10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2005

Commission File No. 1-9972

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 Number)
170 Mt. Airy Rd., Basking Ridge, NJ	07920
(Address of principal executive office)	(Zip Code)

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

None

(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  ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Class	Outstanding at April 30, 2005
Common stock, $.04 par value	65,250,479

HOOPER HOLMES, INC. AND SUBSIDIARIES

INDEX

			Page No.
PART I - Financial Information (unaudited)
	ITEM 1 - Financial Statements
		Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004	1
		Consolidated Statements of Income for the Three Months Ended March 31, 2005 and 2004	2
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004	3
		Notes to Unaudited Consolidated Financial Statements	4-14
	ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		15-30
	ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk		31
	ITEM 4 – Controls and Procedures		32
PART II – Other Information
	ITEM 1 – Legal Proceedings		33
	ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds		33-34
	ITEM 3 - Defaults upon Senior Securities		34
	ITEM 4 – Submission of Matters to a Vote of Security Holders		34
	ITEM 5 – Other Information		34
	ITEM 6 - Exhibits		35
	Signatures		36

Hooper Holmes, Inc.

Consolidated Balance Sheets

(unaudited; in thousands)

	03/31/2005		12/31/2004
ASSETS
Current assets:
Cash and cash equivalents	$	11,968	$	16,973
Marketable securities		6,179		6,886
Accounts receivable, net		49,188		42,001
Other current assets		7,082		7,242
Total current assets		74,417		73,102
Property, plant and equipment:
Land and land improvements		628		628
Building		4,988		4,988
Furniture, fixtures and equipment		29,818		29,381
Leasehold improvements		1,733		1,743
Total property, plant and equipment		37,167		36,740
Less: Accumulated depreciation and amortization		26,087		25,540
Property, plant and equipment, net		11,080		11,200
Goodwill		155,422		155,502
Intangible assets		34,063		35,380
Other assets		703		521
Total assets	$	275,685	$	275,705
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,062	$	1,067
Accounts payable		14,628		14,701
Accrued expenses:
Salaries, wages and fees		1,047		1,105
Income taxes payable		3,764		2,512
Other		14,073		15,453
Total current liabilities		34,574		34,838
Long term debt, less current maturities		—		1,000
Other long term liabilities		3,848		3,881
Deferred income taxes		7,301		7,475
Minority interest		260		254
Stockholders’ equity:
Common stock, par value $.04 per share; authorized 240,000,000 shares, issued 67,499,074 in 2005 and 2004.		2,700		2,700
Additional paid-in capital		125,919		126,086
Accumulated other comprehensive income		1,306		1,466
Retained earnings		116,821		115,424
		246,746		245,676
Less: Treasury stock at cost (2,248,595 shares in 2005 and 2,297,995 shares in 2004)		17,044		17,419
Total stockholders’ equity		229,702		228,257
Total liabilities and stockholders’ equity	$	275,685	$	275,705

See accompanying notes to unaudited consolidated financial statements.

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Hooper Holmes, Inc.

Consolidated Statements Of Income

(unaudited; in thousands, except share and per share amounts)

	Three months ended March 31,
	2005			2004
Revenues	$	82,505		$	79,993
Cost of operations		58,846			57,148
Gross profit		23,659			22,845
Selling, general and administrative expenses		19,460			17,793
Operating income		4,199			5,052
Other income (expense):
Interest expense		(180	)		(148	)
Interest income		47			105
Other expense, net		(95	)		(123	)
		(228	)		(166	)
Income before income taxes		3,971			4,886
Income taxes		1,595			1,805
Net income	$	2,376		$	3,081
Earnings per share:
Basic		0.04			0.05
Diluted	$	0.04		$	0.05
Weighted average shares - basic		65,238,859			64,876,031
Weighted average shares - diluted		66,455,731			66,747,322

See accompanying notes to unaudited consolidated financial statements.

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Hooper Holmes, Inc.

Consolidated Statements of Cash Flows

(unaudited; in thousands)

	Three months ended March 31,
	2005			2004
Cash flows from operating activities:
Net income	$	2,376		$	3,081
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		2,178			1,934
Deferred tax benefit		(174	)		(84	)
Net realized loss on marketable securities available for sale		9			2
Issuance of stock awards		151			206
Loss on sale of fixed assets		29			0
Change in assets and liabilities:
Accounts receivable		(7,139	)		(4,840	)
Other current assets		(33	)		148
Accounts payable and accrued expenses		(281	)		(97	)
Net cash (used in) provided by operating activities		(2,884	)		350
Cash flows from investing activities:
Purchases of marketable securities		(1,108	)		(2,405	)
Redemptions of marketable securities		1,812			5,695
Business acquisition, net of cash acquired		0			(10,947	)
Capital expenditures		(719	)		(515	)
Net cash used in investing activities		(15	)		(8,172	)
Cash flows from financing activities:
Principal payments on long term debt		(1,005	)		(1,160	)
Proceeds related to the exercise of stock options		24			75
Dividends paid		(979	)		(973	)
Net cash used in financing activities		(1,960	)		(2,058	)
Effect of exchange rate changes on cash		(147	)		36
Net decrease in cash and cash equivalents		(5,006	)		(9,844	)
Cash and cash equivalents at beginning of year		16,973			28,291
Cash and cash equivalents at end of period	$	11,967		$	18,447
Supplemental disclosure of non-cash investing activity
Change in net unrealized gain on marketable secutiries available for sale	$	10		$	1
Supplemental disclosure of cash flow information
Cash paid during the quarter for:
Interest	$	72		$	63
Income taxes	$	397		$	208

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HOOPER HOLMES, INC.

Notes to Unaudited Consolidated Financial Statements

March 31, 2005

Note 1: Basis of Presentation

The financial information included herein is unaudited however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of the management of Hooper Holmes, Inc. (the “Company”) necessary for a fair statement of results for the interim periods.

The unaudited interim consolidated financial statements have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission (“SEC”). 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 2004 annual report on Form 10-K.

The results of operations for the three months ended March 31, 2005 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.

Certain amounts in the quarter ending March 31, 2004 consolidated financial statements have been reclassified to conform with the 2005 financial statement presentation. The company has reclassified certain auction rate securities for which interest rates reset in less than 90 days, but for which the maturity date is longer than 90 days. The Company previously followed the common practice of classifying its investment in auction rate securities as cash and cash equivalents on the Company’s consolidated balance sheet. It was determined that these instruments are marketable securities and therefore, the Company has made a reclassification to its consolidated Statements of Cash Flows in order to conform to the current year’s presentation. The reclassification resulted in a net increase of approximately $.06 million in cash used in investing activities. Net cash used in investing activities resulted from an increase in purchases of marketable securities.

Note 2: Earnings Per Share

“Basic” earnings per share equals net income divided by the weighted average common shares outstanding during the period. “Diluted” earnings per share equals net income divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. Common stock equivalents (1,216,872 and 1,871,291 for the three months ended March 31, 2005 and 2004, respectively) are shares to be issued upon the exercise of outstanding stock options.

Options to purchase 6,650,325 and 3,839,925 shares of the Company’s common stock were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2005 and 2004, respectively, because their exercise prices exceeded the average market price of outstanding common shares for the period and were, therefore, antidilutive.

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Note 3: Stock-Based Compensation

The Company has stock-based employee compensation plans. The Company applies the intrinsic value based method of accounting for stock options prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. SFAS No. 123, “Accounting for Stock-Based Compensation, (“SFAS No. 123”) established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to adopt the disclosure requirements of SFAS No. 123 and SFAS No. 148. No stock-based compensation cost is reflected in net income for stock options, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:

	Three Months Ended March 31
(thousands of dollars, except per share data)	2005		2004
Net income, as reported	$	2,376	$	3,081
Add: Stock based employee compensation expense included in reported net income, net of related tax effect		91		124
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		1,422		579
Pro forma net income	$	1,045	$	2,626
Earnings per share:
Basic, as reported	$	.02	$	.05
Basic, pro forma	$	.02	$	.04
Diluted, as reported	$	.02	$	.05
Diluted, pro forma	$	.02	$	.04

During the first quarter of 2004, the Company granted options exercisable for a total of 50,000 shares, with exercise prices equal to the fair market value of such stock at date of grant. There were no stock option grants during the quarter ended March 31, 2005. The fair value of each stock option granted was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions:

	Three Months Ended March 31, 2004
Expected Life (in years)		7.0
Expected Volatility		51.35	%
Expected Dividend Yield		0.82	%
Risk-free Interest Rate		3.25	%
Weighted Average Fair Value	$	3.71

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As previously reported in the Company’s annual report on Form 10-K, on January 31, 2005, the Board of Directors of the Company accelerated the vesting of all of the Company’s unvested stock options awarded to officers and employees under its 1992, 1994, 1997 and 1999 Stock Option Plans, all of which had an exercise price greater than $5.05, the closing price of the Company’s common stock on the American Stock Exchange on January 31, 2005. As a result of the acceleration, options to acquire approximately 1.6 million shares (with exercise prices ranging from $5.47 to $10.76), of the Company’s common stock, which otherwise would have vested from time to time over the next 48 months, became immediately exercisable.

The Board’s decision to accelerate the vesting of these options was in response to a review of the Company’s long term incentive compensation programs in light of changes in market practices and recently issued changes in accounting rules resulting from the issuance by the Financial Accounting Standard Board of Statement of Financial Accounting Standard No. 123 (revised 2004) (“FASB No. 123R”), “Share Based Payment,” which the Company is required to implement effective at the beginning of its first quarter in 2006. FASB No. 123R requires that all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair values beginning with the first annual period beginning after June 15, 2005. Management believes that accelerating the vesting of these options prior to the adoption of FASB No. 123R will result in the Company not being required to recognize compensation expense in 2006 in the amount of $362 (after-tax) or in subsequent years through 2008 of $102, (after tax).

On January 28, 2003, the Board of Directors passed a resolution to award each non-employee director of the Company up to a maximum of 15,000 shares of the Company’s common stock as compensation. Each non-employee director was awarded 5,000 shares on January 31, 2003, 2004 and 2005, which vested immediately. All shares awarded are restricted securities within the meaning of Rule 144 promulgated under the Securities Act of 1933, and may not be sold or transferred by the non-employee director until four years from the date of issue. During the first quarter of 2003, 2004 and 2005 the Company expensed the fair value of the 30,000 shares awarded to its non-employee directors on January 2003, 2004 and 2005 and such amount is included in Selling, General and Administrative expense in the consolidated Statements of Income. The total charges were $164, $206, and $152 thousand, respectively.

