MINNEAPOLIS, March 7 /PRNewswire-FirstCall/ -- Health Fitness Corporation
(OTC Bulletin Board: HFIT) today announced financial results for the fourth
quarter and year ended December 31, 2004. Highlights for the fiscal year
were:
-- Total revenue increased 66.6% over the prior year to $52.5 million;
-- Health improvement services revenue increased 171.3% to $2.3 million;
and
-- Positive net earnings applicable to common shareholders of $1.6 million
compared to a net loss of $27 thousand in 2003.
"2004 was an important year for the maturation of our company," said Jerry
Noyce, President and Chief Executive Officer. "During 2004, we completed the
integration of our acquisition of the Health and Fitness Services Business of
Johnson & Johnson Healthcare Systems Inc. Prior to the acquisition, we were
noted for being the largest provider of corporate fitness management services,
and Johnson & Johnson was noted as a leading provider of employee health and
wellness management services. As a result of combining the best practices,
programs and people of both companies, we are uniquely positioned to meet the
growing demands of major corporations to provide solutions to address employee
health issues and rising corporate healthcare costs."
Noyce also noted that the Company made significant progress in a number of
other areas during 2004, including:
-- The number of sites managed by HFC grew to 403 at the end of 2004, up
from 386 at the end of 2003.
-- Working capital increased $1,700,652 to $3,955,534 for 2004, compared
to $2,254,882 for 2003.
-- Long-term debt decreased $2,737,253 to $1,612,759 for 2004, from
$4,350,012 for 2003. In December 2004, the Company prepaid a 12%,
$2,000,000 Secured Senior Subordinated Note.
Fourth Quarter Performance
For the fourth quarter of 2004, revenue increased $4,721,342, or 53.8% to
13,504,239, from $8,782,897 for the same period in 2003. Of this increase,
$4,283,817 is primarily attributable to management services revenue acquired
in connection with the Company's December 2003 acquisition of the Health and
Fitness Services Business of Johnson & Johnson Healthcare Systems Inc, as well
as growth in management services revenue from new 2004 contracts. The Company
also saw revenue from its health improvement program services grow $437,525 to
$725,444 for the fourth quarter of 2004, from $287,919 for the same period in
2003.
For the fourth quarter of 2004, the Company reported net earnings
applicable to common shareholders of $314,995, compared to a net loss
applicable to common shareholders of $600,353 for the same period in 2003.
This positive change of $915,348 is primarily attributable to a $643,635
increase in operating income, a $104,541 decrease in income tax expense and
the difference in one-time charges between 2004 and 2003. With respect to
one-time charges, the Company incurred non-cash dividend expense of $659,930
in the fourth quarter of 2003 on preferred stock the Company issued to finance
its Johnson & Johnson acquisition. In December 2004, the Company incurred a
one-time charge to interest expense of $474,669, of which $394,669 was non-
cash, related to the prepayment of a $2,000,000 Secured Senior Subordinated
Note.
Net earnings per diluted share were $0.02 for the fourth quarter of 2004,
compared with a net loss per diluted share of $0.05 for the same period in
2003.
Year-end Performance
For 2004, revenue increased $20,975,846, or 66.6% to $52,454,668, from
$31,478,822 for 2003. Of this increase, $19,494,200 is primarily attributable
to acquired management services revenue, growth in management services revenue
from new 2004 contracts and higher consulting revenue. The remaining increase
in revenue is attributable to the Company's health improvement program
services, which grew $1,481,646 to $2,346,726 in 2004, from $865,080 in 2003.
For 2004, the Company also reported net earnings applicable to common
shareholders of $1,587,620, compared to a net loss applicable to common
shareholders of $27,254 for 2003. This positive change of $1,614,874 is
primarily attributable to a $2,172,500 increase in operating income between
2004 and 2003. However, the full effect of this increase in operating income
was not fully realized due primarily to higher interest and income tax
expenses, and the difference in one-time charges between 2004 and 2003.
Net earnings per diluted share were $0.10 for 2004, compared with a net
loss per diluted share of $0.00 for 2003.
About The Company
Health Fitness Corporation is the leading provider of results-oriented
health improvement management services to corporations, hospitals,
universities and communities. Serving clients since 1975, the Company
provides fitness and health improvement services at more than 400 sites across
the U.S. and Canada. For more information about Health Fitness Corporation,
go to http://www.hfit.com .
