Health Revenue Assurance Holdings, Inc. Reports Financial Results For The Third Quarter And First Nine Months Of 2013

Plantation, FL, Nov. 14, 2013 (GLOBE NEWSWIRE) -- Health Revenue Assurance Holdings, Inc. (OTCBB:HRAA), the leading provider of revenue integrity solutions forhealthcare organizations, announced its financial results for thethird quarter and first nine months ended September 30, 2013.

Third Quarter and First Nine Monthsof 2013 Highlights:
  • Total revenues for the first nine months of 2013 were$6,075,437, an increase of 67.9% as compared to $3,619,611 for theprior year's first nine months; HRAA was selected to provide anICD-10 Curriculum to and manage an Internship program for theLatter-Day Saints Business College Medical Coding CertificateProgram;
  • HRAA's ICDVisualizerTM BusinessIntelligence Solution was selected by Otsego Memorial Hospital tosupport ICD-10 transition;
  • HRAA was chosen to perform ICD-10 Transition Services for KirbyMedical Center;
  • Company was selected to provide ICD-10 Educational Services toMarshall Browning Hospital;
  • Chairman and CEO Andrea Clark named one of top 10 CEOs inBroward County by South Florida Business Journal's 2013 BrowardUltimate CEO Awards.

Andrea Clark, HRAA's Chairman, CEO and Founderstated, "We continue to see great demand for our coding andeducation services as well as our technology platforms by healthcare organizations that include Otsego Memorial Hospital, KirbyMedical Center and Marshall Browning Hospital. Educationalinstitutions are seeking out our services to help revamp theircoding curriculum, as coders will need to be fully prepared to workunder ICD-10 in less than a year. Also, we recently received astrategic investment of $5.4 million from Great Point Partners thatwill help us to fuel the expansion of our Medical Coding and ICD-10Transition Solutions. Great Point's recent capital infusion isvalidation of our business model and product suite and we lookforward to utilizing their vast knowledge, experience and deepindustry relationships."  

Ms. Clark added, "These customer wins,partnerships and the strategic investment from Great Point Partnersfurther validate the revenue potential of our best-of-breedsolutions as we continue to execute on our growth strategy whiledriving shareholder value. As a leader in ICD-10 transitionservices, we continue to set the bar in training, coding andtechnology while identifying major factors that will impacthealthcare organizations during this shift."

Commenting on the financial results, CEO AndreaClark, stated, "On a GAAP basis, our net loss for the quarterwidened substantially due to a number of non-cash charges includinga one-time, non-cash charge of almost $1 million related to R&Dand significantly higher operating expenses. The increase inoperating expenses during the quarter was in-line with our internalexpectations as we made planned investments in the build-up ofstaff to meet the growing demand for our coding services as well asthe development and market launch of our suite of businesstechnology solutions. During the quarter, we converted asubstantial amount of outstanding notes to equity, reducing ourdebt by $402,000. By extinguishing this debt, we strengthened ourbalance sheet and reduced our debt service obligations goingforward. With much of our planned investments having been deployedduring the first nine months of the year, and this large one-timenon-cash charge behind us, we expect our bottom line to show amarked and steady improvement going into the current fourth quarterand into 2014."

Third Quarter 2013 FinancialResults

For the third quarter of 2013, total revenueswere $1,851,377, a decrease of $134,139 or 6.7%, from revenues of$1,985,516 for the third quarter of 2012.  The decrease inrevenues was primarily due to customer fiscal budget restraints foreducation services as management focused its resources on thedevelopment and market launch of HRAA's business intelligence Visualizer software products.

Adjusted EBITDA loss was $(868,951) for thequarter ended September 30, 2013 compared to adjusted EBITDA of$161,812 for the same quarter in 2012.

Operating expenses were $2,865,142 for the thirdquarter of 2013, increasing 164% from operating expenses of$1,084,803 for the prior year's third quarter, primarily due to theaddition of extra staff and infrastructure to support the build-upof the Company's anticipated rapid growth throughout its business.The Company had an operating loss in the third quarter of 2013 of$(2,102,207), compared to an operating income of $142,446 for theprior year's third quarter.

