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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)

SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended June 30, 2004

Commission File No. 1-9972

Hooper Holmes, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (908) 766-5000

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2).

Yes x    No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

HOOPER HOLMES, INC. AND SUBSIDIARIES

INDEX

Hooper Holmes, Inc.

Consolidated Balance Sheets

(unaudited)

See accompanying notes to unaudited consolidated financial statements.

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Hooper Holmes, Inc.

Consolidated Statements Of Income

(unaudited)

See accompanying notes to unaudited consolidated financial statements.

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Hooper Holmes, Inc.

Consolidated Statements of Cash Flows

(unaudited)

See accompanying notes to unaudited consolidated financial statements.

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HOOPER HOLMES, INC.

Notes to Unaudited Consolidated Financial Statements

June 30, 2004

The financial information included herein is unaudited however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2003 annual report on Form 10-K.

The results of operations for the three and six months ended June 30, 2004 are not necessarily indicative of the results to be expected for any other interim period or the full year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

The SEC’s rules and regulations require that the Company’s independent auditor complete a review of the interim consolidated financial statements included within this quarterly report on Form 10-Q prior to the filing of the Form 10-Q. Subsequent to the end of the second quarter of 2004, the Audit Committee of the Company’s Board of Directors commenced an inquiry into certain reimbursements to the Company’s CEO for charitable contributions and other expenditures made by or at the direction of the CEO in the Company’s name, such contributions and expenditures having been asserted to be in violation of the Company’s Code of Conduct and Ethics and a breach of fiduciary duty, and certain other unspecified violations of the Code of Conduct and Ethics. The Audit Committee has engaged independent counsel to assist it in this inquiry and independent counsel has, in turn, engaged an independent accounting firm to assist it. Due to the ongoing nature of this investigation, the Company has been advised by its independent auditor, KPMG LLP, that KPMG is not able to complete its review, in accordance with Rule 10-01(d) of Regulation S-X promulgated by the SEC, of the Company’s interim consolidated financial statements as of and for the three and six month periods ended June 30, 2004, prior to the completion of the Audit Committee’s inquiry. Accordingly, this Form 10-Q is filed with the Securities and Exchange Commission without such review. The Company anticipates amending this Form 10-Q when the inquiry is finalized and the independent auditors’ review is complete.

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“Basic” earnings per share equals net income divided by the weighted average common shares outstanding during the period. “Diluted” earnings per share equals net income divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. Common stock equivalents (1,627,310 and 1,937,770 for the three months ended and 1,752,876 and 1,708,193 for the six months ended June 30, 2004 and 2003, respectively) are shares assumed to be issued if outstanding stock options were exercised.

Options to purchase 4,858,175 and 3,935,925 shares of common stock were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2004 and 2003, respectively, and 4,349,050 and 4,623,388 shares for the six months ended June 30, 2004 and 2003, respectively, because their exercise prices exceeded the average market price of outstanding common shares for the period and were therefore antidilutive.

The Company has stock-based employee compensation plans. In December 2002, the FSAB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, and amendment of FASB Statement No. 123.” This statement amends FASB Statement No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. The Company continues to account for those plans under the recognition and measurement provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. SFAS No. 123, “Accounting for Stock-Based Compensation,” established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to adopt the disclosure requirements of SFAS No. 123 and SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, and amendment of FASB Statement No. 123.” No stock-based compensation cost is reflected in net income for stock options, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) to stock-based employee compensation:

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During the first quarter of 2004 and 2003, options were granted totaling 50,000 shares and 2,028,600 shares, respectively, with exercise prices equal to the fair market value at date of grant. There were no stock option grants during the quarter ended June 30, 2004 and 2003. The fair value of each stock option granted was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions.

On January 28, 2003, a Board resolution was passed to award non-employee directors of the Company up to a maximum of 15,000 shares of the Company’s common stock as compensation. Each director was awarded 5,000 shares on January 31, 2003 and 2004, which vested immediately, and will be awarded an additional 5,000 shares on January 31, 2005, subject to certain conditions. All shares awarded or to be rewarded will be restricted under SEC Rule 144, and may not be sold or transferred by the outside director until four years from the date of issue. During the first quarters of 2003 and 2004, the Company expensed the fair value of the 30,000 shares awarded both in January 2003 and 2004 and such amount is included in Selling, General and Administrative expenses in the consolidated Statement of Income. The total charge was $164,100 and $206,400 in the first quarter of 2003 and 2004, respectively.

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Comprehensive income includes net income and other comprehensive income (loss) which refers to those revenues, expenses, gains and losses which are excluded from net income. Other comprehensive income includes unrealized gains and losses on marketable securities classified as available-for-sale.

