MINNEAPOLIS, May 4 /PRNewswire-FirstCall/ -- Health Fitness Corporation
(OTC Bulletin Board: HFIT) today reported financial results for its first
quarter ended March 31, 2004.
Revenue was $12,666,374 for the first quarter, up $5,148,169, or 68.5%
over revenue of $7,518,205 for the first quarter last year. Gross profit was
$3,086,937 for the quarter, an increase of $1,432,538 or 86.6%, compared to
gross profit of $1,654,399 for the first quarter last year. As a percent of
revenue, gross profit increased to 24.4% compared to 22.0% for the first
quarter last year. Earnings before income taxes were $561,207, up $111,197,
or 24.7% from $450,010 in the first quarter of last year. Net earnings
applicable to common shareholders were $336,707, an increase of $68,727, or
25.6%, compared to $267,980 for the same quarter last year.
HFC said the increase in revenue, gross profit and net earnings is
primarily due to HFC's December 2003 acquisition of the Health & Fitness
Services Business of Johnson & Johnson Health Care Systems Inc.
Jerry Noyce, President and CEO, said, "The positive results of our first
quarter as a combined company confirms the soundness of our decision to
acquire the Johnson & Johnson fitness services business. The increase in
gross profit as a percent of revenue was primarily due to improvements in our
contract portfolio as a result of the acquisition, as well as an increase in
sales of our Health Enhancement Program offerings. Operating expenses, as a
percent of revenue, increased to 18.9% from 15.9% for the same quarter in
2003. Of this increase, $219,584 represents a non-cash expense related to the
amortization of acquired intangible assets. The remaining increase of
$979,959 represents the cost of salaries, benefits and other expenses of the
management team that came over in the acquisition, all of who will be very
important to our future growth.
"From an operations standpoint, the integration process for our two
companies has gone very well. Since we closed the transaction, our combined
management team has spent a considerable amount of time strengthening our
strategic plan. We believe this plan will provide new opportunities for HFC
and solidify our position as the leading provider of health management
services to the corporate market."
Health Fitness Corporation is the leading provider of results-oriented
health improvement management services to corporations, hospitals,
universities and communities. HFC has been serving clients since 1975 and
manages more than 390 sites across the U.S. and Canada. For more information
about Health Fitness Corporation, go to http://www.hfit.com .
This press release contains forward-looking statements within the meaning
of federal securities laws. These statements include statements regarding
intent, belief, or current expectations of the Company and its management and
specifically include the statement regarding the Company's belief that their
strategic plan will solidify its position as the leading provider of health
management services to the corporate market. These forward-looking statements
are not guarantees of the future performance and involve a number of risks and
uncertainties that may cause the Company's actual results to differ materially
from the results discussed in these statements. These statements should be
read in conjunction with the various factors affecting the Company's
operations and financial condition discussed in the section titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained within the Company's Annual Report on Form 10-K for the
year ended December 31, 2003, as well as the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2004. There is no assurance that
the Company will be able to capitalize on any of these forward-looking
statements.
Financial tables follow ...
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
2004 2003
REVENUE $12,666,374 $7,518,205
COSTS OF REVENUE 9,579,437 5,863,806
GROSS PROFIT 3,086,937 1,654,399
OPERATING EXPENSES
Salaries 1,342,709 783,542
Selling, general and administrative 830,106 409,314
Amortization of acquired intangible assets 219,584 -
Total operating expenses 2,392,399 1,192,856
OPERATING INCOME 694,538 461,543
OTHER INCOME (EXPENSE)
Interest expense (134,252) (10,505)
Other, net 921 (1,028)
EARNINGS BEFORE INCOME TAX EXPENSE 561,207 450,010
INCOME TAX EXPENSE 209,500 182,030
NET EARNINGS 351,707 267,980
Dividend to preferred shareholders 15,000 -
NET EARNINGS APPLICABLE TO COMMON SHAREHOLDERS $336,707 $267,980
NET EARNINGS PER COMMON SHARE:
Basic $0.03 $0.02
Diluted 0.02 0.02
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 12,409,619 12,308,321
Diluted 16,038,913 12,404,312
See notes to consolidated financial statements
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2004 2003
ASSETS
CURRENT ASSETS
Cash $907,646 $281,294
Trade and other accounts receivable,
less allowances of $141,000 and $131,000 8,162,549 5,218,224
Prepaid expenses and other 270,810 187,347
Deferred tax assets 850,300 850,300
Total current assets 10,191,305 6,537,165
PROPERTY AND EQUIPMENT, net 192,734 177,217
OTHER ASSETS
Goodwill 8,915,280 8,725,574
Customer contracts, less accumulated
amortization of $269,400 and $67,400 1,460,555 1,662,639
Trademark, less accumulated amortization
of $23,300 and $5,800 326,666 344,166
Other intangible assets, less accumulated
amortization of $11,700 and $4,200 131,051 138,582
Cash held in escrow 473,103 471,999
Deferred tax assets 1,509,033 1,686,301
Other 63,467 64,458
$23,263,194 $19,808,101
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $462,781 $569,730
Accrued salaries, wages, and payroll taxes 2,434,589 1,607,157
Other accrued liabilities 521,837 450,255
Accrued self funded insurance 588,025 228,084
Deferred revenue 1,474,686 1,427,057
Total current liabilities 5,481,918 4,282,283
LONG-TERM OBLIGATIONS 6,220,759 4,350,012
COMMITMENTS AND CONTINGENCIES - -
PREFERRED STOCK, $0.01 par value; 5,000,000
shares authorized, 1,018,833 and 1,003,833
issued and outstanding 1,458,833 1,443,833
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 25,000,000
shares authorized; 12,438,245 and
12,357,334 shares issued and outstanding 124,382 123,573
Additional paid-in capital 17,705,004 17,671,536
Accumulated comprehensive income 4,434 5,707
Accumulated deficit (7,732,136) (8,068,843)
10,101,684 9,731,973
$23,263,194 $19,808,101
See notes to consolidated financial statements.
SOURCE Health Fitness Corporation
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CONTACT:
Wes Winnekins, CFO, of Health Fitness
Corporation, +1-952-897-5275, wwinnekins@hfit.com , or Dennis B.
McGrath of McGrath Buckley Communications Counseling,
+1-651-646-4115, dennis@mcgrath-buckley.com
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