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Note 4: Comprehensive Income

Comprehensive income includes net income and other comprehensive income (loss) which refers to those revenues, expenses, gains and losses which are excluded from net income. Other comprehensive income includes unrealized gains and losses on marketable securities classified as available-for-sale and the effects of foreign currency translation adjustments.

	Three Month Period Ended
(in thousands)	March 31, 2005			March 31, 2004
Net Income	$	2,376		$	3,081
Other comprehensive income:
Unrealized holding gains (losses) on marketable securities arising during period		1			(11	)
Less: reclassification adjustment for (gains) losses included in net income		5			1
Net unrealized gain (loss) on securities		6			(10	)
Foreign currency translation		(166	)		201
Total comprehensive income	$	2,216		$	3,272

Note 5: Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale securities by major security type and class of security at March 31, 2005 and December 31, 2004, were as follows:

(in thousands)	Amortized Cost		Gross Unrealized Holding Gain		Gross Unrealized Holding Losses			Fair Value
At March 31, 2005
Bank certificates of deposit	$	491	$	0	$	(2	)	$	489
Government agencies		0		0		0			0
Government bonds & notes		5,690		0		0			5,690
Corporate debt securities		0		0		0			0
Total	$	6,181	$	0	$	(2	)	$	6,179
At December 31, 2004
Bank certificates of deposit	$	394	$	0	$	(2	)	$	392
Government agencies		0		0		0			0
Government bonds & notes		5,191		0		(8	)		5,183
Corporate debt securities		1,313		0		(2	)		1,311
Total	$	6,898	$	0	$	(12	)	$	6,886

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Maturities of debt securities classified as available-for-sale were as follows at March 31, 2005 (maturities of mortgage-backed securities and collateralized mortgage obligations have been presented based upon estimated cash flows, assuming no change in the current interest rate environment):

(in thousands)	Amortized Cost		Fair Value
Due within one year	$	3,491	$	3,489
Due after one year through five years		2,690		2,690
	$	6,181	$	6,179

Proceeds from the sale of investment securities available-for-sale were $1.8 million in the three months ended Match 31, 2005 and $5.7 million for the year ended December 31, 2004. Gross realized gains, which were included in income, in the three months ended March 31, 2005 and 2004 were $0 and $13 thousand respectively, and gross realized losses, which were included in income, in the three months ended March 31, 2005 and 2004 were $9 thousand and $15 thousand respectively.

Note 6: Capital Stock

The net tax benefit derived from the exercise of stock options was $ 0.03 million and $0.1 million for the three months ended March 31, 2005 and 2004, respectively. Options exercised for the three months ended March 31, 2005 and 2004 totaled 19,400 shares and 41,200 shares, respectively, all of which were issued from treasury stock.

On May 30, 2000, the Board of Directors adopted a resolution authorizing the repurchase in any calendar year of up to 2.5 million shares of the Company’s common stock for an aggregate purchase price not to exceed $25 million. The Company did not purchase any treasury shares during the three months ended March 31, 2005 and 2004. The Boards resolution was superseded on April 27, 2005 when the Board of Directors authorized the repurchase of between 1.0 and 1.5 million shares of the Company’s common stock in any calendar year. Shares may be repurchased in open market purchases or through privately negotiated transactions. All share repurchases will be made in compliance with applicable rules and regulations and may be discontinued at any time.

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Note 7: Goodwill and Intangible Assets

All identifiable intangible assets are being amortized over their estimated useful lives, as indicated below. Intangible assets consist of:

(in thousands)	Weighted Average Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Balance
At March 31, 2005
Non-Competition agreements	4.4	$	11,006	$	(8,856	)	$	2,150
Referral base	12.9		37,353		(10,599	)		26,754
Contractor Network	7.3		6,382		(5,109	)		1,273
Trademarks and tradenames	19.2		4,440		(554	)		3,886
		$	59,181	$	(25,118	)	$	34,063
At December 31, 2004
Non-Competition agreements	4.4		11,006		(8,512	)		2,494
Referral base	12.9		37,353		(9,816	)		27,537
Contractor Network	7.3		6,382		(4,978	)		1,404
Trademarks and tradenames	19.2		4,440		(495	)		3,945
		$	59,181	$	(23,801	)	$	35,380

The changes in the carrying amount of goodwill for the three months ended March 31, 2005, including a breakdown by the Company’s two segments, the Health Information Division (“HID”) and the Claims Evaluation Division (“CED”), are reflected below:

(in thousands)	HID			CED		Total
Balance as of December 31, 2004	$	123,589		$	31,913	$	155,502
Acquisitions		5			—		5
Foreign currency translation adjustment		(85	)		—		(85	)
Balance as of March 31, 2005	$	123,509		$	31,913	$	155,422

The aggregate amortization expense for intangible assets for the three months ended March 31, 2005 and 2004, was approximately $1,211 and $1,242 respectively. The estimated intangible amortization expense for the fiscal years ending December 31, 2005 to December 31, 2009 is $5,091, $4,317, $3,394, $2,955 and $2,450 respectively.

Note 8: Commitments and Contingencies

On January 25, 2005 Sylvia Gayed, one of the Company’s examiners in California, filed a lawsuit against the Company in the Superior Court of California, Los Angeles County, alleging violations of California’s wage and hour laws. The complaint alleges that the Company failed to pay overtime wages, provide meal and rest periods and reimbursement for expenses incurred in performing examinations. The plaintiff is attempting to have the

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lawsuit certified as a class action on behalf of other examiners who perform similar work for the Company in California. We currently employ 441 examiners in California and have employed in excess of 1,200 examiners in California over the past 48 months. The Company believes that it has properly paid its California examiners for overtime worked and intends to provide a vigorous defense to the litigation. However, we cannot predict the outcome of the lawsuit.

The Company is aware of allegations that an independent examiner, who billed work through an independent contractor, which in turn billed work through the Company, assaulted certain insurance applicants in the course of conducting examinations. The examiner did not work for the Company nor was the Company aware that the examiner was performing examinations. The Company has agreed to reimburse one of its insurance company clients, which it billed for examinations performed by this examiner, for certain legal, consulting and other costs incurred by the client, as well as an apportionment of any liability that may stem from examinations performed by the independent examiner. The related costs and estimated liability were accrued in 2003 and increased in the third quarter of 2004. To date, the Company and its client have settled with four claimants and no additional claims are pending. The Company expects that the outcome of this matter will not have a material effect on the Company’s consolidated financial position or liquidity.

The Company is a party to a number of 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.

Effective May 23, 2003, the Company entered into an employment agreement with James M. McNamee, the Company’s President and Chief Executive Officer. The employment agreement was filed as Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2003.

The Company has employment retention contracts with certain executive officers of the Company for a two-year period from the date a change in control occurs as further defined in the contracts.

Note 9: Operating Segments

The Company has two reportable operating segments: the Health Information Division (HID) and the Claims Evaluation Division (CED). The HID segment provides a full range of paramedical and underwriting services to the life insurance industry in the U.S. and the United Kingdom. The CED segment provides independent medical examinations (IME) and case-management services primarily for property and casualty insurers and claims reviewers.

The segments’ accounting policies are the same as those described in the summary of significant accounting policies discussed in the Company’s 2004 annual report on Form 10-K except that interest expense and non-operating income and expenses are not allocated to the individual operating segment when determining segment profit or loss.

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Each of the Company’s subsidiaries operates in only one of our two operating segments. The total assets of each segment are comprised of the assets of the subsidiaries operating in that segment. Corporate related assets are included in the Health Information Division.

A summary of segment information as of and for the three month periods ended March 31, 2005 and 2004 is presented below (in thousands).

	As of and for the Three months ended March 31, 2005						As of and for the Three months ended March 31, 2004
	HID		CED		Total		HID		CED		Total
Revenue	$	71,924	$	10,581	$	82,505	$	70,272	$	9,721	$	79,993
Operating Income	$	3,469	$	730	$	4,199	$	4,541	$	511	$	5,052
Total Assets	$	232,488	$	43,197	$	275,685	$	230,846	$	26,690	$	257,536
Depreciation/Amortization	$	1,525	$	653	$	2,178	$	1,444	$	490	$	1,934

Note 10: Acquisitions and Dispositions

During the first quarter of 2005, the Company’s Heritage Labs subsidiary purchased specific inventory, fixed assets and a lab process specific to hemoglobin testing from Matria Women’s and Children’s Healthcare Inc.

The total purchase price of this transaction was $32 thousand. The purchase price was allocated to inventory and fixed assets.

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Note 11: Recently Issued Accounting Standards

In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). This interpretation states that the term “conditional asset retirement obligation” as used in paragraph A23 of SFAS No 143 refers to a legal obligation to perform an asset retirement in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement obligation is unconditional even though uncertainty exists about the timing and/or method of settlement. The effective date for adopting this interpretation is no later than the end of fiscal years ending after December 15, 2005. The Company is currently in the process of determining the impact of FIN 47, if any, on its financial condition, results of operations and cash flows.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS No. 123 no longer will be an alternative to financial statement recognition. As a result of a rule amendment adopted by the SEC in April 2005, the Company is required to implement SFAS No. 123R at the beginning of its 2006 fiscal year. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive option, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the retroactive method would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company is evaluating the requirements of SFAS No. 123R and the expected effect on the Company including, among other items, reviewing compensation strategies related to stock-based awards, selecting an option pricing model and determining the transition method.

In December 2004, the FASB issued FASB Staff Position 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (FSP 109-2), in response to the American Jobs Creation Act of 2004 which was signed into law in October 2004 and which provides for a special one-time tax deduction of 85% of certain foreign earnings that are repatriated (as defined). Based on the Company’s decision to reinvest rather than repatriate the unremitted foreign earnings of the current year and prior years, the application of FSP 109-2 did not affect income tax expense in the period of enactment or any related disclosures.

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Note 12: Long-Term Debt

On October 29, 1999, the Company entered into a $100 million Amended and Restated Revolving Credit and Term Loan Agreement with three banks. This senior credit facility consists of a $65 million six-year term loan and a $35 million three-year revolving loan, both unsecured. During 2001, the three-year revolving loan expiration date was extended for one year to October 31, 2003. During 2003, the revolving loan expiration date was extended for three years to October 31, 2006. There are no borrowings outstanding against the revolving loan at March 31, 2005. There are no additional borrowings available under the original $65 million term loan due to previous borrowings which have been repaid. As of March 31, 2005, $1.0 million is outstanding against the term loan. A principal payment of $1.0 million is due to be repaid on January 31, 2006. The Company has not borrowed under the $35 million revolving loan.

