INSpire Insurance Solutions Reports First Quarter 2001 Results; Company Is Moving Forward With 100-Day Plan With Efforts to Improve Performance

Apr 23, 2001, 01:00 ET from INSpire Insurance Solutions, Inc.

    FORT WORTH, Texas, April 23 /PRNewswire Interactive News Release/ --
 INSpire Insurance Solutions, Inc. (Nasdaq: NSPR), a leading property and
 casualty insurance outsourcing and integrated solutions provider, today
 announced results for the first quarter 2001.
     Net revenues for the first quarter were $18.7 million, down 49.2% from
 $36.8 million in the same period of 2000.  Operating expenses fell 30.4% from
 $34.5 million to $24.0 million.  The Company's operating loss for the quarter
 was $5.4 million compared to $2.4 million operating profit for the same period
 in 2000.
     The loss for the first quarter was primarily the result of rapidly
 declining revenues which were not sufficiently offset by expense cuts.  The
 decline in revenues reflects two primary factors.  First, revenues are off
 $12 million due to the previously disclosed cancellations of the Island Group
 and The Robert Plan contracts.  Second, volume from some continuing customers
 has declined and this trend is likely to continue.
     "The operating loss is unacceptable.  It is a result of not cutting
 expenses as fast as revenues declined during the quarter," said INSpire
 Chairman and CEO John Pergande.  "As we stated earlier, we made the strategic
 decision at year end to fully evaluate the business rather than making rash
 expense cut decisions.  We're making progress, but revenue generation in the
 first quarter has been much slower than we projected."
     The net loss for the first quarter was $3.6 million, or $0.19 per basic
 and diluted share, compared to a net loss of $3.3 million, or $0.17 per basic
 and diluted share, for the same period of the prior year.  The year ago net
 loss reflects a $4.9 million charge for the cumulative effect of the change in
 accounting for outsourcing services.
     INSpire Insurance Solutions put in place a new management team at the end
 of 2000.  The team immediately undertook a complete strategic and operational
 review of the Company.  INSpire developed and is implementing a 100-Day Plan
 to improve the Company.  The Plan focuses on the five areas that reflect the
 core of its business:  software development and implementation, expense
 management, service levels, employees, and sales and marketing.
     "Progress with the 100-Day Plan has been good in several areas," continued
 Mr. Pergande.  "Changes include new budget practices, a new management team,
 operational workflow improvements, stock option grants to employees, improved
 employee morale, a technology roadmap for 2001 and beyond, service level
 improvements, a targeted approach to sales and marketing, collections on a
 portion of our past due receivables, efforts to begin reductions in
 unnecessary expenses, better efforts to improve how we forecast, a new
 compensation methodology, and, most importantly, happier customers."
     Software implementation time from start to finish has been slashed from
 six months to eight weeks for one line of business in one state.  The time-to-
 market and cost implications for customers from this type of improvement are
 dramatic.
     Efforts are ongoing to analyze and more effectively manage expense levels
 in the future without jeopardizing customer service.  Headcount decreased
 22.3% from end of year levels, while maintaining the ability to take on new
 clients.  All vendor contracts are being evaluated and renegotiated where
 possible.  For example, INSpire renegotiated its telephone contract and this
 change will save the Company $500,000 in 2001.
     Employee morale has improved.  The Company has focused on training, better
 communication from all levels of management, and recognition of employee
 contributions.  The Company also had its first ever company-wide stock option
 grant designed to encourage employees to think like owners.  Attrition has
 dropped from 51% in 2000 to an annualized rate of 26% in the first quarter of
 2001.
     Service levels are improving as demonstrated by:  96.8% of new business is
 issued within three days of receipt of required information, 100% of renewals
 are issued within time required by statute, 95.1% of endorsements are
 processed within six days, 100% of all bills are printed and mailed each day,
 and 100% of all cancels and non-renewals are printed and mailed daily.
     Efforts are being made at rebuilding the sales pipeline.  The Company has
 bid on more business year-to-date than in all of 2000.  The Company's new
 marketing campaign will launch in May.  The campaign includes ads in trade
 publications, a complete overhaul of the Web site, and strategic promotions at
 industry trade shows.
     In other developments, INSpire recently delivered eINSpire, its Web-based
 quote and policy issuance solution, for production use by a West Coast branch
 of a large international insurance company.  This is the second insurance
 company to "go live" with eINSpire.  eINSpire is an integral component of
 INSpire's complete insurance processing solution which also includes
 components for rating, underwriting, billing, third party report ordering,
 workflow management, imaging, printing, reporting, and policy and claims
 administration.  The next generation of the full product suite will officially
 be released on May 1, and signals INSpire's renewed commitment to research and
 development.
     INSpire will host a conference call to discuss first quarter results and
 outlook going forward on Tuesday, April 24, 2001 at 10 a.m. CT.  The dial in
 number is 800-233-2795.  The conference ID is INSPIRE.  The conference call
 will simultaneously be Web-cast and the Web-cast will be available for 90 days
 after the conference call at INSpire's Web site www.nspr.com.  Conference call
 information is available at www.videonewswire.com/INSpire/042401/.
     INSpire Insurance Solutions, Inc. provides policy and claims
 administration solutions for all Property and Casualty insurance products.  As
 one of the foremost providers of outsourcing and integrated systems, INSpire
 serves clients with needs to enter new markets quickly, reduce expenses,
 increase customer satisfaction and focus on core competencies.  Additional
 information can be obtained from INSpire's Web site at www.nspr.com or by
 calling 817-348-3999.
     This press release contains certain forward-looking statements within the
 meaning of Section 27A of the Securities Act of 1933, as amended (the
 "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
 amended.  When used in this press release, words such as "anticipate,"
 "believe," "estimate," "expect," "intend," and similar expressions, as they
 relate to INSpire or its management, identify forward-looking statements.
 These forward-looking statements are based on information currently available
 to INSpire's management.  Actual results could differ materially from those
 contemplated by the forward-looking statements as a result of certain factors,
 including but not limited to: difficulties associated with growth, INSpire's
 dependence on major customers and limited operating history, technological
 change, competitive factors and pricing pressures, product development risks,
 changes in legal and regulatory requirements, general economic conditions and
 other factors.  Such statements reflect the current views of INSpire's
 management with respect to future events and are subject to these and other
 risks, uncertainties and assumptions relating to the operations, results of
 operations, growth strategy and liquidity of INSpire.  All subsequent written
 and oral forward-looking statements attributable to INSpire, or persons acting
 on its behalf, are expressly qualified in their entirety by this paragraph.
 In the context of forward-looking information provided in this press release,
 reference is made to the discussion of risk factors detailed in the Company's
 filings with the Securities and Exchange Commission during the past 12 months.
 
