HealthGrades Expects Third Quarter Revenue of Approximately $10 Million : Full-Year 2008 Ratings and Advisory Revenue to Be $39 Million to $40 Million Company Provides Update on Stock Repurchase Program

Health Grades, Inc. (NASDAQ:HGRD), the leading independent healthcare quality ratings company, today announced that it expects total revenue for the third quarter ended September 30, 2008 to be approximately $10 million. This represents an increase of 23% compared with the third quarter of 2007.

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There is significant interest in our sponsorship and advertising programs and traffic to the HealthGrades Web site is at record levels

GOLDEN, Colo. (PRWEB) October 14, 2008

HealthGrades also announced that it now expects full-year 2008 ratings and advisory revenue to be in the range of $39 million to $40 million, compared with previous guidance of $41 million to $43 million. This new guidance represents growth of 19% to 22% compared with 2007 and includes only a modest contribution from the acquisition of WrongDiagnosis.com, which the Company announced today. HealthGrades affirms guidance for 2008 operating margin to be in the range of 17% to 21%.

Since June 30, 2008, the Company has repurchased 666,871 shares of its common stock for an aggregate purchase price of approximately $2.3 million. In 2008 the Company has repurchased 2,097,742 shares of its common stock for an aggregate purchase price of approximately $10.0 million.

"There is significant interest in our sponsorship and advertising programs and traffic to the HealthGrades Web site is at record levels," said Kerry Hicks, CEO of HealthGrades. "However, revenue growth in the Internet Business Group is below our previous internal forecast due to fewer-than-expected new advertisers and lower-than-expected advertising rates. Given the current economic and business environment, we do not expect advertising spending or rates to improve before the end of the year. In addition, while we are seeing our new sales pipeline build in our Provider Services business, the sales cycle is extending in this area as well. We do not believe this is a reflection on the long-term prospects of this business, but rather hospitals are taking a bit more time to make purchasing decisions in the current economic climate."

The Company plans to report financial results for the third quarter before the market opens on October 30, 2008. HealthGrades management will discuss quarterly results and comment on the outlook for the remainder of the year in an investment community conference call and webcast that same day beginning at 11:00 a.m. Eastern time.

About Health Grades, Inc.

HealthGrades is the leading independent healthcare ratings company, providing ratings and profiles of hospitals, nursing homes and physicians to consumers, corporations, health plans and hospitals. Millions of consumers and many of the nation's largest employers, health plans and hospitals rely on HealthGrades' independent ratings and decision-support resources to make healthcare decisions based on the quality and cost of care. More information on the Company can be found at http://www.healthgrades.com.

Forward-Looking Statements

This press release contains forward-looking statements, including without limitation statements relating to the Company's expected revenue for the third quarter 2008, and ratings and advisory revenue for the full year 2008. Actual results may differ materially from those described in such forward-looking statements due to several factors, including without limitation, slower than expected adoption of some of the Company's newer product areas such as advertising/sponsorship sales, a decline in advertising rates, a decline in anticipated contract retention rates, the Company's inability to enter into meaningful contractual arrangements and to successfully expand certain lines of business and other factors described in the Company's filings with the Securities and Exchange Commission, especially the section entitled "Risk Factors" in its 2007 Annual Report on Form 10-K. The Company does not undertake to update its forward-looking statements.


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