Date: Thu, 18 Dec 1997 09:58:49 GMT Server: Apache/1.2.0 Last-Modified: Tue, 04 Nov 1997 22:01:55 GMT ETag: "3809a93-31b3-345f9b53" Content-Length: 12723 Accept-Ranges: bytes Connection: close Content-Type: text/html Investor Relations Information From HRI

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Financial Highlights
News Release
HRI at NASDAQ

E-mail Comments to Chief Financial Officer




(Dollars in thousands except lives installed and per share results)

                                                                         9 Months
                                        Year Ended December 31,     Ended September 30,
                                     ----------------------------    ----------------
                                         1995             1996             1997
                                     ------------     -----------    ----------------
Total revenues.......................  $22,496          $31,419          $28,421
Gross profit.........................  $12,231          $16,393          $14,974
Net income...........................  $ 3,426          $ 5,101          $ 1,950
Earnings per common share............  $  0.35          $  0.52          $  0.18
Lives installed (in millions)........     18.0             29.8             34.3

 




Contact: Chief Financial Officer
502/454-1365

3rd QUARTER NET INCOME UP 58%, EPS UP 33%

>31% Increase in 3rd Quarter Revenue

>Backlog at $642 Million, Up 22% Over Prior Year

>3.1 Million Lives Added to Service

Louisville, Kentucky (November 4, 1997) --
Healthcare Recoveries, Inc. (NASDAQ: HCRI) today reported results for the quarter and
the nine months ended September 30, 1997.

Net income for the quarter increased 58% to $1.84 million from $1.16 million in the year-earlier period. Earnings per share for the quarter increased 33% to $0.16 per share from $0.12 per share in the comparable quarter last year.

Revenue for the quarter was $10.2 million, up 31% from the $7.8 million
in the year-earlier period.

For the nine months ended September 30, 1997, net income increased 52% to $4.8 million from $3.16 million a year ago, excluding nonrecurring items. Earnings per share for this period increased 41% to $0.45 per share from $0.32 in the comparable period last year, similarly adjusted. These nonrecurring items were the noncash $2.8 million compensation charge (not deductible for tax purposes) incurred in the second quarter of 1997 related to Medaphis' divestiture of HRI and $605,000 of net income derived from the implant settlement in the second and third quarters of 1996.

For the nine months ended September 30, 1997, revenue was $28.4 million, up 29% from $22.1 million in the year-earlier period, excluding $1.04 million of nonrecurring revenue derived from the implant settlement in the second and third quarters of 1996.


Quarterly and Year-to-Date Statements of Income
(Dollars in thousands, except per share results)

As Reported:                        3 Months Ended           9 Months Ended
                                     September 30,            September 30,
                                -----------------------  -----------------------
                                   1997         1996         1997        1996
                                ----------   ----------  ----------   ----------
Revenues:
  Subrogation................... $10,180       $7,718      $28,421     $22,074
  Other revenues................    -              72         -          1,042
                                 -------      -------      -------     -------
       Total revenues...........  10,180        7,790       28,421      23,116

  Cost of services..............   4,762        3,869       13,447      10,926
                                 -------      -------      -------     -------
  Gross profit..................   5,418        3,921       14,974      12,190
  Support expenses..............   2,332        1,807        6,638       5,418
  Depreciation and                
    amortization................     317          237          799         642
  Non-recurring 
    compensation charge.........    -            -           2,848        -
                                 -------      -------      -------     -------
       Operating income.........   2,769        1,877        4,689       6,130

  Interest income...............     411          123          740         347

  Income before income taxes....   3,180        2,000        5,429       6,477

  Provision for income taxes....   1,341          838        3,479       2,716
                                 -------      -------      -------     -------
       Net income...............  $1,839       $1,162       $1,950      $3,761
                                 =======      =======      =======     =======

  Weighted average shares.......  11,646        9,800       10,583       9,800

  Earnings per common share.....   $0.16        $0.12        $0.18       $0.38
                                 =======      =======      =======     =======

As Adjusted:
  Subrogation revenues.......... $10,180       $7,718      $28,421     $22,074
  Gross profit..................   5,418        3,849       14,974      11,148
  Operating income..............   2,769        1,805        7,537       5,088
  Income before income taxes....   3,180        1,928        8,277       5,435
  Net income....................  $1,839       $1,120       $4,798      $3,156
                                 =======      =======      =======     =======

Earnings per common share.......   $0.16        $0.11        $0.45       $0.32
                                 =======      =======      =======     =======


The following tables present certain key operating indicators for the periods indicated.

