A.D.A.M., Inc. Announces Financial Results for Third Quarter 2008
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Thursday November 6, 6:00 am ET
Health Content License Revenues Increase 17%; Benergy Third Quarter Bookings Double on Key Employer Wins
ATLANTA--(BUSINESS WIRE)--A.D.A.M., Inc. (NASDAQ: ADAM), a leading provider of health information and benefit technology solutions, today announced financial results for its third quarter ended September 30, 2008.
“We are very pleased with the growth we are experiencing in our health content licensing and encouraged by the level of activity and number of new contracts we secured in the third quarter,” said Kevin Noland, A.D.A.M.’s president and chief executive officer. “We more than doubled the amount of new enrollment contracts during the quarter, a direct result of our investments in our recently expanded sales force. We also believe that the market for Benergy and our health content products will continue to grow even with today’s challenging economic climate as our products are uniquely positioned to help our clients drive awareness for their services and reduce administrative costs.”
Third Quarter Financial Highlights
Licensing revenues, which include health content and Benergy products, for the third quarter ended September 30, 2008 were $6,270,000 as compared to $5,822,000 for the same period of 2007, an increase of 8%. The increase in revenues is primarily attributable to additional contracts for health content products that were sold in previous quarters.
Total revenues for the third quarter ended September 30, 2008 were $7,139,000 as compared to $6,676,000 for the same period of 2007, an increase of 7%. A.D.A.M. experienced solid growth for its health content products during the third quarter as a result of increased investment in sales, marketing and client management functions. Overall revenue growth was impacted by the Company’s education product sales. The Company is currently transitioning its line of CD ROM-based educational products to a Web-based subscription model. The Company is expected to release its first Web-based product for education during 2009. Benergy revenues experienced a modest decline in the third quarter. During the first three quarters of 2008, the Company enhanced its support services for its broker channel and expanded its sales force to address a growing market opportunity for its Benergy and enrollment solutions for larger employers. These efforts resulted in a number of new Benergy and enrollment contracts sold during the third quarter. Revenues from these new contracts will begin in the fourth quarter of 2008 and will be generally realized during the 2009 enrollment year.
Net income for the third quarter ended September 30, 2008 was $688,000 or $0.06 per share on a fully diluted basis as compared to $788,000 or $0.07 per share on a fully diluted basis for the same period of 2007.
Adjusted non-GAAP operating income for the third quarter ended September 30, 2008 was $1,323,000, or 19% of revenues, compared to $1,600,000 for the same period in 2007. Investment in expansion of the Company’s sales force and client management functions contributed to the reduction in operating income. The Company believes these investments are essential in realizing its long-term growth opportunity.
Adjusted EBITDA was $1,909,000, or 27% of revenues, for the third quarter ended September 30, 2008 as compared to $2,085,000 for the same period of 2007.
Due in part to its strong cashflow, the Company made an early prepayment of $2,000,000 (in advance of the required repayment schedule) on its long-term note payable during the third quarter in order to reduce future interest expenses.
September Year-to-Date Results
For the nine-month period ended September 30, 2008, revenues were $21,451,000, up 6% from $20,245,000 in the same period last year. Net income for the nine-month period ended September 30, 2008 was $2,046,000, as compared to $2,115,000, for the same period last year. Increases in revenues are primarily attributable to increased sales of the Company’s health content products. Net income for the nine-month period ended September 30, 2008 was reduced by the increased investments in sales, marketing and client management functions, as compared to the same period in 2007. In 2008, net income results included a benefit or reduction of $810,000 in interest expense due to the payments made by the Company to reduce its long-term debt.
During the first nine months of 2008, A.D.A.M. generated $5,521,000 in cash flow from operations and the Company’s cash on hand was $2,388,000 at September 30, 2008. |
