AdvancePCS Announces Record Results For Quarter Ended Dec. 31, 2001.Health/Medical Writers IRVING Irving, city (1990 pop. 155,037), Dallas co., N Tex., a suburb of Dallas; inc. as a city 1952. Building supplies, chemicals, electronic equipment, and airplane parts are manufactured in Irving. , Texas--(BW HealthWire)--Jan. 29, 2002 AdvancePCS AdvancePCS Inc. was a large prescription benefit plan administrator from the USA. The company merged with Caremark Rx in the beginning of 2005 and is now known under that name. (Nasdaq: ADVP), the nation's leading provider of health improvement services, today reported its 59th consecutive quarter of record revenues and 30th consecutive quarter of record earnings (excluding one time charges). For its fiscal 2002 third quarter ended Dec. 31, 2001, AdvancePCS generated revenues of approximately $3.4 billion and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $75.4 million, compared to $2.9 billion in revenues and $58.2 million in EBITDA during the same period last year, for increases of 15 percent and 30 percent respectively. Earnings per 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. share were $0.32 compared with $0.08 for the third quarter of the prior year (excluding extraordinary loss, merger costs and non-recurring charges), an increase of 300 percent. Diluted weighted average shares outstanding were 102.3 million compared to 89.0 million shares for the third quarter of the prior year. For the nine months ended Dec. 31, 2001, the company reported revenues of $9.7 billion and EBITDA of $219.6 million (excluding $1.8 million in non-recurring charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. acquisition), compared with revenues of $4.0 billion and EBITDA of $86.6 million for the comparable period last year, representing increases of 140 percent and 153 percent respectively. Excluding extraordinary loss, merger costs and non-recurring charges, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.90 for the nine months ended Dec. 31, 2001, compared with $0.30 for the comparable period in the prior year, an increase of 200 percent. In the quarter ended Dec. 31, 2001, the company completed a partial refinancing Refinancing An extension and/or increase in amount of existing debt. of its secured bank debt with a $150 million asset securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. facility. The securitization is included in the company's debt balance as of Dec. 31, 2001 and will continue to be reflected "on-balance sheet." In connection with this refinancing and the bank debt repayments made in the second and third quarters of fiscal 2002, the company has recorded an extraordinary, non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for a portion of the deferred financing fees related to the secured bank agreement in the amount of $5,314,000, net of tax. "We are pleased to be able to report results that reflect the continued strength of our business and our unique positioning in the marketplace. "Our completed integration efforts, important new business wins and contract renewals over the past year have fueled the impressive 30 percent year-over-year growth in EBITDA and 358 percent growth in earnings excluding extraordinary loss, merger costs and non-recurring charges. "These accomplishments position us solidly for strong earnings growth in the coming quarters," said David D. Halbert, AdvancePCS chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "In addition, the results for the quarter ended Dec. 31 are notable in light of the investment we made this quarter to be prepared for the Jan. 1 implementation of 58 new plans," added Halbert. "In a quarter with seasonally low new business implementation, as is typical in the December quarter, our revenues and earnings per diluted share each grew almost 7 percent on a sequential basis. This profit growth is impressive, as we had to dramatically increase our staffing, and thus incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. expenses before year-end, without the associated benefit of the revenues from our new clients." Earlier this month, AdvancePCS announced it had signed a multi-year agreement with Horizon Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of New Jersey to begin providing fully integrated pharmacy benefit management A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. services in July. Horizon BCBSNJ BCBSNJ Blue Cross Blue Shield of New Jersey provides health plan coverage to more than 2.5 million individuals, with approximately 1.4 million members under management for pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. benefit services. "Horizon BCBSNJ is a significant new client for AdvancePCS," noted Halbert. "It is a sophisticated and progressive organization, as reflected by the new and innovative programs that AdvancePCS will be implementing on their behalf. "Their decision to award AdvancePCS this contract validates not only the unique strategic positioning of our company, which is centered on improving the health of individuals while reducing overall costs, but also the value we bring to our health plan clients in managing and reducing drug costs." AdvancePCS continued to experience significant success in cross-selling its specialty pharmacy services to its customers. During the quarter, AdvancePCS SpecialtyRx signed new contracts representing over 2.6 million new lives. To date, AdvancePCS has agreements to provide specialty pharmacy services to more than 7.8 million lives, the vast majority of which are under preferred or exclusive agreements. Of note, just five months