GOLDEN, Colo., Aug. 9 /PRNewswire-FirstCall/ -- HealtheTech, Inc. , the maker of proprietary handheld medical devices and software for the measurement of resting metabolic rate and nutrition monitoring, today reported financial results for the second quarter of 2004. Total revenues for the second quarter of 2004 were $1,041,000, compared to $739,000 for the first quarter 2004, a 41% quarter over quarter improvement and compared to $1,208,000 in the second quarter of 2003. The year over year 14% decline in revenue was expected, due to stocking purchases and minimum purchase commitments made by large customers and distributors during the second quarter of 2003. Net loss for the second quarter of 2004 improved 15% from the first quarter of 2004 and 63% from the second quarter 2003. The Company reported a loss of $2.6 million ($0.36 per share) for the second quarter 2004 compared to a net loss of $3.0 million ($0.43 per share) for the first quarter of 2004 and a net loss of $7.0 million ($1.79 per share) for the second quarter of 2003.
Statistics - three and six months ended June 30, 2004 (in thousands except per share amounts) Three months ended Six months ended June 30, June 30, 2003 2004 2003 2004 Revenue $ 1,208 $ 1,041 $ 2,826 $ 1,780 Gross profit $ 69 $ 231 $ 493 $ 315 Operating expense (GAAP) $ 7,130 $ 2,828 $ 18,524 $ 5,974 Business operations expense (non-GAAP) $ 4,522 $ 2,401 $ 14,399 $ 4,756 Net loss $(7,012) $(2,561) $(17,910) (1) $(5,579) Loss per share (2) $ (1.79) $ (0.36) $ (4.57) (1) $ (0.79) Weighted average shares (2) 3,923 7,083 3,920 7,073 (1) includes impact of 1/1/03 FAS123 adoption - originally reported as $(17,014) and $(4.34), respectively (2) 2003 restated for 1-for-5 reverse split effective December 31, 2003
As of June 30, 2004 HealtheTech had $12.8 million in cash and cash equivalents, compared to $14.4 million as of March 31, 2004 and $10.7 million as of June 30, 2003.
“Our second quarter was the second consecutive quarter of double digit revenue growth,” stated Jim Dennis, Chairman & CEO. “We are beginning to see a broader acceptance of our products in the commercial fitness, medically supervised weight management and corporate wellness areas. Our ‘SmartGem’ pre-loaded measurement model continues to be the product of choice for our customers with over 90% of all placements during the quarter coming from this configuration. Total unit placements for the quarter were up 135% over the previous quarter with the first quarter of 2004 up over 100% from the fourth quarter of 2003. Our business operations expense (non-GAAP) maintained last quarter’s efficient levels and provided a year over year improvement of 47% for the second quarter. At the same time we were able to grow revenues 41% over the first quarter, which was itself, a 25% gain over its previous quarter.
We are beginning to see early results from our agreements with Sodexho in the medically supervised weight management market and Health Fitness Corporation in the corporate wellness market. In the second quarter of 2004 we began shipping ‘SmartGem’ units to 24 Hour Fitness for distribution to approximately 300 of its fitness centers nationwide. We believe this is the beginning of a long-term relationship and strengthens our position in the very important fitness market.”
During the second quarter, as a cost efficiency measure and to better control quality, we developed an internal manufacturing capability for production of our MedGem and BodyGem devices. Additionally, results were enhanced by a $124,000 revenue recognition for software revenue that had been deferred from a previous period.
In our previous earnings release we introduced a non-GAAP measure, “business operations expense,” that our management uses as a benchmark on how well we are managing our controllable expenses. While we are not suggesting that this measure is superior to traditional GAAP metrics, we find that it effectively isolates those expenses that our employees can directly influence. Reconciliation of this non-GAAP measure to GAAP follows:
Reconciliation of non-GAAP term (in 000’s) Three months Six months ended 6/30, ended 6/30, 2003 2004 2003 2004 Operating expenses (GAAP) $7,130 $ 2,828 $18,524 (1) $5,974 Less - Restructuring charges (2,114) (105) (2,114) (377) Less - Stock-based charges (494) (322) (2,011)(1) (841) Business operations expense (non-GAAP) $ 4,522 $ 2,401 $14,399 $4,756 (1) includes impact of 1/1/03 FAS123 adoption -- originally reported as $17,674 and $1,115, respectively. 2004 Outlook
In the 4th quarter 2003 earnings release, the Company projected 2004 revenues would fall between $7 and $10 million. We now believe that, despite two quarters of strong double-digit growth, revenues will fall short of the projected range. Additionally, while we are encouraged by the growth trend of our business, we believe that given our size, and the volatility that comes with an early stage company, we cannot, with any degree of appropriate accuracy, provide quarter-to-quarter financial guidance. At a time when our customer base is larger and our selling cycle is more predictable we may resume the practice.
