Second quarter 2009 Highlights: - Secured a $1.3 million commitment
from a Fortune 100 financial services company; - $3.1 million of
new potential annualized revenue, net of contract terminations, was
generated during the quarter from 7 new commitments and 3 customer
expansions; - 27 Requests for Proposal received; - Cash totaled
$4.7 million compared to $1.3 million at December 31, 2008.
MINNEAPOLIS, Aug. 5 /PRNewswire/ -- Health Fitness Corporation
(NYSE Amex: FIT), a leading provider of integrated employee health
and productivity management solutions, today announced financial
results for the second quarter ended June 30, 2009. The company
reported revenue of $18.8 million in the second quarter of 2009, in
line with second quarter 2008 revenue of $18.8 million. Gross
profit for the quarter increased 1.4 percent to $5.6 million
compared to $5.5 million in the second quarter of 2008. Gross
margin for the quarter was 29.9 percent compared to 29.4 percent in
last year's second quarter. The company reported net earnings of
$0.36 million, or $0.04 per diluted share, the same as in the
second quarter of 2008. Three new health management commitments and
three health management customer expansions were generated during
the quarter, resulting in potential annualized revenue of $3.7
million, compared to $1.9 million generated in the same quarter
last year, a 95% increase. Four new fitness management commitments
were generated during the quarter, resulting in potential
annualized revenue of $0.7 million, compared to $0.5 million of
customer expansions in the same quarter last year, a 40% increase.
Health and fitness management annualized revenue loss from contract
cancellations during the quarter totaled $0.1 million and $1.2
million, respectively, versus $0.2 million in last year's second
quarter for fitness management. Net of contract cancellations,
total potential annualized revenue generated during the second
quarter of 2009 was $3.1 million, up 41 percent compared to $2.2
million in the comparable quarter of 2008. Gregg Lehman, Ph.D.,
president and chief executive officer, said, "Our financial
performance for the quarter came in as we expected. We had a very
good quarter in terms of generating $4.4 million of potential
annualized revenue from new fitness and health management business.
The $3.7 million of potential annualized revenue from new health
management business represents our best quarter since the second
quarter of 2006. Some notable health management wins for the second
quarter include a $1.2 million expansion of a middle market
customer we secured during the first quarter, and a $1.3 million
commitment from a Fortune 100 financial services company. Regarding
our health management sales pipeline, we are currently among the
finalists on 18 Requests for Proposal representing total potential
annualized revenue of approximately $10 million. Given the new
commitments and expansions generated in the first half of the year,
along with a strong sales pipeline, we are optimistic that 2010
will produce stronger top- and bottom-line results." "We are also
very pleased with the four new fitness commitments we obtained
during the quarter, which represents the highest number of wins
since the fourth quarter of 2006. At the same time, the weak
economy has further eroded our base of fitness revenue as evidenced
by the $1.2 million of annualized revenue we will lose from second
quarter contract cancellations. The good news is that the economy
appears to be stabilizing, which makes us believe that contract
cancellations may be lower during the second half of the year. When
combined with approximately $3 million of potential annualized
revenue in our fitness sales pipeline, there is a very good
opportunity to start 2010 with positive revenue growth in our
fitness segment." 2009 Second Quarter Business Segment Information
Revenue and gross profit information by segment: Health Management
(in thousands) REVENUE Q2 2009 Q2 2008 ------- ------- Staffing
Services $4,650 $4,569 Program Services $4,186 $3,760 Total Health
Mgmt. $8,836 $8,329 GROSS PROFIT Q2 2009 Q2 2008 ------- -------
Staffing Services $1,023 $1,238 Program Services $2,186 $1,713
Total Health Mgmt. $3,209 $2,951 During the second quarter, health
management segment revenue grew 6.1 percent to $8.8 million
compared to $8.3 million in the second quarter of 2008. Within the
segment, staffing services revenue increased 1.8 percent and
program services revenue grew 11.3 percent compared to the second
quarter of the previous year. During the second quarter, compared
