HealthExtras Reports Record Fourth Quarter and Year-End Results; 2005 Earnings Up Over 40% From Prior Year, Company Increases 2006 Guidance

2005 Highlights

-- Net income for 2005 was $23.0 million or $.56 per diluted share including a $0.6 million after-tax charge for stock option expense. 2005 net income was up 40% to $23.0 million from $16.4 million in 2004.

-- Revenue for 2005 totaled $695 million, a 33% increase over 2004 revenue of $521 million.

-- Completed the acquisition of EBRx, a provider of pharmacy benefit management services with a strategic focus on the third party administrator market segment.

Fourth Quarter Highlights

-- Net income, including a $0.6 million after-tax charge for stock option expense, was $5.8 million or $.14 per diluted share. Excluding the stock option charge, on a comparable basis with the fourth quarter in the prior year, earnings were up 42% from $4.5 million to $6.4 million.

-- Revenue totaled $181.5 million, a 18% increase over fourth quarter 2004 revenue of $153.4 million.

-- Over 4.2 million prescriptions were processed during the quarter

-- Selling, general and administrative expenses, excluding the previously mentioned charge for stock option expense, increased approximately $1.0 million from the prior quarter as a result of marketing and implementation expenses directly related to new business for 2006.

"We continue to be pleased with the Company's overallperformance," said David T. Blair, Chief Executive Officer ofHealthExtras. "The fourth quarter financial performance reflects thecompletion of a year in which we met both our growth and profitabilityobjectives but more importantly improved our long term competitivepositioning. In addition to the strong financial results, during theyear we successfully implemented new business, continued to invest innew product offerings and positioned the Company to again delivergreater than 40% earnings growth in 2006."

Consistent with previous disclosures related to FAS 123R, theCompany recorded a non-cash charge of $0.6 million in the fourthquarter related to accelerated vesting of stock options. Additionaldisclosures related to the charge have been made as required in ourfilings with the Securities and Exchange Commission.

"The fourth quarter was a milestone in many respects, in additionto key client additions and a strategic acquisition, the Companycommitted significant resources to sales and marketing efforts whichshould position the Company for sustained growth in 2006 and beyond,"stated Mr. Blair.

2006 Financial Guidance

Based on additional fourth quarter sales and the recentacquisition of EBRx, the Company is raising 2006 financial guidance.The Company now expects 2006 revenues to exceed $1.2 billion and netincome to grow by 45% over 2005. The Company expects 2006 net incometo be approximately $33.5 million, which would equate to dilutedearnings per share of $.80. Earnings contributions for the year willbe weighted to the third and fourth quarters due to implementation andtransition expenses associated with mid-year client additions.Earnings in the second half of 2006 will likely be more than sixtypercent of the overall revised guidance referenced above.

About HealthExtras (www.healthextras.com)

HealthExtras, Inc. is a full-service pharmacy management company.Its clients include self-insured employers, including state and localgovernments, third-party administrators, managed care organizationsand individuals. The Company's integrated pharmacy benefit managementservices marketed under the name Catalyst Rx include: claimsprocessing, benefit design consultation, drug utilization review,formulary management, drug data analysis services and mail orderservices. Additionally, the Company operates a national retailpharmacy network with over 55,000 participating pharmacies.

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

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

Revenue (excludes member co-payments
of $70,268 and $65,290 for the
quarters ended December 31, 2005 and
2004 respectively) $181,475 $153,410
--------------- ---------------

Direct expenses 160,087 134,961
Selling, general & administrative
expenses 13,124 10,992
--------------- ---------------

Total operating expenses 173,211 145,953
--------------- ---------------

Operating income 8,264 7,457

Interest income, net 583 (238)
Other Income 30 35
--------------- ---------------
Income before tax 8,877 7,254

Income tax provision 3,074 2,735
--------------- ---------------

Net income $5,803 $4,519
=============== ===============

EPS - basic $0.15 $0.13

EPS - diluted $0.14 $0.12

Weighted average common shares, basic 39,537 35,010

Weighted average common shares,
diluted 41,903 37,284



Income Statement
(In thousands, except per share data)
For the year For the year
ended ended
Dec. 31, 2005 Dec. 31, 2004


Revenue (excludes member co-payments
of $279,238 and $213,014 for the
years ended December 31, 2005 and
2004 respectively) $694,519 $521,325
--------------- ---------------

Direct expenses 613,308 460,783
Selling, general & administrative
expenses 46,387 35,583
--------------- ---------------

Total operating expenses 659,695 496,366
--------------- ---------------

Operating income 34,824 24,959

Interest income, net 1,231 (762)
Other Income 87 2,100
--------------- ---------------
Income before tax 36,142 26,297

Income tax provision 13,162 9,914
--------------- ---------------

Net income $22,980 $16,383
=============== ===============

EPS - basic $0.59 $0.49

EPS - diluted $0.56 $0.45

Weighted average common shares, basic 38,648 33,642

Weighted average common shares,
diluted 41,353 36,407