About HealtheTech
HealtheTech, Inc., headquartered in Golden, CO, develops and markets technologically advanced and proprietary handheld medical devices and software for the measurement of resting metabolic rate and monitoring of weight and nutrition. HealtheTech’s breakthrough products assist healthcare and wellness professionals in the areas of weight management, fitness, health and medical nutrition therapy, to provide cost-effective and individualized nutrition monitoring and weight management tools. HealtheTech’s product line includes hardware and software that enables individuals to monitor their health and nutrition conveniently and affordably. The Company’s common stock is traded on the Nasdaq National Market under the symbol “HETC.” For more information, please visit http://www.healthetech.com/.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Such statements are based on management’s current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed in the risk factors contained in the Company’s 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2004. All forward-looking statements are expressly qualified in their entirety by such factors.
HealtheTech, Inc. Statements of Operations ($ in 000’s) Three Months Ending Six Months Ending 06/30/03 06/30/04 06/30/03 06/30/04 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue: Product and Measurement Sales 675 791 1,603 1,403 Software and Other 533 250 1,223 377 Total Revenue 1,208 1,041 2,826 1,780 Cost of Revenue: Product and Measurement Sales 677 670 1,549 1,132 Software and Other 460 132 733 308 Stock Based Charges 3 7 51 25 Total Cost of Revenue 1,140 810 2,334 1,465 Gross Profit 69 231 493 315 Gross Profit % 6% 22% 17% 18% Operating Expenses: Research & Development 1,681 718 4,116 1,504 Selling, General and Administrative 2,844 1,690 10,334 3,278 Restructuring Charges & Asset Impairment 2,114 105 2,114 377 Stock-based Charges 491 315 1,960 816 Total Operating Expenses 7,130 2,828 18,524 5,974 Loss from Operations (7,062) (2,597) (18,031) (5,659) Interest Income 51 37 124 81 Interest Expense (2) (0) (3) (1) Net Loss (7,012) (2,561) (17,910) (5,579) Basic and diluted loss per common share (2) (1.79) (0.36) (4.57) (0.79) Basic and diluted weighted average common shares outstanding (2) 3,923 7,083 3,920 7,073 (1) six months ended 6/30/2003 includes impact of 1/1/03 FAS123 adoption originally reported as net income of $(17,014) and EPS of $(4.34). (2) restated for 1-for-5 reverse split effective December 31, 2003 HealtheTech, Inc. Balance Sheet ($ in 000’s) December 31, 2003 June 30, 2004 (Unaudited) ASSETS Current assets: Cash and cash equivalents 17,003 12,762 Receivables, net of allowance 620 556 Inventory 1,908 1,708 Prepaid expenses 676 306 Other current assets 18 55 Total current assets 20,226 15,387 Property & equipment, net 1,844 1,332 Deposits 266 265 Intangible assets, net of amortization 1,556 1,499 TOTAL ASSETS 23,892 18,483 LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 489 327 Accrued liabilities 1,214 618 Deferred revenue 72 65 Total current liabilities 1,774 1,010 Other liabilities: 89 93 Total other liabilities 89 93 Total liabilities 1,863 1,103 Stockholders’ equity: Common stock 7 7 Deferred stock-based charges (1,817) (2,006) Additional paid-in capital 114,764 115,882 Accumulated deficit (90,924) (96,503) Total stockholders’ equity 22,029 17,379 TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY 23,892 18,483
HealtheTech, Inc.,
CONTACT: Allison Snyder, Public Relations, +1-303-526-5085, ext. 398,asnyder@healthetech.com, or James W. Dennis, Chairman and CEO,+1-303-526-5085, both of HealtheTech, Inc.
Web site: http://www.healthetech.com/