Both the term loan and the revolving loan bear interest at either the prime rate minus ½% or LIBOR plus ¾% to 1¾%, depending on the ratio of our consolidated funded debt, as defined, to earnings before interest, taxes, depreciation and amortization, or “EBITDA.” As of March 31, 2005, interest was payable at an effective average annual interest rate of 3.41%. Either loan can be prepaid without penalty at any time. Commitment fees of up to 0.3% of the unused revolving loan are charged. The agreement contains the following financial covenants:

• dividends are limited to 50% of the Company’s average quarterly net income;

• the Company’s Consolidated Fixed Charge Coverage Ratio must be no less than 1.50 to 1.00, measured on a trailing four quarter basis;

• the Company’s Consolidated Funded Debt to EBITDA Ratio must not at any time exceed 2.75 to 1.00 measured on a trailing four quarter basis; and

• the Company is not permitted to purchase treasury stock for an aggregate purchase in excess of $25 million for the period from October 30, 2003 to October 31, 2006.

As of March 31, 2005, the Company was in compliance with all financial covenants.

Note 13: Restructuring

During the first quarter of 2005, the Company recorded a pretax restructuring charge of approximately $1.0 million ($0.6 million after tax). During the first quarter of 2005, the Company paid $0.5 million in connection with the restructuring.

The charge related to certain employee terminations and branch office closures that occurred in the first quarter of 2005. The Company is likely to incur additional charges of this type in subsequent quarters in 2005.

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Note 14: Related Party Transaction

During the first quarter of 2005, we paid approximately $47 thousand to Douglas Consulting, a United Kingdom-based IT company 100% owned by John L. Spenser, an Executive Vice President of the Company, for information technology (IT) consulting services provided to our U.K. subsidiary, Medicals Direct Group.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. We intend that such forward-looking statements be subject to the safe harbors created by this legislation.

In some cases, you can identify forward-looking statements by our use of terms such as “anticipate,” “believe,” “continue,” “could,” “should,” “estimate,” “expect,” “forecast,” “intend,” “hope,” “goal,” “may,” “will,” “plan,” “seek” and variations of these words or similar expressions.

Forward-looking statements are based on management’s current assumptions, estimates and expectations of future events. We cannot guarantee that these assumptions are accurate or that the estimates and expectations will be realized. Thus, all of these forward-looking statements are subject to risks and uncertainties. Some of the factors that could cause our actual results to differ materially from those projected in any such forward-looking statements include, without limitation:

• the loss of one or more of our customers and our ability to obtain new customers or additional business from existing customers;

• our susceptibility to trends and other developments affecting the life and other segments of the insurance industry, including changes in the types of services demanded by life insurance carriers in connection with their underwriting of individual life insurance policies, and by property and casualty insurance carriers in connection with their processing of medical claims;

• the intense competition in the industries in which we operate, including the impact of pricing pressures;

• our ability to anticipate, conform and/or modify our business operations to comply with complex state regulations that are subject to frequent changes;

• our ability to enhance and expand our technology and network infrastructure;

• the continued success of our acquisitions and other strategic investments;

• the effectiveness of our sales, advertising and marketing programs;

• our ability to hire and retain key management personnel, and manage our paramedical examiners, physicians and other key personnel; and

• general industry, economic and political conditions.

Our annual report or Form 10-K should be read in conjunction with this quarterly report on Form 10-Q. The “Risk Factors” section of the 10-K addresses some of the important risk factors that are affecting or may affect our business, results of operations and financial condition. These risk factors are not necessarily all of the factors that could

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cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors not identified could also have material adverse effects on our future results.

The forward-looking statements included in this quarterly report are made as of the date of this report. Other than as required by law, we expressly disclaim any intent or obligation to update any forward-looking statements to reflect events or circumstances that subsequently occur or of which we hereafter become aware.

Overview:

Hooper Holmes, Inc. and its subsidiaries currently engage in two principal businesses, which are operated as distinct business divisions:

• Our Health Information Division, which we formerly referred to as the Health Information Business Unit or HIBU, is one of the leading providers of outsourced risk assessment services to the life and health insurance industry. The risk assessment services that we provide include:

• our Portamedic business, which involves the arranging of paramedical and medical examinations (including blood and urine specimen collection), primarily in connection with insurance carriers’ processing and evaluation of the risks associated with underwriting insurance policies (mainly life insurance policies);

• under the Infolink name, tele-underwriting, telephone personal health interviews and medical records retrieval; and

• through our wholly-owned subsidiary, Heritage Labs, the processing of specimens obtained in connection with our paramedical examinations, as well as the specimens provided by third-party health information service providers.

This collective information assists the insurance carriers in evaluating mortality and morbidity risks of the applicants they process.

• Our Claims Evaluation Division, which we formerly referred to as the Diversified Business Unit, provides medical claims services to insurance adjusters for use in processing accident claims, primarily on behalf of property and casualty insurance carriers. The core activity of the businesses comprising the Claims Evaluation Division consists of arranging for independent medical exams (IMEs) for the purpose of determining the nature, source and extent of injury.

Over the course of its 100+ year history, the Company has had diversified businesses, but since the sale of a segment in 1995 our sole business had been that conducted by the Health Information Division. In August 2002, we determined to expand that business geographically by acquiring Medicals Direct Group, a company based in the United Kingdom that provides paramedical examinations (referred to as “screenings” in the U.K.) and underwriting services to the life insurance industry, medical services through company-operated clinics, and medical reports to the legal profession. This acquisition

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afforded us the opportunity to enter the U.K. insurance market and potentially expand into insurance markets throughout Europe, though our preliminary research suggests that the life insurance markets in Europe are in a very early stage of formation relative to what such markets may need by way of medical underwriting services. In 2003, we enhanced our presence in the United Kingdom through Medicals Direct Group’s acquisition of three complimentary companies, which increased its market share in the United Kingdom and enhanced its screenings and general medicals businesses. In 2004, Medicals Direct Group completed two additional acquisitions to expand its services being provided to the legal profession.

The acquisition of Medicals Direct Group represented our first entry into the outsourced underwriting services business, a key component of our growth strategy. In May 2004, we took another step to implement this strategy by acquiring Mid-America Agency Services, Inc. (MAAS), a full-service insurance services organization based in Omaha, Nebraska, that provides risk selection services to the insurance underwriting industry. The purchase price associated with the MAAS acquisition, including acquisition costs, was $9.0 million.

In early 2005, the Company launched the Portamedic Direct initiative intended to aggressively pursue a portion of the market for paramedical examination services which is largely performed by contractor affiliate operations complementary to our company owned branches.

Our Claims Evaluation Division is the result of our implementation of a plan, formulated in 2001 and 2002, to diversify into a second major segment of business, in part to address what our management anticipated would be a continued worsening of the market conditions affecting our Health Information Division. In October 2002, we made the first of four acquisitions in the automobile no-fault and workers’ compensation industries by acquiring D&D Associates. D&D is a New York-based IME company which provides case management services primarily to property and casualty insurance companies in the New York City metropolitan area. The D&D acquisition represented our initial entry into the IME market, and furthered our strategy of acquiring businesses that complemented our existing health information business. In October 2003, we acquired Medimax, Inc., a provider of IMEs and functional capacity evaluations for workers’ compensation, disability and no-fault customers, primarily in Pennsylvania and New Jersey. In January 2004, we acquired Allegiance Health, Inc., a provider of IMEs, peer reviews and closely related services to the automobile no-fault insurance market in New York, and IMEs in connection with worker’s compensation claims in New York. In May 2004, we acquired Michigan Evaluation Group, which provides IMEs in Michigan to workers’ compensation and no-fault auto claims handlers. Together, D&D, Medimax, Allegiance Health and Michigan Evaluation Group constitute our Claims Evaluation Division.

Our management, in evaluating the Company’s operating performance and financial condition, focuses on:

• our development of value added services;

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• our success in retaining and expanding the share of a client’s business we enjoy;

• our success in securing additional clients;

• our ability to deliver a superior service to our customers, at the lowest price;

• certain performance criteria, which includes actual performance to budget;

• maintaining proper expense levels relative to business volume.

Management has focused on the need for a superior service at the lowest possible price since the insurance industry has evolved to one which is very price sensitive. Our business plan requires that costs must be controlled to insure favorable pricing to our customers and to maintain satisfactory margins.

In our Health Information Division (HID) segment, we service most of the major insurance companies in the U.S. and therefore our objective is to expand our share of their books of business, and hence our market share. We expect to successfully execute this plan by continuing to expand our service to the life insurance industry. This includes our most recently acquired capabilities in underwriting services for our clients. Major life insurers have been reducing costs as well, and the size and capacity of underwriting departments is noticeably reduced. Our U.K. subsidiary has been performing outsourced underwriting services for several years as has the recently acquired Mid-America Agency Service (MAAS). One goal for 2005 is to secure more U.S. based outsourced underwriting, and use of our resources at MAAS are a primary driver of this initiative. Combining this initiative with our existing Portamedic and Heritage Labs services should result in applications for life insurance policies being issued more promptly, thereby significantly benefiting our clients.

In our Claims Evaluation Division Unit (CED) segment, our strategy is to expand into key states to form a foundation of strong business units in both automobile no-fault insurance and workers compensation markets. If successful, this will permit the Company to expand organically in the future. With respect to our CED assets, our strategy is to become a unified national provider of outsourced independent medical examination services while retaining the strong local presence of our individual companies. Accordingly, we have adopted the approach where most, but not all, CED functions will be centralized. Specifically, the immediate plan objectives are to:

• substantially expand our present panel of doctors so as to be able to provide a more extensive selection of IME providers to our clients in all major markets. We intend to leverage Hooper Holmes’ resources by creating a centrally managed doctor recruitment function.

• complete and take delivery of our enhanced CED IT system. The system is designed in four component pieces, which will be delivered in phases, through the first half of 2005. This system will centralize the division’s financial functions and provide a unified operational platform.

• complete our reorganization of the sales teams at our CED companies so that we can best accommodate national, as well as local and regional, sales initiatives. To date, we have appointed a national sales manager for the division and identified certain individuals with division-wide sales responsibilities. We plan to continue our review of the responsibilities and duties of all division sales staff, and to complete this reorganization by the beginning of 2005.

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• complete the centralization of our medical provider credentialing function at the CED division level. By centralizing such function, we plan to benefit from the economies of scale of providing such services to all CED companies in conjunction with providing similar services to other departments of Hooper Holmes.

