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HFC Announces Revenue Increase in Year-end and Fourth Quarter 2008 Results

MINNEAPOLIS -- Health Fitness Corp. (HFC), Minneapolis, had an increase in revenue both in fourth quarter 2008 and for the year 2008, the company announced Wednesday in a conference call with analysts.

For the fourth quarter, revenues increased 12.6 percent to $21.7 million compared to $19.2 million in fourth quarter 2007. Gross profit rose to $6.9 million in the quarter, up from $5.2 million in fourth quarter 2007. Operating income totaled $2.1 million for the quarter, an increase of $0.4 million. Net earnings were $1.2 million, or 12 cents per share, compared to $0.2 million, or 2 cents per share, in fourth quarter 2007.

For the year ended Dec. 31, 2008, revenue increased 11.0 percent to $77.7 million from $70.0 million in the previous year. Gross profit rose 20.9 percent to $23.7 million, or 30.6 percent of revenue, from $19.6 million, or 28.1 percent of revenue, for the prior year. Operating income for the year was $4.8 million, up from $1.9 million during the prior year. Net earnings for 2008 climbed to $2.7 million, or 28 cents per share, from $0.9 million, or 9 cents per share, last year.

“Obviously, we are very pleased with these outstanding results, particularly in light of the difficult macro-economic conditions in which we all operate,” Gregg Lehman, HFC president and CEO, said during the call. “We turned in a very solid performance in what you all know was a very difficult year.”

Results differed in fourth quarter 2008 for HFC’s health management and fitness management divisions. Health management revenue grew 36 percent compared to the same period in 2007 while fitness management revenue decreased 6.2 percent compared to fourth quarter 2007.

“It marked the first quarter in which revenues for health management exceeded those of fitness management—that is, 54 percent vs. 46 percent,” Lehman said. “At the same time, fitness management will continue to be a very important component of our overall business in the coming years. In addition to generating predictable revenue and cash flow, our fitness customers represent an opportunity to further grow health management revenue by introducing the benefits of our employee health improvement programs.”

Lehman added that he remains optimistic about the company in the coming years and predicts a shift in employer-provided health care, which will involve a greater assumption of health responsibility on employees.

“We believe the focus will decidedly turn to the concepts of wellness and preventative care,” Lehman said. “There will be a shift to healthy living, emphasizing diet, exercise and preventive medicine, with the idea that health-care costs can be substantially cut by adopting and maintaining healthy lifestyle habits, rather than focusing on providing costly acute care for advanced medical conditions. This dramatic shift will require a fundamental cultural change for the entire American population, and that will take time.”

HFC’s stock was listed at $1.82 on the American Stock Exchange in mid-morning trading today.

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