Forward-Looking Statements
Certain statements in this release that are not historical facts,
including, without limitation, those relating to management's belief that the
Company is uniquely positioned to meet the growing demands of major
corporations to provide solutions to address employee health issues and rising
corporate healthcare costs, are forward-looking statements that involve risks
and uncertainties. Such statements are based upon the current beliefs and
expectations of our management. Actual results may vary materially from those
contained in forward-looking statements based on a number of factors
including, without limitation, our inability to meet the growing demands of
major corporations and other factors disclosed from time to time in our
filings with the U.S. Securities and Exchange Commission. Investors should
take such risks into account when making investment decisions. Shareholders
and other readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date on which they are made.
We undertake no obligation to update any forward-looking statements.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ending Years Ending
12/31/04 12/31/03 12/31/04 12/31/03
Unaudited Unaudited
REVENUE $13,504,239 $8,782,897 $52,454,668 $31,478,822
COSTS OF REVENUE 9,921,400 6,949,009 38,995,451 24,943,625
GROSS PROFIT 3,582,839 1,833,888 13,459,217 6,535,197
OPERATING EXPENSES
Salaries 1,419,443 837,100 5,600,203 3,244,639
Selling, general,
and
administrative 1,001,964 625,380 3,440,134 1,849,317
Amortization of
acquired intangible
assets 219,583 73,194 878,333 73,194
Total operating
expenses 2,640,990 1,535,674 9,918,670 5,167,150
OPERATING INCOME 941,849 298,214 3,540,547 1,368,047
OTHER INCOME (EXPENSE)
Interest expense (84,873) (121,443) (465,571) (204,430)
Interest cost -
early debt
repayment costs (474,669) -- (474,669) --
Other, net (656) 32,403 1,642 (2,405)
EARNINGS BEFORE INCOME
TAXES 381,651 209,174 2,601,949 1,161,212
INCOME TAX EXPENSE 45,056 149,597 927,929 528,536
NET EARNINGS 336,595 59,577 1,674,020 632,676
Deemed dividend to
preferred
shareholders -- 656,096 -- 656,096
Dividend to preferred
shareholders 21,600 3,834 86,400 3,834
NET EARNINGS (LOSS)
APPLICABLE TO COMMON
SHAREHOLDERS $314,995 $(600,353) $1,587,620 $(27,254)
NET EARNINGS PER
COMMON SHARE
Basic $0.03 $ (0.05) $ 0.13 $ 0.00
Diluted 0.02 (0.05) 0.10 0.00
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 12,566,735 12,356,315 12,503,345 12,332,363
Diluted 16,349,043 12,356,315 16,151,017 12,332,363
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
2004 2003
ASSETS
CURRENT ASSETS
Cash $241,302 $281,294
Trade and other accounts receivable, less
allowances of $211,000 and $131,000 at
December 31, 2004 and 2003 8,147,430 5,218,224
Prepaid expenses and other 213,954 187,347
Deferred tax assets 1,660,100 850,300
Total current assets 10,262,786 6,537,165
PROPERTY AND EQUIPMENT, net 150,308 177,217
OTHER ASSETS
Goodwill 9,022,501 8,725,574
Customer contracts, less accumulated
amortization of $875,700 and $67,400 at
December 31, 2004 and 2003 854,306 1,662,639
Trademark, less accumulated amortization of
$75,800 and $5,800 at December 31, 2004
and 2003 274,167 344,166
Other intangible assets, less accumulated
amortization of $81,300 and $4,200 at
December 31, 2004 and 2003 61,493 138,582
Cash held in escrow -- 471,999
Deferred tax assets 221,400 1,686,301
Other 87,015 64,458
$20,933,976 $19,808,101
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable 840,155 569,730
Accrued salaries, wages, and payroll taxes 2,768,734 1,607,157
Other accrued liabilities 495,770 450,255
Accrued self funded insurance 225,500 228,084
Deferred revenue 1,977,093 1,427,057
Total current liabilities 6,307,252 4,282,283
LONG-TERM OBLIGATIONS 1,612,759 4,350,012
COMMITMENTS AND CONTINGENCIES -- --
PREFERRED STOCK, $0.01 par value; 10,000,000
shares authorized, 1,063,945 and 1,003,833
shares issued and outstanding at December 31,
2004 and 2003 1,530,232 1,443,833
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 50,000,000
shares authorized; 12,582,170 and
12,357,334 shares issued and outstanding at
December 31, 2004 and 2003 125,822 123,573
Additional paid-in capital 17,836,675 17,671,536
Accumulated comprehensive income from
foreign currency translation 2,459 5,707
Accumulated deficit (6,481,223) (8,068,843)
11,483,733 9,731,973
$20,933,976 $19,808,101
SOURCE Health Fitness Corporation
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CONTACT:
Wes Winnekins, Chief Financial Officer, of
Health Fitness Corporation, +1-952-897-5275,
wes.winnekins@hfit.com
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