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A.D.A.M., Inc. Acquires OnlineBenefits, Inc.
Combination will deliver comprehensive health, wellness and benefit
management solutions to employers and consumers
Atlanta, GA and New York, NY - August 14, 2006 - A.D.A.M., Inc. (Nasdaq:
ADAM) today announced that it has completed its acquisition of privately held
OnlineBenefits, Inc., a leading provider of benefit management solutions
servicing small to mid-sized employers. The combination of these two market
leaders will result in an expanded suite of consumer-directed healthcare services
for employers, employees, consumers, and healthcare payers designed to help
all stakeholders work together to reduce the costs of healthcare and benefit
administration. The centerpiece of the expanded suite of services is an online
self-service platform for employees that allows them to learn about, enroll in,
and track their benefits; manage their health account finances; and access
personalized health and wellness information.
This consumer platform, OnlineBenefits' Benergy System, is currently used by
over 5,000 employers and one million employees through a network of more
than 550 insurance brokers nationwide. In addition, OnlineBenefits provides
online services to human resource managers at over 38,000 employers. By
leveraging these existing distribution channels, A.D.A.M. can extend its reach
into the small to mid-sized employer market for its health, wellness, and decision
support products. Benergy's unique success in the employer market is due to its
highly scalable product designs, which allow for rapid custom installation and
seamlessly provide portal communication services between benefits brokers,
employers, and employees.
The total purchase price of OnlineBenefits was $32.5 million, which included $1.5
of assumed debt. To finance the acquisition, A.D.A.M. issued $3.0 million of
restricted common stock and arranged for a credit facility of $27.0 million from
CapitalSource of Chevy Chase, MD. A.D.A.M. will pay the balance of the purchase
price from its current cash position. Lane, Berry & Co. International, LLC acted as
financial advisor and placement agent to A.D.A.M. in connection with the
transaction. DLA Piper Rudnick Gray Cary US LLP served as legal advisor to
A.D.A.M.
Kevin Noland, A.D.A.M.'s president and chief executive officer, commented,"OnlineBenefits brings a transformational opportunity for growth to A.D.A.M. Our
combination will create an organization clearly positioned to capitalize on the
accelerating trends in healthcare and benefits consumerism. With more and
more employers facing the financial burdens of higher healthcare premiums and
consumers demanding more control of their healthcare and benefits, our
comprehensive integrated platform of products will speak directly to the needs of
both administrators and consumers."
A.D.A.M. and OnlineBenefits have had a strategic partnership since early 2005.
During that time, the companies have been integrating A.D.A.M.'s health and
wellness products into the next generation Benergy System, called Benergy 2G!,
which will be available in early 2007. Benergy 2G! will provide consumers with a
highly personalized, fully integrated portal with access to health information, a
personal health record, risk assessments and employer reporting, and an
enhanced suite of decision support tools to aid in the choice of health, insurance,
and financial options.
"We believe that one of the most significant growth opportunities in the small to
mid-sized employer market is providing integrated health and benefits
management solutions tailored to the specific needs of each employee," said
Alan Cohen, OnlineBenefits' chief executive officer. "Employers today seek to
provide the right mix of tools and information so they can have well-informed
and productive employees. They also value the automation and administrative
efficiencies that the Benergy System delivers, and with the addition of A.D.A.M.,
we are in a strong position to make Benergy the platform of choice."
OnlineBenefits' founders, Alan Cohen and John Gedney, will join A.D.A.M. as
President, OnlineBenefits, and Chief Operating Officer, OnlineBenefits,
respectively. OnlineBenefits will continue to maintain its main office in Uniondale,
New York, with additional facilities in Pennsylvania and Florida.
