First Quarter 2009 Highlights: - Diluted EPS of $0.10 versus $0.03;
- Record high 42 requests for proposals received; - Health
management segment revenue grew 13 percent; - Health coaching and
advising services revenue increased 79 percent; - Gross margin
expanded to 33 percent from 29 percent; - Net earnings increased
209 percent to $1,003,000 from $325,000; - Cash totaled $5.3
million, an increase of 308 percent compared to December 31, 2008.
MINNEAPOLIS, May 6 /PRNewswire-FirstCall/ -- Health Fitness
Corporation (NYSE Amex: FIT), a leading provider of integrated
employee health and productivity management solutions, today
announced financial results for the first quarter ended March 31,
2009. For the first quarter, revenue increased 2.7 percent to $19.2
million, compared to $18.7 million in the first quarter of 2008.
Gross profit during the quarter rose 17.8 percent to $6.3 million,
from $5.3 million in the comparable quarter last year. Operating
income totaled $1.7 million for the quarter, an increase of 201.6
percent, compared to $0.6 million for the same period in 2008. Net
earnings increased 208.9 percent to $1.0 million, or $0.10 per
diluted share, compared to $0.32 million, or $0.03 per diluted
share, in the first quarter of 2008. 2009 First Quarter Business
Segment Information Revenue and gross profit information by
segment: Health Management (in thousands) REVENUE Q1 2009 Q1 2008
------- ------- Staffing Services $4,542 $4,296 Program Services
$4,899 $4,081 Total Health Mgmt. $9,441 $8,377 GROSS PROFIT Q1 2009
Q1 2008 ------- ------- Staffing Services $1,140 $939 Program
Services $2,788 $2,050 Total Health Mgmt. $3,928 $2,989 During the
first quarter, health management segment revenue grew 12.7 percent
compared to the same period in 2008. Within the segment, staffing
services revenue increased 5.7 percent and program services revenue
grew 20.1 percent compared to the first quarter of the previous
fiscal year. Health coaching and advising services revenue
increased approximately 79 percent; biometric screening revenues
increased 7 percent and eHealth portal revenues grew 13 percent
during the quarter. Gross margin for the health management segment
was 41.6 percent for the quarter, up from 35.7 percent for the
prior-year period. Within the segment, gross margin for program
services increased to 56.9 percent, from 50.2 percent for the
prior-year period, primarily driven by a gross profit increase of
$528,000 for health coaching and advising services, which is
attributable to revenue growth and productivity improvements. Gross
margin for staffing services expanded to 25.1 percent for the
quarter, from 21.9 percent for the prior-year period, which
reflects better pricing on new business, improved utilization of
full-time labor and lower variable operating expenses. Fitness
Management (in thousands) REVENUE Q1 2009 Q1 2008 ------- -------
Staffing Services $9,202 $9,706 Program Services $564 $620 Total
Fitness Mgmt. $9,766 $10,326 GROSS PROFIT Q1 2009 Q1 2008 -------
------- Staffing Services $2,140 $2,116 Program Services $223 $237
Total Fitness Mgmt. $2,363 $2,353 Fitness management segment
revenue during the first quarter of 2009 decreased 5.4 percent
compared to the same period last year. This anticipated decrease in
revenue primarily reflects revenue lost due to contract
terminations during 2008 and 2009. Gross margin for the fitness
management segment increased to 24.2 percent, from 22.8 percent
during the prior-year period, primarily reflecting a margin
increase of 150 basis points for staffing services. First Quarter
Commitments and RFPs During the quarter, the company secured four
new health management commitments, of which two relate to a new
middle-market offering, and one new fitness management commitment,
which combined may realize annualized revenue of $1.6 million.
Fitness and health management contract cancellations during the
quarter totaled $0.5 million, which is attributed to customer
reaction to current economic conditions. During the first quarter,
the company received 40 new RFPs for health management services and
two new RFPs for fitness management services. The 42 new RFPs
received during the quarter represent a quarterly record for
HealthFitness. For the trailing 12 months ended March 31, 2009, the
company received 96 new RFPs for health management services and 12
new RFPs for fitness management services. Gregg Lehman, Ph.D.,
president and chief executive officer, said, "This was a solid
quarter for HealthFitness and we are pleased with the financial
results. Despite a challenging economic environment, total revenues
increased 2.7 percent for the quarter, and our diluted earnings per
share was $0.10 versus $0.03 in the comparable quarter last year.
