EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Press Release

A.D.A.M., Inc. Reports Financial Results for First Quarter 2007

Adjusted EBITDA increases 127%; Net income of $0.04 per share

ATLANTA, GA – (BUSINESS WIRE) – May 8, 2007 – A.D.A.M., Inc. (Nasdaq: ADAM):

Financial and Operating Highlights:

 

   

Revenues for the quarter ended March 31, 2007 were $6,546,000 as compared to $2,482,000 in the year ago period, an increase of 164%. The increase is primarily attributable to the Company’s expansion into the employer and consumer directed healthcare market through its acquisition of OnlineBenefits, Inc. in August, 2006.

 

   

Adjusted EBITDA was $1,851,000 for the quarter ended March 31, 2007 as compared to Adjusted EBITDA of $815,000 in the year ago period, an increase of 127%. Adjusted EBITDA margins for the first quarter of 2007 were 28% of revenues.

 

   

Operating income for the quarter ended March 31, 2007 was $1,151,000 as compared to $601,000 in the year ago period. Adjusted operating income, which excludes non-cash stock-based compensation and amortization expense from purchased intangibles associated with the Company’s acquisition of OnlineBenefits, Inc. was $1,622,000 as compared to $590,000 for the same period last year, an increase of 175%.

 

   

Net income for the quarter ended March 31, 2007 was $466,000 or $0.04 per share on a fully diluted basis as compared to $728,000 or $0.07 per share on a fully diluted basis for the year ago period. First quarter net income included a ($0.09) negative impact from the Company recording a higher non-cash stock-based compensation expense of $283,000 and interest charges from debt associated with the Company’s acquisition of OnlineBenefits, Inc. of $681,000.

 

   

Cash and investments totaled $5,700,000 as of March 31, 2007, a decrease of $1,540,000 from $7,240,000 as of December 31, 2006. During the first quarter of 2007, the Company made a $2,000,000 advance principal payment in connection with its debt agreement with CapitalSource Finance, LLC and a $1,500,000 principal payment on debt acquired with Online Benefits, Inc.

“We are off to a great start towards meeting our objectives for 2007,” said Kevin Noland, A.D.A.M.’s president and chief executive officer. “Our key business units, content licensing and OnlineBenefits, both delivered solid performance for the first quarter. OnlineBenefits has now been with A.D.A.M. for two full quarters, and over this time our


focused integration efforts have paid off in both financial results and an improved operational synergy within the company. Our engineering and production teams are working closely together on Benergy 2G!, our next generation product that speaks directly to the needs of the burgeoning consumer-driven healthcare movement. Benergy 2G! brings together A.D.A.M.’s robust health and wellness assets with a full-service benefits management platform, to create an end-to-end solution for employers and employees alike. We anticipate the launch of Benergy 2G! in the late second to third quarter of 2007. Given our positive momentum, we are maintaining our 2007 guidance at $6,000,000 to $7,000,000 in Adjusted EBITDA and $26,000,000 to $28,000,000 in revenue.”

Non-GAAP Measures

Adjusted operating income represents operating income before non-cash stock-based compensation expense and amortization of purchased intangibles. Adjusted net income represents net income before non-cash stock-based compensation expense and amortization of purchased intangibles. Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization and non-cash stock-based compensation expense. These financial measures are not measures of financial performance in accordance with generally accepted accounting principles. We believe these non-GAAP financial measures are useful because they are appropriate measures for evaluating our operating performance. We present these non-GAAP financial measures to provide additional information regarding our performance and because they are measures by which we gauge our profitability. You should not consider these non-GAAP financial measures as an alternative to net income. Our calculation of these financial measures may be different from the calculations used by other companies and, as a result, comparability may be limited.

Forward-Looking Statements

Except for historical information, all of the statements, expectations and assumptions contained in this press release are forward-looking statements. These statements, especially revenue, net income, cash flow and Adjusted EBITDA forecasts, involve a number of risks and uncertainties that could cause actual results, performance or developments to differ materially. Factors that could affect the company’s actual results, performance or developments include general economic conditions, development of the Internet as a source of health information, pricing actions taken by competitors, demand for the company’s health information, the ability to realize the anticipated benefits of the acquisition, regulatory changes in laws and regulations that impact how the company conducts its business and the other factors described in A.D.A.M.’s filings with the SEC. A.D.A.M. disclaims any obligation or duty to update any of its forward-looking statements.