 
                       INSpire Insurance Solutions, Inc.
                            Statements of Operations
                                  (Unaudited)
 
                                                        Three Months
                                                       Ended March 31,
                                                    2001             2000
     REVENUES:
       Outsourcing services                    $ 17,419,626     $ 32,800,954
       Software and software services             1,086,959        3,731,205
       Other                                        156,195          307,831
         Total revenues                          18,662,780       36,839,990
     EXPENSES:
       Cost of outsourcing services              17,893,118       25,238,516
       Cost of software and software services       763,623        2,580,301
       Cost of other revenues, net                   18,974          118,526
       Selling, general and administrative        2,840,403        3,430,087
       Research and development, net                496,860          919,447
       Severance expense                             83,769           78,697
       Depreciation and amortization              1,704,615        2,113,010
       Bad debt expense                             150,000              ---
       Litigation expense                            82,918              ---
       Other                                           (196)         (10,125)
         Total expenses                          24,034,084       34,468,459
     OPERATING INCOME (LOSS)                     (5,371,304)       2,371,531
     OTHER INCOME:
       Interest income                              221,112          185,583
         Total other income                         221,112          185,583
     INCOME (LOSS) BEFORE INCOME TAX AND
      CUMULATIVE EFFECT OF ACCOUNTING CHANGE     (5,150,192)       2,557,114
     INCOME TAX BENEFIT (EXPENSE)                 1,596,559       (1,001,188)
     INCOME (LOSS) BEFORE CUMULATIVE EFFECT
      OF ACCOUNTING CHANGE                       (3,553,633)       1,555,926
     Cumulative effect of change in accounting
      for outsourcing services, net of
      $2,184,241 income tax benefit                     ---       (4,861,698)
     NET LOSS                                  $ (3,553,633)    $ (3,305,772)
 
     SHARES OUTSTANDING (BASIC AND DILUTED)      18,771,621       19,032,051
 
     EARNINGS PER COMMON SHARE (BASIC AND DILUTED):
     INCOME (LOSS) BEFORE CUMULATIVE EFFECT
      OF ACCOUNTING CHANGE                     $      (0.19)    $       0.08
     Cumulative effect of change in accounting
      for outsourcing services, net of income
      tax benefit                              $        ---     $      (0.25)
     NET LOSS                                  $      (0.19)    $      (0.17)
 
