09/16/96 OPEN WIDE AND SAY HOOPER HOLMES

OPEN WIDE AND SAY HOOPER HOLMES

If you've had a life-insurance physical lately, chances are good the doctor or nurse who performed the examination worked for Hooper Holmes (HH). Sure, the business is mundane, but it's a critical service. Demand for these exams is strong and getting stronger. Hooper, with 200 branch offices, commands 35% of the market.
The stock has moved up as the smart money caught on. The shares hit 13 3/4 on July 2, up from 8, where it had been stuck in previous months. Now at 12 1/8, the stock has some big investors buying, figuring it could move up to 20 in a year.
In general, life insurers haven't required exams unless an applicant was applying for a policy with benefits above, say, $200,000. But now, insurers are starting to lower the level and require more exams to get a better handle on the liabilities they face. Some major players may even start to require physicals of all applicants. Such a trend plays right into Hooper Holmes' strengths. The Hooper bulls also argue that introduction of Confide, Johnson & Johnson's do-it-yourself AIDS test kit, will prompt insurers to do more exhaustive screening. They say insurers are worried that those testing positive for the AIDS virus will seek policies that don't require exams.
As a result, Hooper's business should zoom, says analyst Greg Simpson of A.G. Edwards & Sons. Insurers, on average, test only about 1 applicant in 10. ``If that number moves closer to 2 in 10, the revenue jump for Hooper will be tremendous,'' says a Hooper insider. So Simpson has upped his earnings estimates: For 1996, he sees 58 cents a share, and for 1997, 85 cents. In 1995, Hooper earned 25 cents a share.

BY GENE G. MARCIAL