EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

A.D.A.M. Announces Financial Results for Second Quarter 2007

Adjusted EBITDA increases 102%; Content licensing revenues up 17%; Net income of $0.08 per share

ATLANTA, GA –August 07, 2007 – A.D.A.M., Inc. (NasdaqCM: ADAM) today announced financial results for its second quarter ended June 30, 2007:

Kevin Noland, President and Chief Executive Officer of A.D.A.M., commented: “Second quarter results demonstrate favorably the progress we are making in expanding our licensing relationships and growing our market share. I am enthusiastic that the efforts we have put into Benergy™ 2G!, and the opportunities we have to capitalize on employers’ needs and the growing consumer driven trends positions us well for long-term revenue growth and margin expansion.”

Second Quarter Financial and Operating Highlights:

 

   

Revenues for the second quarter were $7,024,000 as compared to $2,715,000 in the same period last year, an increase of 159%. The increase is primarily attributable to A.D.A.M.’s acquisition of OnlineBenefits, Inc. in August, 2006.

 

   

Revenues for the second quarter grew 7% sequentially from the first quarter ended March 31, 2007, as license, product and professional service components all increased during the second quarter.

 

   

A.D.A.M.’s health content licensing revenues for the second quarter grew to $2,473,000 as compared to $2,114,000 in the same period last year. Strong renewal rates and increased distribution into the hospital and internet portal markets contributed to the growth.

 

   

Adjusted EBITDA was $1,822,000 for the second quarter as compared to $903,000 in the same period last year, an increase of 102%. Adjusted EBITDA margins for the second quarter were 26% of revenues.

 

   

Operating income for the second quarter was $1,437,000 as compared to $800,000 in the same period last year. Adjusted operating income for the second quarter, which excludes non-cash stock-based compensation and amortization expense from purchased intangibles associated with the acquisition of OnlineBenefits, was $1,582,000 as compared to $676,000 for the same period last year, an increase of 134%.

 


   

Net income for the second quarter was $861,000, or $0.08 per share, on a fully diluted basis as compared to $951,000 or $0.10 per share on a fully diluted basis for the year ago period. Net income included a $0.05 per share favorable impact from a higher non-cash stock-based compensation benefit of $43,000 and interest charges from debt associated with the acquisition of OnlineBenefits of $576,000.

First-Half 2007 Results

For the six-month period ended June 30, 2007, revenues were $13,570,000, up 161% from $5,197,000 in the same period last year. Net income for the six-month period ended June 30, 2007 was $1,327,000, or $0.13 per share on a fully diluted basis, as compared to $1,679,000, or $0.17 per share on a fully diluted basis for the same period last year. Increases in revenues and operating income are primarily attributable to the acquisition of OnlineBenefits. Net income for the first-half of 2007 was impacted by the increased operating income, which was offset by interest charges of $576,000 associated with the debt used to acquire OnlineBenefits.

During the first six months of 2007, A.D.A.M. generated $1,897,000 in cash flow from operations. As of June 30, 2007, A.D.A.M.’s cash and investments increased to $7,749,000 from $7,240,000 as of December 31, 2006 from the increased cash flow from operations, which was offset by principal payments on debt.

A.D.A.M. Introduces New Employee Portal

A.D.A.M. also announced today that it has introduced Benergy 2G!, its next generation employee portal. The new product builds on Benergy’s success with employee benefits management by integrating A.D.A.M.’s consumer-friendly health and wellness education tools and a human resources center for policies and communications into one completely redesigned, highly personalized portal.

Anticipating the needs of employers and their employees, A.D.A.M. bolstered its suite of products with several new tools. A.D.A.M.’s new Personal Health Record allows employees to securely store and track their medical history online. A.D.A.M.’s new Synergy newsletter offers featured health stories, health tips, benefits information and other timely communications. In addition, a new integrated proprietary search engine assists employees in finding the most relevant health information they need across thousands of articles on disease, treatments, symptoms, alternative medicine, and lifestyle issues. These features, along with a number of decision support tools, health risk assessments and interactive learning programs, are all designed to help employees become more proactive in their health and benefits management.

