1st Quarter Net Income Down 33% & EPS Down 33%, Including Acquisitions.LOUISVILLE Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. , Ky.--(BW HealthWire)--May 4, 1999 -- 1st Quarter Revenues, Including Acquisitions, Increase 24% -- Lives Sold at 59.4 Million & Lives Installed at 53.5 Million, Including Acquisitions Healthcare Recoveries, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : HCRI HCRI Harvard Clinical Research Institute HCRI Health Communication Research Institute, Inc. ) today reported results for the quarter ended March 31, 1999. Net income for the quarter decreased 33% to $1.4 million from $2.1 million in the year-earlier period. Earnings per share for the quarter decreased 33% to $0.12 per share from $0.18 per share in the comparable quarter last year (all per share amounts are on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis). Revenues for the quarter were $13.9 million, up 24% from $11.2 million in the year-earlier period. In a news release dated March 15, 1999, HCRI estimated that recoveries for the first quarter, excluding those from the acquisitions (described below), would be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $40 million, and that revenues, including those of the acquisitions, would be between $13.0 million and $14.0 million, yielding earnings per share between $0.12 and $0.14 on a diluted basis. Actual recoveries for the period, excluding those from the acquisitions, were $43.2 million, resulting in revenues of $11.9 million, a 7% decrease from the prior quarter and a 6% increase over the comparable quarter of the prior year. As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , management believes that the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in first quarter operating results resulted primarily from changes made in HCRI's operations in the second half of 1998 and the first quarter of 1999. These changes entailed materially increasing the number of files assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to each examiner, and resulted in an unforeseen decline in throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. . Management further believes that its current plan to reduce the ratio of files to examiners will return HCRI (not including the acquisitions) to historic throughput levels by the end of 1999. During the quarter, HCRI closed on the $24.4 million acquisition of Subro Audit, Inc. (SAI), a subrogation The substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or Securities. services vendor with offices in Milwaukee, Wisconsin For other places with the same name, see Milwaukee (disambiguation). Milwaukee is the largest city within the state of Wisconsin and 25th largest (by population) in the United States. and Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. , Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. , and the $10 million acquisition of MedCap Medical Cost Management, Inc. ("MedCap"), a hospital bill auditing company in Encino, California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . The following quarterly income statement and key operating indicators for HCRI reflect the financial results and operating performance of SAI after January January: see month. 25, 1999 and of MedCap after February February: see month. 15, 1999, the respective closing dates. -0-
Quarterly Statement of Income
(Dollars in thousands, except per share results)
3 Months ended
March 31,
1999 1998
---- ----
As Reported:
Revenues $13,860 $11,196
Cost of services 6,995 5,259
----------- -----------
Gross profit 6,865 5,937
Support expenses 3,600 2,240
Depreciation & amortization 994 509
----------- -----------
Operating income 2,271 3,188
Interest income 120 420
----------- -----------
Income before income taxes 2,391 3,608
Provision for income taxes 993 1,515
=========== ===========
$ 1,398 $2,093
=========== ===========
Basic weighted average shares 11,503 11,470
Diluted weighted average shares 11,514 11,626
Basic earnings per common share $ 0.12 $ 0.18
Diluted earnings per common share $ 0.12 $ 0.18
The following tables present certain key operating indicators for
the periods indicated.
Lives Sold and Installed
(In millions)
3 Months ended
March 31,
1999 1998
---- ----
Cumulative Lives Sold, Beginning of Period 40.5 38.5
Lives From Acquisitions 18.6 --
Lives From Existing Client Growth (Loss) (1.2) (0.5)
Lives Added From Contracts With Existing Clients -- 0.7
Lives Added From Contracts With New Clients 1.5 0.1
======== ========
Cumulative Lives Sold, End of Period 59.4 38.8
======== ========
Lives Installed, End of Period 53.5 36.6
======== ========
HCRI ended the first quarter of 1999 with 59.4 million lives sold, an increase of 18.9 million lives, or 47%, over the end of the prior quarter. This increase is the consequence of the addition of 10.5 million lives from the acquisition of MedCap, the addition of 8.1 million lives from the acquisition of SAI, a net decrease of 1.2 million in the lives from existing clients (including the loss of 900,000 lives from Blue Shield of California Blue Shield of California is a not-for-profit health insurance provider headquartered in San Francisco, California. An independent licensee of the Blue Cross and Blue Shield Association, Blue Shield of California is an incorporated, wholly owned subsidiary of California Physicians' ), and the addition of 1.5 million lives from Oxford Health Plans (a re-acquired client). Compared to the end of the same quarter last year, lives sold increased by 20.6 million lives, or 53%. HCRI ended the first quarter of 1999 with 53.5 million lives installed, an increase of 15.0 million installed lives, or 39%, over the end of the prior quarter. This increase is the consequence of the addition of 8.0 million lives in the MedCap acquisition, the addition of 8.0 million lives in the SAI acquisition, the installation during the period of lives sold, and a net decline in existing client lives. Compared to the same quarter last year, lives installed increased by 16.9 million lives, or 46%. -0-
Key Operating Indicators
(Dollars in millions)
3 Months ended
March 31,
1999 1998
---- ----
Backlog (1) $1,069.6 $692.8
Claims Recoveries $ 51.2 $ 41.1
Throughput (2) 4.7% 6.0%
Effective Fee Rate 27.1% 27.2%
Direct Operation Employees 561 409
Support Staff Employees 131 94
============= ========
Total Employees 692 503
============= ========
----------------------------------------------------------------------
(1) Backlog is the total dollar amount of claims at the end of the
period that are potentially recoverable either by or on behalf of
clients.
