A.D.A.M.'s license revenues increase by 5% for fourth-quarter ended December 31, 2009

A.D.A.M., Inc. (Nasdaq: ADAM), a leading provider of health information and benefit technology solutions, today announced its financial results for the fourth quarter ended December 31, 2009.

“In the fourth quarter, we generated a 15% increase in cash flow compared to 2008 and an operating margin of 22%”

Highlights

• License revenues for the fourth quarter of 2009 were $6.7 million, up 5% over fourth quarter of 2008 due to increased health solutions license revenues.
• Adjusted operating income margin for the fourth quarter of 2009 was 22% of revenues, and raised the 2009 full year ratio to 20%.
• Adjusted net income was a $1.6 million profit for the fourth quarter of 2009, GAAP net income was a loss of $1.1 million, which included charges for a deferred tax asset write-down and severance costs.
• Adjusted EBITDA was $2.3 million for the fourth quarter of 2009, up 15% from fourth quarter of 2008.

“In the fourth quarter, we generated a 15% increase in cash flow compared to 2008 and an operating margin of 22%,” said Mark Adams, president and chief executive officer of A.D.A.M., Inc. “Our results demonstrate the multiple strengths of A.D.A.M.’s business model: high recurring revenues, multiple year contracts, high customer retention rates, and strong cash generation. Our priorities in 2010 include expanding our product offerings, enhancing client service delivery, improving product development processes, and sharpening our focus on execution. These and other steps over time will lead to revenue growth in both businesses and allow us to further leverage our highly scalable business model.”

Financial Results:

Fourth Quarter Highlights

License revenues for the fourth quarter ended December 31, 2009 were $6.7 million, compared to $6.4 million in the fourth quarter of 2008, an increase of 5%. The increase from the prior year reflects a 14% increase in health solutions license revenue, the result of new client contracts, strong retention rates and solid results from distribution partners.

Total revenues were $7.4 million for the fourth quarter 2009 and 2008. This reflects the previously mentioned increase in health solutions license revenue, which was offset by lower revenues and utilization of Benergy services in 2009.

Adjusted operating income was $1.7 million, compared to $1.6 million for the fourth quarter ended December 31, 2009 and 2008, respectively. Both amounts were 22% of revenues for the period. Adjusted operating income reflected the company’s strong operating model of profitability.

Cash flow, as measured by Adjusted EBITDA rose 15% to $2.3 million, or 31% of revenues, for the fourth quarter ended December 31, 2009, as compared to $2.0 million or 27% of revenues for the same period a year ago.

Net income (loss) for the fourth quarter ended December 31, 2009 was a loss of $1.1 million as compared to net loss of $2.0 million for the fourth quarter of 2008. Included in the fourth quarter 2009 were charges for the write-down of the deferred tax asset of $1.2 million and severance costs of $1.1 million related to the employment agreement of the previous CEO. Included in the fourth quarter, 2008 were restructuring costs of $2.2 million related to the facility consolidation program.

Non-GAAP net income was $1.6 million, an increase of 8% from the same period a year ago, and excludes charges for stock-based compensation, amortization of purchased intangibles, write-down of the deferred tax asset, and severance costs.

2009 Highlights

License revenues for year ended December 31, 2009, were $26.1 million, an increase of 3% from $25.4 million in the same period last year. The increase from the prior year reflects the growth in health solutions revenues.

Adjusted operating income was $5.6 million, compared to $5.7 million, for the year ended December 31, 2009 and 2008, respectively. Both amounts were 20% of revenues for the period.

Net income (loss) for the year ended December 31, 2009 was a loss of $13.3 million as compared to net income of $38,000 for the year ended December 31, 2008. Included in 2009, among other items, were non-cash charges for goodwill impairment of $13.9 million, restructuring costs of $1.4 million, write-down of the deferred tax asset of $1.2 million, and severance costs of $1.1 million.

Non-GAAP net income for the year ended December 31, 2009, which excludes charges for stock-based compensation, amortization of purchased intangibles, and items listed on the reconciliation schedule such as goodwill impairment, restructuring and severance costs, and write-down of the deferred tax asset, was $5.7 million, an increase of 22% from the same period a year ago.

Cash flow, as measured by Adjusted EBITDA was $8.3 million, or 29% of revenues, for the year ended December 31, 2009, as compared to $7.9 million or 27% of revenues for the same period a year ago.

At December 31, 2009, the company had cash and cash equivalents of $5.4 million as compared to $1.4 million at December 31, 2008. Long-term debt was also reduced by $2.0 million during 2009.

SOURCE A.D.A.M., Inc.