The Company recorded a net loss of $(2,561,475),or $(0.05) per basic and diluted share, for the third quarter of2013, as compared to a net loss of $(230,149), or $(0.01) per basicand diluted share, for the third quarter of 2012. The net loss inthe third quarter of 2013 includes an interest expense of $357,127primarily due to the amortization of debt financing fees, a writeoff unamortized debt discount fees related to a conversion ofpromissory notes to common stock and interest on debt obligations.  In addition, the Company incurred a one-time non-cashcharge to operating expenses of $946,931 related to the impairmentof research and development costs previously capitalized. TheCompany also recorded a $112,583 non-cash charge related to theconversion of promissory notes into common stock and a non-cashcharge of $192,130 for stock based compensation expense.

Nine Month Results

For the nine months ended September 30, 2013,total revenues were $6,075,437, an increase of $2,455,826 or 67.9%,from revenues of $3,619,611 for the first nine months of2012. 

Adjusted EBITDA loss was $(1,893,508) for thenine months ended September 30, 2013 compared to adjusted EBITDAloss of $(794,091) for the same period in 2012.

Operating expenses were $6,295,788 for the firstnine months of 2013, compared to operating expenses of $2,817,292for the same period in 2012, primarily due to increased personneland business development costs. The Company had an operating lossfor the nine months ended September 30, 2013 of $(3,269,745),compared to an operating loss of $(840,300) for the same period in2012.

The Company recorded a net loss of $(4,093,364),or $(0.09) per basic and diluted share, for the nine months endedSeptember 30, 2013 as compared to a net loss of $(1,223,737) or$(0.04) per basic and diluted share, for the same period in 2012.The net loss for the nine months ending September 30, 2013 includesan interest expense of $721,829 primarily due to the amortizationof debt financing fees, a write off unamortized debt discount feesrelated to a conversion of promissory notes to common stock andinterest on debt obligations. In addition, the Company incurred anon-cash charge of $946,931 related to the impairment of researchand development costs previously capitalized. The Company alsorecorded a $112,583 non-cash charge related to the conversion ofpromissory notes into common stock and a non-cash charge of$290,162 for stock based compensation expense.

About HRAA

HRAA (OTCQB: HRAA) interprets data to ensurethat healthcare is efficient and effective for everyone by pullingmedical data together to create a predictive window to understandcost and revenues looking back and going forward. Founded in 2001and based out of Plantation, FL, HRAA combines years of industryexpertise with best-in-breed technology to create market leadingbusiness intelligence products and consulting services to ensurehospitals are reimbursed for every pill they prescribe, everyprocedure they perform and every test they administer. HRAA bothtrains and supplies the high tech workforce to hospitals togenerate the predictive data used by the whole healthcare systemand offers a full suite of solutions needed to keep up with theever-changing healthcare industry including data analyticssoftware, business intelligence technology, medical coding,auditing, education, revenue cycle consulting, and ICD-10transition solutions. For more information please visit:  http://www.hraa.com

Caution Regarding Forward LookingStatements

Certain statements in this news release and suchconference call are forward-looking, including (without limitation)expectations or guidance respecting customer contract expansion,growing revenues and profits through organic growth andacquisitions, attracting new business that will increase HRAA'srevenues, continuing to maintain costs and consummating anytransactions. Undue reliance should not be placed on suchforward-looking statements because the matters they describe aresubject to known and unknown risks, uncertainties and otherunpredictable factors, many of which are beyond the Company'scontrol. The Company's actual results, performance and trends coulddiffer materially from those indicated or implied by suchstatements as a result of various factors, including (withoutlimitation) the continued strengthening of HRAA's selling andmarketing functions, continued customer satisfaction and contractrenewal, new product development, continued availability of capablededicated personnel, continued cost management, the success andavailability of acquisitions, availability of financing and otherfactors, as well as by factors applicable to most companies such asgeneral economic, competitive and other business and civilconditions. Information regarding certain of those and other riskfactors and cautionary statements that could affect future results,performance or trends are discussed in HRAA's most recent annualreport on Form 10-K, quarterly reports on Form 10-Q, and otherfilings made with the Securities and Exchange Commission from timeto time. All of the Company's forward-looking statements areexpressly qualified by all such risk factors and other cautionarystatements.