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for sale securities by major security type and class of security at June 30, 2004 and December 31, 2003, were as follows:

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Maturities of debt securities classified as available-for-sale were as follows at June 30, 2004 (maturities of mortgage-backed securities and collateralized mortgage obligations have been presented based upon estimated cash flows, assuming no change in the current interest rate environment):

Proceeds from the sale of investment securities available-for-sale were $9,987,226 and $20,690,095 in the six months ended June 30, 2004 and 2003, respectively. Gross realized gains included in income in the six months ended June 30, 2004 and 2003 were $17,205 and $135,320 respectively, and gross realized losses included in income in the six months ended June 30, 2004 and 2003 were $18,409 and $674, respectively.

The net tax benefit derived from the exercise of stock options was $ 0.1 million for the six months ended June 30, 2004 and 2003. Options exercised for the six months ended June 30, 2004 and June 30, 2003, totaled 65,700 shares and 101,300, respectively, all of which were issued from treasury stock.

On May 30, 2000, the Board of Directors authorized the repurchase in any calendar year of up to 2.5 million shares of the Company’s common stock for an aggregate purchase price not to exceed $ 25 million. For the three months ended June 30, 2003, the Company purchased 89,800 shares at a total cost of approximately $0.4 million. The Company did not purchase any treasury shares during the six months ended June 30, 2004.

The Company has two reportable operating segments: the Health Information Business Unit (HIBU) and the Diversified Business Unit (DBU). See Note 10.

HIBU includes our core health information operations: Portamedic, Infolink, Heritage Labs and Medicals Direct. It provides a full range of paramedical services to the life insurance industry in the U.S. and the United Kingdom. The DBU operating segment provides Independent Medical Examinations (IME) case-management services primarily for property and casualty insurers and claims reviewers.

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The changes in the carrying amount of goodwill for the six months ended June 30, 2004, are as follows:

The Company performs its annual impairment testing of goodwill at December 31 of each year. There was no impairment at December 31, 2003, and no indication of impairment since that date.

All intangible assets are being amortized over their estimated useful lives, as indicated below. Intangible assets consist of:

The aggregate amortization expense for intangible assets for the six months ended June 30, 2004, and 2003, was approximately $2,611,000 and $2,009,000 respectively. The estimated intangible amortization expense for the fiscal years ending December 31, 2004 to December 31, 2008 is $5,367,000, $5,031,000, $4,295,000, $3,500,000 and $3,160,000, respectively.

On June 20, 2002, the Company, and subsequently its three principal competitors, were notified by the California Department of Health Services (DHS) that it was in violation of the California Business and Professions Code with respect to the drawing of blood by phlebotomists on a mobile basis. The Company disagreed with the Department’s

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interpretation of the law, retained legal counsel, and worked with the Department to develop a reasonable interpretation of the law and a plan that allowed the Company to continue using phlebotomists to draw blood. The paramedical industry, working with a lobbyist, was successful in persuading the legislature to enact a law exempting the paramedical industry from licensure by the DHS. The Governor signed the bill into law in February 2004. The Company continues to service it customers in the State of California without interruption.

On July 11, 2003, the Company received a determination from the Internal Revenue Service that one individual the Company contracted with as an independent contractor, should have been classified as an employee in 2002. This ruling also applies to any other individuals engaged by the Company under similar circumstances. The ruling also states that the Company may not be subject to adverse consequences as the Company may be entitled to relief under applicable tax laws (Section 530 of the Revenue Act of 1978). The Company and its advisors are continuing to review this determination. Management believes that the Company qualifies for relief under Section 530 and, based on this, expects the outcome of this matter will not have a material effect on the Company’s consolidated financial position, results of operations and liquidity.

The Company is aware of allegations that an independent examiner, who billed work through an independent contractor, which in turn billed work through the Company, assaulted certain insurance applicants whom were examined. The examiner did not work for the Company nor was the Company aware that the examiner was performing insurance examinations. The Company has agreed to reimburse one of its insurance company clients, which it billed for examinations performed by this examiner, for certain legal, consulting and other costs incurred by the client, as well as an apportionment of any liability that may stem from examinations performed by the independent examiner. The related costs and estimated liability were accrued in 2003. To date, the Company and its client have settled with one claimant and two additional claims are pending. The Company expects that the outcome of this matter will not have a material effect on the Company’s consolidated financial position, or liquidity. However, it could have an impact on the financial results of any one reporting period.

