HealthExtras Reports Second Quarter 2008 Results

Company Announces Mail Service Pharmacy Acquisition

Second Quarter Revenues Up 46% to $614 Million

Net Income Increases 47% to $0.28 Per Diluted Share
ROCKVILLE, Md.--(Business Wire)--
HealthExtras, Inc. (NASDAQ:HLEX), a pharmacy benefit management
company, today announced its financial results for the quarter ended
June 30, 2008. The Company reported a 46% increase in quarterly
revenues to $614.3 million and a 47% increase of net income to $12.0
million, or $0.28 per diluted share over the prior year. Additionally,
the Company announced the acquisition of Immediate Pharmaceutical
Services, Inc. ("IPS") from Discount Drug Mart, Inc. IPS operates a
state-of-the-art prescription mail service fulfillment center located
in Avon Lake, Ohio, a western suburb of Cleveland. "The acquisition of
IPS is the culmination of a comprehensive evaluation of a number of
mail service pharmacies. While there were several potential
acquisition candidates, the quality and efficiencies of IPS, coupled
with the scalability of its operations, makes it a superb platform for
building our mail service capability," stated David T. Blair, Chief
Executive Officer of HealthExtras.

"As illustrated by our performance during the second quarter, we
continue to produce strong revenue and earnings growth. In addition to
our sound financial results, we made key strategic acquisitions of
HospiScript, a leading provider of pharmacy management services to the
hospice industry and most recently IPS, a mail service pharmacy
provider. Our strong performance combined with these acquisitions
demonstrate progress on both our organic and strategic growth
initiatives," added Blair.

Second Quarter Results

Revenue for the second quarter increased by $193.3 million, or
45.9%, to $614.3 million from $421.0 million in the prior year's
comparable quarter. The growth in revenue included $184.5 million from
increased prescription volume, $3.2 million from an increase in unit
prices and $5.6 million from the proportionate amount of prescription
costs paid by plan sponsors. Total claims processed in the second
quarter increased to 12.4 million from 9.6 million for the same period
in 2007. The increase in prescription volume was primarily due to the
addition of new clients.

Gross profit for the second quarter increased $7.6 million, to
$34.1 million or 5.6% of revenue compared to $26.5 million, or 6.3% of
revenue, in the second quarter of the prior year.

Second quarter operating income increased 53.8% to $18.3 million
from $11.9 million in the second quarter of 2007. The increase in
operating income was primarily due to the increase in gross profit,
offset by a $1.3 million increase in selling, general and
administrative expenses. The increase in selling, general and
administrative expenses included $1.2 million associated with
consolidating HospiScript results.

Net income for the second quarter of 2008 was $12.0 million, or
$0.28 per diluted share, compared to the prior year's net income of
$8.2 million, or $0.19 per diluted share.

Six Month Results

Revenue for the six months ended June 30, 2008 increased 45.4%, to
$1.2 billion from $827.4 million in the prior year. The growth in
revenue included $368.1 million from increased prescription volume,
$0.2 million from an increase in unit prices and $7.3 million from the
proportionate amount of prescription costs paid by plan sponsors.
Total claims processed increased to 25.3 million for the six months
ended June 30, 2008 from 19.3 million for the same period in 2007. The
increase in prescription volume was primarily due to the addition of
new clients.

Gross profit for the first six months of 2008, increased by $11.2
million to $65.3 million, or 5.4% of revenue, compared to $54.1
million, or 6.5% of revenue, in the first six months of the prior
year.

Operating income increased by $8.3 million to $35.0 million in the
first six months of 2008 from $26.7 million in the same period of the
prior year. The increase in operating income was primarily due to the
increase in gross profit offset by an increase in selling, general and
administrative expenses. The increase in selling, general and
administrative expenses included $2.9 million associated with
initiatives to support the Company's continued growth, such as
additional employee facilities and vendor costs to serve and implement
new clients, as well as $1.2 million relating to consolidating
HospiScript's results.