after formation of the company's specialty pharmacy joint venture, it began shipping specialty pharmacy prescriptions to patients in November. During the quarter, through several initiatives, AdvancePCS expanded its commitment to provide information to physicians that can help improve the health of patients and reduce overall costs. Under one new program, AdvancePCS launched a customized, interactive learning tool to help physicians meet their continuing medical education continuing medical education See CME. needs. The new program provides a more efficient and enjoyable medium for physicians to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. their regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and should help increase physician compliance with nationally accepted treatment protocols. In addition, AdvancePCS recently announced the purchase of software code and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. of iScribe iScribe Therapeutics A handheld electronic prescribing doodad in order to expand its capabilities and expertise in the area of physician connectivity. This acquisition will help supplement internal efforts in the development of mobile electronic applications that deliver pharmacy benefit and prescribing information to physicians at the point of care. By making it convenient for physicians to obtain information about formulary formulary /for·mu·lary/ (for´mu-lar?e) a collection of recipes, formulas, and prescriptions. National Formulary see under N. for·mu·lar·y n. guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. , patient drug histories, drug interactions, and alternate therapy choices before a prescription is written, patient care and service can be improved. Better information also can result in reduced costs for health plans and lower copays for patients when physicians know which drug is the most cost effective. "We could not be more pleased with our strategic positioning at this time. With Merck announcing its intention to spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. Medco, a cloud of conflict relating to the manufacturer-owned PBM PBM - play by mail. See play by electronic mail. model has been lifted from the industry, which will level the playing field and position us better to accomplish our health improvement mission. "Since we closed the PCS acquisition, we have won business representing more than 10 million new lives, some of which offset expected losses of lower-value cash card and processing-only business. "Finally, with our scale as the nation's leading health improvement company, not only can we deliver the best services and value equation to our clients, but also we can innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. like no other and develop new programs that provide value to our payer clients as well as our pharmaceutical manufacturer partners," added Halbert. About AdvancePCS AdvancePCS (www.advancepcsrx.com) is the nation's largest independent provider of health improvement services, touching the lives of more than 75 million health plan members and managing more than $21 billion in annual prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, spending. AdvancePCS offers health plans a wide range of health improvement products and services designed to improve the quality of care delivered to health plan members and manage costs. The company's capabilities include integrated mail service and retail pharmacy networks, innovative clinical services, customized disease management programs, specialty pharmacy, clinical trials and outcomes research, information management, prescription drug services for the uninsured, and online health information for consumers. AdvancePCS clients include Blue Cross and Blue Shield organizations, insurance companies and HMOs, Fortune 500 employers, Taft-Hartley groups, state and local governments, and other health plan sponsors. AdvancePCS is ranked by Fortune magazine as one of America's 100 fastest-growing public companies and is included on the Forbes Platinum 400 list of best big companies. Conference Call Information As previously announced, AdvancePCS will hold an investor conference call at 10 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. on Wednesday, Jan. 30, 2002, to review the financial results and discuss the general operations of the company. The call will be broadcast live through the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and can be accessed at www.streetevents.com or on the investor relations Investor relations The process by which the corporation communicates with its investors. section of the AdvancePCS Web site at www.advancepcsrx.com. The webcast will be archived and available for replay for 30 days. A telephone replay of the conference call will be available for seven days beginning at 12 p.m. CST on Jan. 30 by dialing 888/203-1112, confirmation code 680283. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Any statements included in this press release that are not historical facts and that concern predictions of economic performance and management's plans and objectives constitute forward-looking statements under the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provision of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. We do not undertake any obligation to provide updates to such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, changes in the health care industry or the economy in general, competition, acquisitions, changes in the legislative or regulatory environment, and other factors detailed in AdvancePCS' Securities and Exchange Commission filings.