 


Conference Call and Earnings Release Information

These financial results are preliminary and subject to adjustments during the Company’s year-end close process. The Company will be conducting a conference call to discuss its first quarter 2007 earnings results on May 8, 2007, at 10:00 A.M. ET. To participate in the call, please dial (866) 624-3372 approximately five minutes prior to the start time. International callers may dial (706) 758-3874. A digital replay will be available the following day by dialing (800) 633-8284 or (402) 977-9140 with reservation number 21337222. The Company will issue its final results prior to the conference call.

About A.D.A.M., Inc.

A.D.A.M. (Nasdaq: ADAM ) is a leading provider of health information services and benefits management solutions serving healthcare organizations, employers, insurance brokers, consumers, and educational institutions. With an industry-leading employee and HR benefits management platform and one of the largest consumer health information libraries in the world, A.D.A.M. engages consumers to learn about their health and manage their benefit choices while reducing the costs of healthcare and benefits administration. For more information, visit www.adam.com or call 1-800-408-ADAM.

###

Contact:

A.D.A.M., Inc., Atlanta

Victor Thompson

770-321-4326


A.D.A.M., Inc.

Condensed Consolidated Statements of Operations

First Quarter, 2007 and 2006

 

     Three Months Ended March 31,     % Increase
(Decrease)
in US $
 
     2007     % of
Revenues
    2006     % of
Revenues
   

Revenues, net:

          

Licensing

   $ 5,699     87.1 %   $ 2,122     85.5 %   168.6 %

Product

     374     5.7 %     236     9.5 %   58.5 %

Professional services and other

     473     7.2 %     124     5.0 %   281.5 %
                              

Total revenues, net

     6,546     100.0 %     2,482     100.0 %   163.7 %
                              

Cost of Revenues:

          

Cost of revenues

     1,331     20.3 %     301     12.1 %   342.2 %

Cost of revenues – amortization

     315     4.8 %     188     7.6 %   67.6 %
                              

Total cost of revenues

     1,646     25.1 %     489     19.7 %   236.6 %
                              

Gross Profit

     4,900     74.9 %     1,993     80.3 %   145.9 %
                              

Operating expenses:

          

Product & content development

     1,152     17.6 %     360     14.5 %   220.0 %

Sales & marketing

     1,127     17.2 %     435     17.5 %   159.1 %

General & administrative

     1,470     22.5 %     597     24.1 %   146.2 %
                              

Total operating expenses

     3,749     57.3 %     1,392     56.1 %   169.3 %
                              

Operating income

     1,151     17.6 %     601     24.2 %   91.5 %
                              

Interest expense

     693     10.6 %     3     0.1 %   (a )

Interest income

     (12 )   -0.2 %     (130 )   -5.2 %   -90.8 %

(Gain) loss on sale of assets

     4     0.1 %     —       0.0 %   (a )
                              

Income before income taxes

     466     7.1 %     728     29.3 %   -36.0 %
                              

Income tax expense (benefit)

     —       0.0 %     —       0.0 %   (a )

Net Income

   $ 466     7.1 %   $ 728     29.3 %   -36.0 %
                              

Earnings Per Share

          

Basic

   $ 0.05       $ 0.09      

Diluted

   $ 0.04       $ 0.07      

Weighted Average Common Shares Outstanding

          

Basic

     9,389         8,316      

Diluted

     10,654         9,896      

 

(a) not meaningful


A.D.A.M., Inc.

Non-GAAP Condensed Financial Results

First Quarter, 2007 and 2006

 

     Three Months Ended March 31,     % Increase (Decrease)  
     2007
GAAP
    Adj.     2007
Non-GAAP
    2006
GAAP
    Adj.     2006
Non-GAAP
    GAAP     Non-GAAP  

Total revenues

   $ 6,546     $ —       $ 6,546     $ 2,482     $ —       $ 2,482     163.7 %   163.7 %

Total operating expenses

     5,395       (471 )     4,924       1,881       11       1,892     186.8 %   160.3 %

Stock-based compensation (1)

     283       (283 )     —         (11 )     11       —       (a )   (a )

Amortization of purchased intangibles (2)

     188       (188 )     —         —         —         —       (a )   (a )

Operating income

     1,151       471       1,622       601       (11 )     590     91.5 %   174.9 %

Operating margin     %

     17.6 %       24.8 %     24.2 %       23.8 %    

Income before income taxes

     466       471       937       728       (11 )     717     -36.0 %   30.7 %

Income tax expense (benefit)

     —         —         —         —         —         —       (a )   (a )

