Minneapolis — The continued corporate focus on decreasing health benefit costs by improving employee health may have contributed to Health Fitness Corp., Minneapolis, holding steady in its revenue for the second quarter. The company generated three new health management commitments and three health management customer expansions during the quarter, resulting in potential annualized revenue of $3.7 million, compared with $1.9 million generated in the same quarter last year — a 95 percent increase. That represents the company's best quarter since the second quarter of 2006, Gregg Lehman, president and CEO, said in a statement from the company.
Health Fitness also generated four new fitness management commitments during the quarter, resulting in potential annualized revenue of $0.7 million, compared to $0.5 million of customer expansions in the same quarter last year, a 40 percent increase. This is the highest number of new fitness commitments for the company since the fourth quarter of 2006, Lehman said.
Not all is rosy, however. The weak economy has further eroded the company's base of fitness revenue as evidenced by the $1.2 million of annualized revenue Health Fitness will lose from second quarter contract cancellations, Lehman said. Despite the contract cancellations, total potential annualized revenue generated during the second quarter of 2009 was $3.1 million, up 41 percent compared to $2.2 million in the comparable quarter of 2008.
Overall, the second quarter brought in steady numbers. Revenue was $18.8 million, which was in line with second quarter 2008 revenue of $18.8 million, according to financials released last month. Gross profit for the quarter increased 1.4 percent to $5.6 million compared to $5.5 million in second quarter 2008. Gross margin for the quarter was 29.9 percent compared to 29.4 percent in last year's second quarter.
In the second quarter, Health Fitness won the bid on a $1.2 million expansion of a middle market customer that it secured during the first quarter, and a $1.3 million commitment from a Fortune 100 financial services company. Health Fitness is among the finalists on 18 requests for proposals representing total potential annualized revenue of approximately $10 million, according to Lehman.
“Given the new commitments and expansions generated in the first half of the year, along with a strong sales pipeline, we are optimistic that 2010 will produce stronger top- and bottom-line results,” he said.