MINNEAPOLIS, Aug. 8 /PRNewswire-FirstCall/ -- Health Fitness Corporation
(OTC Bulletn Board: HFIT) today announced financial results for the second
quarter and six months ended June 30, 2005.
For the second quarter 2005, revenue grew 4.2% to $13,678,615, from
$13,129,715 for the same period last year. Gross profit during the quarter
increased 0.2% to $3,450,616, from $3,442,358 for the same quarter last year.
Net earnings applicable to common shareholders increased 5.8% to $498,183,
from $470,754 for the same quarter last year. Net earnings per diluted share
of $0.03 remained unchanged from $0.03 for the same quarter last year.
For the six months ended June 30, 2005, revenue grew 5.2% to $27,143,716,
from $25,796,089 for the same period last year. Gross profit increased 5.6% to
$6,892,418, from $6,529,295 for the same period last year. Net earnings
applicable to common shareholders increased 39.5% to $1,126,117, from $807,461
for the same period last year. Net earnings per diluted share of $0.07
increased 40% from $0.05 for the same period last year.
"Our revenue growth of 4.2% for the second quarter compared to the same
period last year was attributed to a 1.5% increase from our Fitness Management
area of business, and a 14.8% increase from our Health Management area of
business," said Jerry Noyce, Health Fitness Corporation CEO and President.
"For the first six months, our revenue growth of 5.2% over the same period
last year was attributed to a 2.4% increase from our Fitness Management area
of business, and a 16.0% increase from our Health Management area of business.
We believe the recent realignment of our business into Fitness and Health
Management Services was the right strategic move for us. It definitely has
allowed us to more closely focus on our expansion efforts in the rapidly
growing Corporate Health Management market."
Revenue
data: Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 % 2005 2004 %
Change Change
Fitness
Management
Revenue
Staffing
Services $9,671,877 $9,892,295 (2.2)% $19,297,301 $19,480,786 (0.9)%
Program
Services 875,258 532,520 64.4% 1,580,660 940,848 68.0%
Consulting
Services 98,267 63,765 54.1% 112,717 71,265 58.2%
10,645,402 10,488,580 1.5% 20,990,678 20,492,899 2.4%
Health
Management
Revenue
Staffing
Services 2,868,171 2,581,181 11.1% 5,846,914 5,200,791 12.4%
Program
Services 156,650 54,761 186.1% 291,693 92,918 213.9%
Consulting
Services 8,392 5,193 61.6% 14,431 9,481 52.2%
3,033,213 2,641,135 14.8% 6,153,038 5,303,190 16.0%
Total Revenue
Staffing
Services 12,540,048 12,473,476 0.5% 25,144,215 24,681,577 1.9%
Program
Services 1,031,908 587,281 75.7% 1,872,353 1,033,766 81.1%
Consulting
Services 106,659 68,958 54.7% 127,148 80,746 57.5%
$13,678,615 $13,129,715 4.2% $27,143,716 $25,796,089 5.2%
Financial Highlights for Three and Six Months Ended June 30, 2005
-- The decrease in Fitness Management Staffing revenue for the second
quarter and year-to-date is attributed to higher-than-normal revenue
attrition from contracts that were acquired in December 2003. Since
contract attrition can be unpredictable, the Company generally does not
view short-term changes in contract revenue to be indicative of future
results, or a trend in the business. New contracts the Company secures
may take 90 to 180 days to generate full revenue. On the other hand,
many of the Company's contracts can be terminated with a 30 day notice.
Because this timing difference can temporarily sway revenue results one
way or another, the Company generally evaluates prospective revenue
trends over a 12 to 18 month period.
-- Fitness Management Program Services are fee-for-service revenues we
earn at managed fitness centers for services such as personal training,
massage therapy, weight loss programs and specialty fitness classes.
The increase in this revenue category for the second quarter and year-
to-date is attributed to higher utilization of these services by
fitness center members.
-- The growth of Health Management Staffing Services revenue for the
second quarter and year-to-date is due primarily to new contracts to
manage corporate wellness programs and growth of existing programs.
-- Health Management Program Services include revenue derived from
providing employee health risk assessments, biometric screening
services, health data collection and management and electronic health
education platform. The increase in this revenue category for the
second quarter and year-to-date is attributed to higher utilization of
these services by existing customers as well as new customers.
-- Gross profit as a percent of revenue decreased to 25.2% for the second
quarter, from 26.2% for the same period last year. This decrease is due
primarily to contract terminations and business pricing pressures. Year
to date gross profit as a percent of revenue increased to 25.4%, from
25.3% for the same period last year. This increase is primarily due to
lower medical costs for full-time employees in the first quarter, which
were offset by contract terminations and business pricing pressures in
the second quarter.