We have the resources in place to achieve these objectives and we have recently committed capital spending to accelerate the process.

Results of Operations

Three months ended March 31, 2005 compared to three months ended March 31, 2004.

The following provides a summary of the results of our operations during the three months ended March 31, 2005 and 2004 and a discussion of these results follows.

• Mid-America Agency Services (MAAS), our outsourced underwriting business (acquired on May 1, 2004) added $4.5 million in revenues;

• Medicals Direct, our UK subsidiary, increased its revenues by 12% to $10.6 million as a result of aggressive expansion efforts and select small acquisitions made in 2004;

• Heritage Labs, generated revenue growth of 14% to $4.8 million;

• Infolink, generated revenue growth of 6% to approximately $7.0 million

• Portamedic revenues decreased to $45.0 million, compared to $50.0 million in the same period of the prior year;

• Revenues for the Claims Evaluation Division (CED) increased approximately 9% to $10.6 million compared to the same period of the prior year, primarily as a result of the acquisition of Michigan Evaluation Group on May 1, 2004.

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The table below sets forth certain of our operating data expressed as a percentage of our revenues for the periods indicated:

	Three Months Ended March 31
(In thousands)	2005					2004
Revenue	$	82,505		100.0	%	$	79,993		100.0	%
Cost of Operations		58,846		71.3			57,148		71.5
Gross profit		23,659		28.7			22,845		28.5
Selling, general & Administrative expenses		19,460		23.6			17,793		22.2
Operating income		4,199		5.1			5,052		6.3
Interest expense		(180	)	(.3	)		(148	)	(.1	)
Interest income		47		.1			105		.1
Other expense, net		(95	)	(.1	)		(123	)	(.1	)
Income before income taxes		3,971		4.8			4,886		6.2
Income taxes		1,595		1.9			1,805		2.3
Net income	$	2,376		2.9	%	$	3,081		3.9	%

Analysis of Comparative Operating Results

Revenues

Our consolidated revenues for the three months ended March 31, 2005 totaled $82.5 million, an increase of $2.5 million or 3.1% compared to the corresponding period of 2004. Each of the Company’s two business segments contributed to the increases and are discussed below.

Health Information Division. Revenues for the Health Information Division for the three months ended March 31, 2005, were $71.9 million, compared to $70.3 million for the three months ended March 31, 2004, an increase of $1.6 million or 2.3%.

Portamedic. Revenues of the Portamedic business were down approximately $4.9 million ($45.0 million vs. $49.9 million) in the three months ended March 31, 2005 compared to the corresponding period of the prior year.

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The decline reflects the continuing decline in life insurance application activity in the United States, based on data available from The Medical Information Bureau Group Inc. (MIB), which indicates application activity is down 2.3% for the three months ended March 2005 compared to three months ended March 31, 2004. The number of paramedical examinations performed in the first quarter 2005 was approximately 640,000 units, compared to approximately 666,000 units in the first quarter of 2004, a decline of 26,000 units, or 3.9%. Management is aware of the loss of two customers during 2004 (representing quarter over quarter revenues of $.6 million). Management determined not to compete for these customers’ business at the price points being offered by our competitors.

In addition to the decline in the number of paramedical examination units, our average revenue per examination in the first quarter of 2005 declined 5.9% to $73.67, compared to $78.25 for the first quarter of 2004. The decrease is reflective of the greater discounting of prices in the division’s risk assessment services market in response to pressure from the insurance industry and competitive pressure, which we believe is a continuing trend in the paramedical industry, in which price has become the primary driver in insurance companies’ selection process of outsourced underwriting services.

Infolink. The decline in Portamedic revenues was partially offset by an increase in Infolink revenues in the first quarter of 2005 of $0.4 million, from $6.6 million in the first quarter of 2004 to $7.0 million in the first quarter of 2005. The number of Infolink reports in the first quarter of 2005 increased by 18.3% to 155,000 units, compared to 131,000 units in the first quarter of 2004. Our average revenue per Infolink unit decreased 10.6% to $45.15 for the first quarter of 2005 compared to $50.48 for the first quarter of 2004. Management attributes the growth in Infolink revenues to the success of its centralized call center located in Kansas City, Kansas.

During 2004, we were awarded several contracts to handle certain clients’ tele-interviews, and in the first quarter of 2005 we entered into agreements for Infolink services with additional clients. Our management believes that by securing a carrier’s Infolink business we may be able to secure its paramedical and attending physician statement (APS) business, as well.

Our Internet driven business (i.e. units received via the Internet) remains an important part of our overall business. The Internet units were flat in the first quarter of 2005 compared with the first quarter of 2004 at 170,000 units. However, internet units in the first quarter 2005, were up 8% over the fourth quarter of 2004. This portion of our business is largely a sub-set of the Portamedic business.

Medicals Direct Group. Medicals Direct Group’s revenue increase $1.1 million to $10.6 million for the first quarter of 2005 compared to $9.5 million for the first quarter of 2004. The increase in 2005 was attributable to a number of factors, including:

• the addition of several new insurance company clients in 2004 for Medicals Direct Group’s underwriting services. Management believes that the high quality of its outsourced underwriting services continues to fuel the growth in Medicals Direct Group’s outsourced underwriting business.

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• continued growth in the number of screenings, reflecting the life insurance application activity and our increased market share in the United Kingdom.

• Growth, organically and through a 2004 acquisition in Medicals Direct Group’s business with law firms (referred to as Medico-Legal).

• An increase in the Pound Sterling/U.S. dollar exchange rate.

Other Services. The “Other Services” component of our Health Information Division includes Mid-America Agency Services, Inc. (MAAS) and Heritage Labs business. These businesses generated revenues of $9.3 million in the first quarter of 2005, an increase of $5.1 million compared to the first quarter of 2004. The primary reason for the increase was the May 2004 acquisition of MAAS, which contributed revenues of $4.5 million in the first quarter of 2005. MAAS, like Medicals Direct Group, performs outsourced underwriting services to the life insurance industry. In 2005, we hope to leverage MAAS’s industry expertise to attract new customers and grow this business.

Heritage Labs also contributed to the revenue growth. Heritage Labs tested an increased number of specimens in the first quarter of 2005, 221,000 compared to 206,000 in the first quarter of 2004. The average price per specimen tested increased to $14.12, an increase of 5%. Management attributes the increase in specimens tested in the quarter to Heritage Lab’s strategy to attract customers through offering attractive prices for short periods of time in order to attract new customers.

Claims Evaluation Division. Our Claims Evaluation Division’s revenues in the first quarter of 2005 were $10.6 million, an increase of 8.9% compared to the $9.7 million in revenues for the corresponding period in 2004.

The increase in the Claims Evaluation Division’s revenues in the first quarter of 2005 was primarily attributable to the revenue contributions of $1.4 million from Michigan Evaluation Group, which was acquired in 2004, and the revenue growth of Medimax, Inc. of $0.3 million.

Offsetting the overall increase in the Claims Evaluation Division’s growth in revenues was a decline in the first quarter of 2005 revenues of Allegiance Health, Inc. and D&D Associates of $0.7 million. D&D Associates and Allegiance Health operate primarily in the State of New York. The decline in its revenues was attributable to several factors, including:

• A decline in automobile claims activity in New York, which management believes is attributable to more conservative automobile insurance underwriting standards;

• The continuing effects of regulatory changes requiring claimants and medical practitioners to notify insurers of potential no-fault auto claims on a more timely basis, which has resulted in a decline in the number of claims that may be considered for an IME or peer review;

• Increased enforcement of insurance fraud laws by the New York State Insurance Fraud Bureau and special investigative units of insurance companies, which reduces such companies’ need for additional claims evaluation services; and

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• Increased competition from other service providers, which has apparently led insurers to more evenly distribute claims among vendors.

Recognizing that the above factors have created structural changes in the New York market, the Claims Evaluation Division intends to take a number of steps to address those changes, including: more aggressively selling its services to claims handlers, with the focus being on the high quality of the services we provide; expanding organically into new service areas by leveraging the division’s infrastructure and experienced staff; utilizing the division’s updated web-based platform, which will allow for higher quality and more timely services; and considering acquisitions in new markets to further the division’s strategy for national growth.

In addition, the Claims Evaluation Division experienced a reduction in the amount of business from one customer in 2004 following the customer’s decision to lessen the concentration of its claims evaluation services being provided by the division.

Cost of Operations

Our total cost of operations for the three months ended March 31, 2005 was $58.8 million compared to $57.1 million for the three months ended March 31, 2004. The table below presents cost of operations as a percentage of segment revenues for the three months ended March 31, 2005 and 2004.

	For the three months Ended March 31
(In millions)	2005		As % of Segment Revenues		2004		As % of Segment Revenues
HID
Portamedic/Infolink	$	38.1	73.3	%	$	40.7	72.0	%
Medicals Direct		8.0	75.7			7.1	74.9
Other Services		5.3	56.9			2.5	59.6
Total HID		51.4	71.5			50.3	71.7
CED		7.4	69.8			6.8	69.8
Total	$	58.8	71.3	%	$	57.1	71.4	%

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Health Information Division. Cost of operation for the Health Information Division was $51.4 million for the three months ended March 31, 2005, compared to $50.3 million for the three months ended March 31, 2004, and as a percentage of revenues totaled 71.5% and 71.7% for the three months ended March 31, 2005 and 2004, respectively. The increase in the amount of the HID’s cost of operations reflected the higher revenue levels for the Medicals Direct Group and Heritage Labs, and the May 2004 acquisition of MAAS. Portamedic cost of operations decline by $2.6 million due to lower revenue levels.

The relatively small decrease in cost of operations as a percentage of revenues is due to the MAAS acquisition, which has lower operating costs than our traditional HID business, and continued efficiencies at Heritage Labs. These efficiencies are reduced laboratory kit costs, increased yields for certain reformulating agents, improved efficiency of acquired testing equipment and more effective utilization of employee production runs. The decreases were partially offset by the effect of the increased revenues of Medicals Direct Group Medico Legal businesses which historically have had higher direct costs and operating expenses. In addition, Infolink has a lower gross margin than that of Portamedic.

Claims Evaluation Division. Cost of operations for the Claims Evaluation Division totaled $7.4 million for the three months ended March 31, 2005 and increase of $0.6 million (8.9%) compared to the corresponding period of the prior year. The increase in cost of sales in the first quarter of 2005 is primarily due to the increase in revenues resulting from the May 2004 acquistion of Michigan Evaluation Group, Inc. and an increase in revenue from Medimax, Inc. Partially offsetting these increases was the lower cost of operations associated with D&D Associates and Allegiance Health Inc., due to their lower revenue levels in the first quarter of 2005 compared to the first quarter of 2004.

