HealthFitness Announces Year-End 2009 Financial Results
MINNEAPOLIS, Feb. 12 /PRNewswire-FirstCall/ -- Health Fitness Corporation (NYSE Amex: FIT), a leading provider of integrated employee health and productivity management solutions, today announced unaudited financial results for the fourth quarter and the year ended December 31, 2009. As previously announced and further explained below, Health Fitness Corporation (the "Company") has entered into a definitive agreement with Trustmark Mutual Holding Company pursuant to which the Company expects to be acquired in an all-cash transaction valued at approximately $97 million.
For the fourth quarter, revenues were $21.7 million, compared to $21.7 million in the fourth quarter of 2008. Gross profit during the quarter rose to $7.0 million, or 32.3 percent of revenue, from $6.9 million, or 31.7 percent of revenue, in the comparable quarter last year. Operating income totaled $1.7 million for the quarter, down from $2.1 million for the same period in 2008. Net earnings were $1.0 million, or $0.10 per diluted share, versus $1.2 million, or $0.12 per diluted share, in the fourth quarter of 2008.
2009 Fourth Quarter Business Segment Information
Revenue and gross profit information by segment:
Health Management
(in thousands)
REVENUE Q4 2009 Q4 2008
------- -------
Staffing Services $4,879 $4,724
Program Services $6,917 $6,912
Total Health Mgmt. $11,796 $11,636
GROSS PROFIT Q4 2009 Q4 2008
------- -------
Staffing Services $1,048 $1,332
Program Services $3,354 $3,273
Total Health Mgmt. $4,402 $4,605
During the fourth quarter, health management segment revenue grew 1.4 percent compared to the same period in 2008. Within the segment, staffing services revenue increased 3.3 percent, and program services revenue was comparable to the 2008 fourth quarter. This gain was primarily driven by staffing revenue increases at existing sites and 70 percent growth in revenue for health coaching and advising services, which were offset by an 18 percent revenue decrease for biometric screening services and a 44 percent revenue decrease for flu shots.
Gross margin for the health management segment was 37.3 percent for the quarter, down from 39.6 percent for the prior-year period. Within the segment, gross margin for program services increased to 48.5 percent, from 47.4 percent for the prior-year period, which was primarily driven by the introduction of our Walk This Way walking program to certain health management customers.
Gross margin for staffing services fell to 21.5 percent for the quarter from 28.2 percent for the prior-year period, which reflects higher costs for staff wages and benefits, as well as site maintenance services.
Fitness Management
(in thousands)
REVENUE Q4 2009 Q4 2008
------- -------
Staffing Services $9,407 $9,453
Program Services $506 $572
Total Fitness Mgmt. $9,913 $10,025
GROSS PROFIT Q4 2009 Q4 2008
------- -------
Staffing Services $2,443 $2,022
Program Services $173 $246
Total Fitness Mgmt. $2,616 $2,268
During the 2009 fourth quarter, fitness management segment revenue decreased 1.1 percent compared to the same period last year, which primarily reflects revenue loss related to contract terminations during 2008 and 2009.
Gross margin for the fitness management segment increased to 26.4 percent, from 22.6 percent during the prior-year period, reflecting a higher margin for staffing services, which is attributed to lower staff wages and site supply costs.
Fourth Quarter and Fiscal Year-end Commitments and RFPs
During the quarter, the company secured two new health management commitments representing potential annualized revenue of $0.5 million, and one new fitness management commitment representing potential annualized revenue of $0.1 million. Fitness and health management contract cancellations totaled $3.0 million for the quarter, which is comprised of $0.7 million for fitness management and $2.3 million for health management. These cancellations reflect the continuing weakness in the economy and the financial challenges companies have been experiencing. During the fourth quarter, the company received 23 RFPs for health management services and 6 RFPs for fitness management services.
For the year ended December 31, 2009, the company received a total of 13 health management commitments and expanded services with three existing health management customers. In addition, the company received eight fitness management commitments. Combined commitment and service-expansion activity for 2009 may realize annualized revenue of $11.8 million, which will be partially offset by an annualized revenue loss of $5.2 million from contract cancellations, of which $2.5 million is attributed to fitness management and $2.7 million is attributed to health management. For the year, the company received 109 RFPs for health management services and 24 RFPs for fitness management services.
Year-End 2009 Financial Results
For the year ended December 31, 2009, revenue increased 2.3 percent to $79.5 million, from $77.7 million in the previous year. Gross profit rose 6.8 percent to $25.4 million, or 31.9 percent of revenue, from $23.7 million, or 30.6 percent of revenue, for the prior year.
Operating income was $5.5 million for the year ended December 31, 2009, up from $4.8 million during the prior year, primarily reflecting a 130 basis point increase in gross margins. For the year, net earnings applicable to common shareholders climbed to $3.3 million from $2.7 million last year. Net earnings per diluted share totaled $0.32 compared to $0.27 last year.