-Tables Follow-

HEALTH REVENUE ASSURANCE HOLDINGS, INC.AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
    September30,     December31,  
    2013     2012  
    (unaudited)        
Assets            
             
Cash   $ 185,600     $ 893,458  
Accounts receivable     1,011,929       1,246,814  
Accounts receivable - Related Party, net ofallowance $117,632 and $0, respectively     --       --  
Prepaid expenses     1,181,321       3,600  
Other current assets     70,020       688  
   Total CurrentAssets     2,448,870       2,144,560  
                 
Property and Equipment, net     400,126       365,017  
                 
Software, net     --       258,933  
Other assets     8,865       8,871  
Finance costs, net     2,232       2,477  
   Total OtherAssets     11,097       270,281  
                 
   TotalAssets   $ 2,860,093     $ 2,779,858  
                 
Liabilities and Stockholders'Equity (Deficit)                
                 
Accounts payable   $ 520,054     $ 207,741  
Due to officers     115,000       75,000  
Accrued expenses     103,142       64,077  
Accrued payroll     693,826       412,186  
Loan payable to factor     443,648       827,075  
Accrued interest     --       4,524  
Line of credit, current portion     46,166       25,000  
Capital Leases, current portion     32,768       16,923  
Notes payable, current portion, net ofdiscount     372,161       202,557  
Long term debt, current portion     43,956       37,513  
Settlement Payable     --       115,278  
Other current liabilities     51,257       --  
   Total CurrentLiabilities     2,421,978       1,987,874  
Capital Leases (net of current portion)     34,300       23,974  
Line of credit (net of current portion)     --       125,000  
Notes payable (net of current portion), netof discount     124,054       273,751  
Long term debt (net of current portion)     286,549       181,457  
   TotalLiabilities   $ 2,866,881     $ 2,592,056  
                 
Commitments and Contingencies                
                 
Stockholders' Equity (Deficit):                
Preferred stock ($0.001 par value, 25,000,000shares authorized, none issued or outstanding)   $ --     $ --  
Common stock ($0.001 par value, 500,000,000shares authorized, 54,577,294 shares and 39,054,867 issued andoutstanding at September 30, 2013 and December 31, 2012,respectively)     54,577       39,055  
Additional paid-in capital     6,616,797       2,738,545  
Subscription receivable     --       (5,000 )
Accumulated deficit     (6,678,162 )     (2,584,798 )
   Total Stockholders'Equity (Deficit)     (6,788 )     187,802  
                 
   Total Liabilitiesand Stockholders' Equity (Deficit)   $ 2,860,093     $ 2,779,858  

The accompanying unaudited notes are anintegral part of these unaudited consolidated financialstatements.

1
HEALTH REVENUEASSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATEDSTATEMENTS OF OPERATIONS (unaudited)
                         
    (For the threemonths ended)     (For the ninemonths ended)  
    September30,     September30,     September30,     September30,  
    2013     2012     2013     2012  
                         
Revenue   $ 1,790,825       1,985,516     $ 5,787,811       3,619,611  
Revenue - Related Party     60,552       --       287,626       --  
Total Revenue     1,851,377       1,985,516       6,075,437       3,619,611  
                                 
Cost of Revenues     1,088,442       758,267       3,049,394       1,642,619  
Gross Profit     762,935       1,227,249       3,026,043       1,976,992  
                                 
Operating Expenses                                
Selling and administrative expenses (includesstock compensation of $290,162 and $0 as of September 30, 2013 and2012, respectively)     1,898,595       1,069,870       5,284,354       2,726,475  
Research and development     --       926       289       54,059  
Asset Impairment     946,931       --       946,931       --  
Depreciation and amortization     19,616       14,007       64,214       36,758  
Total Operating Expenses     2,865,142       1,084,803       6,295,788       2,817,292  
                                 
Operating Income (Loss)     (2,102,207 )     142,446       (3,269,745 )     (840,300 )
                                 
Other Income (Expense)                                
Other income     10,442       5,359       10,793       9,451  
Interest expense     (357,127 )     (377,954 )     (721,829 )     (392,888 )
Loss on extinguishment of debt     (112,583 )     --       (112,583 )      -  
Total Other Income (Expense), net     (459,268 )     (372,595 )     (823,619 )     (383,437 )
                                 
(Loss) before provision for incometaxes     (2,561,475 )     (230,149 )     (4,093,364 )     (1,223,737 )
                                 
Net (Loss)   $ (2,561,475 )   $ (230,149 )   $ (4,093,364 )   $ (1,223,737 )
                                 
Net Loss Per Share                                
basic and diluted   $ (0.05 )   $ (0.01 )   $ (0.09 )   $ (0.04 )
Weighted Average Number of SharesOutstanding                                
basic and diluted     49,438,329       32,843,413       46,239,643       31,468,471  

The accompanying unaudited notes are anintegral part of these unaudited consolidated financialstatements.

###
CONTACT: Investor Contacts:         KCSA Strategic Communications         Philip Carlson          +1 212.896.1233          pcarlson@kcsa.com 

HRAA

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