Selling, General and Administrative Expenses

As reflected in the table below, selling, general and administrative expenses (SG&A) for the first quarter of 2005 totaled $19.5 million, compared to $17.8 million in the prior period, an increase of $1.7 million (9.4%). As a percentage of our revenues, SG&A amounted to 23.6% in the first quarter of 2005, compared to 22.2% in the first quarter of 2004.

	For the Three Months ended March 31
(in millions)	2005		2004	Change 2005 vs. 2004
HID	$	17.0	15.4	$	1.6
CED		2.5	2.4		.1
Total	$	19.5	17.8	$	1.7

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Health Information Division. The Health Information Division’s SG&A (which includes corporate overhead) for the three months ended March 31, 2005, amounted to $17.0 million, an increase of $1.6 million (10.6%) compared to the prior period. As a percentage of the division’s revenues, SG&A represented 23.6% for the first quarter of 2005 compared to 21.9% for the first quarter of 2004.

The increase in the Health information Division’s SG&A expenses in the first quarter of 2005 compared to the first quarter of 2004 was primarily attributable to the following:

• costs associated with a restructuring charge, consisting of severance payments and closed office lease costs, approximately $1.0 million; and

• expenses associated with the acquisitions of MAAS in the second quarter of 2004, approximately $0.7 million.

Claims Evaluation Division. The Claims Evaluation Division’s SG&A for the first quarter of 2005 totaled $2.5 million compared to $2.4 million in the corresponding period of the prior year. As a percentage of revenues, SG&A represented 23.3% and 24.9% for the first quarters of 2005 and 2004, respectively. The increase in SG&A was attributable to the acquisition of MEG in May 2004 and was offset by reductions, primarily in Allegiance Health, Inc. As revenues within Allegiance Health, Inc. declined, the Division instituted SG&A reduction programs.

The Claims Evaluation Division has initiated implementation of several project plans to streamline and work towards becoming a unified national provider of outsourced independent medical exams. Specifically, the plans contemplate:

• development and delivery of a unified Claims Evaluation Division IT and financial management system. This system is expected to provide the division with a unified system to better manage and monitor its activities. The system is scheduled for delivery during the second quarter of 2005.

• creation of a unified medical provider credentialing function at the division level. The division has teamed up with the Company’s Health Information Division to establish a unified credentialing function in the Company’s corporate office.

Each of these two components of the plans are expected to result in SG&A savings.

Operating Income

Our consolidated operating income in the first quarter of 2005 of $4.2 million reflected a decline of 16.9% compared to the corresponding period of the prior year of $5.1 million. As a percentage of our total consolidated revenues, total operating income represented 5.1% and 6.3% of such revenues for the first quarter of 2005 and 2004, respectively.

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Health Information Division. The Health Information Division’s operating income for the first quarter of 2005 decreased to $3.5 million, a decline of $1.0 million (23.6%) compared to the corresponding period of the prior year. As a percentage of the division’s revenues, the division’s operating income represented 4.8% of such revenues for the first quarter of 2005 compared to 6.5% for the first quarter of 2004.

Claims Evaluation Division. The Claims Evaluation Division’s operating income for the first quarter of 2005 increased to $0.7 million from $0.5 million, an increase of 42.7%. As a percentage of the division’s revenues, the division’s operating income represented 6.9% for the first quarter of 2005, compared to 5.3% for the first quarter of 2004.

Interest Income

Interest income in the first quarter of 2005 was $0.05 million, compared to $0.1 million for the first quarter of 2004. The reduced interest income was attributable to lower levels of invested funds, reflecting the cash used to fund acquisitions in the first quarter of 2004 and lower interest rates.

Interest Expense

Interest expense in the first quarter of 2005 increased to $0.2 million, compared to $0.1 million in the first quarter of 2004. The increase was due to interest on the factoring of Medicals Direct Group’s accounts receivable, which have increased both from acquisitions and organic growth, and higher interest rates.

Income Taxes

The effective tax rate was 40.1% for the first quarter of 2005, compared to 36.6% for the first quarter of 2004. The increase in the effective rate was due to higher state income tax rates and the impact of book/tax differences on lower taxable income.

Net Income

As a result of the foregoing, net income for the first quarter of 2005 was $2.4 million or $.04 per diluted share, compared to $3.1 million or $.05 per diluted share for the first quarter of 2004.

Liquidity and Financial Resources

The Company’s primary sources of cash are internally generated funds, cash equivalents, marketable securities and the Company’s $35 million revolving credit facility. At March 31, 2005 and December 31, 2004, working capital was $39.8 million and $38.3 million, respectively. Our current ratio as of March 31, 2005 and December 31, 2004 was 2.2 to 1, and 2.1 to 1, respectively. Management believes that the combination of cash, cash equivalents, marketable securities and available borrowings under our revolving credit facility, along with anticipated cash flows from operations, should provide sufficient capital resources to satisfy both our short-term and foreseeable long-term needs.

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Cash Flows Used In Operating Activities.

For the three months ended March 31, 2005, net cash used in operating activities was $2.8 million. The significant sources were net income of $2.4 million adjusted for the non-cash expenses of $2.2 million for depreciation and amortization. These items were offset by an increase in accounts receivable of $7.1 million. Consolidated days sales outstanding, measured on a rolling 90-day basis, was 53.1 days at March 31, 2005, 44.6 days at December 31, 2004 and 46.3 days at March 31, 2004.

The increase in accounts receivable at March 31, 2005 compared to December 31, 2004, was the result of:

• increased revenue in March 2005 over December 2004 in Portamedic and Infolink, Heritage Labs Inc. and MAAS, which has an immediate impact on the accounts receivable balance at March 31, 2005.

• new contract terms with certain clients that allow for payment terms beyond the Company standard of net 30 days.

• temporary delays from certain customers in processing February payments that are normally received by the end of March.

Cash Flows Used in Investing Activities.

During the first quarter of 2005, the Company made required performance related payments relative to the Medimax, Inc. acquisition of $0.9 million.

Required payments of additional purchase price related to the 2002 acquisition of D&D Associates, the 2003 acquisitions of Heritage Labs and Medimax, Inc., and the 2004 acquisitions of Allegiance Health, Inc., and Michigan Evaluation Group, Inc., of $4.5 million and $3.5 million in 2005 and 2006, respectively, are expected to be funded from cash from operations. Relative to the Medimax, Inc. and Michigan Evaluation Group, Inc. acquisitions, if certain acquisition performance criteria are met, additional contingent consideration could be paid in 2005 totaling $1.0 million and in 2006 totaling $0.3 million. All payments are expected to be funded from cash from operations.

During the first quarter of 2005, capital expenditures totaled approximately $0.7 million and were funded from cash from operations.

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Cash Flows Used in Financing Activities

On October 29, 1999, the Company entered into a $100 million Amended and Restated Revolving Credit and Term Loan Agreement with three banks. This senior credit facility consists of a $65 million six-year term loan and a $35 million three-year revolving loan, both unsecured. During 2001, the three-year revolving loan expiration date was extended for one year to October 31, 2003. During 2003, the revolving loan expiration date was extended for three years to October 31, 2006. There were no borrowings outstanding against the revolving loan at March 31, 2005. There are no additional borrowings available under the original $65 million term loan due to previous borrowings, which have been repaid. As of March 31, 2005, $1.0 million is outstanding under the term loan. A principal payment of $1.0 million is due to be repaid on January 31, 2006. The Company has not borrowed under the $35 million revolving loan.

Both the term loan and the revolving loan bear interest at either the prime rate minus  ¹/2% or LIBOR plus  ³/4% to 1 ³/4%, depending on the ratio of our consolidated funded debt, as defined, to earnings before interest, taxes, depreciation and amortization, or “EBITDA.” As of March 31, 2005 interest was payable at an effective average annual interest rate of 3.41%. Either loan can be prepaid without penalty at any time. Commitment fees of up to 0.3% of the unused revolving loan are charged. The agreement contains the following financial covenants:

• dividends are limited to 50% of the Company’s average quarterly net income;

• the Company’s Consolidated Fixed Charge Coverage Ratio must be no less than 1.50 to 1.00, measured on a trailing four quarter basis;

• the Company’s Consolidated Funded Debt to EBITDA Ratio must not at any time exceed 2.75 to 1.00, measured on a trailing four quarter basis;

• the Company is not permitted to purchase treasury stock for an aggregate purchase price in excess of $25 million for the period October 30, 2003 to October 31, 2006.

As of March 31, 2005, the Company is in compliance with all financial covenants.

On May 30, 2000, the Board of Directors adopted a resolution authorizing the repurchase in any calendar year of up to 2.5 million shares of the Company’s common stock for an aggregate purchase price not to exceed $25 million. The Company did not purchase any treasury shares during the three months ended March 31, 2005 and 2004. The Boards resolution was superseded on April 27, 2005 when the Board of Directors authorized the repurchase of between 1.0 and 1.5 million shares of the Company’s common stock in any calendar year. Shares may be repurchased in open market purchases or through privately negotiated transactions. All share repurchases will be made in compliance with applicable rules and regulations and may be discontinued at any time.

Quarterly dividends paid in the first quarter of 2005 were $0.015 per share and totaled $1.0 million.

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On January 28, 2003, the Board of Directors passed a resolution to award each non-employee director of the Company up to a maximum of 15,000 shares of the Company’s common stock as compensation. Each non-employee director was awarded 5,000 shares on January 31, 2003 and 2004 and 2005, which vested immediately. All shares awarded are restricted securities within the meaning of Rule 144 promulgated under the Securities Act of 1933, and may not be sold or transferred by the non-employee director until four years from the date of issue. During the first quarters of 2003, 2004 and 2005 the Company expensed the fair value of the 30,000 shares awarded to its non-employee directors on January 2003, 2004 and 2005 and such amount is included in Selling, General and Administrative expenses in the consolidated Statements of Income. The total charges were $164, $206, and $152 thousand, respectively.

Contractual Obligations

Capital expenditures during 2005 are expected to increase by approximately $2.6 million over 2004 for the upgrade of the Company’s financial software system, development of case management software and hardware and software for the CED’s IT systems development projects. All 2005 capital expenditures are expected to be funded by cash generated from operations.

Inflation has not had, nor is it expected to have, a material impact on our consolidated financial results. Quarterly dividends paid in February were $0.015 per share and totaled $1.0 million. At its April 27, 2005 Board Meeting, the Company declared a second quarter dividend of $0.015 per share.