Balance Sheet
The company ended 2009 with $6.6 million in cash, compared to $1.3 million at the end of 2008. Working capital at December 31, 2009, less cash, totaled $8.8 million, compared to $9.4 million at December 31, 2008. At December 31, 2009, the company had no balance outstanding on its $3.5 million credit facility, and had stockholders' equity of $32.6 million.
The foregoing financial information has not been audited by the Company's independent registered public accounting firm and is subject to adjustment based upon, among other things, the finalization of the annual audit.
Trustmark to Acquire Health Fitness Corporation
On January 21, 2010, Trustmark Mutual Holding Company and Health Fitness Corporation announced a definitive merger agreement, pursuant to which Trustmark would acquire Health Fitness Corporation, subject to satisfaction of customary closing conditions, in an all-cash transaction valued at approximately $97 million, or $8.78 per share. On January 26, 2010, Trustmark filed a Tender Offer Statement on Schedule TO with the Securities and Exchange Commission (the "SEC") to commence a cash tender offer through its wholly-owned subsidiary Trustco Minnesota, Inc., to purchase all outstanding shares of common stock of Health Fitness Corporation. The tender offer will expire at midnight on February 24, 2010, unless extended in accordance with the merger agreement and the applicable rules and regulations of the SEC. The transaction is expected to close in the first quarter of 2010, subject to satisfaction of closing conditions. The Company's Board and a special committee of disinterested directors of the Company's Board each unanimously (i) determined that this acquisition is advisable and fair to, and in the best interests of, the Company and its shareholders; (ii) adopted and approved the definitive merger agreement, and (iii) recommended that the Company's shareholders tender their shares of common stock in the Tender Offer. On February 5, 2010, the Company filed Amendment No. 1 to the Solicitation/Recommendation Statement filed by the Company on Schedule 14D-9, noting that the Federal Trade Commission had granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Termination of the waiting period satisfies one of the conditions to the closing of the tender offer.
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™ Health Coaching, and fitness facility design and management. For more information on HealthFitness, visit www.hfit.com.
Forward Looking Statements
This press release contains "forward-looking statements." Such statements include, but are not limited to, statements about the anticipated timing and likelihood of the closing of the transaction involving Trustmark and the Company. In addition, the estimated annualized revenue value of new and lost contracts and expanded services 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 2010 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 terminations. 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, 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, and, with respect to the proposed transaction with Trustmark, the satisfaction of closing conditions for the acquisition, including the tender of a majority of the outstanding shares of our common stock, calculated on a fully diluted basis, and the possibility that the transaction will not be completed, or if completed, not completed on a timely basis. The company can give no assurance that any of the transactions related to the tender offer will be completed or that the conditions to the tender offer and the merger will be satisfied. 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 as a result of new information or future events or developments.
Important Additional Information
This press release relates to the tender offer (the "Offer") by Trustmark Mutual Holding Company ("Trustmark"), through its wholly owned subsidiaries Trustco Holdings, Inc. ("Trustco Holdings") and Trustco Minnesota, Inc. ("Trustco Minnesota"), to purchase each outstanding share of common stock of Health Fitness Corporation ("HealthFitness") in exchange for $8.78 in cash. This press release is for informational purposes only and does not constitute an offer to purchase, or a solicitation of an offer to sell, shares of common stock of HealthFitness, nor is it a substitute for the Tender Offer Statement on Schedule TO (including the Offer to Purchase, Letter of Transmittal and related tender offer documents and as amended from time to time, the "Tender Offer Documents") filed by Trustmark, Trustco Holdings and Trustco Minnesota with the Securities and Exchange Commission (the "SEC") on January 26, 2010. The Offer is being made only through the Tender Offer Documents. Before making any decision with respect to the Offer, investors and HealthFitness shareholders are strongly advised to read the Tender Offer Documents, the related Solicitation/Recommendation Statement on Schedule 14D-9 filed by HealthFitness with the SEC on January 26, 2010, and other relevant materials when they become available, because they contain important information.
Investors and HealthFitness shareholders can obtain copies of these materials (and all other related documents filed with the SEC) at no charge on the SEC's website at www.sec.gov. Copies can also be obtained at no charge by directing a request to Georgeson, Inc. at Georgeson, 199 Water Street — 26th Floor, New York, New York 10038 or by phone at (800) 509-1038 or to Trustmark Mutual Holding Company at Trustmark Companies, 400 Field Drive, Lake Forest, Illinois 60045, Attention: Carol Egan, or by phone at (847) 283-2520. Investors and HealthFitness shareholders may also read and copy any reports, statements and other information filed by Trustmark, Trustco Holdings, Trustco Minnesota or HealthFitness with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for further information on its public reference room.
