Health Grades, Inc. Announces First-Quarter Results.Business Editors & Health/Medical Writers LAKEWOOD, Colo.--(BW HealthWire)--May 14, 2002 Health Grades, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :HGRD) today announced financial results for the first quarter ended March 31, 2002. Total revenues for the three months ended March 31, 2002, were $1,152,919. Ratings and advisory revenue for the three months ended March 31, 2002, was $1,039,067, representing an increase of $480,205, or 86%, over ratings and advisory revenue for the first quarter of 2001. Net loss before income taxes for the three months ended March 31, 2002, was $502,446, or $0.01 per share, on 35.5 million weighted average shares. As of April 30, 2002, cash was approximately $1.7 million. On March 9, 2002, President Bush signed into law the Job Creation and Worker Assistance Act of 2002 ("JCWA JCWA Job Creation and Workers Assistance Act (Internal Revenue Code) Act"). One of the provisions of the JCWA Act extends the net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryback carryback n. in taxation accounting, using a current tax year's deductions, business losses or credits to refigure and amend a previously filed tax return to reduce the tax liability. (See: carryover) provisions of the Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. from two years to five years for losses incurred in 2001 and 2002. Prior to the passage of the JCWA Act the Company did not have the ability to utilize its 2001 tax loss to reduce prior-year taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. because the Company had no taxable income in 2000 or 1999. However, with the passage of the JCWA Act, the Company believes it has the ability to carryback its 2001 tax loss to reduce taxable income in 1997. In April 2002, the Company filed an Application for Tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. Refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies for the 1997 tax year and expects to receive a tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. of approximately $1.0 million. The Company has recorded the anticipated income tax benefit in its statement of operations See Income statement. for the three months ended March 31, 2002, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which requires that the effects of changes in tax laws be recognized in the period new legislation is adopted. The Company anticipates it will receive the refund in the second or third quarter of 2002. Effective May 10, 2002, the Company completed a line of credit arrangement (the "Agreement") with Silicon Valley Bank. Under the terms of the Agreement, the company may request advances not to exceed an aggregate amount of $1.0 million over the one-year term of the Agreement. In addition, advances under the Agreement are limited to 75% of Eligible Accounts (as defined in the Agreement) plus 50% of the Company's cash invested with Silicon Valley Bank. Advances under the Agreement bear interest at Silicon Valley Bank's prime rate plus .75%. Interest is due monthly on advances outstanding and the principal balance of any advances taken by the Company are due at the end of the one-year Agreement term, subject to earlier payment to the extent advances exceed delimitations described above. The Company's ability to request advances under the Agreement is subject to certain financial and other covenants. Kerry Hicks Hicks , Edward 1780-1849. American painter of primitive works, notably The Peaceable Kingdom, of which nearly 100 versions exist. , President and Chief Executive Officer of Health Grades, Inc., stated: "We are pleased with our continued progress in developing our ratings and advisory business. Our continued revenue growth is illustrative il·lus·tra·tive adj. Acting or serving as an illustration. il·lus  tra·tive·ly adv.Adj. 1. of the increased acceptance of our healthcare quality information and services. In addition, the recent press we have received in the Wall Street Journal, BusinessWeek, CNBC CNBC Center for the Neural Basis of Cognition (artificial intelligence) CNBC Consumer News and Business Channel CNBC Congress of National Black Churches, Inc. and NBC Nightly News NBC Nightly News is the flagship evening news program for NBC News and broadcasts from the GE Building, Rockefeller Center in New York City. It has been known by this name since August 1, 1970. is indicative of the value of our services to healthcare consumers."
HEALTH GRADES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended
March 31,
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2002 2001
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Revenue:
Ratings and advisory 1,039,067 558,862
Physician practice service fees 111,831 136,016
Other 2,021 2,709
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1,152,919 697,587
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Costs and expenses:
Ratings and advisory costs and expenses:
Production content and product
development 198,629 291,435
Sales and marketing 270,668 371,652
Physician practice management costs
and expenses:
Litigation and other costs 2,253 45,087
General and administrative 1,187,921 2,296,250
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1,659,471 3,004,424
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Loss from operations (506,552) (2,306,837)
Other:
Gain on sale of assets and other -- 325
Interest income 4,106 54,566
Interest expense -- (28,563)
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Loss before income taxes (502,446) (2,280,509)
Income tax benefit 1,046,296 --
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Net Income (loss) $ 543,850 $(2,280,509)
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Net Income (loss) per share
(basic and diluted) $ 0.02 $ (0.11)
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Weighted average shares outstanding
(basic and diluted) 35,526,744 21,507,758
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About Health Grades, Inc. Health Grades, Inc. (OTCBB:HGRD), http://www.healthgrades.com, provides information designed to help assess and improve the quality of healthcare nationwide. Using its proprietary objective healthcare provider ratings and expert advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal , Health Grades works with providers, employers, payers and patients to offer targeted information that can increase the utilization of quality healthcare. Health Grades offers consumers free ratings to evaluate and select providers, works with providers to assess and enhance their care, and helps employers and payers lower healthcare costs by identifying opportunities to improve the quality of care provided to their employees or members. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements addressing our anticipated tax refund. Actual results may differ materially from those described in such forward-looking statements due to several factors, including a delay in our receipt of our anticipated tax refund and other factors described in the Company's filings with the Securities and Exchange Commission. |
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