Critical Accounting Policies:

There were no changes to the Company’s critical accounting policies during the three months ended March 31, 2005. Such policies are described in the Company’s 2004 annual report on Form 10-K.

Recently Issued Accounting Standards:

In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). This interpretation states that the term “conditional asset retirement obligation” as used in paragraph A23 of SFAS No. 143 refers to a legal obligation to perform an asset retirement in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement obligation is unconditional even though uncertainty exists about the timing and/or method of settlement. The effective date for adopting this interpretation is no later than the end of fiscal years ending after December 15, 2005. The Company is currently in the process of determining the impact of FIN 47, if any, on its financial condition, results of operations and cash flows.

29

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), and supercedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS No. 123 no longer will be an alternative to financial statement recognition. As a result of a rule amendment adopted by the SEC in April 2005, the Company is required to implement SFAS No. 123R at the beginning of its 2006 fiscal year. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive option, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS No. 123R, while the retroactive method would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company is evaluating the requirements of SFAS No. 123R and the expected effect on the Company including, among other items, reviewing compensation strategies related to stock-based awards, selecting an option pricing model and determining the transition method.

In December 2004, the FASB issued FASB Staff Position 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (FSP 109-2), in response to the American Jobs Creation Act of 2004 which was signed into law in October 2004 and which provides for a special one-time tax deduction of 85% of certain foreign earnings that are repatriated (as defined). Based on the Company’s decision to reinvest rather than repatriate the unremitted foreign earnings of the current year and prior years, the application of FSP 109-2 did not affect income tax expense in the period of enactment or any related disclosures.

30

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment portfolio. The Company invests in securities with high quality issuers and, by policy, limits the amount of credit exposure to any one issuer. The Company does not invest in portfolio equity securities or commodities or use financial derivatives for trading purposes. The Company’s debt security portfolio represents funds held temporarily pending use in our business and operations. The Company mitigates this risk by investing in only high credit quality securities that it believes to be low risk and by positioning its portfolio to respond to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity.

The table below presents the principal amounts and related weighted average interest rates by year of maturity for our investment portfolio as of March 31, 2005.

	2005			2006			2007		2008		2010 & Thereafter			Total			Estimated Fair Value
(in thousands)
Fixed Rate Investments	$	3,394		$	97		$	0	$	0	$	2,690		$	6,181		$	6,179
Average Interest Rates		2.40	%		2.95	%						2.13	%		2.29	%

The Company is also exposed to interest rate risk primarily through its borrowing activities, which are described in Note 12 to the unaudited interim financial statements included in this quarterly report on Form 10-Q. The Company’s borrowings are under variable rate instruments. Future payments due under borrowings are $62 in 2005 and $1,000 in 2006, at an average interest rate of 3.41%.

We have foreign currency rate exposure to exchange rate fluctuations with respect to the British pound. We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future. We assess our market risk based on changes in foreign currency exchange rates by measuring the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in currency rates.

Based on the Company’s market risk sensitive instruments (including investments and variable rate debt) outstanding at March 31, 2005, the Company has determined that there was no material market risk exposure to the Company’s consolidated financial position, results of operations or cash flows as of such date.

31

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated our disclosure controls and procedures as of March 31, 2005, the end of the period covered by this quarterly report. Disclosure controls and procedures are defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, amended (the “Exchange Act”) to mean controls and procedures that are designed to ensure that information required to be disclosed by an SEC-reporting company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, except as described below, our disclosure controls and procedures were effective as of March 31, 2005.

Although the Company has undertaken to file ownership reports on behalf of the officers and directors of the Company subject to the beneficial ownership requirements of Section 16(a) of the Exchange Act, we determined that, as of March 31, 2005, these reports had not been filed with respect to a large number of option grants, exercises and subsequent sales of shares of the Company’s common stock underlying these options. We also determined that a number of other ownership reports had not been filed timely. The Company did assist in filing a substantial number of reports covering several years on April 13, 2005. While we believe that information regarding the grant and exercises of options to our directors and officers has been reflected in (or incorporated by reference to the proxy statement relating to our annual meeting of shareholders) in each of our annual reports on Form 10-K for the years during which such options were granted or exercised, we had not disclosed the failure to file such Section 16 reports (as we were required to do in accordance with the SEC’s reporting requirements) until disclosure was made in our proxy statement for our annual meeting of shareholders to be held on May 24, 2005. We believe that all such delinquent Section 16 reports have now been filed.

Changes in Internal Control Over Financial Reporting

Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) and is required to evaluate any change in our internal control over financial reporting that occurred during each of our fiscal quarters that has materially affected, or is reasonably likely to material affect, our internal control over financial reporting. We have evaluated the changes in internal control over financial reporting that occurred during the quarter ended March 31, 2005, and have concluded that there have been no changes during such quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

32

Part II – Other Information

Item 1 – Legal Proceedings

On January 25, 2005 Sylvia Gayed, one of the Company’s examiners in California, filed a lawsuit against the Company in the Superior Court of California, Los Angeles County, alleging violations of California’s wage and hour laws. The complaint alleges that the Company failed to pay overtime wages, provide meal and rest periods and reimbursement for expenses incurred in performing examinations. The plaintiff is attempting to have the lawsuit certified as a class action on behalf of other examiners who perform similar work for the Company in California. We currently employ 441 examiners in California and have employed in excess of 1,200 examiners in California over the past 48 months. The Company believes that it has properly paid its California examiners for overtime worked and intends to provide a vigorous defense to the litigation. However, we cannot predict the outcome of the lawsuit.

The Company is aware of allegations that an independent examiner, who billed work through an independent contractor, which in turn billed work through the Company, assaulted certain insurance applicants in the course of conducting examinations. The examiner did not work for the Company nor was the Company aware that the examiner was performing examinations. The Company has agreed to reimburse one of its insurance company clients, which it billed for examinations performed by this examiner, for certain legal, consulting and other costs incurred by the client, as well as an apportionment of any liability that may stem from examinations performed by the independent examiner. The related costs and estimated liability were accrued in 2003 and increased in the third quarter of 2004. To date, the Company and its client have settled with four claimants and no additional claims are pending. The Company expects that the outcome of this matter will not have a material effect on the Company’s consolidated financial position or liquidity.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

Non-Employee Directors Restricted Stock Grant

On January 31, 2005, the Company issued an aggregate of 30,000 shares of its common stock to the non-employee directors serving on its Board as additional compensation for service on the Board, in accordance with a resolution of the Board dated January 28, 2003. The issuance of these shares was in connection with transactions deemed to be exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering.

33

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about purchases made by the Company during the quarter ended March 31, 2005.

Period	Total number of shares purchased	Average price per share	Total number of shares purchased as part of publicly announced plans of programs	Maximum number of shares that may yet be purchased under the plans or programs (a)
January 1 – March 31, 2005	0	—	0
Total	0	—	0	2,500,000

(a) On May 30, 2000, the Board of Directors authorized the repurchase in any calendar year of up to 2,500,000 shares of the Company’s common stock for an aggregate purchase price not to exceed $25 million. The Company did not purchase any treasury shares during the three months ended March 31, 2005.

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Submission of Matters to a Vote of Security Holders

None

Item 5 – Other Information

None

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Item 6 – Exhibits

Exhibit No.	Description of Exhibit
10.1	Agreement and General Release (Alexander Warren)
10.2	Agreement and General Release (Raymond Sinclair)
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.

35

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: May 10, 2005

BY:	/s/ James M. McNamee
	James M. McNamee
	Chairman, President and
	Chief Executive Officer
BY:	/s/ Fred Lash
	Fred Lash
	Senior Vice President
	Chief Financial Officer & Treasurer

36

EX-10.1

EXHIBIT 10.1

AGREEMENT AND GENERAL RELEASE

Hooper Holmes, Inc., (referred to throughout this Agreement as “Employer”), and Alexander Warren, (referred to throughout this Agreement as “Employee”), agree that:

1. Last Day of Employment. Employee’s last day of employment with Employer is March 18, 2005.

2. Consideration. In consideration for signing this Agreement and compliance with the promises made herein, Employer agrees:

a. to pay to Employee twelve (12) months salary in the amount of Two Hundred Thirty-Five Thousand Dollars ($235,000.00), less lawful deductions, within fifteen (15) days after the passage of the revocation period described in paragraph “4”; and

b. to pay to Employee the sum of Nine Thousand Two Hundred Fifty Dollars ($9,250.00) less lawful deductions, within fifteen (15) days after the passage of the aforesaid revocation period, representing the annual amount of income presently attributable to Employee for the use of the automobile presently leased for him by Employer; and

c. if Employee elects to continue medical and/or dental coverage under Employer’s group medical and dental insurance plans in accordance with the continuation requirements of COBRA, the Employer shall reimburse Employee for the cost of said coverage for a period of twelve (12) months beginning on April 1, 2005 and ending on March 31, 2006. Employee acknowledges that Employer cannot make COBRA payments directly to the group medical and dental insurance carriers and that Employer will pay the COBRA amount to Employee on a monthly basis through March 31, 2006. Employee acknowledges that Employer shall withhold taxes and other lawful withholdings from the monthly payments to Employee, so that the net amount received by Employee will be less than the monthly COBRA amount. Employee will be issued a Form W-2 by Employer indicating all withholdings. It shall be the obligation of Employee to promptly notify Employer if and when he has discontinued COBRA coverage or has obtained other medical and/or dental insurance coverage, either directly or through another employer’s group plan, during said twelve (12) month period, in which event Employer’s obligation to Employee for COBRA payments shall cease; and

d. to pay Employee’s SERP life insurance premium for the one-year policy period February 2005 through January 2006 when said premium payment is due; and

e. to pay Employee for all unused vacation days in calendar year 2005.

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3. No Consideration Absent Execution of this Agreement. Employee understands and agrees that Employee would not receive the monies and/or benefits specified in paragraph “2” above, except for Employee’s execution of this Agreement and the fulfillment of the promises contained herein.