 
                       INSpire Insurance Solutions, Inc.
                                 Balance Sheets
 
                                                 March 31,      December 31,
                                                    2001             2000
                    ASSETS                      (unaudited)
 
     CURRENT ASSETS:
       Cash and cash equivalents               $ 10,272,776     $  8,619,072
       Investments                                      ---        4,867,269
       Interest receivable                           22,712              ---
       Accounts receivable, net                  15,171,491       19,761,284
       Income taxes receivable                    1,303,294        1,882,467
       Deferred income taxes                      8,782,861        8,782,860
       Prepaid expenses and other current assets  1,641,271        1,663,358
         Total current assets                    37,194,405       45,576,310
     Deferred income taxes                        8,657,498        7,060,939
     Property and equipment                       7,292,393        7,863,203
     Intangibles and other assets                37,267,187       37,391,191
     TOTAL ASSETS                              $ 90,411,483     $ 97,891,643
 
             LIABILITIES AND SHAREHOLDERS' EQUITY
 
     CURRENT LIABILITIES:
       Accounts payable                        $    972,949     $  2,924,290
       Accrued payroll and compensation           1,469,016        1,426,216
       Other accrued expenses                     7,631,388        9,580,427
       Unearned revenue                           7,748,595        7,286,896
       Deferred compensation                        497,032          821,855
         Total current liabilities               18,318,980       22,039,684
     Deferred compensation                          367,616          370,229
     TOTAL LIABILITIES                         $ 18,686,596     $ 22,409,913
     Commitments and contingencies                      ---              ---
 
     SHAREHOLDERS' EQUITY:
     Preferred stock, $1.00 par value;
      1,000,000 shares authorized,
      none issued and outstanding                       ---              ---
     Common stock, $.01 par value;
      50,000,000 shares authorized,
      18,771,621 issued and outstanding
      in 2001; 19,138,001 issued and
      outstanding in 2000                      $    191,380     $    191,380
     Additional paid-in capital                 113,994,356      113,729,020
     Treasury stock, at cost                       (399,744)             ---
     Accumulated deficit                        (42,061,105)     (38,438,670)
       Total shareholders' equity              $ 71,724,887     $ 75,481,730
 
     TOTAL                                     $ 90,411,483     $ 97,891,643
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X32049224
 
 