The Company is a party to a number of legal actions arising in the ordinary course of its business. In the opinion of management, the Company, has substantial legal defenses and/or insurance coverage with respect to all of its pending legal actions. Accordingly, none of these actions is expected to have a material adverse effect on the Company’s liquidity, its consolidated results of operations or its consolidated financial position.

In connection with an acquisition during the second quarter of 2003, the Company is obligated for payment of a portion of the purchase price amounting to $4.5 million, which is due as follows: $1.7 million in April 2005 and $2.8 million in July 2006. These amounts are included in other current liabilities and other long-term liabilities, respectively, on the consolidated balance sheet, at June 30, 2004, and are accruing interest at a weighted average rate of 5%.

Also, in conjunction with the acquisition of Allegiance Health, Inc. (Allegiance) in January 2004 and Michigan Evaluation Group (MEG) in May 2004, total additional consideration of up to $4.1 million and $0.3 million, respectively, could be payable in 2005 and 2006 if certain performance criteria are met.

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During the six months ended June 30, 2004, the Company acquired specific assets and liabilities of three companies, which upon acquisition, were included within the HIBU segment and two companies, which upon acquisition, were included within the DBU segment.

Within HIBU, in May 2004, the Company purchased specific assets and liabilities of Mid-American Agency Services, Inc. for $9.0 million.

Within the DBU, the Company purchased specific assets and liabilities of Allegiance Health, Inc. in January 2004, and Michigan Evaluation group in May 2004, for an aggregate purchase price of $14.7 million.

The following table provides the purchase price of these acquisitions:

The allocations of the purchase prices for these acquisitions are set forth below:

On a pro forma basis, the effect of 2004 acquisitions on revenue, net income and earnings per share was not material. The 2004 acquisitions resulted in additional amortization expense of approximately $0.3 million during the six months ended June 30, 2004.

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The Company has two reportable operating segments: the Health Information Business Unit (HIBU) and the Diversified Business Unit (DBU). HIBU includes our core health information operations: Portamedic, Infolink, Heritage Labs and Medicals Direct. It provides a full range of paramedical services to the life insurance industry in the U.S. and the United Kingdom. The DBU operating segment, which consists of D&D Associates, Medimax, Inc. and Allegiance Health, Inc., provides Independent Medical Examinations (IME) case-management services primarily for property and casualty insurers and claims reviewers.

The segments’ accounting policies are the same as those described in the summary of significant accounting policies discussed in the Company’s 2003 annual report on Form 10-K except that interest expense and non-operating income and expenses are not allocated to the individual operating segment when determining segment profit or loss.

A summary of segment information as of and for the three and six month periods ended June 30, 2004 and 2003 is presented below (in thousands).

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In March 2004, the Financial Accounting Standards Board (FASB) issued the exposure draft, “Shared-Based Payment.” The proposed standard would require all equity-based awards to employees to be recognized in the consolidated statement of income based on their fair value for fiscal years beginning after December 15, 2004. The new standard, if accepted in its present form, would apply to all awards granted, modified or settled after the effective date. We are in the process of analyzing the potential impact of this proposed standard on our consolidated results of operations and financial position.

In December 2003, the FASB issued FASB Interpretation No. 46R (revised December 2003), “Consolidation of Variable Interest Entities (VIE’s),” which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. The Company does not have any VIE’s that would require consolidation or any significant exposure to VIE’s that would require disclosure.

On October 29, 1999, the Company entered into a $100 million Amended and Restated Revolving Credit and Term Loan Agreement with three banks. This senior credit facility consists of a $65 million six-year term loan and a $35 million three-year revolving loan, both unsecured. During 2001, the three-year revolving loan expiration date was extended for one year to October 31, 2003. During 2003, the revolving loan expiration date was extended for three years to October 31, 2006. There are no borrowings outstanding against the revolving loan at June 30, 2004. There are no additional borrowings available under the original $65 million term loan due to previous borrowings which have been repaid. As of June 30, 2004, $2.0 million is outstanding against the term loan. Principal payments of $1.0 million are due to be repaid on January 31, 2005 and 2006. The Company has not borrowed under the $35 million revolving loan.

Both the term loan and the revolving loan bear interest at either the prime rate minus ½% or LIBOR plus ¾%to 1¾%, depending on the ratio of our consolidated funded debt, as defined, to earnings before interest, taxes, depreciation and amortization, or “EBITDA.” As of June 30, 2004, interest was payable at an effective average annual interest rate of 2.46%. Either loan can be prepaid without penalty at any time. Also, commitment fees of up to 0.3% of the unused revolving loan are charged, and the agreement contains certain financial covenants related to dividends, fixed charge coverage, funded debt to “EBITDA” ratio and stock re-purchases. As of June 30, 2004, the Company is in compliance with all financial covenants.