4. Revocation. Employee may revoke this Agreement for a period of seven (7) calendar days following the day Employee executes this Agreement. Any revocation within this period must be submitted, in writing, to Robert William Jewett, Senior Vice President and General Counsel and state, “I hereby revoke my acceptance of our Agreement and General Release.” The revocation must be personally delivered to Mr. Jewett or Employer’s designee, or mailed to Mr. Jewett c/o Hooper Holmes, Inc., 170 Mt. Airy Road, Basking Ridge, New Jersey 07920 and postmarked within seven (7) calendar days of execution of this Agreement. This Agreement shall not become effective or enforceable until the revocation period has expired. If the last day of the revocation period is a Saturday, Sunday, or legal holiday in New Jersey, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

5. General Release of Claim. Employee, Employee’s heirs, executors, administrators, fiduciaries, successors and/or assigns, knowingly and voluntarily release and forever discharge, to the full extent permitted by law, Employer, Employer’s past, present and future direct or indirect parent organizations, subsidiaries, divisions, affiliated entities, partners, officers, directors, trustees, administrators, fiduciaries, employment benefit plans and/or pension plans or funds, executors, attorneys, employees, insurers, reinsurers and/or agents and their successors and assigns individually and in their official capacities, and its and their past, present and future direct or indirect parent organizations, subsidiaries, divisions, affiliated entities, partners, officers, directors, trustees, administrators, fiduciaries, employment benefit plans and/or pension plans or funds, executors, attorneys, employees, insurers, reinsurers and/or agents and their successors and assigns, individually and in their official capacities, (collectively referred to herein as “Released Parties” or “Released Party”) jointly and severally, of and from all claims, known or unknown, that Employee has or may have against Released Parties as of the date of execution of this Agreement, including, but not limited to, any alleged violation of:

• The National Labor Relations Act;

• Title VII of the Civil Rights Act;

• Civil Rights Act of 1991

• Sections 1981 through 1988 of Title 42 of the United States Code;

• The Employee Retirement Income Security Act;

• The Fair Credit Reporting Act;

• The Immigration Reform Control Act;

• The Americans with Disabilities Act;

• The Rehabilitation Act;

• The Age Discrimination in Employment Act;

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• The Occupational Safety and Health Act;

• The Family and Medical Leave Act;

• The Equal Pay Act;

• The Fair Labor Standards Act;

• Worker Adjustment and Retraining Notification Act;

• Employee Polygraph Protection Act;

• The New Jersey Law Against Discrimination;

• The New Jersey Family Leave Act;

• The New Jersey State Wage and Hour Law;

• The New Jersey Conscientious Employee Protection Act;

• The New Jersey Equal Pay Law;

• The New Jersey Occupational Safety and Health Law;

• The New Jersey Smokers’ Rights Law;

• The New Jersey Genetic Privacy Act;

• The New Jersey Fair Credit Reporting Act;

• The New Jersey Statutory Provision Regarding Retaliation/Discrimination for Filing A Workers’ Compensation Claim;

• The New Jersey Public Employees’ Occupational Safety and Health Act;

• New Jersey laws regarding Political Activities of Employees, Lie Detector Tests, Jury Duty, Employment Protection, and Discrimination;

• any other federal, state or local civil rights law, whistle-blower or any other local, state or federal law, regulation or ordinance;

• any public policy, contract (oral, written or implied), tort, constitution or common law;

• any claims for vacation, sick or personal leave pay or payment pursuant to any practice, policy, handbook or manual; or

• any allegation for costs, fees, or other expenses including attorneys’ fees.

6. Affirmations. Employee affirms that Employee has not filed, caused to be filed, and presently is not a party to any claim, complaint, or action against Released Parties in any forum or form. Employee further affirms that Employee has been paid and/or has received all leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits to which Employee may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions and/or benefits are due to Employee, except as provided in this Agreement. Employee furthermore affirms that Employee has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act and/or any other federal, state or local leave law, including the New Jersey Family Leave Act. Employee agrees not to seek employment with Released Parties in the future.

7. Confidentiality. To the extent permitted by law, Employee and Employer mutually agree not to disclose any information regarding the existence or substance of this Agreement, except that Employee may disclose the substance of this Agreement to Employee’s spouse, tax advisor, or an attorney with whom Employee chooses to consult regarding Employee’s consideration of this Agreement, each of whom shall likewise agree to

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keep the information confidential. In the event Employee is subject to subpoena, court order or otherwise compelled to testify, appear or provide information regarding Released Parties, within three (3) days of Employee’s receipt of said subpoena, court order, or other notification, Employee will provide written notice, via facsimile and mail, to Robert William Jewett, Senior Vice President and General Counsel, Hooper Holmes, Inc., 170 Mt. Airy Road, Basking Ridge, New Jersey 07920, facsimile number 908-953-6304. This Agreement shall not be filed with any court and shall remain forever confidential except in an action to enforce or for breach of this Agreement. If Employee asserts an action to enforce this Agreement or for breach of this Agreement, Employee shall maintain such confidentiality by whatever means necessary, including, but not limited to, submitting the Agreement to a court under confidential seal.

8. Governing Law and Interpretation. This Agreement shall be governed and conformed in accordance with the laws of the State of New Jersey without regard to its conflict of laws provision. In the event Employee or Employer breaches any provision of this Agreement, Employee and Employer affirm that either may institute an action against the other to specifically enforce any term or terms of this Agreement, in addition to any other legal or equitable relief permitted by law. In the event that any provision of this Agreement is declared illegal or unenforceable by a court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. Moreover, if any such provision determined to be invalid, illegal or unenforceable can be made valid, legal or enforceable by modification thereof, then the party for whose benefit the provision exists, may make such modification as necessary to make the provision valid, legal and enforceable.

9. Non Disparagement. Employee agrees not to defame, disparage or demean Employer in any manner whatsoever and Employer agrees not to defame, disparage or demean Employee in any manner whatsoever.

10. Cooperation. Subject to Employee’s other personal and professional obligations and on reasonable notice and at reasonable times, Employee will cooperate with Employer and its counsel in connection with any investigation, administrative or regulatory proceeding or litigation relating to any matter in which Employee was involved or of which Employee has knowledge as a result of Employee’s employment with Employer and/or any Released Party or Released Parties.

11. Return of Property. Employee agrees that on or before March 18, 2005, to return any and all property, including all copies or duplicates thereof, belonging to Released Parties, including, but not limited to, keys, security cards, equipment, documents, supplies, customer lists and customer information, confidential documents, leased automobile with keys and manuals, and any other property of the Employer in Employee’s possession.

12. Nonadmission of Wrongdoing. Employee agrees that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at anytime for any purpose as an admission by Employer of any liability or unlawful conduct of any kind.

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13. Non-Competition. In exchange for the consideration provided by Employer, as set forth in Paragraph 2 above, Employee agrees that for a period of one (1) year following his last day of employment with Employer, as set forth in Paragraph 1 above, he will not engage in any business in which Employer is currently engaged, in the States of New Jersey or California. Employee is thus prohibited from performing work as an employee, contractor, consultant or advisor, for any company, entity or other organization that provides the same or similar services as Employer. Employee agrees that Employer shall be entitled to injunctive relief, and such other relief as the courts shall grant it, in the event of any breach or threatened breach of this provision by Employee. Employee agrees that in the event that a court finds this provision to be unreasonable in terms of duration or territory, the court may modify this provision as it deems appropriate and reasonable.

14. Amendment. This Agreement may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement.

15. Entire Agreement. This Agreement sets forth the entire agreement between the Employee and Released Parties hereto, and fully supercedes any prior or contemporaneous agreements or understandings between Employee and Released Parties; provided, however, that this Agreement does not supercede or affect any confidentiality, non-disclosure, invention, assignment of proprietary rights, or non-solicitation agreement(s) signed by Employee. The obligations of such agreements remain in full force and effect and Employee expressly acknowledges Employee’s intent to adhere to the promises contained in those agreements. Employee also acknowledges that Employee has not relied on any representation, promises, or agreements of any kind made in connection with the decision to sign this Agreement, except for those set forth in this Agreement.

EMPLOYEE IS HEREBY ADVISED THAT EMPLOYEE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO REVIEW THIS AGREEMENT AND GENERAL RELEASE AND IS HEREBY ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.

HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES AND TO RECEIVE THE SUMS AND BENEFITS IN PARAGRAPH “2” ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EMPLOYEE HAS OR MIGHT HAVE AGAINST RELEASED PARTIES AS OF THE DATE OF THE EXECUTION OF THIS AGREEMENT.

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IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement and General Release as of the date set forth below:

/s/ Alexander Warren

Alexander Warren

Date: March 10, 2005

HOOPER HOLMES, INC.

By:	/s/ John L. Spenser
NAME:	John L. Spenser
TITLE:	Executive Vice President &
	Chief Administrative/ Technology Officer
Date:	March 8, 2005

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EX-10.2

EXHIBIT 10.2

AGREEMENT AND GENERAL RELEASE

Hooper Holmes, Inc., (referred to throughout this Agreement as “Employer”), and Raymond A. Sinclair, (referred to throughout this Agreement as “Employee”), agree that:

1. Last Day of Employment. Employee’s last day of employment with Employer is April 16, 2005.

2. Consideration. In consideration for signing this Agreement and compliance with the promises made herein, Employer agrees:

a. to pay to Employee twelve (12) months salary in the amount of One Hundred Forty-Four Thousand Five Hundred Fifty-One Dollars ($144,551.00), less lawful deductions, within fifteen days after the passage of the revocation period described in paragraph “4” or on April 16, 2005, whichever comes later; and

b. if Employee elects to continue medical and/or dental coverage under Employer’s group medical and dental insurance plans in accordance with the continuation requirements of COBRA, the Employer shall reimburse Employee for the cost of said coverage for a period of eighteen (18) months beginning on May 1, 2005 and ending on October 31, 2006. Employee acknowledges that Employer cannot make COBRA payments directly to the group medical and dental insurance carriers and that Employer will pay the COBRA amount to Employee on a monthly basis through October 31, 2006. Employer shall “gross up” the monthly payments to Employee, so that the amount received by Employee, net of taxes and other withholdings, will equal the monthly COBRA amount. Employee will be issued a Form W-2 by Employer indicating all withholdings. It shall be the obligation of Employee to promptly notify Employer if and when he has discontinued COBRA coverage or has obtained other medical and/or dental insurance coverage, either directly or through another employer’s group plan, during said eighteen (18) month period, in which event Employer’s obligation to Employee for COBRA payments shall cease; and

c. to pay Employee’s SERP life insurance premium for the one-year policy period February 2005 through January 2006 when said premium payment is due; and

d. to pay Employee the amount of Twenty Seven Thousand Seven Hundred Forty-Two Dollars ($27,742.00), such sum being the end of lease buyout value of the vehicle leased by Employer for Employee plus the seven remaining payments under the lease, which sum shall be “grossed up” by Employer so that Employee shall receive $27,742.00 net of taxes and other withholdings. (It being agreed that Employee will surrender the vehicle and the keys and manuals thereto on the last day of his employment) ; and

e. to pay Employee for all unused vacation days in calendar year 2005.

