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HealthFitness Announces Third Quarter 2007 Financial Results
Date:11/5/2007

ntracts. The revenue decrease for program and consulting services

is primarily due to fewer biometric screening engagements at our

fitness center sites.

-- During the quarter, we obtained four new customer commitments in our

health management segment that may realize incremental annualized

revenue of approximately $2.0 million. In our fitness management

segment, we obtained one new customer commitment that may realize

incremental annualized revenue of approximately $0.6 million. The

$2.6 million total for potential new, incremental annualized revenue

is offset by a potential annualized revenue loss of $1.2 million from

fitness management contract cancellations. Approximately

$0.7 million of these contract cancellations is due to our decision

to not renew an underperforming contract.

We generally evaluate prospective revenue and operating trends over a

12 to 18 month period of time. As a result, we do not view

short-term changes in contract revenue, lower growth rates, or higher

operating expenses to be an indication of future results, or a trend

in our business. We have adopted this view because revenue attrition

can be largely unpredictable as many of our contracts can be

terminated with a 30 day notice. At the same time, new customer

commitments, particularly in our health management segment, may take

90 to 180 days to generate full revenue once the planning process is

complete. All of these events, taken together, can temporarily

affect short-term revenue results and operating margins.

-- Gross margin for our health management segment fell to 37.0%, from

41.5% for the prior year period. This result is due to a gross

margin decrease for staffing services, which fell to 25.8%, from

30.6% last y
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SOURCE Health Fitness Corporation
Copyright©2007 PR Newswire.
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