-- Interest expense decreased $112,019 and $234,347 for the second quarter
and six months ended June 30, 2005. This decrease is primarily due to
the repayment of our 12%, $2 million Senior Subordinated Note in
December 2004.
-- Long-Term Obligations decreased $1,551,014 to $22,774
for the quarter ended June 30, 2005, from $1,573,788 for the quarter
ended March 31, 2005.
About The Company
Health Fitness Corporation is a 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, including, without limitation, those
relating to management's belief that the recent realignment of its business
was the right strategic move, are forward-looking statements. Any statements
that are not based upon historical facts, including the outcome of events that
have not yet occurred and our expectations for future performance, are
forward-looking statements. The words "believe," "estimate," "expect,"
"intend," "may," "could," "will," "plan," "anticipate," and similar words and
expressions are intended to identify forward-looking statements. 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 employee health management
demands of major corporations and other factors disclosed from time to time in
our filings with the U.S. Securities and Exchange Commission. You should take
such factors into account when making investment decisions and 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.
Financial tables follow...
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
REVENUE $13,678,615 $13,129,715 $27,143,716 $25,796,089
COSTS OF REVENUE 10,227,999 9,687,357 20,251,298 19,266,794
GROSS PROFIT 3,450,616 3,442,358 6,892,418 6,529,295
OPERATING EXPENSES
Salaries 1,406,562 1,429,569 2,794,485 2,772,278
Other selling,
general and
administrative 942,631 823,504 1,679,497 1,653,610
Amortization of
acquired intangible
assets 219,754 219,583 439,337 439,167
Total operating
expenses 2,568,947 2,472,656 4,913,319 4,865,055
OPERATING INCOME 881,669 969,702 1,979,099 1,664,240
OTHER INCOME (EXPENSE)
Interest expense (16,325) (128,344) (28,249) (262,596)
Other, net (340) 469 (1,990) 1,390
EARNINGS BEFORE
INCOME TAXES 865,004 841,827 1,948,860 1,403,034
INCOME TAX EXPENSE 345,221 342,873 779,543 552,373
NET EARNINGS 519,783 498,954 1,169,317 850,661
Dividend to preferred
shareholders 21,600 28,200 43,200 43,200
NET EARNINGS APPLICABLE
TO COMMON
SHAREHOLDERS 498,183 470,754 1,126,117 807,461
NET EARNINGS PER SHARE:
Basic $0.04 $0.04 $0.09 $0.06
Diluted 0.03 0.03 0.07 0.05
WEIGHTED AVERAGE COMMON
SHARES:
Basic 12,652,370 12,483,979 12,636,465 12,447,374
Diluted 16,618,997 16,066,003 16,617,853 16,054,047
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2005 2004
ASSETS
CURRENT ASSETS
Cash $20,155 $241,302
Trade and other accounts receivable,
less allowances of $208,500 and
$210,700 8,092,592 8,147,430
Prepaid expenses and other 427,353 213,954
Deferred tax assets 911,549 1,660,100
Total current assets 9,451,649 10,262,786
PROPERTY AND EQUIPMENT, net 145,993 150,308
OTHER ASSETS
Goodwill 9,022,501 9,022,501
Customer contracts, less accumulated
amortization of $1,279,900 and $875,700 450,139 854,306
Trademark, less accumulated amortization
of $111,000 and $75,800 246,080 274,167
Other intangible assets, less accumulated
amortization of $84,600 and $81,300 13,448 61,493
Deferred tax assets 306,700 221,400
Other 66,307 87,015
$19,702,817 $20,933,976
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $595,321 $840,155
Accrued salaries, wages, and payroll taxes 2,356,395 2,768,734
Other accrued liabilities 550,743 495,770
Accrued self funded insurance 137,143 225,500
Deferred revenue 1,826,490 1,977,093
Total current liabilities 5,466,092 6,307,252
LONG-TERM OBLIGATIONS 22,774 1,612,759
COMMITMENTS AND CONTINGENCIES - -
CUMULATIVE CONVERTIBLE PREFERRED STOCK,
10,000,000 shares authorized, 1,093,699
and 1,063,945 issued and outstanding 1,542,896 1,530,232
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 50,000,000
shares authorized; 12,652,370 and 12,582,170
shares issued and outstanding 126,524 125,822
Additional paid-in capital 17,895,457 17,836,675
Accumulated comprehensive income 4,180 2,459
Accumulated deficit (5,355,106) (6,481,223)
12,671,055 11,483,733
$19,702,817 $20,933,976
SOURCE Health Fitness Corporation
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Related links:
http://www.hfit.com
Company News On-Call:
http://www.prnewswire.com/comp/000921.html
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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