to the same quarter last year, eHealth platform enrollment
increased 34.3%, participation in biometric screenings increased
12.4 percent; health advising sessions increased 51.5 percent and
health coaching enrollment increased 132.2 percent. The growth of
these service areas represents important data points regarding the
achievement of future participation and revenue goals. Gross margin
for the health management segment was 36.3 percent for the quarter,
up from 35.4 percent for the prior-year period. Within the segment,
gross margin for program services increased to 52.2 percent, from
45.6 percent for the prior-year period, primarily driven by
improved pricing and cost management within screenings and health
advising/coaching services. Gross margin for staffing services
decreased to 22.0 percent for the quarter, compared to 27.1 percent
for the prior-year period, which is attributed to higher wages and
benefits for onsite staff. Fitness Management (in thousands)
REVENUE Q2 2009 Q2 2008 ------- ------- Staffing Services $9,272 $
9,837 Program Services $ 673 $ 650 Total Fitness Mgmt. $9,945
$10,487 GROSS PROFIT Q2 2009 Q2 2008 ------- ------- Staffing
Services $2,115 $2,350 Program Services $ 288 $ 236 Total Fitness
Mgmt. $2,403 $2,586 Fitness management segment revenue during the
second quarter of 2009 decreased 5.2 percent compared to the same
period last year. This anticipated decrease in revenue primarily
reflects revenue lost due to contract terminations during the past
twelve months. Gross margin for the fitness management segment was
24.2 percent compared to 24.7 percent during the prior-year period.
Second Quarter RFPs During the second quarter, the company received
15 new RFPs for health management services and 12 new RFPs for
fitness management services. For the first six months of 2009, the
company received 55 new RFPs for health management services and 14
new RFPs for fitness management services. 2009 First-Half Results
For the six months ended June 30, 2009, revenue increased 1.3
percent to $38.0 million, from $37.5 million for the same period
last year. Gross profit increased 9.4 percent to $11.9 million from
$10.9 million for the prior-year period. Gross margins for the
six-month period increased to 31.3 percent compared to 29.0 percent
during the prior year period. Net earnings for the six-month period
increased 97.8 percent to $1.4 million compared to $0.69 million
for the prior year period. Net earnings per diluted share totaled
$0.13 compared to $0.07 for the same period last year. Seven new
health management commitments and three health management customer
expansions were generated during the first six months, resulting in
potential annualized revenue of $5.2 million, compared to $3.9
million generated in the same period last year, a 33% increase.
Five new fitness management commitments were generated during the
first six months, resulting in potential annualized revenue of $0.8
million, compared to $0.5 million of customer expansions in the
same period last year, a 60% increase. Health and fitness
management annualized revenue loss from contract cancellations
during the first six months totaled $0.2 million and $1.6 million,
respectively, versus $0.6 million in the same period last year for
fitness management. Net of contract cancellations, total potential
annualized revenue generated during the first six months of 2009
was $4.2 million, up 11 percent compared to $3.8 million in the
comparable period of 2008. Balance Sheet The company ended its
second quarter with $4.7 million in cash, compared to $1.3 million
at December 31, 2008. Working capital at June 30, 2009, less cash,
totaled $7.8 million compared to $9.4 million on December 31, 2008.
At June 30, 2009, the company had no balance outstanding on its
$3.5 million credit facility, and had stockholders' equity of $29.8
million. Mr. Lehman concluded, "As the healthcare reform debate
progresses, the idea of healthy diets, physical activity and
preventative care are increasingly being accepted as common sense
approaches to improving quality of life and reducing healthcare
costs. The large increases we have experienced in eHealth platform
enrollments and the number of biometric screenings, health advising
sessions and health coaching enrollees are strong indications that
the concept of wellness is growing. Coupled with our ability to
demonstrate a return on investment that generally exceeds 2 to 1,
we believe that Health Fitness is viewed as a leading provider of
integrated employee health improvement services, which should
position us for continued growth in the quarters to come."