Net Income

     466       471       937       728       (11 )     717     -36.0 %   30.7 %

Diluted earnings per share

   $ 0.04       $ 0.09     $ 0.07       $ 0.07     -40.5 %   21.4 %

Diluted shares outstanding

     10,654         10,654       9,896         9,896      
                                                    

Income before income taxes

     466       471       937       728       (11 )     717      

Depreciation

     107       —         107       37       —         37      

Amortization of software development

     127       —         127       188       —         188      

Amortization of purchase intangibles (2)

     188       (188 )     —         —         —         —        

Interest expense (income)

     681       —         681       (127 )     —         (127 )    
                                                    

EBITDA

     1,569       283       1,852       826       (11 )     815     90.0 %   127.2 %
                                                    

(a) not meaningful

                

 

  (1) Stock-based compensation related to non-cash charges for stock options and variable stock compensation expense.
  (2) Amortization of customer list and purchased software acquired with Online Benefits.


A.D.A.M., Inc.

Consolidated Balance Sheets

March 31, 2007 and December 31, 2006

 

     March 31,
2007
    December 31,
2006
 

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 5,700     $ 6,382  

Short term investments

     —         858  

Accounts receivable, net

     3,643       3,082  

Restricted cash

     45       2,192  

Inventories

     70       74  

Prepaids and other current assets

     1,508       1,673  
                

Total current assets

     10,966       14,261  
                

Non-current assets

    

Property and equipment, net

     848       876  

Intangible assets, net

     10,172       10,276  

Goodwill

     27,883       27,883  

Other assets

     158       158  

Deferred financing costs, net

     1,094       1,184  

Deferred tax asset, net of current portion

     5,500       5,500  
                

Total non-current assets

     45,655       45,877  
                

TOTAL ASSETS

   $ 56,621     $ 60,138  
                

Liabilities and Shareholders’ Equity

    

Current liabilities

    

Accounts payables and accrued expenses

   $ 2,789     $ 4,075  

Deferred revenue

     5,053       4,447  

Note payable

     —         1,500  

Current portion of long term debt

     —         1,000  

Current portion of capital lease obligations

     146       155  
                

Total current liabilities

     7,988       11,177  
                

Non-current liabilities

    

Capital lease obligations, net of current portion

     151       178  

Other liabilities

     1,237       1,314  

Long term debt, net of current portion

     23,000       24,000  
                

Total non-current liabilities

     24,388       25,492  
                

Stockholders’ equity

    

Common stock

     94       94  

Treasury stock

     (1,088 )     (1,088 )

Additional paid-in capital

     54,410       54,109  

Unrealized gain (loss) on investments

     7       (2 )

Accumulated deficit

     (29,178 )     (29,644 )
                

Total stockholders’ equity

     24,245       23,469  
                

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 56,621     $ 60,138  
                


A.D.A.M., Inc.

Condensed Consolidated Statements of Cash Flows

First Quarter, 2007 and 2006

 

     Quarter Ended
March 31,
2007
    Quarter Ended
March 31,
2006
 

Cash flows from operating activities

    

Net income

   $ 466     $ 728  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     423       224  

Deferred financing cost amortization

     96       —    

Gain on sale of assets

     4       —    

Stock-based compensation expense

     282       (11 )

Changes in assets and liabilities:

    

Accounts receivable

     (562 )     932  

Inventories

     5       (2 )

Prepaids and other assets

     158       (25 )

Accounts payable and accrued liabilities

     (1,286 )     (360 )

Deferred revenue

     606       (416 )

Other liabilities

     (77 )     —    
                

Net cash provided by operating activities

     115       1,070  
                

Cash flows from investing activities

    

Purchases of property and equipment

     (91 )     (39 )

Proceeds from sale of property and equipment

     7       —    

Net change in restricted cash

     2,148       (2 )

Software product and content development costs

     (212 )     (116 )

Maturities and reclassifications of investments

     858       2,054  

Proceeds of investments

     52       —    

Purchase of investments

     (43 )     (844 )
                

Net cash provided by investing activities

     2,719       1,053  
                

Cash flows from financing activities

    

Payment on note payable

     (1,500 )     —    

Payment on long term debt

     (2,000 )     —    

Proceeds from exercise of common stock options

     19       457  

Repayments on capital leases

     (35 )     (5 )
                

Net cash (used in) provided by financing activities

     (3,516 )     452  
                

Increase (decrease) in cash and cash equivalents

     (682 )     2,575  
                

Cash and cash equivalents, beginning of the period

     6,382       2,816  
                

Cash and cash equivalents, end of the period

   $ 5,700     $ 5,391