated Statements of Cash Flows (unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Net loss	$ (8,668)	$ (1,678)
Income from discontinued operation, net of income taxes	65	0
Loss from continuing operations	(8,733)	(1,678)
Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities of continuing operations:
Depreciation	1,972	1,629
Amortization	151	180
Provision for bad debt expense	37	(16)
Share-based compensation expense	331	257
Loss on disposal and impairment of fixed assets	211	11
Change in assets and liabilities:
Accounts receivable	1,354	1,719
Inventories	(618)	(250)
Other assets	1,047	344
Accounts payable, accrued expenses and other long-term liabilities	998	(577)
Net cash (used in) provided by operating activities of continuing operations	(3,250)	1,619
Cash flows from investing activities:
Capital expenditures	(2,030)	(1,883)
Proceeds from sale of fixed assets	51	0
Net cash used in investing activities of continuing operations	(1,979)	(1,883)
Cash flows from financing activities:
Reduction in capital lease obligations	(144)	(153)
Debt financing fees	(101)	(101)
Net cash used in financing activities of continuing operations	(245)	(254)
Net decrease in cash and cash equivalents	(5,474)	(518)
Cash and cash equivalents at beginning of period	16,917	21,391
Cash and cash equivalents at end of period	11,443	20,873
Supplemental disclosure of non-cash investing activities:
Fixed assets vouchered but not paid	570	558
Fixed assets acquired by capital lease	0	211
Supplemental disclosure of cash paid during the period for:
Income taxes	$ 40	$ 52

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Intangible Assets

6 Months Ended

Jun. 30, 2012

Intangible Assets [Abstract]

Intangible Assets

Intangible Assets

The following table presents certain information regarding the Company's intangible assets as of June 30, 2012 and December 31, 2011.

	Weighted
	Average	Gross
	Useful Life	Carrying		Accumulated		Net
(dollars in thousands)	(years)	Amount		Amortization		Balance
At June 30, 2012:
Customer relationships	9.7	$	12,502	$	12,497	$	5
Trade names	15.7	487		448		39
		$	12,989	$	12,945	$	44
At December 31, 2011:
Customer relationships	9.7	$	12,502	$	12,360	$	142
Trade names	15.7	487		434		53
		$	12,989	$	12,794	$	195

The aggregate intangible amortization expense for the six month periods ended June 30, 2012 and 2011 was approximately $0.2 million and $0.2 million, respectively. The estimated intangible amortization expense for the remainder of 2012 is $0.02 million.

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Intangible Assets (Details) (USD $)	6 Months Ended			6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 Customer Relationships [Member]	Dec. 31, 2011 Customer Relationships [Member]	Jun. 30, 2012 Trade Names [Member]	Dec. 31, 2011 Trade Names [Member]
Acquired Finite-Lived Intangible Assets
Useful Life				9 years 8 months 12 days	9 years 8 months 12 days	15 years 8 months 12 days	15 years 8 months 12 days
Gross	$ 12,989,000		$ 12,989,000	$ 12,502,000	$ 12,502,000	$ 487,000	$ 487,000
Accumulated Amortization	12,945,000		12,794,000	12,497,000	12,360,000	448,000	434,000
Net	44,000		195,000	5,000	142,000	39,000	53,000
Amortization of Acquired Intangible Assets	200,000	200,000
Estimated Amortization of Acquired Intangible Assets, Remainder of Year	$ 20,000

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Intangible Assets [Abstract]

Schedule of Finite-Lived Intangible Assets

The following table presents certain information regarding the Company's intangible assets as of June 30, 2012 and December 31, 2011.

	Weighted
	Average	Gross
	Useful Life	Carrying		Accumulated		Net
(dollars in thousands)	(years)	Amount		Amortization		Balance
At June 30, 2012:
Customer relationships	9.7	$	12,502	$	12,497	$	5
Trade names	15.7	487		448		39
		$	12,989	$	12,945	$	44
At December 31, 2011:
Customer relationships	9.7	$	12,502	$	12,360	$	142
Trade names	15.7	487		434		53
		$	12,989	$	12,794	$	195