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Overview:

Certain written and oral statements made by our Company or with the approval of an authorized executive officer of our Company may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995, including statements made in this report and other filings with the Securities and Exchange Commission. These statements generally are not historical in nature and can be identified by words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may,” “should,” “could” and similar expressions. These statements involve risks and uncertainties that could cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. These statements are not guarantees of future performance or results.

Hooper Holmes, Inc. is one of the nation’s leading providers of outsourced risk assessment services to the life and health insurance industry and medical evaluation and claims management services to the automobile insurance and workers’ compensation industries. Our services include arranging and providing mobile paramedical and medical examinations, independent medical examinations (IME), personal health interviews, record collection and laboratory testing which help life insurance companies evaluate the risks associated with underwriting insurance policies and property and casualty insurers evaluate physical injuries. We provide our risk assessment services nationwide through our network of registered and licensed practical nurses, physicians, phlebotomists and medical and EKG technicians. Our evaluation and claims management services are provided primarily in the states of New York, New Jersey and Pennsylvania but on occasion in other states in the U.S. through three regional offices. Our services are provided to most of the insurance companies in the United States and Puerto Rico as well as those in the United Kingdom.

In evaluating the Company’s operating performance and financial condition, management is focused on:

Management has focused on the need for a superior service at the lowest possible price since the insurance industry has evolved to one which is very price sensitive. To be successful, costs must be controlled to insure favorable pricing to our customers and to maintain satisfactory margins. In our Health Information Business Unit (HIBU) segment, we service most of the major insurance companies in the U.S. and therefore our objective is to

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expand our share of their books of business, and hence our market share. In our Diversified Business Unit (DBU) segment our strategy is to expand into key states to form a foundation of strong business units in both automobile no fault insurance markets and workers compensation markets, from which to expand organically in the future.

The Company measures performance in several ways and ties incentive compensation to the successful achievement of these performance measures. Performance is measured against annual budgets prepared going into each year and the successful attainment of both budgeted revenue targets and branch contribution objectives. Additional incentives have been awarded on unit count increases as compared to year ago levels. The incentives are based on both quarterly and annual performance.

Management operates and views the business through two distinct business units. The Health Information Business Unit (HIBU) consists of the Company’s Portamedic, Infolink, Heritage Labs, Medicals Direct Group (MDG), our U.K. subsidiary and the May 2004 acquisition of Mid-America Agency Service, Inc. (MAAS). It provides paramedical, laboratory, attending physician statement (APS), inspection reports and outsourced underwriting services used to underwrite life, health and disability insurance. The Diversified Business Unit (DBU) consists of D&D Associates, Medimax, Inc., Allegiance Health, Inc., and the May 2004 acquisition of Michigan Evaluation Group (MEG). The DBU provides outsourced claims management services to automobile and workers’ compensation insurance carriers.

During the second quarter of 2004, the Company completed the acquisitions of:

These companies were acquired to further expand the foundation we seek in the DBU and to complete the offering package of services we provide in the HIBU by adding an important component, that being outsourced underwriting services to couple with our paramedical exam, laboratory and other information gathering activities.

The following provides a summary of the results of our operations for the three months ended June 30, 2004 and 2003 and a detailed discussion regarding these results follows.

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Revenues:

Comparative Revenues are set forth below:

Total consolidated revenues for 2004 increased 8.8% to $82.8 million for the second quarter of 2004, compared to $76.2 million for the second quarter of 2003.

Revenues for the HIBU segment increased $4.2 million to $71.8 million for the second quarter of 2004, compared to $67.6 million for the second quarter of 2003. Within this segment, revenues of the Portamedic business decreased $4.6 million to $48.2 million for second quarter of 2004, compared to $52.8 million for the second quarter of 2003, and revenues of the Infolink business increased 24.1% to $7.3 million for second quarter of 2004, compared to $5.9 million for second quarter of 2003. Factors that contributed to the Portamedic revenue changes are:

The Company continues to experience reduced revenues in its core Portamedic business. Management believes price is the primary reason for this decline as it has become the main driver in the selection process by insurance companies choosing this paramedical vendor. The Company has experienced a 1.6% decrease in price from the second quarter of 2003 to the second quarter of 2004.