Guidance
OnlineBenefits has experienced solid growth over the past several years in both
revenue and Adjusted EBITDA (which we define as earnings before interest,
taxes, depreciation, amortization and non-cash stock option expense.) Revenues
and Adjusted EBITDA for the combined company in calendar year 2007 are
expected to be $30.0 to $32.0 million and $7.5 to $9.5 million, respectively. For
the calendar year 2007, the operations acquired from OnlineBenefits are
expected to contribute approximately $18.0 to $20.0 million in revenues and
approximately $5.5 to $6.5 million in Adjusted EBITDA. All amounts are subject
to changes resulting from purchase price accounting. A.D.A.M. expects the
acquisition to be accretive to 2007 earnings per share on a fully diluted basis.
Conference Call
A.D.A.M. will be hosting a conference call to further discuss the strategic and
financial aspects of the acquisition and A.D.A.M.'s second quarter earnings
results August 15, 2006, at 10:00 A.M. ET. To participate in the call, please dial
(877) 829-1394 approximately five minutes prior to the start time. International
callers may dial (706) 679-8134. A digital replay will be available at 12 noon ET
on August 15, 2006 by dialing (800) 633-8284 or (402) 977-9140 with
reservation number 21299743.
About A.D.A.M., Inc.
For more than a decade, A.D.A.M.'s unique, visually engaging health content,
decision support tools and educational products have been helping millions of
people "get smart" about their health and wellness. With one of the largest
consumer-oriented medical information libraries in the world, A.D.A.M. markets
its solutions to leading healthcare and pharmaceutical organizations,
government, employers, and educational institutions. These innovative products
empower consumers with the information they need to effectively participate in
consumer directed health plans, make positive changes in behavior and improve
overall health. To learn more about A.D.A.M., visit www.adam.com.
About OnlineBenefits, Inc.
OnlineBenefits, Inc. is a leading provider of web-based applications serving the
benefits management needs of consumers, employers and brokers. Its award-winning consumer solutions include employee self-service portals for benefits
communication and enrollment, and flexible spending account administration.
Currently, over 1 million employees in more than 5,000 companies use its
Benergy System. For its partnership network, comprised of more than 550 of
the nation's leading brokers and consultants, the company offers agency
management, client communication and intelligence products, and the ability to
deliver the Benergy System to clients. To learn more about OnlineBenefits, visit
www.onlinebenefits.com.
About CapitalSource
CapitalSource is a specialized commercial finance company operating as a REIT
and offering first mortgage, asset-based, cash flow and mezzanine financing to
small and mid-sized borrowers through three focused lending businesses:
Structured Finance, Healthcare and Specialty Finance and Corporate Finance. By
offering a broad array of financial products, we had outstanding $10.5 billion in
loan commitments as of June 30, 2006. Headquartered in Chevy Chase,
Maryland, it has a national network of offices across the country.
Non-GAAP Measure
Adjusted EBITDA represents earnings before interest, taxes, depreciation,
amortization and non-cash stock compensation expense. This financial measure
is not a measure of financial performance in accordance with generally accepted
accounting principles. We believe that this non-GAAP financial measure is useful
because it is an appropriate measure for evaluating our operating performance.
We present this non-GAAP financial measure to provide additional information
regarding our performance and because it is a measure by which we gauge our
profitability. You should not consider this non-GAAP financial measure as an
alternative to net income. Our calculation of this financial measure may be
different from the calculation used by other companies and, as a result,
comparability may be limited.
Forward-Looking Statements
Except for historical information, all of the statements, expectations and
assumptions contained in this press release are forward-looking statements.
These statements, especially revenue, net income and cash flow forecasts,
involve a number of risks and uncertainties that could cause actual results,
performance or developments to differ materially. Factors that could affect the
company's actual results, performance or developments include general
economic conditions, development of the Internet as a source of health
information, pricing actions taken by competitors, demand for the company's
health information, the ability to realize the anticipated benefits of the
acquisition, regulatory changes in laws and regulations that impact how the
company conducts its business and the other factors described in A.D.A.M.'s
filings with the SEC. A.D.A.M. disclaims any obligation or duty to update any of
its forward-looking statements. |
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