NWH Announces Second Quarter Results And Plans For Substantial Growth From ENS In Fiscal 2004

NEW YORK, June 10 /PRNewswire-FirstCall/ -- NWH, Inc. , the parent company of Electronic Network Systems, Inc. ("ENS"), today reported financial results for its fiscal second quarter and six months ended April 30, 2004. NWH owns and operates ENS (http://www.enshealth.com/ ), a payer services organization that connects healthcare payers and providers using state of the art proprietary software and telecommunications services for most healthcare payment and insurance validation transactions. The Company focuses its efforts on the development of ENS' business and continues its business of acquiring and disposing of interests in healthcare and other business areas.

NWH's net revenues for the second quarter of fiscal 2004 were $4.4 million, compared to $2.9 million in the second quarter of the prior fiscal year. NWH's reported net income for the second quarter was $529,560 (including $851,568 of Other Income), or $0.18 per share basic and diluted, as compared to net (loss) of ($679,072) (including ($667,890) of Other Income) or ($0.23) basic and diluted per share, in the second quarter of the prior fiscal year. Shares used for computing basic earnings per share were 2,924,631 and 2,919,979, and fully diluted earnings per share were 2,924,657 and 2,932,299, for the second fiscal quarter ended April 30, 2004 and 2003, respectively.

Net revenue for the six months ended April 30, 2004 was $8.6 million, as compared to net revenue of $5.9 million for the six months ended April 30, 2003. NWH's net income for the six months ended April 30, 2004 was $413,074 (including $793,950 of Other Income), or $0.14 per share basic and diluted, compared to a net income of $805,121 (including $1,513,253 of Other Income), or $0.28 per share basic and diluted, in fiscal 2003. Shares used for computing basic earnings per share were 2,924,631 and 2,921,020, and fully diluted earnings per share were 2,964,657 and 2,924,495, for the six month period ended April 30, 2004 and 2003, respectively. Other Income consists primarily of gain or loss on securities transactions, reflecting the net results of option and short sale position and settlements and sale of BellSouth Common Stock. Further, unrealized gains and losses on BellSouth common stock are recorded through Other Comprehensive Income (Loss) and are only recorded in the Statement of Operations when realized upon ultimate sale. The realized loss on derivative transactions decreased from ($837,998) for the three months ended April 30, 2003 to a gain of $738,015 for the three months ended April 30, 2004. The unrealized gain on BellSouth common stock, reflected in Other Comprehensive Loss, net of income taxes, for the three months ended April 30, 2003 was $956,180 as compared to a loss of ($505,566) for the three months ended April 30, 2004.

"NWH posted a strong second quarter of fiscal 2004, reflecting ENS revenues that surpassed our expectations, as well as better than anticipated expense management. After giving effect to dividends paid, NWH had a cash and short-term investments position of $31.8 million at the end of April," said Terrence S. Cassidy, NWH's President and CEO. "ENS' improving results are expected to help propel NWH to significant year-over-year revenue growth in fiscal 2004."

About NWH and ENS

ENS is a payer services organization that connects payers (i.e., insurance companies and third party administrators) and providers (i.e., doctors, group practices and other healthcare providers) using state of the art proprietary software and telecommunications services for most healthcare payment and insurance validation transactions. ENS provides a state of the art technology platform for web based graphical user interfaces on a national basis, which enables its clients, both payers and providers, to comply fully with applicable regulatory requirements such as those imposed by HIPAA (as discussed in Industry below). ENS' service offerings address the full array of evolving industry needs in this focused area with a complete cycle of services from a single point of entry (a personal computer in the client's office) for both providers and payers, compatible with multiple system and database operating environments. These services include an Internet transactions portal, payer transactions hosting, electronic data interchange, Pre- adjudication software services (PASS(TM)), scanning, optical character recognition and data entry of paper claims and correspondence and mailroom services. ENS generates revenue through recurring subscriptions, flat or per transaction fees and revenue sharing.

Safe Harbor Statement

Certain statements contained in this press release, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company's financial and business prospects and capital requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the limited nature of the Company's operations and the risk of the Company's failure to acquire additional businesses; the uncertain acceptance of Health-e Network(R); competition; existing government regulations and changes in, or the failure to comply with, government regulations; the ability of the Company to sustain, manage or forecast its growth; dependence on significant customers and the potential loss thereof; the ability to attract and retain qualified personnel; risk of technological obsolescence, and other factors referenced in this Quarterly Report on Form 10-Q including, without limitation, in "Management's Discussion and Analysis of Financial Condition and Results of Operations." Certain of these factors are discussed in more detail in the Company's Annual Report on Form 10-K for the year ended October 31, 2003, including, without limitation, under the caption "Business" and Exhibit 99.1 thereto. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

Additional information on these and other factors are contained in NWH's reports filed with the Securities and Exchange Commission (SEC), including the Company's Quarterly Report on Form 10-Q as filed with the SEC on June 10, 2004, copies of which are available at the website maintained by the SEC at http://www.sec.gov/ . NWH assumes no obligation to update the forward-looking statements included in this press release.