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The reduction in the Portamedic business described above was offset by an increase in the number of Infolink reports. Management attributes this increase to:

Revenues for the second quarter of 2004 for Medicals Direct Group (MDG), the Company’s UK based subsidiary, were $10.0 million, compared to $5.1 million for the second quarter of 2003. Medicals Direct growth is attributed to:

The services offered by MDG are “Screenings,” the equivalent of Hooper Holmes’ paramedical examination service; “Underwriting,” which is underwriting life insurance policies on an outsourced basis; “General Medicals,” which provides independent medical reports for legal, corporate, and insurance industries; and “Clinics,” which offer physical examination screening services for public transportation and corporate agencies.

Other Services, consists of Heritage Labs and MAAS, acquired in May 2004. Revenues for other services grew 65.3% for the second quarter of 2004 to $6.3 million, from the $3.8 million for the second quarter of 2003. This results from:

Our future revenue stream is dependent upon the stability and growth of the life and other segments of the insurance industry and the number of new policies being written which require medical underwriting information. Pricing of our services has become a significant business factor but we remain confident that we will hold our market share and that our company-owned branch structure, and automation efficiencies, will allow us to continue to

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be successful in this challenging competitive environment.

Revenues for the Diversified Business Unit (DBU) segment totaled $11.0 million in the second quarter of 2004, compared to $8.6 million in the second quarter of 2003.

Revenue from the October 2003 acquisition of Medimax, Inc., and the 2004 acquisitions of Allegiance Health, Inc. and Michigan Evaluation Group accounted for $4.2 million of this increase. This increase was offset by a decline in revenues experienced by D&D Associates during the second quarter of 2004 of approximately $1.8 million or 20.5% from the second quarter of 2003. The decrease is primarily due to the following:

The Company continues its efforts to counter this revenue decline by expanding its market share through:

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Cost of Operations:

The following table summarizes Cost of Operations for the quarter ended June 30, 2004 compared to June 30, 2003.

The Company’s consolidated cost of operations for the second quarter of 2004 totaled $59.8 million compared to $53.8 million for the second quarter of 2003. As a percentage of revenues, cost of operations increased to 72.2% for the second quarter of 2004 compared to 70.7% for the second quarter of 2003.

Cost of operations for the HIBU segment totaled $52.0 million for the second quarter of 2004, compared to $48.3 for the second quarter of 2003, an increase of $3.7 million, and as a percentage of revenues, totaled 72.4% for the second quarter of 2004, compared to 71.5% for the second quarter of 2003. Within the HIBU segment, cost of operations for the Portamedic and Infolink businesses totaled $40.7 million for the second quarter of 2004, compared to $42.2 million for the second quarter of 2003. As a percentage of Portamedic and Infolink revenues, cost of operations totaled 73.4% for the second quarter of 2004 and 71.8% for the second quarter of 2003. As a percentage of revenues, the increase is due to lower revenue levels for the second quarter of 2004, increased branch operating expenses, and an increase in Infolink revenues which has a lower gross margin compared to declining revenues in Portamedic, which has a higher gross margin.

Cost of operations for Medicals Direct Group, our U.K. subsidiary, totaled $7.3 million for the second quarter of 2004 and $3.6 million for the second quarter of 2003. As a percentage of revenues, cost of sales totaled 72.5% for the second quarter of 2004 compared to 71.6% for the second quarter of 2003. The increase in cost of sales is the result of:

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Cost of operations for Other Services increased to $4.0 million for the second quarter of 2004, compared to $2.5 million for the second quarter of 2003, and as a percentage of revenues totaled 63.4% for the second quarter of 2004, compared to 66.3% for the second quarter of 2003. The dollar increase is due to higher revenue levels for Heritage Labs and the acquisition of MAAS in May 2004. As a percentage of revenues, the decrease is due to reduced material and labor costs at Heritage Labs.

Cost of operations for the DBU segment totaled $7.8 million for the second quarter of 2004, compared to $5.5 million for the second quarter of 2003. As a percentage of revenues, cost of sales totaled 70.7% for the second quarter of 2004, compared to 64.4% for the second quarter of 2003. The increase in cost of sales as a percentage of revenues is due to:

Selling, General and Administrative Expenses:

Consolidated selling, general and administrative (SG&A) expenses totaled $17.4 million for the second quarter of 2004, compared to $14.0 million for the second quarter of 2003, and as a percentage of revenues totaled 21.0% compared to 18.4% respectively.

SG&A for the HIBU segment increased $2.4 million to $15.0 million for the second quarter of 2004, compared to $12.6 million for the second quarter of 2003. As a percentage of HIBU revenues, SG&A totaled 20.9% compared to 18.6% for the second quarter of 2004 and 2003, respectively. The dollar increase within the HIBU is due to: