HealthExtras Reports Record First Quarter Results; Net Income and Reve

HealthExtras Reports Record First Quarter Results; Net Income and Revenues Both Up By More Than 50% Over Prior Year; Company Reports Net Income of $5.1 Million

    Business Editors/Health/Medical Writers

    ROCKVILLE, Md.--(BUSINESS WIRE)--April 27, 2005--HealthExtras, Inc. (NASDAQ:HLEX), a pharmacy benefit management company, today announced its financial results for the first quarter ended March 31, 2005.
    First Quarter Highlights

--	Net income for the first quarter 2005 was $5.1 million or $.13 per share, a 50% increase over first quarter 2004 earnings of $3.4 million or $.10 per share.
--	Revenues for the first quarter 2005 totaled $169.0 million, a 53% increase over first quarter 2004 revenues of $110.5 million.
--	Over 4.3 million prescriptions were processed during the quarter.

    "We are pleased with the Company's first quarter financial performance. The Company continues to produce significant earnings and revenue growth driven by new client additions and improved operating margins resulting from higher generic and preferred brand utilization," said David T. Blair, Chief Executive Officer of HealthExtras. "Not only are the year-over-year financial comparisons impressive but the Company produced 11% sequential PBM revenue growth over the fourth quarter of last year."
    Operating income for the three months ended March 31, 2005 increased to $8.1 million, a 44% increase over the $5.6 million from the same period in 2004. "Throughout the year we expect to continue to add clients in both existing and new markets, further integrate our operations, implement programs to control our clients' drug costs and provide our clients with an exemplary level of service. In addition, we are benefiting from significant sales momentum and are pursuing opportunities to accelerate our growth through select acquisitions," added Mr. Blair.

    About HealthExtras (www.healthextras.com)

    HealthExtras, Inc., a pharmacy benefit management company, currently provides benefits to over three million members. Its clients include self-insured employers, including state and local governments, third-party administrators, managed care organizations and individuals. The Company's integrated pharmacy benefit management services marketed under the name Catalyst Rx include: claims processing, benefit design consultation, drug utilization review, formulary management, drug data analysis services and mail order services. Additionally, the Company operates a national retail pharmacy network with over 55,000 participating pharmacies.

    This press release may contain forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Forward-looking statements may be significantly impacted by certain risks and uncertainties described in HealthExtras' filings with the Securities and Exchange Commission.

Income Statement (In thousands, except per share data) For the For the quarter ended quarter ended March 31, 2005 March 31, 2004

Revenue (excludes member co-payments of $72,435 and $42,449 for the quarters ended March 31, 2005 and 2004, respectively) $169,003 $110,520 --------------- ---------------

Direct expenses 150,043 97,695 Selling, general & administrative expenses 10,879 7,226 --------------- ---------------

Total operating expenses 160,922 104,921 --------------- ---------------

Operating income 8,081 5,599

Interest income 416 36 Interest expense (331) (115) --------------- ---------------

Income before tax 8,166 5,520

Income tax provision 3,021 2,081 --------------- ---------------

Net income $5,145 $3,439 =============== ===============

EPS - basic $0.14 $0.10

EPS - diluted $0.13 $0.10

Weighted average common shares, basic 37,880 32,964

Weighted average common shares, diluted 40,794 35,937

Financial statements follow:

HealthExtras, Inc. Balance Sheet Information ------------------------------------- (In thousands) March 31, 2005 ------------ Assets Current assets: Cash and cash equivalents $74,174 Accounts receivable, net of allowance for doubtful accounts of $800 74,141 Income tax receivable 530 Inventory, net of allowance for obsolescence of $50 589 Deferred charges 1,876 Other current assets 2,267 ------------

Total current assets 153,577

Fixed assets, net 9,661 Intangible assets, net of accumulated amortization of $3,255 21,832 Goodwill 69,272 Restricted cash 1,000 Other assets 429 ------------

Total assets $255,771 ============

Liabilities and stockholders' equity Current liabilities: Accounts payable $60,699 Accrued expenses and other current liabilities 4,162 Note payable 5,000 Deferred income taxes 967 Deferred revenue 5,076 ------------

Total current liabilities 75,904

Deferred income taxes 4,960 Notes payable 19,250 ------------

Total liabilities 100,114 ------------

Stockholders' equity: Common stock 381 Additional paid-in capital 134,521 Accumulated other comprehensive income 153 Retained earnings 20,602 ------------

Total stockholders' equity 155,657 ------------

Total liabilities and stockholders' equity $255,771 ============

--30--DES/ph*

CONTACT: HealthExtras, Inc. Michael P. Donovan, 301-548-2900 mdonovan@HealthExtras.com

KEYWORD: MARYLAND INDUSTRY KEYWORD: MEDICAL INSURANCE EARNINGS SOURCE: HealthExtras, Inc.

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