NWH, INC. Condensed Consolidated Balance Sheets April 30, October 31, 2004 2003 (Unaudited) Assets Current assets Cash and cash equivalents $26,043,838 $29,309,192 Marketable securities 5,785,105 9,777,901 Trade and other receivables 2,840,630 2,419,797 Prepaid expenses and other current assets 487,591 456,794 Refundable income taxes 45,053 Total current assets 35,202,217 41,963,684 Property and equipment, net of accumulated depreciation and amortization of $3,119,173 and $2,865,039, respectively 829,590 703,739 Internally developed software, net of accumulated amortization of $1,701,637 and $1,238,812, respectively 2,447,539 2,489,215 Goodwill 3,762,187 3,762,187 Investments and other assets 1,006,466 957,748 Total assets $43,247,999 $49,876,573 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued expenses $2,086,719 $2,116,881 Call options written at fair value 242,000 2,148,928 Current portion of long-term debt 80,259 71,078 Current income taxes 970,426 Deferred income taxes 2,690,792 3,598,792 Dividends payable 1,462,316 1,462,316 Total current liabilities 6,562,086 10,368,421 Note payable 140,000 140,000 Long-term debt 112,319 15,022 Total liabilities 6,814,405 10,523,443 Stockholders' equity Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding Common stock, $.01 par value: 20,000,000 shares authorized; 3,342,231 shares issued 33,422 33,422 Additional paid-in capital 23,195,991 23,195,991 Retained earnings 17,864,161 20,375,719 Accumulated other comprehensive income 431,654 839,632 Treasury stock 417,600 shares at cost (5,091,634) (5,091,634) Total stockholders' equity 36,433,594 39,353,130 Total liabilities and stockholders' equity $43,247,999 $49,876,573 NWH, INC. Condensed Consolidated Statement of Operations (Unaudited) For the Three Months For the Six Months Ended April 30, Ended April 30, 2004 2003 2004 2003 Services revenue $4,373,436 $2,890,901 $8,559,746 $5,936,991 Cost of services 2,350,858 1,494,353 4,536,508 2,985,293 Professional fees 179,002 125,116 397,530 309,476 General and administrative 1,768,232 1,605,902 3,614,018 3,038,324 Depreciation and amortization 76,352 82,712 142,566 168,022 Total expenses 4,374,444 3,308,083 8,690,622 6,501,115 Loss from operations (1,008) (417,182) (130,876) (564,124) Other income (expense) Gain (loss) on securities transactions, net 738,015 (837,998) 558,458 739,113 Dividend income 56,035 98,975 124,571 192,613 Interest income 65,105 87,091 134,920 191,640 Interest expense (7,587) (15,958) (23,999) (31,366) Other income -- -- -- 421,253 851,568 (667,890) 793,950 1,513,253 Income (loss) before provision for (benefit from) income taxes 850,560 (1,085,072) 663,074 949,129 Provision for (benefit from) income taxes 321,000 (406,000) 250,000 144,000 Net income (loss) $529,560 $(679,072) $413,074 $805,129 Net income (loss) per common share Basic $.18 (.23) $.14 .28 Diluted $.18 $(.23) $.14 $.28 Weighted average number of common shares outstanding Basic 2,924,631 2,919,979 2,924,631 2,921,023 Diluted 2,924,657 2,932,299 2,964,657 2,924,495 NWH, Inc. Condensed Consolidated Statements of Comprehensive Income (Unaudited) For the Three Months For the Six Months Ended April 30, Ended April 30, 2004 2003 2004 2003 Net income (loss) $529,560 $(679,072) 413,074 805,129 Other comprehensive (loss) income Net unrealized holding (loss) gain on marketable securities arising during the period, net of income tax of ($261,000), $489,990, $52,457 and ($130,010), respectively (505,566) 956,180 99,237 (222,193) Reclassification adjustment for gains recognized in net income, net of income taxes of $0, $0, ($261,293) and $0, respectively (507,215) Other comprehensive (loss) income (505,566) 956,180 (407,978) (222,193) Comprehensive income $23,994 $277,108 $5,096 $582,936 NWH, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended April 30, 2004 2003 Cash flows from operating activities Net income $413,074 $805,129 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 770,624 691,224 Gain on securities transactions, net (558,458) (739,113) Gain on sale of investment -- (421,253) Deferred income taxes (700,000) (402,625) Bad debt expense 24,641 21,040 Changes in assets and liabilities Trade and other receivables (445,474) 158,354 Prepaid expenses and