Third Quarter 2009 Highlights: - Total revenue grew 6.9 percent
compared to Q3 2008; - Health management revenue increased 22.9
percent compared to Q3 2008; - Secured a $3.0 million health
management commitment from a large health insurance plan; - Secured
a $1.6 million fitness management commitment from a large
automotive company; - $4.8 million of new potential annualized
revenue, net of contract terminations, was generated during the
quarter from six new commitments; - Cash of $5.2 million compared
to $1.3 million at December 31, 2008, and no debt outstanding.
MINNEAPOLIS, Nov. 4 /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 third quarter ended September
30, 2009. The company reported revenue of $19.8 million in the
third quarter of 2009, a 6.9 percent increase compared to third
quarter 2008 revenue of $18.5 million. Gross profit for the quarter
increased 7.6 percent to $6.4 million compared to $6.0 million in
the third quarter of 2008. Gross margin for the quarter was 32.6
percent compared to 32.4 percent in last year's third quarter. The
company reported net earnings of $0.91 million, or $0.09 per
diluted share, compared to $0.84 million, or $0.09 per diluted
share for the third quarter of 2008. Four new health management
commitments were generated during the quarter, resulting in
potential annualized revenue of $3.3 million, compared to $1.2
million of potential annualized revenue generated in the same
quarter last year, a 175 percent increase. Two new fitness
management commitments were generated during the quarter, resulting
in potential annualized revenue of $1.9 million, compared to $0.5
million of potential annualized revenue generated in the same
quarter last year, a 280 percent increase. Health and fitness
management annualized revenue loss from contract cancellations
during the quarter totaled $0.2 million and $0.2 million,
respectively, versus $0.3 million and $0.8 million in last year's
third quarter. Total potential annualized revenue generated during
the third quarter of 2009, net of contract cancellations, was $4.8
million, up 700 percent compared to $0.6 million in the comparable
quarter of 2008. Gregg Lehman, Ph.D., president and chief executive
officer, said, "We are pleased with 6.9 percent quarterly revenue
growth in light of a tough economy. The $4.8 million of net
potential annualized revenue generated during the quarter surpasses
the $3.1 million of net potential annualized revenue we produced
during the second quarter of 2009, and represents our best quarter
for new potential annualized revenue since the second quarter of
2006. Highlights from the third quarter include a health management
commitment from a large insurance plan for $3.0 million of
potential annualized revenue, which will begin service
implementation in July 2010. We also received a fitness management
commitment from an auto manufacturer, representing $1.6 million of
potential annualized revenue, which will begin service
implementation in January 2010." "Going into the fourth quarter and
2010, we are optimistic about the potential for continued revenue
growth. We are currently a finalist in one fitness management
proposal and 12 health management proposals, representing potential
annualized revenue of $10.7 million. As stated previously, our
future revenue growth will continue to be driven by our ability to
help self-insured employers reduce the cost of employee healthcare.