Conference Call The company will conduct a conference call today at
4:30 pm ET discuss its financial results for the second quarter
ended June 30, 2009. Participants can dial (800) 860-2442 or (412)
858-4600 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 (877) 344-7529 or (412)
317-0088, access code 432598, through August 7, 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 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, the return on investment of the
company's programs, the strong finalist pipeline, the company's
optimism that 2010 will produce stronger top- and bottom-line
results, the company's belief that contract cancellations may be
lower during the second half of the year, the opportunity to start
2010 with positive revenue growth in the fitness segment, and the
company's continued growth in the quarters to come, are
forward-looking statements. In addition, the estimated annualized
revenue value of new and lost contracts, customer expansions and
outstanding requests for proposal are forward looking statements,
which are based upon estimates 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, contract cancellations, 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.
Financial tables on following pages HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months
Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 ----
---- ---- ---- REVENUE $18,780,909 $18,815,458 $37,988,139
$37,518,125 COSTS OF REVENUE 13,168,278 13,278,965 26,084,284
26,639,367 ---------- ---------- ---------- ---------- GROSS PROFIT
5,612,631 5,536,493 11,903,855 10,878,758 OPERATING EXPENSES
Salaries 3,172,648 3,026,310 6,116,403 5,998,687 Other selling,
general and administrative 1,781,319 1,832,102 3,404,848 3,595,767
Amortization of trademarks and other intangible assets 24,759
42,770 49,517 85,540 ------ ------ ------ ------ Total operating
expenses 4,978,726 4,901,182 9,570,768 9,679,994 ---------
--------- --------- --------- OPERATING INCOME 633,905 635,311
2,333,087 1,198,764 OTHER INCOME (EXPENSE) Interest expense -
(3,208) - (4,131) Other, net 556 (1,211) 1,527 1,074 --- -------
----- ----- EARNINGS BEFORE INCOME TAX EXPENSE 634,461 630,892
2,334,614 1,195,707 INCOME TAX EXPENSE 278,010 268,192 974,975
508,295 ------- ------- ------- ------- NET EARNINGS $356,451
$362,700 $1,359,639 $687,412 ======== ======== ========== ========
NET EARNINGS PER COMMON SHARE: Basic $0.04 $0.04 $0.14 $0.07
Diluted 0.04 0.04 0.13 0.07 WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: Basic 9,722,328 9,863,977 9,695,135 9,953,124 Diluted
10,137,907 9,992,369 10,071,685 10,140,886 HEALTH FITNESS
CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) JUNE 30, 2009
AND DECEMBER 31, 2008 June 30, December 31, 2009 2008 ---- ----
ASSETS CURRENT ASSETS Cash $4,689,079 $1,300,620 Trade and other
accounts receivable, less allowances of $308,000 and $317,600
13,848,845 16,306,197 Inventory 305,666 347,510 Prepaid expenses
and other 708,621 354,257 Deferred tax assets 288,626 288,626
------- ------- Total current assets 19,840,837 18,597,210 PROPERTY
AND EQUIPMENT, net 1,193,507 1,243,413 OTHER ASSETS Goodwill
14,546,250 14,546,250 Software technology, less accumulated
amortization of $1,619,000 and $1,301,300 2,137,540 1,977,071
Trademark, less accumulated amortization of $452,300 and $438,700
40,800 54,400 Other intangible assets, less accumulated
amortization of $349,500 and $313,600 179,583 215,500 -------
------- $37,938,517 $36,633,844 =========== =========== LIABILITIES
AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable
$1,420,153 $1,470,440 Accrued salaries, wages, and payroll taxes
3,008,662 2,632,329 Other accrued liabilities 883,133 1,664,710
Accrued self funded insurance 289,269 310,511 Deferred revenue
1,754,197 1,820,960 --------- --------- Total current liabilities
7,355,414 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; 10,077,750 and 9,647,404 shares issued and
outstanding at June 30, 2009 and December 31, 2008, respectively
100,778 96,474 Additional paid-in capital 28,740,589 28,263,803
Accumulated comprehensive loss from foreign currency translation
(76,355) (83,835) Retained earnings (accumulated deficit) 1,066,322
(293,317) --------- -------- 29,831,334 27,983,125 ----------
---------- $37,938,517 $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 Investor Relations, Joe Dorame,
Robert Blum, 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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