Our commitment to expanding gross margins, managing expenses and
achieving process improvements across all operating functions was
rewarded this quarter by strong earnings per share results.
Additionally, during this period of macro-economic difficulty, we
are dedicated to accumulating and prudently managing our cash
position to assure the financial underpinnings of the company
remain strong. We ended the quarter with a very strong cash
position of $5.3 million compared to $1.3 million on December 31,
2008. "As stated before in previous communications, our health
management programs have demonstrated a return on investment that
exceeds 2 to 1, which dramatically improves the ability of our
customers to rein in the negative impact of escalating health care
costs. In that regard, we are particularly pleased with the 79
percent increase in health coaching revenue during the quarter.
This indicates that program participants are increasingly utilizing
the expertise of our health coaches to improve and manage their
physical health and lifestyle behaviors, which we believe will
positively impact our customers' bottom line over time. This is a
strong validation of our value proposition." Lehman continued, "We
also believe that current RFP activity reflects the traction we are
gaining as a leading provider of integrated employee health
improvement services. At the same time, we recognize the economy
remains weak, which could cause potential customers to further
delay their purchase of an employee wellness program. We plan to
address this inertia during the second quarter by collaboratively
engaging companies that have delayed their proposal decision, with
the goal of demonstrating our value proposition and showing them it
makes more financial sense than ever, in a down economy, to invest
in employee wellness. If successful, we believe this initiative
could position us for higher growth in the quarters ahead." Balance
Sheet The company ended its first quarter with $5.3 million in
cash, compared to $1.3 million at December 31, 2008. Working
capital at March 31, 2009, less cash, totaled $6.6 million, a
decrease of $2.8 million compared to December 31, 2008, a very
positive outcome attributed to an improved conversion of accounts
receivable into cash. At March 31, 2009, the company had no balance
outstanding on its $3.5 million credit facility, and had
stockholders' equity of $29.2 million. Conference Call The company
will conduct a conference call to discuss its financial results for
the first quarter ended March 31, 2009. The call will be at 4:30
p.m. ET on Wednesday, May 6, 2009. Participants can dial (888)
396-5640 or (706) 643-0580 to access the conference call, or can
listen via a live Internet web cast, which can be found at
http://www.hfit.com/. A replay of the call is available by visiting
http://www.hfit.com/ for the next 30 days or by calling (800)
642-1687 or (706) 645-9291, access code 94816123, through May 8,
2009. About HealthFitness HealthFitness is a leading provider of
integrated employee health improvement services to Fortune 500
companies, the health care industry and individual consumers. With
30-plus years of experience, HealthFitness partners with employers
to effectively manage health care and productivity costs by
improving individual health and well-being. HealthFitness provides
a portfolio of health and fitness management solutions, including
best-in-class integration, INSIGHT(R) Health Risk Assessments,
screenings, EMPOWERED(TM) Health Coaching, and fitness facility
design and management. For more information on HealthFitness, visit
http://www.hfit.com/. Forward-Looking Statements Certain statements
in this release, including, without limitation, statements relating
to the state of the economy and the return on investment of the
company's programs, management's belief that participation in the
company's health coaching program will positively impact its
customers' bottom line over time, management's belief that current
RFP activity reflects the traction the company is gaining as a
leading provider of integrated employee health improvement
services, and management's belief that the company can noticeably
improve its win rate by collaboratively engaging companies that
have delayed their proposal decision, which could position the
company for higher growth in the quarters ahead, are
forward-looking statements. In addition, the estimated annualized
revenue value of new and lost contracts is a forward-looking
statement, which is based upon an estimate of the anticipated
annualized revenue to be realized or lost. Such information should
be used only as an indication of the activity the company has
recently experienced in its two business segments. These estimates,
when considered together, should not be considered an indication of