In addition to the University of Louisville ROI study we published
earlier this year, we are currently completing several new ROI
analyses that initially show returns ranging from $2.25 to $3.62
for every $1.00 invested. We are excited about these initial
results because they affirm the proposition that health improvement
services can reduce the impact of health care costs. We will
disclose more details about these successful outcomes in future
issue briefs and other communications" 2009 Third Quarter Business
Segment Information Revenue and gross profit information by
segment: Health Management (in thousands) REVENUE Q3 2009 Q3 2008
------- ------- Staffing Services $4,730 $4,552 Program Services
$5,320 $3,624 Total Health Mgmt. $10,050 $8,176 GROSS PROFIT Q3
2009 Q3 2008 ------- ------- Staffing Services $1,233 $1,280
Program Services $2,814 $2,142 Total Health Mgmt. $4,047 $3,422
During the third quarter, health management segment revenue grew
22.9 percent to $10.1 million compared to $8.2 million in the third
quarter of 2008. Within the segment, staffing services revenue
increased 3.9 percent and program services revenue grew 46.8
percent compared to the third quarter of 2008. During the third
quarter, compared to the same quarter last year, eHealth platform
enrollment increased 23 percent; biometric screening participation
increased 21 percent; health advising sessions increased 53 percent
and health coaching enrollment increased 265 percent. Gross margin
for the health management segment was 40.3 percent for the quarter,
down from 41.8 percent for the prior-year period. Within the
segment, gross margin for program services decreased to 52.9
percent, from 59.1 percent for the prior-year period. This decrease
is primarily attributed to the mix of program services delivered,
the addition of telephonic health coaches during the quarter, and
higher costs for our eHealth platform. Gross margin for staffing
services decreased to 26.1 percent for the quarter, compared to
28.1 percent for the prior-year period, which is attributed to
higher wages and benefits for on-site staff. Fitness Management (in
thousands) REVENUE Q3 2009 Q3 2008 ------- ------- Staffing
Services $9,175 $9,702 Program Services $551 $619 Total Fitness
Mgmt. $9,726 $10,321 GROSS PROFIT Q3 2009 Q3 2008 ------- -------
Staffing Services $2,175 $2,357 Program Services $219 $209 Total
Fitness Mgmt. $2,394 $2,566 Fitness management segment revenue
during the third quarter of 2009 decreased 5.8 percent compared to
the same period last year. This anticipated decrease in revenue
primarily reflects revenue lost due to contract terminations since
the beginning of 2008. Gross margin for the fitness management
segment was 24.6 percent compared to 24.9 percent during the
prior-year period. Third Quarter RFPs During the third quarter, the
company received 31 Request For Proposals (RFPs) for health
management services and four RFPs for fitness management services.
For the first nine months of 2009, the company received 86 RFPs for
health management services and 18 RFPs for fitness management
services. 2009 Year-To-Date Results For the nine months ended
September 30, 2009, revenue increased 3.1 percent to $57.8 million,
from $56.0 million for the same period last year. Gross profit
increased 8.8 percent to $18.3 million, from $16.9 million for the
prior-year period. Gross margins for the nine-month period
increased to 31.8 percent compared to 30.1 percent during the
prior-year period. Net earnings for the nine-month period increased
48.6 percent to $2.3 million, from $1.5 million for the prior-year
period. Net earnings per diluted share totaled $0.22 compared to
$0.15 for the same period last year. Eleven new health management
commitments and three health management customer expansions were
generated during the first nine months, resulting in potential
annualized revenue of $8.4 million, compared to $5.1 million
generated in the same period last year, a 65 percent increase.
Seven new fitness management commitments were generated during the
first nine months, resulting in potential annualized revenue of
$2.8 million, compared to $1.0 million generated in the same period
last year, a 180 percent increase. Health and fitness management
annualized revenue loss from contract cancellations during the
first nine months totaled $0.4 million and $1.8 million,
respectively, versus $0.3 million and $1.4 million in the same
period last year. Total potential annualized revenue generated
during the first nine months of 2009, net of contract
cancellations, was $9.0 million, up 105 percent compared to $4.4
million in the comparable period of 2008. Balance Sheet The company
ended its third quarter with $5.2 million in cash, compared to $1.3
million at December 31, 2008. Working capital at September 30,
2009, less cash, totaled $8.4 million compared to $9.4 million on
December 31, 2008. At September 30, 2009, the company had no
balance outstanding on its $3.5 million credit facility, and had
stockholders' equity of $31.1 million. Lehman concluded, "While
Congress continues to debate the overall direction of health care
reform, we are pleased that each of the four bills currently under
consideration include provisions that address prevention and
wellness. We believe this focus on prevention and wellness affirms
the critical need for these services to effectively manage rising
health care costs caused by poor diet and exercise choices."
