Healthaxis Announces First Quarter Results On Plan; Corporate Restructuring and Reduction in Workforce
Headquarters Moving From Pennsylvania to Texas
EAST NORRITON, Pa., May 15, 2001 (BW HealthWire) -- Healthaxis Inc. (Nasdaq: HAXS chart, msgs) reported financial results today for the first quarter ended March 31, 2001. Revenues for the first quarter of 2001 were $10.8 million compared to $11.4 million for the same period last year and $10.0 million for the fourth quarter of 2000. Operating expenses before stock based compensation, severance obligations, and depreciation and amortization, were $13.7 million in the first quarter of 2001. For the corresponding 2000 period, operating expenses, before stock based compensation, depreciation, and amortization, were $13.9 million.
The operating loss for the quarter, before stock based compensation, severance obligations, and depreciation and amortization, was $2.9 million, or $0.07 per share. For the corresponding 2000 period, the operating loss, before stock based compensation, depreciation, and amortization, was $2.5 million, or $0.19 per share. The net loss for the first quarter of 2001 was $13.9 million, or $0.33 per share. For the corresponding 2000 period, the net loss was $11.3 million, or $0.87 per share. The first quarter of 2001 includes an extraordinary gain of $1.7 million as a result of restructuring the Company's $27.5 million long-term convertible debt in connection with the reorganization of Healthaxis, Inc. and Healthaxis.com, Inc.
The Company said that the lower revenue compared to last year was primarily the result of lost sales from two of its data imaging customers in mid-2000, partially offset by higher license fees and professional services revenue received this year. Operating expenses, net of merger related costs, were essentially unchanged in the first quarter of 2001 from the first quarter of 2000. Expenses for the first quarter of 2001 do reflect higher spending in sales and marketing and technology development, where the Company is investing for future growth, but such costs are substantially offset by lower costs in the general and administrative areas. Excluding severance and stock based compensation expenses; G & A expenses are down approximately 34% from the first quarter last year.
The Company also announced today an internal restructuring plan and realignment of operations resulting in a reduction-in-force of approximately sixty full-time employees, or about 15% of its Texas and Pennsylvania staff. Related to the realignment and reduction-in-force, the Company said that it expects to record restructuring charges of between $3.2 million and $4.5 million in the second quarter of 2001. Of this amount, approximately 15% relates to severance and other personnel costs for the workforce reduction, 50% relates to the revaluation of certain software and other capitalized costs of the Company, and the remainder relates to relocating the Company's headquarters. In total, counting the reduction-in-force and other contemplated expense reductions, the Company said its initiative is designed to save in excess of $11.0 million annually.
James W. McLane, President and CEO of Healthaxis, stated: "The results for the first quarter of 2001 were in line with our plan as we began the process of turning Healthaxis around in accord with the objectives which I outlined in my letter to shareholders in the 2000 Annual Report. Having now had three months to evaluate the considerable strengths of the Company and its position in its various markets, we are making adjustments that we believe will enable the Company to grow its top line beyond the 37 customers we service today, align its expenses with its revenues, become cash flow positive and begin generating operating profits this year. We will continue to invest in the appropriate foundations for future growth, while refocusing the organization to service our existing customers better and deliver our unique capabilities more effectively to our target markets."
Mr. McLane continued, "We are consolidating and moving the Corporation's headquarters offices from East Norriton, Pennsylvania to Irving, Texas, in the Dallas/Fort Worth area, to concentrate all our resources against the many opportunities available in today's healthcare technology market. We also are transitioning the organization into four core business units in which sales, delivery and customer service are fully integrated and targeted against specific customer markets. The new product based organization ensures that there is clear accountability for product leadership, revenue growth and profitability."
The company announced that the new integrated business units are Application Solutions, headed by Nancy Mendoza; Web Technologies, headed by Emry Sisson; Healthaxis Imaging Services, headed by Mark Airhart; and UICI Technology Services, headed by Vern Shepard.
The Company's management will host a conference call to review results and answer questions. The conference call will be held on May 17 at 3:00 P.M. EDT. Investors wishing to participate should call 800/815-2528, or 706/679-3660 for International callers, and request the Healthaxis IR Call. A replay will be available for 10 days at: 800/642-1687 and 706/645-9291 for International callers. The access code (for replay only) is 416053.
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