(2) Equals recoveries for the period divided by the average of
backlog at the beginning and end of the period. The variation
from historical throughput levels in the current period is in
part an effect of the timing of the SAI and MedCap acquisitions
on backlog. HCRI throughput for the quarter, excluding the effect
of the acquisitions, was approximately 5.6%.
Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. for the quarter grew $376.8 million, or 54%, over the comparable quarter and $298.9 million, or 39%, over the prior quarter. This net growth in backlog was the result of the installation of new lives, the processing of lives already installed, the addition of $130 million from the SAI acquisition, and the addition of $181 million from the MedCap acquisition. Excluding the additions to backlog resulting from the acquisitions of SAI and MedCap, HCRI would have reported backlog of $758.6 million at the end of the first quarter. Also as a result of the acquisitions, HCRI added, from SAI and MedCap, respectively, 106 and 53 direct operations employees and 23 and 13 support staff employees. On March 12, 1999, HCRI's Board of Directors approved a stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program under which HCRI is authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. , from time to time, up to $10 million of HCRI common stock in the open market. After the end of the quarter, HCRI acquired, in a series of open market purchases, 305,000 shares of its common stock, at an average purchase price per share of $4.51. Statements in this release that look forward in time involve risks and uncertainties, including the ability of HCRI to successfully implement its operating and acquisition strategies, HCRI's ability to manage growth, changes in laws and government regulations applicable to HCRI, adverse litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. results, and changes in the historical relationships among such key operating indicators as lives sold, lives installed, backlog and throughput and in the predictive value pre·dic·tive value n. The likelihood that a positive test result indicates disease or that a negative test result excludes disease. predictive value a measure used by clinicians to interpret diagnostic test results. of these indicators with respect to certain aspects of HCRI's financial results. HCRI is a leading provider of health insurance subrogation and related recovery services for private healthcare payors. -0-
HEALTHCARE RECOVERIES, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands, except share information)
March 31, December 31,
1999 1998
----------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 812 $31,133
Restricted cash 25,982 16,927
Accounts receivable, less
allowance for doubtful accounts
of $347 - March 31, 1999 and
$307 - December 31, 1998 5,423 3,607
Other current assets 875 1,583
----------------- --------------
Total current assets 33,092 53,250
----------------- --------------
Property and equipment, at cost:
Building and land 5,024 --
Furniture and fixtures 2,727 2,527
Office equipment 1,917 1,783
Computer equipment 8,915 7,991
Leasehold improvements 933 845
-------------- ---------------
19,516 13,146
Accumulated depreciation
and amortization (7,616) (6,962)
----------------- --------------
Property and equipment, net 11,900 6,184
----------------- --------------
Cost in excess of net assets
acquired 23,629 --
Identifiable intangibles 5,917 --
Other assets 1,328 1,569
----------------- --------------
Total assets $75,866 $61,003
================= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 2,148 $ 1,234
Accrued expenses 5,679 5,516
Funds due clients 13,315 13,118
Income taxes payable 2,398 2,484
----------------- -----------
Total current liabilities 23,540 22,352
Other liabilities 1,300 1,458
Long Term Borrowings 12,300 --
----------------- -----------
Total liabilities 37,140 23,810
----------------- -----------
Contingencies
Stockholders' equity:
Preferred stock, $.001
par value, 2,000 shares
authorized no shares issued
or outstanding -- --
Common stock, $.001 par value,
20,000 shares authorized, 11,503 -
March 31, 1999 and 11,503 - December 31,
1998 shares issued and outstanding 12 12
Capital in excess of par value 22,563 22,428
Retained earnings 16,151 14,753
----------------- -------------
Total stockholders' equity 38,726 37,193
----------------- -------------
Total liabilities and
stockholders' equity $75,866 $61,003
================= ==============
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