Conference Call The company will conduct a conference call today at
4:30 pm ET to discuss its financial results for the third quarter
ended September 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, conference number 435003, through November 10, 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 potential for continued revenue
growth, the return on investment of the company's programs, the
strong finalist pipeline, and health care reform, 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,
governmental action on health care reform, 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. 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: HEALTH FITNESS
CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three
Months Ended Nine Months Ended September 30, September 30, 2009
2008 2009 2008 ---- ---- ---- ---- REVENUE $19,775,972 $18,497,423
$57,764,111 $56,015,548 COSTS OF REVENUE 13,335,335 12,510,045
39,419,619 39,149,412 ---------- ---------- ---------- ----------
GROSS PROFIT 6,440,637 5,987,378 18,344,492 16,866,136 OPERATING
EXPENSES Salaries 3,143,231 2,950,618 9,259,634 8,949,305 Other
selling, general and administrative 1,783,897 1,485,206 5,188,745
5,080,973 Amortization of trademarks and other intangible assets
24,758 42,771 74,275 128,311 ------ ------ ------ ------- Total
operating expenses 4,951,886 4,478,595 14,522,654 14,158,589
--------- --------- ---------- ---------- OPERATING INCOME
1,488,751 1,508,783 3,821,838 2,707,547 OTHER INCOME (EXPENSE)
Interest expense - (16,252) - (20,383) Other, net 19 (662) 1,546
412 -- ---- ----- --- EARNINGS BEFORE INCOME TAX EXPENSE 1,488,770
1,491,869 3,823,384 2,687,576 INCOME TAX EXPENSE 576,872 650,519
1,551,847 1,158,814 ------- ------- --------- --------- NET
EARNINGS $911,898 $841,350 $2,271,537 $1,528,762 ======== ========
========== ========== NET EARNINGS PER COMMON SHARE: Basic $0.09
$0.09 $0.23 $0.16 Diluted 0.09 0.09 0.22 0.15 WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING: Basic 9,781,522 9,610,238 9,724,247
9,837,994 Diluted 10,438,155 9,688,941 10,138,651 9,982,990 HEALTH
FITNESS CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 2009 AND DECEMBER 31, 2008 September 30, December 31,
2009 2008 ---- ---- ASSETS CURRENT ASSETS Cash $5,194,454
$1,300,620 Trade and other accounts receivable, less allowances of
$285,000 and $317,600 15,558,692 16,306,197 Inventory 300,757
347,510 Prepaid expenses and other 750,135 354,257 Deferred tax
assets 324,831 288,626 ------- ------- Total current assets
22,128,869 18,597,210 PROPERTY AND EQUIPMENT, net 1,378,396
1,243,413 OTHER ASSETS Goodwill 14,546,250 14,546,250 Software
technology, less accumulated amortization of $1,789,200 and
$1,301,300 2,173,204 1,977,071 Trademark, less accumulated
amortization of $459,000 and $438,700 34,000 54,400 Other
intangible assets, less accumulated amortization of $367,500 and
$313,600 161,625 215,500 ------- ------- $40,422,344 $36,633,844
=========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES Trade accounts payable $1,563,775 $1,470,440
Accrued salaries, wages, and payroll taxes 3,881,585 2,632,329
Other accrued liabilities 1,138,652 1,664,710 Accrued self funded
insurance 217,620 310,511 Deferred revenue 1,708,619 1,820,960
--------- --------- Total current liabilities 8,510,251 7,898,950
DEFERRED TAX LIABILITY 769,607 751,769 LONG-TERM OBLIGATIONS - -
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock,
$0.01 par value; 25,000,000 shares authorized; 10,136,550 and
9,647,404 shares issued and outstanding at September 30, 2009 and
December 31, 2008, respectively 101,366 96,474 Additional paid-in
capital 29,129,448 28,263,803 Accumulated comprehensive loss from
foreign currency translation (66,548) (83,835) Retained earnings
(accumulated deficit) 1,978,220 (293,317) --------- --------
31,142,486 27,983,125 ---------- ---------- $40,422,344 $36,633,844
=========== =========== DATASOURCE: Health Fitness Corporation
CONTACT: Company Contact, Wes Winnekins, CFO of Health Fitness
Corporation, +1-952-897-5275; or Investor Relations, 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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