Condensed Statement of Operations
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Dec. 31, Dec. 31,
2001 2000(b) 2001(b) 2000(b)
---------- ---------- ---------- ----------
Revenues (a) $3,365,895 $2,916,471 $9,668,418 $4,032,904
Cost of revenues (a) 3,251,818 2,825,051 9,339,690 3,898,252
Selling, general and
administrative 48,252 55,072 137,341 76,369
Non-recurring and
impairment 0 680 1,760 680
---------- ---------- ---------- ----------
Operating income 65,825 35,668 189,627 57,603
Interest expense (net of
income) 11,835 20,527 47,374 21,953
Merger costs 0 0 0 1,200
---------- ---------- ---------- ----------
Income before taxes 53,990 15,141 142,253 34,450
Provision for income taxes 21,326 8,420 56,181 15,932
---------- ---------- ---------- ----------
Net income before
extraordinary loss 32,664 6,721 86,072 18,518
Extraordinary loss on
early retirement of
debt, net of taxes (c) 5,314 0 5,314 0
---------- ---------- ---------- ----------
Net income $ 27,350 $ 6,721 $ 80,758 $ 18,518
========== ========== ========== ==========
Net income exclusive of
extraordinary loss, merger
costs and non-recurring
charges (net of tax): $ 32,664 $ 7,135 $ 87,146 $ 19,664
Net income per share
exclusive of extraordinary
loss, merger costs and
non-recurring charges:
Diluted $ 0.32 $ 0.08 $ 0.90 $ 0.30
Basic $ 0.36 $ 0.12 $ 1.07 $ 0.37
Net income per share before
extraordinary loss:
Diluted $ 0.32 $ 0.08 $ 0.89 $ 0.28
Basic $ 0.36 $ 0.11 $ 1.05 $ 0.35
Net income per share:
Diluted $ 0.27 $ 0.08 $ 0.83 $ 0.28
Basic $ 0.30 $ 0.11 $ 0.99 $ 0.35
Weighted average shares
outstanding:
Diluted 102,321 89,014 96,964 66,610
Basic 91,912 59,826 81,630 53,394
Reconciliation of prior
year under FAS 142:
Amortization, net of tax
effect $ 10,169 $ 11,393
Net income $ 16,890 $ 29,911
Net income per share:
Diluted $ 0.19 $ 0.45
Basic $ 0.28 $ 0.56
Supplemental Data
(in thousands)
Three Months Ended Nine Months Ended
Dec. 31, Dec. 31,
2001 2000(b) 2001(b) 2000(b)
--------- ---------- --------- -----------
EBITDA (excluding
extraordinary loss,
merger costs and
non-recurring charges) $ 75,402 $ 58,150 $219,562 $ 86,640
Total depreciation and
amort. (including
goodwill) $ 9,577 $ 21,802 $ 28,174 $ 28,358
Pharmacy network claims
processed 114,042 108,155 336,344 155,611
Mail pharmacy
prescriptions filled 2,697 2,249 7,822 3,189
Balance Sheet Data
(in thousands)
Dec. 31, 2001 March 31, 2001(b)
------------- -----------------
Cash $129,247 $110,048
Total assets $3,159,710 $3,001,850
Long-term debt, including
current portion $501,167 $845,000
Stockholders' equity $824,328 $404,537
Notes
(a) Historical revenues for the three months and nine months ended
Dec. 31, 2000 have been reclassified to reflect adoption of
consistent revenue recognition policies with PCS.
(b) Have been restated to give effect to the acquisition of CHI.
(c) In connection with the asset securitization refinancing and the
bank debt repayments made in the second and third quarters of
fiscal 2002, the company has recorded an extraordinary, non-cash
charge for a portion of the deferred financing fees related to
the secured bank agreement in the amount of $5,314,000, net of
tax.
Financial and share information contained throughout this press
release has been retroactively adjusted to reflect the impact of a
two-for-one stock split in October 2001.
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