SOURCE INSpire Insurance Solutions, Inc.
    FORT WORTH, Texas, April 23 /PRNewswire Interactive News Release/ --
 INSpire Insurance Solutions, Inc. (Nasdaq: NSPR), a leading property and
 casualty insurance outsourcing and integrated solutions provider, today
 announced results for the first quarter 2001.
     Net revenues for the first quarter were $18.7 million, down 49.2% from
 $36.8 million in the same period of 2000.  Operating expenses fell 30.4% from
 $34.5 million to $24.0 million.  The Company's operating loss for the quarter
 was $5.4 million compared to $2.4 million operating profit for the same period
 in 2000.
     The loss for the first quarter was primarily the result of rapidly
 declining revenues which were not sufficiently offset by expense cuts.  The
 decline in revenues reflects two primary factors.  First, revenues are off
 $12 million due to the previously disclosed cancellations of the Island Group
 and The Robert Plan contracts.  Second, volume from some continuing customers
 has declined and this trend is likely to continue.
     "The operating loss is unacceptable.  It is a result of not cutting
 expenses as fast as revenues declined during the quarter," said INSpire
 Chairman and CEO John Pergande.  "As we stated earlier, we made the strategic
 decision at year end to fully evaluate the business rather than making rash
 expense cut decisions.  We're making progress, but revenue generation in the
 first quarter has been much slower than we projected."
     The net loss for the first quarter was $3.6 million, or $0.19 per basic
 and diluted share, compared to a net loss of $3.3 million, or $0.17 per basic
 and diluted share, for the same period of the prior year.  The year ago net
 loss reflects a $4.9 million charge for the cumulative effect of the change in
 accounting for outsourcing services.
     INSpire Insurance Solutions put in place a new management team at the end
 of 2000.  The team immediately undertook a complete strategic and operational
 review of the Company.  INSpire developed and is implementing a 100-Day Plan
 to improve the Company.  The Plan focuses on the five areas that reflect the
 core of its business:  software development and implementation, expense
 management, service levels, employees, and sales and marketing.
     "Progress with the 100-Day Plan has been good in several areas," continued
 Mr. Pergande.  "Changes include new budget practices, a new management team,
 operational workflow improvements, stock option grants to employees, improved
 employee morale, a technology roadmap for 2001 and beyond, service level
 improvements, a targeted approach to sales and marketing, collections on a
 portion of our past due receivables, efforts to begin reductions in
 unnecessary expenses, better efforts to improve how we forecast, a new
 compensation methodology, and, most importantly, happier customers."
     Software implementation time from start to finish has been slashed from
 six months to eight weeks for one line of business in one state.  The time-to-
 market and cost implications for customers from this type of improvement are
 dramatic.
     Efforts are ongoing to analyze and more effectively manage expense levels
 in the future without jeopardizing customer service.  Headcount decreased
 22.3% from end of year levels, while maintaining the ability to take on new
 clients.  All vendor contracts are being evaluated and renegotiated where
 possible.  For example, INSpire renegotiated its telephone contract and this
 change will save the Company $500,000 in 2001.
     Employee morale has improved.  The Company has focused on training, better
 communication from all levels of management, and recognition of employee
 contributions.  The Company also had its first ever company-wide stock option
 grant designed to encourage employees to think like owners.  Attrition has
 dropped from 51% in 2000 to an annualized rate of 26% in the first quarter of
 2001.
     Service levels are improving as demonstrated by:  96.8% of new business is
 issued within three days of receipt of required information, 100% of renewals
 are issued within time required by statute, 95.1% of endorsements are
 processed within six days, 100% of all bills are printed and mailed each day,
 and 100% of all cancels and non-renewals are printed and mailed daily.
     Efforts are being made at rebuilding the sales pipeline.  The Company has
 bid on more business year-to-date than in all of 2000.  The Company's new
 marketing campaign will launch in May.  The campaign includes ads in trade
 publications, a complete overhaul of the Web site, and strategic promotions at
 industry trade shows.
     In other developments, INSpire recently delivered eINSpire, its Web-based
 quote and policy issuance solution, for production use by a West Coast branch
 of a large international insurance company.  This is the second insurance
 company to "go live" with eINSpire.  eINSpire is an integral component of
 INSpire's complete insurance processing solution which also includes
 components for rating, underwriting, billing, third party report ordering,
 workflow management, imaging, printing, reporting, and policy and claims
 administration.  The next generation of the full product suite will officially
 be released on May 1, and signals INSpire's renewed commitment to research and
 development.
     INSpire will host a conference call to discuss first quarter results and
 outlook going forward on Tuesday, April 24, 2001 at 10 a.m. CT.  The dial in
 number is 800-233-2795.  The conference ID is INSPIRE.  The conference call
 will simultaneously be Web-cast and the Web-cast will be available for 90 days
 after the conference call at INSpire's Web site www.nspr.com.  Conference call
 information is available at www.videonewswire.com/INSpire/042401/.
     INSpire Insurance Solutions, Inc. provides policy and claims
 administration solutions for all Property and Casualty insurance products.  As
 one of the foremost providers of outsourcing and integrated systems, INSpire
 serves clients with needs to enter new markets quickly, reduce expenses,
 increase customer satisfaction and focus on core competencies.  Additional
 information can be obtained from INSpire's Web site at www.nspr.com or by
 calling 817-348-3999.
     This press release contains certain forward-looking statements within the
 meaning of Section 27A of the Securities Act of 1933, as amended (the
 "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
 amended.  When used in this press release, words such as "anticipate,"
 "believe," "estimate," "expect," "intend," and similar expressions, as they
 relate to INSpire or its management, identify forward-looking statements.
 These forward-looking statements are based on information currently available
 to INSpire's management.  Actual results could differ materially from those
 contemplated by the forward-looking statements as a result of certain factors,
 including but not limited to: difficulties associated with growth, INSpire's
 dependence on major customers and limited operating history, technological
 change, competitive factors and pricing pressures, product development risks,
 changes in legal and regulatory requirements, general economic conditions and
 other factors.  Such statements reflect the current views of INSpire's
 management with respect to future events and are subject to these and other
 risks, uncertainties and assumptions relating to the operations, results of
 operations, growth strategy and liquidity of INSpire.  All subsequent written
 and oral forward-looking statements attributable to INSpire, or persons acting
 on its behalf, are expressly qualified in their entirety by this paragraph.
 In the context of forward-looking information provided in this press release,
 reference is made to the discussion of risk factors detailed in the Company's
 filings with the Securities and Exchange Commission during the past 12 months.
 