other current assets (82,788) (310,156) Refundable income taxes (45,053) -- Other assets (48,718) 22,990 Accounts payable and accrued expenses (30,162) 40,382 Current income taxes payable (970,426) (583,620) Net cash used in operating activities (1,672,740) (717,648) Cash flows from investing activities Acquisition of property and equipment (202,251) (232,170) Cash paid for internally developed software (405,479) (294,859) Proceeds from sale of marketable securities 4,144,783 -- Proceeds from sale of marketable equity securities-short sale -- 1,309,805 Acquisition of marketable securities-short sale -- (1,301,382) Acquisition of written call options (3,585,825) (7,373,090) Proceeds from sale of written call options 1,469,400 6,155,611 Proceeds from sale of investment -- 1,421,253 Net cash provided by (used in) investing activities 1,420,628 (314,832) Cash flows from financing activities Acquisition of treasury stock -- (323,106) Proceeds of short-term debt 100,000 -- Dividends paid (2,924,632) -- Principal payments of short and long-term debt (117,664) (136,667) Principal payments of capital leases (70,946) -- Net cash used in financing activities (3,013,242) (459,773) Net decrease in cash and cash equivalents (3,265,354) (1,492,253) Cash and cash equivalents Beginning of period 29,309,192 31,498,217 End of period $26,043,838 $30,005,964 Capital lease assets acquired and obligations incurred $195,087 $ -- NWH, Inc. Marketable Securities Unrealized Holding Fair Cost Gain Value BellSouth Common Stock $5,131,451 $653,654 $5,785,105 NWH, Inc. Stock Options Three Months Ended Six Months Ended April 30, April 30, 2004 2003 2004 2003 Net income (loss) As reported $529,560 $(679,072) $413,074 $805,129 Deduct: total stock based employee Compensation expense determined under fair value based method for all awards, net of related tax effects (6,500) (19,770) (13,180) (39,539) Pro forma 523,060 (698,842) 399,894 765,590 Net income (loss) per share Basic - as reported $ .18 $ (.23) $ .14 $ .28 Basic - pro forma .18 (.24) .13 .26 Diluted - as reported .18 (.23) .14 .28 Diluted - pro forma .18 (.24) .13 .26 NWH, Inc. Earnings Per Share Three Months Ended Six Months Ended April 30, April 30, 2004 2003 2004 2003 Basic EPS shares outstanding (weighted average) 2,924,631 2,919,979 2,924,631 2,921,023 Effect of dilutive securities 26 12,320 40,026 3,472 Diluted EPS shares outstanding 2,924,657 2,932,299 2,964,657 2,924,495 NWH, Inc. Marketable Securities NWH and Other ENS Total Three months ended April 30, 2004 Revenues Service $-- $4,373,436 $4,373,436 Expenses Cost of services, professional fees, and general and administrative 485,137 3,812,955 4,298,092 Depreciation and amortization -- 76,352 76,352 (Loss) income from operations $(485,137) $ 484,129 $(1,008) Capital expenditure for property and equipment and internally developed software $-- $ 326,767 $326,767 Three months ended April 30, 2003 Revenues Service $-- $2,890,901 $2,890,901 Expenses Cost of services, professional fees, and general and administrative 487,966 2,737,405 3,225,371 Depreciation and amortization 465 82,247 82,712 (Loss) income from operations $(488,431) $71,249 $(417,182) Capital expenditure for property and equipment and internally developed software $-- $ 312,767 $312,767 Six months ended April 30, 2004 Revenues Service $-- $8,559,746 $8,559,746 Expenses Cost of services, professional fees, and general and administrative 987,900 7,560,156 8,548,056 Depreciation and amortization 500 142,066 142,566 (Loss) income from operations $(988,400) $857,524 $(130,876) Total assets $32,499,354 $10,748,645 $43,247,999 Capital expenditure for property and equipment and internally developed software $-- $802,817 $802,817 Six months ended April 30, 2003 Revenues Service $-- $5,936,991 $5,936,991 Expenses Cost of services, professional fees, and general and administrative 869,287 5,463,806 6,333,093 Depreciation and amortization 930 167,092 168,022 (Loss) income from operations $(870,217) $306,093 $(564,124) Total assets $44,311,549 $9,053,941 $53,365,490 Capital expenditure for property and equipment and internally developed software $-- $ 527,029 $527,029

CONTACT: Carl Nicola of NWH, Inc., +1-212-582-1212

Web site: http://www.enshealth.com/