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3. No Consideration Absent Execution of this Agreement. Employee understands and agrees that Employee would not receive the monies and/or benefits specified in paragraph “2” above, except for Employee’s execution of this Agreement and the fulfillment of the promises contained herein.

4. Revocation. Employee may revoke this Agreement for a period of seven (7) calendar days following the day Employee executes this Agreement. Any revocation within this period must be submitted, in writing, to Robert William Jewett, Senior Vice President and General Counsel and state, “I hereby revoke my acceptance of our Agreement and General Release.” The revocation must be personally delivered to Mr. Jewett or Employer’s designee, or mailed to Mr. Jewett c/o Hooper Holmes, Inc., 170 Mt. Airy Road, Basking Ridge, New Jersey 07920 and postmarked within seven (7) calendar days of execution of this Agreement. This Agreement shall not become effective or enforceable until the revocation period has expired. If the last day of the revocation period is a Saturday, Sunday, or legal holiday in New Jersey, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

5. General Release of Claim. Employee, Employee’s heirs, executors, administrators, fiduciaries, successors and/or assigns, knowingly and voluntarily release and forever discharge, to the full extent permitted by law, Employer, Employer’s past, present and future direct or indirect parent organizations, subsidiaries, divisions, affiliated entities, partners, officers, directors, trustees, administrators, fiduciaries, employment benefit plans and/or pension plans or funds, executors, attorneys, employees, insurers, reinsurers and/or agents and their successors and assigns individually and in their official capacities, and its and their past, present and future direct or indirect parent organizations, subsidiaries, divisions, affiliated entities, partners, officers, directors, trustees, administrators, fiduciaries, employment benefit plans and/or pension plans or funds, executors, attorneys, employees, insurers, reinsurers and/or agents and their successors and assigns, individually and in their official capacities, (collectively referred to herein as “Released Parties” or “Released Party”) jointly and severally, of and from all claims, known or unknown, that Employee has or may have against Released Parties as of the date of execution of this Agreement, including, but not limited to, any alleged violation of:

• The National Labor Relations Act;

• Title VII of the Civil Rights Act;

• Civil Rights Act of 1991

• Sections 1981 through 1988 of Title 42 of the United States Code;

• The Employee Retirement Income Security Act;

• The Fair Credit Reporting Act;

• The Immigration Reform Control Act;

• The Americans with Disabilities Act;

• The Rehabilitation Act;

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• The Age Discrimination in Employment Act;

• The Occupational Safety and Health Act;

• The Family and Medical Leave Act;

• The Equal Pay Act;

• The Fair Labor Standards Act;

• Worker Adjustment and Retraining Notification Act;

• Employee Polygraph Protection Act;

• The North Carolina Human Relations Commission Bias Law;

• The North Carolina Equal Employment Practices Act;

• The North Carolina Wage and Hour Laws;

• The North Carolina Retaliatory Employment Discrimination Law and Rule;

• The North Carolina Equal Pay Law;

• The North Carolina Occupational Safety and Health Laws;

• The North Carolina Smokers’ Rights Law;

• The North Carolina Genetic Testing Law;

• The North Carolina AIDS Bias Law and Rules;

• The North Carolina Communicable Disease Law;

• The North Carolina Persons with Disabilities Protection Act;

• The North Carolina Parental Leave for School Involvement Law;

• The North Carolina Apprenticeship Bias Law;

• The North Carolina Rules on Aging; and

• North Carolina statutes regarding Blacklisting of Employees; Job References; Service Letters; Employees’ Right to Inventions; Jury and Witness Duty; Workplace Violence; Domestic Violence Victims’ Leave’ Disaster Service Leave; Business/Occupation Licensing Records; Use of Lawful Products Outside of the Workplace; Background Checks; Workers’ Compensation; Retaliation; Unemployment Compensation Testimony; Retaliation; Whistleblower Protection; Deception Examiner; Licensing; Drug Testing; Military Leave and Re-Employment Rights; Criminal Records; Personnel Files; Medical Records; and Medical Examination Fees..

6. Affirmations. Employee affirms that Employee has not filed, caused to be filed, and presently is not a party to any claim, complaint, or action against Released Parties in any forum or form. Employee further affirms that Employee has been paid and/or has received all leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits to which Employee may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions and/or benefits are due to Employee, except as provided in this Agreement. Employee furthermore affirms that Employee has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act and/or any other federal, state or local leave law. Employee agrees not to seek employment with Released Parties in the future.

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7. Confidentiality. To the extent permitted by law, Employee agrees not to disclose any information regarding the existence or substance of this Agreement, except that Employee may disclose the substance of this Agreement to Employee’s spouse, tax advisor, or an attorney with whom Employee chooses to consult regarding Employee’s consideration of this Agreement, each of whom shall likewise agree to keep the information confidential. In the event Employee is subject to subpoena, court order or otherwise compelled to testify, appear or provide information regarding Released Parties, within three (3) days of Employee’s receipt of said subpoena, court order, or other notification, Employee will provide written notice, via facsimile and mail, to Robert William Jewett, Senior vice President and General Counsel, Hooper Holmes, Inc., 170 Mt. Airy Road, Basking Ridge, New Jersey 07920, facsimile number 908-953-6304. This Agreement shall not be filed with any court and shall remain forever confidential except in an action to enforce or for breach of this Agreement. If Employee asserts an action to enforce this Agreement or for breach of this Agreement, Employee shall maintain such confidentiality by whatever means necessary, including, but not limited to, submitting the Agreement to a court under confidential seal. Employee acknowledges that Employer is required to file a Form 8-K with the Securities and Exchange Commission, setting forth the terms under which Employee, as an executive officer of Employer, left his employment and any compensation paid to Employee by Employer. Furthermore, Employee acknowledges that this Agreement will be filed with the Securities and Exchange Commission as an exhibit to Employer’s next Form 10-K or Form 10-Q and as such, will become public information. Employee hereby consents to such disclosure by Employer.

8. Governing Law and Interpretation. This Agreement shall be governed and conformed in accordance with the laws of the State of New Jersey without regard to its conflict of laws provision. In the event Employee or Employer breaches any provision of this Agreement, Employee and Employer affirm that either may institute an action against the other to specifically enforce any term or terms of this Agreement, in addition to any other legal or equitable relief permitted by law. In the event that any provision of this Agreement is declared illegal or unenforceable by a court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. Moreover, if any such provision determined to be invalid, illegal or unenforceable can be made valid, legal or enforceable by modification thereof, then the party for whose benefit the provision exists, may make such modification as necessary to make the provision valid, legal and enforceable.

9. Non Disparagement. Employee agrees not to defame, disparage or demean Employer in any manner whatsoever.

10. Cooperation. Subject to Employee’s other personal and professional obligations and on reasonable notice and at reasonable times, Employee will cooperate with Employer and its counsel in connection with any investigation, administrative or regulatory proceeding or litigation relating to any matter in which Employee was involved or of which Employee has knowledge as a result of Employee’s employment with Employer and/or any Released Party or Released Parties.

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11. Return of Property. Employee agrees to vacate his office space and to return any and all property of Employer including, but not limited to, all copies or duplicates thereof, belonging to Released Parties, keys, security cards, credit cards, equipment, documents, supplies, customer lists and customer information, confidential documents, Employee’s company leased vehicle and the keys and manuals thereto, and any other property in Employee’s possession belonging to Employer or Released Parties, by no later than April 16, 2005.

12. Nonadmission of Wrongdoing. Employee and Employer agree that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at anytime for any purpose as an admission by Employer or Employee of any liability or unlawful conduct of any kind.

13. Non-Competition. In exchange for the consideration provided by Employer, as set forth in Paragraph 2 above, Employee agrees that for a period of one (1) year following his last day of employment with Employer, as set forth in Paragraph 1 above, he will not engage in any business in which Employer is currently engaged, in the States of North Carolina or New Jersey. Employee is thus prohibited from performing work as an owner, partner, employee, contractor, consultant or advisor, for any company, entity or other organization that provides the same or similar services as Employer. Employee agrees that Employer shall be entitled to injunctive relief, and such other relief as the courts shall grant it, in the event of any breach or threatened breach of this provision by Employee. Employee agrees that in the event that a court finds this provision to be unreasonable in terms of duration or territory, the court may modify this provision as it deems appropriate and reasonable.

14. Amendment. This Agreement may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement.

15. Entire Agreement. This Agreement sets forth the entire agreement between the Employee and Released Parties hereto, and fully supercedes any prior or contemporaneous agreements or understandings between Employee and Released Parties; provided, however, that this Agreement does not supercede or affect any confidentiality, non-disclosure, invention, assignment of proprietary rights, or non-solicitation agreement(s) signed by Employee. The obligations of such agreements remain in full force and effect and Employee expressly acknowledges Employee’s intent to adhere to the promises contained in those agreements. Employee also acknowledges that Employee has not relied on any representation, promises, or agreements of any kind made in connection with the decision to sign this Agreement, except for those set forth in this Agreement.

EMPLOYEE IS HEREBY ADVISED THAT EMPLOYEE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO REVIEW THIS AGREEMENT AND GENERAL RELEASE AND IS HEREBY ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

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EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.

HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES AND TO RECEIVE THE SUMS AND BENEFITS IN PARAGRAPH “2” ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EMPLOYEE HAS OR MIGHT HAVE AGAINST RELEASED PARTIES AS OF THE DATE OF THE EXECUTION OF THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement and General Release as of the date set forth below:

/s/ Raymond A. Sinclair
Raymond A. Sinclair
Date: April 6, 2005
HOOPER HOLMES, INC.
By:	/s/ James M. McNamee
NAME:	James M. McNamee
TITLE:	Chairman, President & CEO
Date:	April 11, 2005

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EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, James M. McNamee, certify that:

1. I have reviewed this 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/ James M. McNamee

James M. McNamee

Chairman, President and Chief Executive Officer

May 10, 2005

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Fred Lash, certify that:

1. I have reviewed this 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/ Fred Lash

Fred Lash

Senior Vice-President, Treasurer and

Chief Financial Officer

May 10, 2005

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James M. McNamee, Chief Executive 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 period ended March 31, 2005 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: May 10, 2005

/s/ James M. McNamee

James M. McNamee

Chairman, President and

Chief Executive 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.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Fred Lash, Chief Financial 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 period ended March 31, 2005 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: May 10, 2005

/s/ Fred Lash

Fred Lash

Senior Vice President, Treasurer, and

Chief Financial 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.