“We have seen a growing interest from our clients for the need to incorporate integrated health, wellness and decision support tools into Benergy. These areas represent important opportunities for us to extend the value of the Benergy system to our broker clients and to our users,” said Mr. Noland.

 


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

The press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. The forward-looking statements are based on A.D.A.M.’s current intent, belief and expectations. These statements, especially revenue, net income, cash flow, 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

A.D.A.M. will be conducting a conference call to discuss its second quarter 2007 financial results on August 7, 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 21344433.

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

A.D.A.M. (NasdaqCM: 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

Second Quarter, 2007 and 2006

(numbers in thousands, except per share data)

 

     Three Months Ended June 30,     %
Increase
 
           % of           % of     (Decrease)  
     2007     Revenues     2006     Revenues     in US $  

Revenues, net:

          

Licensing

   $ 5,860     83.4 %   $ 2,114     77.9 %   177.2 %

Product

     548     7.8 %     506     18.6 %   8.3 %

Professional services and other

     616     8.8 %     95     3.5 %   548.4 %
                              

Total revenues, net

     7,024     100.0 %     2,715     100.0 %   158.7 %
                              

Cost of Revenues:

          

Cost of revenues

     1,717     24.4 %     319     11.7 %   438.2 %

Cost of revenues-amortization

     320     4.6 %     190     7.0 %   68.4 %
                              

Total cost of revenues

     2,037     29.0 %     509     18.7 %   300.2 %
                              

Gross Profit

     4,987     71.0 %     2,206     81.3 %   126.1 %
                              

Operating expenses:

          

Product & content development

     1,042     14.8 %     350     12.9 %   197.7 %

Sales & marketing

     1,355     19.3 %     454     16.7 %   198.5 %

General & administrative

     1,153     16.4 %     602     22.2 %   91.5 %
                              

Total operating expenses

     3,550     50.5 %     1,406     51.8 %   152.5 %
                              

Operating income

     1,437     20.5 %     800     29.5 %   79.6 %
                              

Interest expense

     622     8.9 %     2     0.1 %   (a )

Interest income

     (46 )   -0.7 %     (153 )   -5.6 %   -69.9 %
                              

Income before income taxes

     861     12.3 %     951     35.0 %   -9.5 %
                              

Income tax expense (benefit)

     —       0.0 %     —       0.0 %   (a )

Net Income

   $ 861     12.3 %   $ 951     35.0 %   -9.5 %
                              

Earnings Per Share

          

Basic

   $ 0.09       $ 0.11      

Diluted

   $ 0.08       $ 0.10      

Weighted Average Common Shares Outstanding

          

Basic

     9,514         8,430      

Diluted

     10,376         9,755      

(a) not meaningful

          


A.D.A.M., Inc.

Condensed Consolidated Statement of Operations

Second Quarter, 2007 and 2006

(numbers in thousands, except per share data)

 

     Six Months Ended June 30,     % Increase  
           % of           % of     (Decrease)  
     2007     Revenues     2006     Revenues     in US $  

Revenues, net:

          

Licensing

   $ 11,559     85.2 %   $ 4,236     81.5 %   172.9 %

Product

     922     6.8 %     742     14.3 %   24.3 %

Professional services and other

     1,089     8.0 %     219     4.2 %   397.3 %
                              

Total revenues, net

     13,570     100.0 %     5,197     100.0 %   161.1 %
                              

Cost of Revenues:

          

Cost of revenues

     3,049     22.5 %     620     11.9 %   391.8 %

Cost of revenues-amortization

     635     4.7 %     377     7.3 %   68.4 %
                              

Total cost of revenues

     3,684     27.1 %     997     19.2 %   269.5 %
                              
                              

Gross Profit

     9,886     72.9 %     4,200     80.8 %   135.4 %
                              

Operating expenses:

          

Product & content development

     2,199     16.2 %     710     13.7 %   209.7 %

Sales & marketing

     2,477     18.3 %     889     17.1 %   178.6 %

General & administrative

     2,622     19.3 %     1,200     23.1 %   118.5 %
                              

Total operating expenses

     7,298     53.8 %     2,799     53.9 %   160.7 %
                              

Operating income

     2,588     19.1 %     1,401     27.0 %   84.7 %
                              

Interest expense

     1,313     9.7 %     5     0.1 %   (a )

