MINNEAPOLIS -- Revenue for the third quarter increased 5 percent at Health Fitness Corp., the provider of integrated employee health management programs announced earlier this week.
Revenue was $17.2 million, an increase from $16.3 million in the third quarter of 2006. However, gross profit during the quarter decreased 7.5 percent to $4.9 million from $5.3 million for the same period last year.
Gross profits in 2006’s third quarter included a $300,000 benefit related to a refund of workers compensation premiums for the company’s 2005 plan year, which explains much of the decrease in that category this year.
“During the quarter, we encountered some temporary revenue and expense challenges,” says Gregg Lehman, Ph.D., president and CEO of Health Fitness Corp. “From a revenue perspective, we experienced longer service implementation schedules for a few of our largest, new health management customers, which affected our ability to realize revenue growth consistent with past quarters. The good news is that we have begun to deliver services to most of these customers, which should lend support to our growth rate in the fourth quarter and into 2008.”
The company’s health management segment revenue grew 16.3 percent to $6.5 million from $5.6 million for the same period last year. Fitness management segment revenue declined 0.9 percent to $10.6 million from $10.7 million for the same period last year. Some of the decline is due to revenue losses from terminated contracts outpacing revenue from 2007 new contracts. In addition, the company has had fewer biometric screening engagements at its fitness center sites.
On the fitness side, the company is still feeling the effects of the revenue lost due to the termination of a large automotive contract during the first quarter of this year, Lehman says. However, the company obtained four new health management commitments and one new fitness management commitment during the third quarter, compared to two health management and three fitness management commitments in the third quarter of last year. Year to date, the company has 32 new commitments, which represents one of the best years for new business development, he says.
Also in the third quarter, the company received 26 new requests for proposals for health management services and 13 new requests for proposals for fitness management services, which represents the highest number the company has received at this time of the year, Lehman says.