the total net, incremental revenue growth the company expects to
generate in 2009 or in any year, as actual net growth may differ
from these estimates due to actual staffing levels, participation
rates and service duration, in addition to other revenue the
company may lose in the future due to customer termination. Any
statements that are not based upon historical facts, including the
outcome of events that have not yet occurred and the company's
expectations for future performance, are forward-looking
statements. The words "potential," "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 management. Actual results may vary materially from
those contained in forward-looking statements based on a number of
factors including, without limitation, the company's inability to
deliver the health management services demanded by major
corporations and other clients, its inability to successfully
cross-sell health management services to its fitness management
clients, its inability to successfully obtain new business
opportunities, its failure to have sufficient resources to make
investments, its ability to make investments and implement
strategies successfully, continued delays in obtaining new
commitments and implementing services, the continued deterioration
of general economic conditions, and other factors disclosed from
time to time in the company's filings with the U.S. Securities and
Exchange Commission including our Form 10-K for 2008 as filed with
the SEC. 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. The company undertakes no obligation
to update any forward-looking statements. HEALTH FITNESS
CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three
Months Ended March 31, 2009 2008 ---- ---- REVENUE $19,207,230
$18,702,667 COSTS OF REVENUE 12,916,006 13,360,402 ----------
---------- GROSS PROFIT 6,291,224 5,342,265 OPERATING EXPENSES
Salaries 2,943,755 2,972,377 Other selling, general and
administrative 1,623,529 1,763,665 Amortization of trademarks and
other intangible assets 24,758 42,770 ------ ------ Total operating
expenses 4,592,042 4,778,812 --------- --------- OPERATING INCOME
1,699,182 563,453 OTHER INCOME (EXPENSE) Interest expense - (923)
Other, net 971 2,285 --- ----- EARNINGS BEFORE INCOME TAX EXPENSE
1,700,153 564,815 INCOME TAX EXPENSE 696,965 240,103 -------
------- NET EARNINGS $1,003,188 $324,712 ========== ======== NET
EARNINGS PER COMMON SHARE: Basic $0.10 $0.03 Diluted 0.10 0.03
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 9,666,876
10,040,374 Diluted 10,014,623 10,206,232 HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, 2009
2008 ---- ---- ASSETS CURRENT ASSETS Cash $5,300,681 $1,300,620
Trade and other accounts receivable, less allowances of $305,000
and $317,600 13,337,434 16,306,197 Inventory 368,373 347,510
Prepaid expenses and other 647,529 354,257 Deferred tax assets
288,626 288,626 ------- ------- Total current assets 19,942,643
18,597,210 PROPERTY AND EQUIPMENT, net 1,183,786 1,243,413 OTHER
ASSETS Goodwill 14,546,250 14,546,250 Software technology, less
accumulated amortization of $1,454,300 and $1,301,300 2,033,155
1,977,071 Trademark, less accumulated amortization of $445,500 and
$438,700 47,600 54,400 Other intangible assets, less accumulated
amortization of $331,500 and $313,600 197,542 215,500 -------
------- $37,950,976 $36,633,844 =========== =========== LIABILITIES
AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable
$1,306,624 $1,470,440 Accrued salaries, wages, and payroll taxes
2,791,466 2,632,329 Other accrued liabilities 2,081,410 1,664,710
Accrued self funded insurance 263,936 310,511 Deferred revenue
1,581,451 1,820,960 --------- --------- Total current liabilities
8,024,887 7,898,950 DEFERRED TAX LIABILITY 751,769 751,769
LONG-TERM OBLIGATIONS - - COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY Common stock, $0.01 par value; 25,000,000
shares authorized; 10,033,351 and 9,647,404 shares issued and
outstanding at March 31, 2009 and December 31, 2008, respectively
100,333 96,474 Additional paid-in capital 28,451,754 28,263,803
Accumulated comprehensive loss from foreign currency translation
(87,638) (83,835) Retained earnings (accumulated deficit) 709,871
(293,317) ------- -------- 29,174,320 27,983,125 ----------
---------- $37,950,976 $36,633,844 =========== =========== CONTACTS
Company Contact: Investor Relations Contact: Wes Winnekins, CFO Joe
Dorame, Robert Blum, Joe Diaz Health Fitness Corporation Lytham
Partners, LLC (952) 897-5275 (602) 889-9700 E: DATASOURCE: Health
Fitness Corporation CONTACT: Wes Winnekins, CFO of Health Fitness
Corporation, +1-952-897-5275; or investors, Joe Dorame, Robert Blum
or Joe Diaz, all of Lytham Partners, LLC, +1-602-889-9700, , for
Health Fitness Corporation Web Site: http://www.hfit.com/
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