Interest income

     (56 )   -0.4 %     (283 )   -5.4 %   -80.2 %

Realized (gain) loss on investments

     —       0.0 %     —       0.0 %   (a )

Loss on sale of assets

     4     0.0 %     —       0.0 %   (a )
                              

Income before income taxes

     1,327     9.8 %     1,679     32.3 %   -21.0 %
                              

Income tax expense (benefit)

     —       0.0 %     —       0.0 %   (a )

Net Income

   $ 1,327     9.8 %   $ 1,679     32.3 %   -21.0 %
                              

Earnings Per Share

          

Basic

   $ 0.14       $ 0.20      

Diluted

   $ 0.13       $ 0.17      

Weighted Average Common Shares Outstanding

          

Basic

     9,317         8,374      

Diluted

     10,182         9,822      

(a) not meaningful

          


A.D.A.M., Inc.

Non-GAAP Condensed Financial Results

Second Quarter, 2007 and 2006

(numbers in thousands)

 

     Three Months Ended June 30,     % Increase (Decrease)  
     2007
GAAP
    Adj.     2007
Non-GAAP
    2006
GAAP
    Adj.     2006
Non-GAAP
    GAAP     Non-GAAP  

Total revenues

   $ 7,024     $ —       $ 7,024     $ 2,715     $ —       $ 2,715     158.7 %   158.7 %

Total operating expenses

     5,587       (145 )     5,442       1,915       124       2,039     191.7 %   166.9 %

Stock-based compensation (1)

     (43 )     43       —         (124 )     124       —       -65.3 %   (a )

Amortization of purchased intangibles (2)

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

Operating income

     1,437       145       1,582       800       (124 )     676     79.6 %   134.0 %

Operating margin %

     20.5 %       22.5 %     29.5 %       24.9 %    

Income before income taxes

     861       145       1,006       951       (124 )     827     -9.5 %   21.6 %

Income tax expense (benefit)

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

Net Income

     861       145       1,006       951       (124 )     827     -9.5 %   21.6 %

Diluted earnings per share

   $ 0.08       $ 0.10     $ 0.10       $ 0.08     -14.9 %   14.4 %

Diluted shares outstanding

     10,376         10,376       9,755         9,755      

Income before income taxes

     861       145       1,006       951       (124 )     827      

Depreciation

     108       —         108       37       —         37      

Amortization of software development

     132       —         132       190       —         190      

Amortization of purchase intangibles (2)

     188       (188 )     —         —         —         —        

Interest expense (income)

     576       —         576       (151 )     —         (151 )    
                                                    

EBITDA

   $ 1,865     $ (43 )   $ 1,822     $ 1,027     $ (124 )   $ 903     81.6 %   101.8 %
                                                    

(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.

Non-GAAP Condensed Financial Results

Second Quarter, 2007 and 2006

(numbers in thousands)

 

     Six Months Ended June 30,     % Increase (Decrease)  
     2007           2007     2006           2006              
     GAAP     Adj.     Non-GAAP     GAAP     Adj.     Non-GAAP     GAAP     Non-GAAP  

Total revenues

   $ 13,570     $     $ 13,570     $ 5,197     $     $ 5,197     161.1 %   161.1 %

Total operating expenses

     10,982       (616 )     10,366       3,796       135       3,931     189.3 %   163.7 %

Stock-based compensation (1)

     239       (239 )     —         (135 )     135       —       -277.0 %   (a )

Amortization of purchase intangibles (2)

     377       (377 )     —         —         —         —       (a )   (a )

Operating income

     2,588       616       3,204       1,401       (135 )     1,266     84.7 %   153.1 %

Operating margin %

     19.1 %       23.6 %     27.0 %       24.4 %    

Income before income taxes

     1,327       616       1,943       1,679       (135 )     1,544     -21.0 %   25.8 %

Income tax expense (benefit)

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

Net Income

     1,327       616       1,943       1,679       (135 )     1,544     -21.0 %   25.8 %

