HORSHAM, Pa. - (BUSINESS WIRE) - National Health Partners, Inc. (OTCBB: NHPR - News), a leading provider of unique discount healthcare membership programs, announced its financial results for its fiscal year ended December 31, 2008.  Gross profit increased $653,269 to $1,635,344 for 2008 from $982,075 for 2007, an increase of 67%, as its gross profit percentage rose to 61% for 2008 from 26% for 2007.  After excluding non-cash equity-based compensation expense, the company's net loss per share decreased 63% to $(0.03) for 2008 compared to $(0.08) for 2007.  

Gross profit for Q4 2008 increased $505,644 to $275,140 from a gross loss of $(230,504) for Q4 2007 as its gross profit percentage rose to 63% for Q4 2008 compared to a gross loss percentage of (49%) for Q4 2007.  Direct costs (sales commissions and network provider costs) decreased $540,740 to $163,786 for Q4 2008 from $704,526 for Q4 2007, representing a decrease of 77%.  After excluding non-cash equity-based compensation expense, the company's net loss decreased $854,173 to $(360,408) for Q4 2008 from $(1,214,581) for Q4 2007, representing a decrease of 70%.

2008 Financial Highlights

• Gross profit increased $653,269 to $1,635,344 for 2008 from $982,075 for 2007, representing an increase of 67%, and increased $505,644 to $275,140 for Q4 2008 from a gross loss of $(230,504) for Q4 2007.
• Gross profit percentage was 61% for 2008 compared to 21% for 2007, and was 63% for Q4 2008 compared to a gross loss percentage of (49%) for Q4 2007.
• Direct costs (sales commissions and network provider costs) decreased $540,740 to $163,786 for Q4 2008 from $704,526 for Q4 2007, representing a decrease of 77%.
• Excluding equity-based non-cash compensation expense, net loss decreased $854,173 to $(360,408) for Q4 2008 from $(1,214,581) for Q4 2007, representing a decrease of 70%.
• Excluding equity-based non-cash compensation expense, net loss per share decreased 63% to $(0.03) for 2008 from $(0.08) for 2007.

2008 Performance and Analysis

The company attributes its growth in gross profit and gross profit percentage as well as the corresponding decrease in net loss primarily to the shift in its sales strategy during the latter half of 2008.  By shifting its sales strategy, the company's direct costs and operating expenses benefited in three important ways.  First, the company experienced substantial reductions in the commissions that it pays to business partners due to the termination of any up-front payments by the company on new sales.  Second, because members generated through affinity groups, employers and insurance brokers boast higher retention rates, lower refund rates and lower chargeback rates, the company was able to renegotiate significantly lower merchant banking fees to a much lower level than it had paid in the past.  Third, the company incurred much lower marketing and advertising costs because it is less costly for the company to sell through these groups than it is for the company to engage in expensive, nationwide marketing and advertising campaigns through marketing companies. 

The benefits of the shift in the company's sales strategy were enhanced by the aforementioned cost-cutting actions taken by management, which included reductions in salaries, contingent staff and capital expenditures, that further reduced the company's operating expenses during Q4 2008.

"Although I am not happy with our overall performance in 2008, I am pleased that we were able to achieve certain financial objectives during a difficult time," stated David M. Daniels, President and Chief Executive Officer of National Health Partners.  "We were able to generate all-time record profit margins and greatly improve cash flows during 2008, and particularly during Q4 2008, against the backdrop of a challenging economic crisis.  As a result of the shift in our sales strategy, we are experiencing substantial growth in the number of affinity groups and other business partners through which we are selling both our CARExpress health discount programs and our CARExpress Plus membership programs.  We are also experiencing interest from organizations that currently offer traditional health insurance to their employees and members but, because of the high cost of such programs and the weak state of the U.S. economy, are seeking a less expensive form of quality health benefits.  I believe that we are positioned extremely well for 2009 as a result of the actions we took during Q4 2008 and Q1 2009.  Our new sales strategy and reduced cost structure will enable us to generate significant positive cash flows from operations on the sales that we generate going forward."

 "In furtherance of our goal of improving the number and quality of our sales and becoming cash flow positive during Q2 2009 and profitable for 2009, we took a number of important actions during 2008," stated Alex Soufflas, Chief Financial Officer and Executive Vice President of National Health Partners.  "Most notably, we successfully shifted our sales strategy from sales through marketing companies to sales through affinity groups, employers and insurance brokers and successfully implemented numerous cost-cutting programs.  We generated a substantial increase in sales of our CARExpress Plus membership programs.  In addition, the shift in sales strategy and cost-cutting programs produced substantially lower direct costs and operating expenses for us during 2008.  The affect of our actions on the company's costs are most evident when comparing our results for Q4 2008 with those for Q4 2007.  Our Q4 2008 direct costs decreased $540,740 to $163,786 for Q4 2008 from $704,526 for Q4, 2007, a decrease of 77%.  As a result of this, our gross profit of $1,635,344 and gross profit margin of 61% for 2008 were substantially higher than our gross profit and gross profit margins for 2007, and our net losses and net losses per share for 2008 were substantially lower than our net losses and net losses per share for 2007." 