Lives Sold and Installed
(In millions)

                                    3 Months Ended           9 Months Ended
                                     September 30,            September 30,
                                -----------------------  -----------------------
                                   1997         1996         1997        1996
                                ----------   ----------  ----------   ----------

Cumulative Lives Sold, 
  Beginning of Period...........   34.3         27.5         29.5        24.2
  Lives From Existing 
    Client Growth...............    0.4          0.5          1.3         0.7
  Lives Added From Contracts 
    With Existing Clients.......    3.1          0.5          5.4         2.0
  Lives Added From Contracts 
    With New Clients............    0.0          0.1          0.6         1.7
                                 -------      -------      -------     -------
  Cumulative Lives Sold, 
    End of Period...............   37.8         28.6         37.8        28.6
                                 =======      =======      =======     =======

Lives Installed.................   34.3         27.1         34.3        27.1
                                 =======      =======      =======     =======

During the third quarter of 1997, HRI signed 3 additional contracts with existing clients, accounting for a total of 3.1 million lives not previously subject to HRI's services. Internal growth from existing clients added another 400,000 lives during the quarter. On a cumulative basis, lives sold grew by 9.2 million over the comparable quarter last year, a 32% increase, and by 3.5 million over the prior quarter, a 10% increase.

Installed lives grew by 7.2 million over the comparable quarter last year, a 27% increase, and 1.6 million over the prior quarter, a 5% increase. These increases represent additional client populations subject to HRI's customary recovery services as the result of the successful completion of electronic data interfaces with new clients, internal growth of client populations under existing contracts, and the contractual expansion of HRI's relationships with existing clients.


Key Operating Indicators
(Dollars in millions)

                                    3 Months Ended           9 Months Ended
                                     September 30,            September 30,
                                -----------------------  -----------------------
                                   1997         1996         1997        1996
                                ----------   ----------  ----------   ----------
Backlog (1).....................  $642.2       $526.5      $642.2       $526.5
Subrogation Recoveries (2)......  $ 37.3       $ 29.4      $105.1       $ 81.5
Subrogation Revenue (2).........  $ 10.2       $  7.7      $ 28.4       $ 22.1
Throughput (3)..................     6.0%         5.7%       17.9%        18.3%
Effective Fee Rate..............    27.3%        26.3%       27.0%        27.1%
Direct Operations 
  Employees.....................   362          298         362          298
  Support Staff Employees.......    82           67          82           67
                                 -------      -------      -------     -------
Total Employees.................   444          365         444          365
                                 =======      =======      =======     =======

(1) Backlog (i.e., gross recoveries in process) is the total dollar amount of potentially recoverable claims pursued on behalf of clients at the end of the period.
(2) Excludes $8.2 million of recoveries and $1.04 million in revenues from the silicone breast implant settlement in 1996.
(3) Equals recoveries for the period divided by the average of backlog at the beginning and end of the period.

Backlog for the quarter grew 22% over the comparable quarter and 7.1% over the prior quarter. This growth in backlog was the result of the installation of new lives and the processing of lives already installed.

Statements in this release that look forward in time involve risks and uncertainties, including the ability of HRI to successfully implement its operating strategy and acquisition strategy, HRI's ability to manage growth, changes in laws and government regulations applicable to HRI, and changes in the historical relationships among such key operating indicators as lives sold, lives installed, backlog and throughput and in the predictive value of these indicators with respect to certain aspects of HRI's financial results.

HRI is a leading provider of health insurance subrogation and related recovery services for private healthcare payors.

For more financial information from HRI please direct your e-mail to Chief Financial Officer.


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