 
                       INSpire Insurance Solutions, Inc.
                            Statements of Operations
                                  (Unaudited)
 
                                                        Three Months
                                                       Ended March 31,
                                                    2001             2000
     REVENUES:
       Outsourcing services                    $ 17,419,626     $ 32,800,954
       Software and software services             1,086,959        3,731,205
       Other                                        156,195          307,831
         Total revenues                          18,662,780       36,839,990
     EXPENSES:
       Cost of outsourcing services              17,893,118       25,238,516
       Cost of software and software services       763,623        2,580,301
       Cost of other revenues, net                   18,974          118,526
       Selling, general and administrative        2,840,403        3,430,087
       Research and development, net                496,860          919,447
       Severance expense                             83,769           78,697
       Depreciation and amortization              1,704,615        2,113,010
       Bad debt expense                             150,000              ---
       Litigation expense                            82,918              ---
       Other                                           (196)         (10,125)
         Total expenses                          24,034,084       34,468,459
     OPERATING INCOME (LOSS)                     (5,371,304)       2,371,531
     OTHER INCOME:
       Interest income                              221,112          185,583
         Total other income                         221,112          185,583
     INCOME (LOSS) BEFORE INCOME TAX AND
      CUMULATIVE EFFECT OF ACCOUNTING CHANGE     (5,150,192)       2,557,114
     INCOME TAX BENEFIT (EXPENSE)                 1,596,559       (1,001,188)
     INCOME (LOSS) BEFORE CUMULATIVE EFFECT
      OF ACCOUNTING CHANGE                       (3,553,633)       1,555,926
     Cumulative effect of change in accounting
      for outsourcing services, net of
      $2,184,241 income tax benefit                     ---       (4,861,698)
     NET LOSS                                  $ (3,553,633)    $ (3,305,772)
 
     SHARES OUTSTANDING (BASIC AND DILUTED)      18,771,621       19,032,051
 
     EARNINGS PER COMMON SHARE (BASIC AND DILUTED):
     INCOME (LOSS) BEFORE CUMULATIVE EFFECT
      OF ACCOUNTING CHANGE                     $      (0.19)    $       0.08
     Cumulative effect of change in accounting
      for outsourcing services, net of income
      tax benefit                              $        ---     $      (0.25)
     NET LOSS                                  $      (0.19)    $      (0.17)
 
 
                       INSpire Insurance Solutions, Inc.
                                 Balance Sheets
 
                                                 March 31,      December 31,
                                                    2001             2000
                    ASSETS                      (unaudited)
 
     CURRENT ASSETS:
       Cash and cash equivalents               $ 10,272,776     $  8,619,072
       Investments                                      ---        4,867,269
       Interest receivable                           22,712              ---
       Accounts receivable, net                  15,171,491       19,761,284
       Income taxes receivable                    1,303,294        1,882,467
       Deferred income taxes                      8,782,861        8,782,860
       Prepaid expenses and other current assets  1,641,271        1,663,358
         Total current assets                    37,194,405       45,576,310
     Deferred income taxes                        8,657,498        7,060,939
     Property and equipment                       7,292,393        7,863,203
     Intangibles and other assets                37,267,187       37,391,191
     TOTAL ASSETS                              $ 90,411,483     $ 97,891,643
 
             LIABILITIES AND SHAREHOLDERS' EQUITY
 
     CURRENT LIABILITIES:
       Accounts payable                        $    972,949     $  2,924,290
       Accrued payroll and compensation           1,469,016        1,426,216
       Other accrued expenses                     7,631,388        9,580,427
       Unearned revenue                           7,748,595        7,286,896
       Deferred compensation                        497,032          821,855
         Total current liabilities               18,318,980       22,039,684
     Deferred compensation                          367,616          370,229
     TOTAL LIABILITIES                         $ 18,686,596     $ 22,409,913
     Commitments and contingencies                      ---              ---
 
     SHAREHOLDERS' EQUITY:
     Preferred stock, $1.00 par value;
      1,000,000 shares authorized,
      none issued and outstanding                       ---              ---
     Common stock, $.01 par value;
      50,000,000 shares authorized,
      18,771,621 issued and outstanding
      in 2001; 19,138,001 issued and
      outstanding in 2000                      $    191,380     $    191,380
     Additional paid-in capital                 113,994,356      113,729,020
     Treasury stock, at cost                       (399,744)             ---
     Accumulated deficit                        (42,061,105)     (38,438,670)
       Total shareholders' equity              $ 71,724,887     $ 75,481,730
 
     TOTAL                                     $ 90,411,483     $ 97,891,643
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X32049224
 
 SOURCE  INSpire Insurance Solutions, Inc.