Jones Lang LaSalle
Hooper Holmes expects a loss and kills dividend
Tuesday, February 07, 2006
BY JOSEPH R. PERONE
Star-Ledger Staff
Hooper Holmes, the troubled insurance services firm, forecast a loss for 2005, omitted its dividend and said an executive vice president had left the company.
Hooper expects to lose 3 cents to 6 cents a share for 2005, which would include about $1.9 million in charges, according to a news release yesterday. The Basking Ridge company, which provides blood and urine testing to screen people who are seeking insurance policies, previously forecast it would earn 7 cents to 9 cents a share for the year.
The company also lowered its sales guidance for the year to between $315 million and $320 million. The new guidance is $5 million to $10 million lower than previous forecasts. The company also plans to take a "material impairment charge" in the fourth quarter.
The company declined to elaborate. Analysts who follow the company were not available for comment.
Hooper said it lowered expectations, in part, because fewer people are applying for life insurance in the United Kingdom, and because of higher costs. As a result, the company's Medicals Direct Group will report annual sales that are $1.5 million lower than expected.
Another unit, Heritage Labs, is expected to have a $900,000 shortfall in revenue because it is "testing a lower than expected number of specimens," according to the company.
"We are now undertaking a thorough and active review of the entire business," Chief Executive James Calver said in a statement.
"I joined Hooper Holmes in January of this year because I believe the company has a good base of products and clients and excellent long-term opportunities for growth. I look forward to setting out plans for repositioning the company, including aligning our infrastructure and revenue base, over the coming months."
During a brief telephone interview yesterday, Calver said he would lay out the company's strategic plans during an analyst conference call March 1. Despite the gloomy outlook, the former Mellon Financial and General Electric executive said he expects the company will be successful in re-engineering itself.
"We have been a leading provider of outsourced medical services for the insurance industry for 107 years," said Calver, who joined the company four weeks ago. "There is no doubt that we have a long history of delivering high-quality services. But our clients continue to ask more of us."
How Hooper will meet those needs remains to be seen. The board of directors voted last Friday to suspend the company's annual dividend of 6 cents a share. Companies often cut or eliminate their dividends to conserve cash during a financial crisis.
Hooper also said Daniel Ross has resigned as executive vice president of the company's Claims Evaluation Division. Calver said John Spenser, chief operating officer, will assume the additional duties of managing that division.
"We're very much a growth-oriented company, and John has a long history of growing companies," Calver said.
The company's lower earnings guidance also reflects about $2.1 million in selling, general and administrative costs that were not anticipated when it made projections for the year last October. The company also expects to incur $1.9 million in severance and restructuring charges, executive relocation expenses and the write-off of some business application software.
The executive suite at Hooper has been in turmoil during the past several months.
Last August, Fred Lash resigned as chief financial officer nearly a year after he questioned whether former Chief Executive James McNamee should have been reimbursed for some charitable contributions and expenses.
McNamee was cleared of any wrongdoing by the board's audit committee last fall. However, McNamee reimbursed the company for $23,000 in expenses after the committee determined they had no business purpose.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
Hooper Holmes expects a loss and kills dividend
Tuesday, February 07, 2006
BY JOSEPH R. PERONE
Star-Ledger Staff
Hooper Holmes, the troubled insurance services firm, forecast a loss for 2005, omitted its dividend and said an executive vice president had left the company.
Hooper expects to lose 3 cents to 6 cents a share for 2005, which would include about $1.9 million in charges, according to a news release yesterday. The Basking Ridge company, which provides blood and urine testing to screen people who are seeking insurance policies, previously forecast it would earn 7 cents to 9 cents a share for the year.
The company also lowered its sales guidance for the year to between $315 million and $320 million. The new guidance is $5 million to $10 million lower than previous forecasts. The company also plans to take a "material impairment charge" in the fourth quarter.
The company declined to elaborate. Analysts who follow the company were not available for comment.
Hooper said it lowered expectations, in part, because fewer people are applying for life insurance in the United Kingdom, and because of higher costs. As a result, the company's Medicals Direct Group will report annual sales that are $1.5 million lower than expected.
Another unit, Heritage Labs, is expected to have a $900,000 shortfall in revenue because it is "testing a lower than expected number of specimens," according to the company.
"We are now undertaking a thorough and active review of the entire business," Chief Executive James Calver said in a statement.
"I joined Hooper Holmes in January of this year because I believe the company has a good base of products and clients and excellent long-term opportunities for growth. I look forward to setting out plans for repositioning the company, including aligning our infrastructure and revenue base, over the coming months."
During a brief telephone interview yesterday, Calver said he would lay out the company's strategic plans during an analyst conference call March 1. Despite the gloomy outlook, the former Mellon Financial and General Electric executive said he expects the company will be successful in re-engineering itself.
"We have been a leading provider of outsourced medical services for the insurance industry for 107 years," said Calver, who joined the company four weeks ago. "There is no doubt that we have a long history of delivering high-quality services. But our clients continue to ask more of us."
How Hooper will meet those needs remains to be seen. The board of directors voted last Friday to suspend the company's annual dividend of 6 cents a share. Companies often cut or eliminate their dividends to conserve cash during a financial crisis.
Hooper also said Daniel Ross has resigned as executive vice president of the company's Claims Evaluation Division. Calver said John Spenser, chief operating officer, will assume the additional duties of managing that division.
"We're very much a growth-oriented company, and John has a long history of growing companies," Calver said.
The company's lower earnings guidance also reflects about $2.1 million in selling, general and administrative costs that were not anticipated when it made projections for the year last October. The company also expects to incur $1.9 million in severance and restructuring charges, executive relocation expenses and the write-off of some business application software.
The executive suite at Hooper has been in turmoil during the past several months.
Last August, Fred Lash resigned as chief financial officer nearly a year after he questioned whether former Chief Executive James McNamee should have been reimbursed for some charitable contributions and expenses.
McNamee was cleared of any wrongdoing by the board's audit committee last fall. However, McNamee reimbursed the company for $23,000 in expenses after the committee determined they had no business purpose.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 11:08 AM
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