Net income for the first six months of 2008 was $23.6 million, or
$0.54 per diluted share, compared to $17.9 million, or $0.42 per
diluted share, in the prior year.

Acquisition of IPS

Today the Company announced that it has entered into a definitive
agreement to acquire IPS. Under the terms of the agreement,
HealthExtras will pay a purchase price of $40 million in cash at
closing. The integration costs of the IPS transaction will have an
impact on results beginning in the third quarter. The Company expects
the IPS transaction to be modestly dilutive to 2008 earnings and
accretive in 2009. Additional information about the timing and extent
of IPS contributions to revenues and earnings will be discussed during
the Company's conference call scheduled for Wednesday, August 6, 2008,
at 10:00 a.m. Eastern time.

HealthExtras expects to expand the operational processes, systems,
and personnel based in Ohio. "As we have demonstrated with previous
acquisitions, we will take a long-term view of IPS. We will invest in
their infrastructure and expand their marketing initiatives. Through
IPS our current and prospective clients will have a mail service
option which provides a greater level of financial transparency and
higher level of service," added Blair.

About HealthExtras (www.healthextras.com):

HealthExtras, Inc. is a full-service pharmacy benefit management
company. Its clients include self-insured employers, including state
and local governments, third-party administrators, managed care
organizations, unions and individuals. The Company's integrated
pharmacy benefit management services marketed under the name Catalyst
Rx include: claims processing, benefit design consultation, drug
utilization review, formulary management, drug data analysis services
and mail order services. Additionally, the Company operates a national
retail pharmacy network with over 60,000 participating pharmacies.

This press release may contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements involve a number of risks and
uncertainties. Factors that we have identified that might materially
affect our results are discussed in our Annual Report on Form 10-K for
the year ended December 31, 2007 under "Item 1.A Risk Factors."
Readers are urged to carefully review and consider the various
disclosures made in our Annual Report on Form 10-K and our other
filings with the Securities and Exchange Commission that attempt to
advise interested parties of the risks and uncertainties that may
affect our business.

-0-
*T

HEALTHEXTRAS, INC.
and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

For the three months For the six months
ended June 30, ended June 30,
-------------------- ---------------------
2008 2007 2008 2007
--------- ---------- ----------- ---------
Revenue (excludes member
co-payments of $173,978,
$143,362, $364,590 and
$299,431 for the three and
six months ended June 30,
2008 and 2007,
respectively) $614,302 $ 421,004 $1,202,946 $827,376
--------- ---------- ----------- ---------
Direct expenses 580,176 394,487 1,137,627 773,301
Selling, general and
administrative expenses 15,860 14,579 30,289 27,391
--------- ---------- ----------- ---------
Total operating expenses 596,036 409,066 1,167,916 800,692
--------- ---------- ----------- ---------
Operating income 18,266 11,938 35,030 26,684
Interest income 1,175 1,457 3,072 2,788
Interest expense (36) (53) (72) (89)
Other income -- -- 1 1
--------- ---------- ----------- ---------
Income before
minority interest
and income taxes 19,405 13,342 38,031 29,384
Minority interest -- -- -- 31
--------- ---------- ----------- ---------
Income before income
taxes 19,405 13,342 38,031 29,353
Income tax expense 7,392 5,143 14,414 11,445
--------- ---------- ----------- ---------
Net income $ 12,013 $ 8,199 $ 23,617 $ 17,908
========= ========== =========== =========

Net income per share, basic $ 0.28 $ 0.20 $ 0.56 $ 0.43
Net income per share,
diluted $ 0.28 $ 0.19 $ 0.54 $ 0.42
Weighted average shares of
common stock outstanding,
basic 42,402 41,433 42,310 41,194
Weighted average shares of
common stock outstanding,
diluted 43,537 43,027 43,461 42,838
*T

HealthExtras, Inc.
Hai Tran, 301-548-2900
htran@HealthExtras.com

Copyright Business Wire 2008