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 |
|
Financial tables on following pages
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008 (UNAUDITED)
2009 2008
----------- -----------
ASSETS
CURRENT ASSETS
Cash $6,550,769 $1,300,620
Trade and other accounts receivable, less
allowances of $273,000 and $317,600 16,755,715 16,306,197
Inventory 234,184 347,510
Prepaid expenses and other 413,851 354,257
Deferred tax assets 243,180 288,626
----------- -----------
Total current assets 24,197,699 18,597,210
PROPERTY AND EQUIPMENT, net 1,491,140 1,243,413
OTHER ASSETS
Goodwill 14,546,250 14,546,250
Software technology, less accumulated
amortization of $1,959,000 and
$1,301,300 2,233,990 1,977,071
Trademark, less accumulated amortization
of $465,900 and $438,700 27,200 54,400
Other intangible assets, less accumulated
amortization of $385,400 and $313,600 143,667 215,500
----------- -----------
$42,639,946 $36,633,844
=========== ===========
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable $1,906,248 $1,470,440
Accrued salaries, wages, and payroll
taxes 3,386,059 2,632,329
Other accrued liabilities 1,257,198 1,664,710
Accrued self funded insurance 263,760 310,511
Deferred revenue 2,072,892 1,820,960
----------- -----------
Total current liabilities 8,886,157 7,898,950
DEFERRED TAX LIABILITY 1,148,847 751,769
LONG-TERM OBLIGATIONS - -
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value; 25,000,000
shares authorized; 10,209,026 and
9,647,404 shares issued and outstanding
at December 31, 2009 and 2008 102,090 96,474
Additional paid-in capital 29,582,509 28,263,803
Accumulated comprehensive loss from
foreign currency translation (65,127) (83,835)
Retained earnings (accumulated deficit) 2,985,470 (293,317)
----------- -----------
32,604,942 27,983,125
----------- -----------
$42,639,946 $36,633,844
=========== ===========
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
----------- ----------- ----------- -----------
REVENUE $21,708,854 $21,660,861 $79,472,965 $77,676,409
COSTS OF REVENUE 14,690,512 14,787,471 54,110,131 53,936,883
----------- ----------- ----------- -----------
GROSS PROFIT 7,018,342 6,873,390 25,362,834 23,739,526
OPERATING EXPENSES
Salaries 3,170,426 2,903,283 12,430,060 11,852,588
Other selling,
general and
administrative 2,097,698 1,856,216 7,286,443 6,937,189
Amortization of
trademarks and
other intangible
assets 24,758 36,682 99,033 164,993
----------- ----------- ----------- -----------
Total operating
expenses 5,292,882 4,796,181 19,815,536 18,954,770
----------- ----------- ----------- -----------
OPERATING INCOME 1,725,460 2,077,209 5,547,298 4,784,756
OTHER INCOME
(EXPENSE)
Interest expense - (1,104) - (21,487)
Other, net - 296 1,546 708
----------- ----------- ----------- -----------
EARNINGS BEFORE
INCOME TAX
EXPENSE 1,725,460 2,076,401 5,548,844 4,763,977
INCOME TAX
EXPENSE 718,210 883,082 2,270,057 2,041,896
----------- ----------- ----------- -----------
NET EARNINGS $1,007,250 $1,193,319 $3,278,787 $2,722,081
=========== =========== =========== ===========
NET EARNINGS
PER COMMON
SHARE:
Basic $0.10 $0.12 $0.34 $0.28
Diluted $0.10 $0.12 $0.32 $0.27
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 9,817,119 9,620,705 9,747,212 9,783,384
Diluted 10,590,748 9,683,524 10,196,784 9,909,680
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Twelve Months Ended
December 31,
2009 2008
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $3,278,787 $2,722,081
Adjustment to reconcile net earnings
to net cash provided by operating
activities:
Common stock issued for Board of
Directors compensation 15,114 -
Common stock issued for services
provided 55,177 -
Stock-based compensation 616,742 761,860
Deferred taxes 442,524 760,887
Depreciation and amortization 1,170,101 1,142,290
Loss on disposal of assets - 4,706
Change in assets and liabilities:
Trade and other accounts
receivable (449,518) (1,619,318)
Inventory 113,326 221,948
Prepaid expenses and other (59,594) (127,366)
Other assets - 9,807
Trade accounts payable 454,516 (678,136)
Accrued liabilities and other 299,467 (924,989)
Deferred revenue 251,932 98,706
---------- ----------
Net cash provided by
operating activities 6,188,574 2,372,476
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (661,183) (344,503)
Sale of property and equipment - 12,781
Capitalized software development
costs (914,531) (735,273)
---------- ----------
Net cash used in investing
activities (1,575,714) (1,066,995)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit - 16,823,447
Repayments under line of credit - (16,823,447)
Repurchase of common stock - (2,354,923)
Proceeds from tax benefit of stock
options exercised 98,081 35,729
Proceeds from the issuance of
common stock 240,196 170,876
Proceeds from the exercise of
stock options 299,012 197,429
---------- ----------
Net cash provided by
(used in) financing
activities 637,289 (1,950,889)
---------- ----------
NET INCREASE (DECREASE) IN CASH 5,250,149 (645,408)
CASH AT BEGINNING OF PERIOD 1,300,620 1,946,028
CASH AT END OF PERIOD $6,550,769 $1,300,620
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Supplemental cash flow information:
Cash paid for interest $- $15,038
Cash paid for taxes 1,686,159 924,525
SOURCE Health Fitness Corporation
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article