Diluted net income (loss) per share

   $ 0.13       $ 0.19     $ 0.17       $ 0.16     -23.8 %   21.4 %

Diluted shares outstanding

     10,182         10,182       9,822         9,822      
                                                            

Income before income taxes

     1,327       616       1,943       1,679       (135 )     1,544      

Depreciation

     215       —         215       75       —         75      

Amortization of software development

     258       —         258       377       —         377      

Amortization of purchase intangibles (2)

     377       (377 )     —         —         —         —        

Interest expense (income)

     1,257       —         1,257       (278 )     —         (278 )    
                                                    

EBITDA

   $ 3,434     $ 239     $ 3,673     $ 1,853     $ (135 )   $ 1,718     85.3 %   113.8 %
                                                    

(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

June 30, 2007 and December 31, 2006

(numbers in thousands)

 

     June 30,
2007
    December 31,
2006
 

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 7,749     $ 6,382  

Short term investments

     —         858  

Accounts receivable, net

     4,033       3,082  

Restricted cash

     45       2,192  

Inventories

     129       74  

Prepaids and other current assets

     1,095       1,673  
                

Total current assets

     13,051       14,261  
                

Non-current assets

    

Property and equipment, net

     842       876  

Intangible assets, net

     10,251       10,276  

Goodwill

     27,951       27,883  

Other assets

     158       158  

Deferred financing costs, net

     1,014       1,184  

Deferred tax asset, net of current portion

     5,500       5,500  
                

Total non-current assets

     45,716       45,877  
                

TOTAL ASSETS

   $ 58,767     $ 60,138  
                

Liabilities and Shareholders’ Equity

    

Current liabilities

    

Accounts payables and accrued expenses

   $ 3,034     $ 4,075  

Deferred revenue

     5,377       4,447  

Note payable

     —         1,500  

Current portion of long term debt

     1,000       1,000  

Current portion of capital lease obligations

     131       155  
                

Total current liabilities

     9,542       11,177  
                

Non-current liabilities

    

Capital lease obligations, net of current portion

     128       178  

Other liabilities

     1,158       1,314  

Long term debt, net of current portion

     22,000       24,000  
                

Total non-current liabilities

     23,286       25,492  
                

Stockholders’ equity

    

Common stock

     98       94  

Treasury stock

     (1,088 )     (1,088 )

Additional paid-in capital

     55,251       54,109  

Unrealized gain (loss) on investments

     (5 )     (2 )

Accumulated deficit

     (28,317 )     (29,644 )
                

Total stockholders’ equity

     25,939       23,469  
                

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 58,767     $ 60,138  
                


A.D.A.M., Inc.

Condensed Consolidated Statements of Cash Flows

Second Quarter, 2007 and 2006

(numbers in thousands)

 

     Six Months Ended     Six Months Ended  
     June 30,
2007
    June 30,
2006
 

Cash flows from operating activities

    

Net income

   $ 1,327     $ 1,679  

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

    

Depreciation and amortization

     851       452  

Deferred financing cost amortization

     174       —    

Gain on sale of assets

     4       —    

Stock-based compensation expense

     239       (135 )

Changes in assets and liabilities:

    

Accounts receivable

     (951 )     (806 )

Inventories

     (54 )     (8 )

Prepaids and other assets

     573       98  

Accounts payable and accrued liabilities

     (1,041 )     (201 )

Deferred revenue

     931       80  

Other liabilities

     (156 )     —    
                

Net cash provided by operating activities

     1,897       1,159  
                

Cash flows from investing activities

    

Purchases of property and equipment

     (193 )     (48 )

Proceeds from sale of property and equipment

     7       —    

Additional costs of previous acquisition

     (68 )  

Net change in restricted cash

     2,148       25  

Software product and content development costs

     (610 )     (359 )

Maturities and reclassifications of investments

     845       2,055  

Proceeds of investments

     104       —    

Purchase of investments

     (95 )     (967 )
                

Net cash provided by investing activities

     2,138       706  
                

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

     907       476  

Repayments on capital leases

     (75 )     (9 )
                

Net cash (used in) provided by financing activities

     (2,668 )     467  
                

Increase (decrease) in cash and cash equivalents

     1,367       2,332  
                

Cash and cash equivalents, beginning of the period

     6,382       2,816  
                

Cash and cash equivalents, end of the period

   $ 7,749     $ 5,148