2009 Projection Highlights

• Revenue of between $1 million and $2 million for Q2 2009, and record revenue of between $8 million and $12 million for the full 2009 year representing an increase of between 200% and 350% over 2008 revenue.
• Gross profit of between $650,000 and $1.3 million for Q2 2009 and between $5.6 million and $8.4 million for the full 2009 year.
• Gross profit percentage of 65% for Q2 2009 and 70% for the full 2009 year.
• Positive cash flows from operating activities of between $100,000 and $300,000 for Q2 2009 and between $1 million and $2 million for the full 2009 year.

2009 Outlook

The company believes that revenue received from sales of CARExpress membership programs by members generated through affinity groups, employers and insurance brokers located throughout the country, combined with lower costs realized through the company's recent cost-cutting actions, will be the primary driver for revenue, positive cash flow and profitability in 2009.  The company expects to generate revenue of between $1 million and $2 million for Q2 2009 and between $8 million and $12 million for the full 2009 year.  Achievement of its Q2 2009 projected revenue would very likely result in a record quarter for the company, and achievement of the full 2009 year revenue projection would represent an increase in revenue of between 200% and 350% over 2008 revenue.  This increase in revenue coupled with the cost-cutting initiatives that the company implemented over the past couple of quarters will result in the company generating positive cash flows from operating activities of between $100,000 and $300,000 for Q2 2009 and between $1 million and $2 million for the full 2009 year.  Positive cash flows from operating activities will be a milestone achievement for the company as it has never generated positive cash flows from operating activities before.

"After completion of some radical steps to improve our operational synergies and with the inclusion of more strategic low-risk opportunities that are either currently being rolled out or are expected to begin in the coming weeks, this is far and away the best outlook for National Health Partners in its history," stated Mr. Daniels.  "Everything is coming together at the same time.  We currently have more than 10 major opportunities that are all in various stages of starting up, and they are coming from a variety of different sources, like affinity groups, insurance brokerages, healthcare companies, employee leasing companies and small businesses.  Prospective customers are telling us that our programs are at the very top of their spending priorities as they seek alternative ways to continue providing superior health benefits to their employees but at a lower cost than that of their current comprehensive health insurance benefits.  Over the course of the next few months, the number of members that we have is going to grow quickly through sales of our traditional CARExpress health discount programs and sales of our CARExpress Plus membership programs."

"We successfully implemented a number of cost-cutting measures during Q4 2008 and Q1 2009 in an extremely difficult economic environment," continued Mr. Daniels.  "Clearly our strategic transformation - migrating to the more profitable segments of our industry, investing in higher quality business partners across the country, and driving productivity improvements and cost reductions throughout the company - is paying dividends," said Mr. Daniels.  "With our strong operational position, solid recurring revenue and profit streams and national reach, we are very excited about 2009.  We currently expect to generate revenue of between $1 million and $2 million for Q2 2009 and between $8 million and $12 million for 2009, as well as positive cash flows from operating activities of between $100,000 and $300,000 for Q2 2009 and between $1 million and $2 million for 2009.  This will be the first time in our company's history that we have achieved positive cash flows from operating activities."

"Based on the successful shift in our sales strategy and implementation of our recently enacted cost-cutting measures and our projected performance in 2009, I believe that our share price has tremendous upside potential during both the short and long term," added Mr. Daniels.  "While we have already achieved significant cost savings through the cost-cutting programs that we implemented over the past couple of quarters, we still see opportunities for additional savings.  Going forward, we will continue to maintain a tight focus on fiscal responsibility, drive revenue and invest in long-term opportunities to deliver value to our customers and shareholders, and will emerge as an even stronger industry leader than we are today."

The company will continue to keep its shareholders informed of its accomplishments and expects to release some exciting news during the next couple of weeks.

National Health Partners, Inc.

National Health Partners, Inc. is a national healthcare savings organization that provides discount healthcare membership programs to uninsured and underinsured people through a national healthcare savings network called "CARExpress."  CARExpress is one of the largest networks of hospitals, doctors, dentists, pharmacists and other healthcare providers in the country and is comprised of over 1,000,000 medical professionals that belong to such PPOs as CareMark and Aetna.  The company's primary target customer group is the 47 million Americans who have no health insurance of any kind.  The company's secondary target customer group includes the 61 million Americans who lack complete health insurance coverage.  The company is headquartered in Horsham, Pennsylvania.  For more information on the company, please visit its website at www.nationalhealthpartners.com.

Safe Harbor Provision

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements other than statements of historical fact contained herein, including, without limitation, statements regarding the company's future financial position, business strategy, budgets, projected revenues and costs, and plans and objectives of management for future operations, are forward-looking statements.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expects," "intends," "plans," "projects," "estimates," "anticipates," or "believes" or the negative thereof or any variation thereon or similar terminology or expressions.  Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from results proposed in such statements.  Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct.  Important factors that could cause actual results to differ materially from the company's expectations include, but are not limited to, its ability to fund future growth and implement its business strategy, its ability to develop and expand the market for its CARExpress membership programs, demand for and acceptance of its CARExpress membership programs, its dependence on a limited number of preferred provider organizations and other provider networks for healthcare providers, as well as those factors set forth in the company's most recently filed post-effective amendment to its registration statement on Form SB-2 and its other filings and submissions with the Securities and Exchange Commission.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made.  Except as required by law, the company assumes no obligation to update or revise any of the information contained in this press release.

Contact: 

National Health Partners, Inc.
Alex Soufflas, 215-682-7114
info@nationalhealthpartners.com

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Source: National Health Partners, Inc.

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