MINNEAPOLIS, Aug. 17 /PRNewswire/ -- Health Fitness Corporation
(OTC Bulletin Board: HFIT) reported today that new hospital center management
contracts contributed to a 2 percent increase in revenues from continuing
operations to $6,350,000 for the second quarter ending June 30, 1999 compared
to revenues of $6,235,000 in the second quarter of 1998.
Net loss for the second quarter of 1999 was $(587,000) compared to a net
loss of $(585,000) during the second quarter last year. Gross profit
decreased 15 percent to $1,337,000 from $1,564,000 in the same period a year
ago due to an increase in costs of revenues. Operating expenses increased
21 percent to $1,435,000 compared to $1,184,000 during the second quarter of
1998 due to costs and fees associated with the company's restructuring actions
and sales of its discontinued divisions. Other income (expense) decreased by
$340,000 from $88,000 income for the three months ended June 30, 1998 to
$253,000 expense for the same period in 1999 primarily due to recognition of
expenses associated with preparing fitness center operating systems for Year
2000 compliance. During the second quarter of 1999, the company did not have
any accounting charges for its discontinued operations, while the second
quarter of 1998 included an $(885,000) charge for discontinued operations.
Revenues for the six-month period ending June 30, 1999 were $13,298,000, a
7 percent increase from the $12,412,000 reported in the first six months of
1998. Growth in revenues came from new fitness center management and Fitness
Club Network contracts. Net loss for the six-month period was $(1,739,000)
compared to a net loss of $(555,000) a year ago. The increase in net loss was
primarily due to expenses and fees associated with the company's restructuring
actions and sales of its discontinued operations. During the first six months
of 1999, the company recognized an accounting charge of $(1,425,000) for its
discontinued operations, as compared to a $(1,283,000) charge for discontinued
operations in the first six months of 1998.
Health Fitness also announced it completed the sale of its equipment
division on July 2, 1999 for a sale price of $175,000, of which the company
has received $80,000 in cash with the remainder amount in two notes payable.
Charles J.B. Mitchell, Jr., acting chief executive officer of Health
Fitness, said, "The first priority is to improve the financial strength of
Health Fitness by consolidating its assets to focus on its core business of
managing corporate and hospital fitness centers. Although there remains much
work to do, the results are as expected at this point in the turnaround
process."
Mitchell added, "During the second quarter, we focused on completing the
sale of the company's physical therapy clinics and its fitness equipment
division, restructuring management, and looking at external opportunities to
strengthen the company's presence in its core market. In the next several
months, our efforts will be directed at completing the sales of the few
remaining non-strategic assets and strengthening the core business where
Health Fitness has a solid customer base and a strong market presence."
Health Fitness Corporation of Minneapolis, Minn. manages corporate fitness
centers and hospital-based fitness centers throughout the United States and
provides a wide range of additional preventive health care services to
corporations.
This press release contains forward-looking statements regarding the
company's anticipated future operations and growth; these statements should be
read in conjunction with the various factors affecting the company's ability
to finance and manage such growth discussed in the Management's Discussion and
Analysis of Financial Condition and Results of Operations portion of the
company's Annual Report on Form 10-K for the year ended December 31, 1998.
Financial information follows
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ending Six Months Ending
6/30/99 6/30/98 6/30/99 6/30/98
Revenues $6,350,000 $6,235,000 $13,298,000 $12,412,000
Costs of revenue 5,013,000 4,671,000 10,195,000 9,234,000
Gross profit 1,337,000 1,564,000 3,103,000 3,178,000
Operating expenses 1,435,000 1,184,000 2,731,000 2,366,000
Operating income (loss) (98,000) 380,000 372,000 812,000
Interest expense (236,000) (180,000) (478,000) (281,000)
Other income (expense) (253,000) 88,000 (207,000) 197,000
Income (loss) from
continuing operations
before income taxes (587,000) 288,000 (313,000) 728,000
Income taxes -- 12,000 1,000 --
Income (loss) from
continuing operations (587,000) 300,000 (314,000) 728,000
Loss from discontinued
operations -- (885,000) (1,425,000) (1,283,000)
Net loss $(587,000) $(585,000) $(1,739,000) $(555,000)
Basic net income (loss)
per share $(0.05) $(0.05) $(0.15) $(0.05)
Diluted net income (loss)
per share $(0.05) $(0.05) $(0.14) $(0.05)
Basic weighted average
common shares
Outstanding 11,949,383 11,769,808 11,917,078 10,754,077
Diluted weighted average
common shares
Outstanding 11,949,383 11,769,808 12,583,744 10,754,077
SOURCE Health Fitness Corporation
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800-758-5804, ext. 000921
CONTACT:
Charles Mitchell of Manchester Company,
612-338-4722, for Health Fitness Corporation
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