Matria Healthcare is a leading provider of comprehensive health enhancement programs to health plans, employers and government agencies. Matria is dedicated to developing better educated, motivated and self-enabled healthcare consumers and supporting clinicians in managing the care of their patients. The Company manages major chronic diseases and episodic conditions including diabetes, congestive heart failure, coronary artery disease, asthma, chronic obstructive pulmonary disease, high-risk obstetrics, cancer, musculoskeletal and chronic pain, depression, obesity, and other conditions. Matria delivers programs that address wellness, healthy living, productivity improvement and patient advocacy, and provides case management of acute and catastrophic conditions. Headquartered in Marietta, Georgia, Matria operates through nearly 50 offices around the United States

http://www.matria.com/

Matria Reports 2006 Results and Announces Quarterly Guidance for 2007 
MARIETTA, Ga.--(BUSINESS WIRE)--Feb. 22, 2007--Matria Healthcare, Inc. (NASDAQ:MATR) announced today its financial results for the fourth quarter and year ended December 31, 2006.

On January 6, 2006, the Company announced its strategic decision to divest Facet Technologies and Dia Real, its foreign diabetes services operation in Germany. The sales of those businesses were completed in 2006, and their results of operations are included in discontinued operations for all periods presented. The comparison between 2005 and 2006 results is for the Company's continuing operations, which include its Health Enhancement segment, comprised of its disease management, wellness, productivity enhancement, maternity management and informatics operations.

2006 Full Year Results

Revenues for the year ended December 31, 2006, increased 88% to $336.1 million, compared to $179.2 million in 2005. Before the effects of share-based compensation expense, 2006 earnings from continuing operations were $23.3 million, or $1.08 per diluted share, compared to $4 million, or $0.20 per diluted share in 2005. Including share-based compensation expense of $7 million or $0.22 per diluted share, earnings from continuing operations for the year ended December 31, 2006, were $18.5 million, or $0.85 per diluted share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the year were $82.6 million, compared to $14.7 million in 2005, excluding the effect of share-based compensation expense in 2006.

Revenues for the Company's wellness and disease management operations more than doubled in 2006 to $228.6 million, compared to $77.4 million in 2005. The improved results reflect a successful year in which the operations of three acquisitions -- CorSolutions, WinningHabits and Miavita -- were effectively integrated into the Company's operations.

Maternity management revenues increased 6% to $107.5 million in 2006, compared to $101.8 million in 2005. The largest component of growth was the Company's MaternaLink(R) program, which provides obstetrical risk assessment and condition/disease management services for high-risk pregnancies.

Parker H. "Pete" Petit, Chairman and CEO, stated, "During 2006, we completed our transition to a company focused on total population health, which includes disease management, wellness and productivity enhancement. We had a very successful year integrating our acquisitions and completing our divestitures. We reduced our debt, and we now have a balance sheet commensurate with our operations and future growth opportunities. Our 2006 results clearly demonstrate the efficiency of our operations in terms of profitability and EBITDA."

Fourth Quarter 2006 Results
Revenues for the fourth quarter of 2006 increased 82% to $88.4 million, compared to $48.6 million in the fourth quarter of 2005. Excluding the impact of share-based compensation, earnings from continuing operations for the quarter ended December 31, 2006, increased to $7.0 million, or $0.32 per diluted share, compared to $1.5 million, or $0.07 per diluted share reported in the fourth quarter of 2005. Including share-based compensation expense of $1.9 million, or $0.06 per diluted share, earnings from continuing operations for the fourth quarter of 2006 were $5.7 million, or $0.26 per diluted share.
EBITDA for the fourth quarter of 2006 increased to $22.5 million, compared to $4.5 million in the fourth quarter of 2005, excluding the effect of share-based compensation expense in 2006.
Wellness and disease management revenues grew during the fourth quarter of 2006 to $61 million, from $23.3 million reported in the fourth quarter of 2005. Maternity management revenues increased 8.3% to $27.4 million, compared to $25.3 million reported in the fourth quarter of 2005. This increase in revenues fell short of the Company's forecast due to greater than anticipated effects of seasonality.

Cash flow from continuing operations was better than expected, totaling $19.3 million, an increase of more than $10 million from the prior quarter. The increase in cash flow was driven primarily by a reduction in accounts receivable.

2007 Guidance
To give greater visibility to the sequential progression of the guidance issued December 18, 2006, a quarterly revenues and earnings summary has been provided in the table below. The Company's quarterly guidance incorporates the 2007 impact of the previously communicated 2007 backlog, all known and estimated unknown revenue attrition, potential new and expanded business from the Company's pipeline and new product introductions.