Continucare Corporation Reports Financial Results for Third Quarter of Fiscal 2006; Third Quarter Revenue Grew 26%; Income From Operations Increased 27%.MIAMI Miami, cities, United States Miami (mīăm`ē, –ə). 1 City (1990 pop. 358,548), seat of Dade co., SE Fla., on Biscayne Bay at the mouth of the Miami River; inc. 1896. -- Continucare Corporation (AMEX AMEX See: American Stock Exchange :CNU CNU Christopher Newport University CNU Chungnam National University (Korea) CNU Congress for the New Urbanism CNU Chonnam National University (Korea) CNU Consiglio Nazionale degli Utenti ) today reported financial results for its third quarter of fiscal 2006 and the nine-months ended March 31, 2006. Financial highlights for the fiscal quarter included: --Total revenues of $37.5 million, a 26% increase from $29.8 million in the third quarter of fiscal 2005; --Income from operations of $2.1 million, a 27% increase from $1.7 million for the same period last year; --Income before income taxes of $2.2 million, a 48% increase from $1.5 million in the third quarter of fiscal 2005; and --Net income of $1.3 million, or $0.03 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, compared to net income of $1.5 million, or $0.03 per diluted share a year ago. Nine-Month Results For the nine-months ended March 31, 2006, total revenue increased 16% to $96.8 million compared to $83.1 million in the same period one year ago. Income from operations during the nine-month period increased 24% to $6.6 million compared to $5.4 million for the same period one year ago. Income before income taxes during the nine-month period ended March 31, 2006 increased 45% to $6.8 million compared to $4.7 million in the year-ago period. Net income for the nine-month period was $4.2 million, or $0.08 per diluted share, compared to $4.7 million, or $0.09 per diluted share. Adjusted Results The nine-months ended March 31, 2005 included in revenue and income from operations a $1.1 million one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. distribution from one of Continucare's HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, affiliates relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. Advantage funding, and also included in income from operations a $0.5 million gain on the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. Without giving effect to these items, revenue for the nine-months ended March 31, 2005 was $81.9 million, and income from operations was $3.7 million. Also, as required by accounting guidance relating to stock options that became effective for the first quarter of fiscal 2006, Continucare's results for the third quarter of fiscal 2006 and the nine-months ended March 31, 2006 included $0.3 million and $0.9 million, respectively, of compensation expense related to stock options resulting from adoption of this accounting guidance. Without giving effect to the adoption of this new accounting guidance, income from operations was $2.4 million and $7.6 million for the third quarter of fiscal 2006 and the nine-months ended March 31, 2006, respectively. Excluding the effect of these items, revenue for the nine-months ended March 31, 2006 increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 18% compared to the same period of fiscal 2005, and income from operations for the third quarter of fiscal 2006 and the nine-months ended March 31, 2006 increased approximately 47% and 104%, respectively, compared to the same period a year ago. In addition, the results for the third quarter of fiscal 2006 and the nine-month period ended March 31, 2006 included a provision for income taxes of $0.8 million and $2.6 million, respectively. The fiscal 2005 periods did not reflect a provision for income tax expense because, in fiscal 2005, Continucare reduced its valuation allowance for deferred tax assets to offset income tax liabilities generated from operations. As previously announced, Continucare eliminated its valuation allowance for its deferred tax assets during the fourth quarter of fiscal 2005. Balance Sheet Continucare's cash and cash equivalents were $8.8 million at March 31, 2006 compared to $5.8 million at June June: see month. 30, 2005 while working capital increased to $14.7 million at quarter-end from $6.9 million at June 30, 2005 and total liabilities were reduced to $2.6 million at March 31, 2006 from $3.8 million at June 30, 2005. The long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. portion of debt at March 31, 2006 was $52,000. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. increased to $35.5 million at March 31, 2006 from $30.3 million at June 30, 2005. "We are proud to have turned in another outstanding quarter which reflected significant growth in revenues, meaningfully improved profit, and a solid cash position," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a C. Pfenniger, Jr. Continucare's Chairman and Chief Executive Officer. "We have worked hard to make our business more competitive in the marketplace and our third quarter results demonstrate our success. Moving forward we will continue to actively seek opportunities for growth by leveraging our infrastructure to serve more patients, expanding our network of IPAs and complementing our organic efforts with acquisitions." About Continucare Corporation Continucare provides primary care physician services on an outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. basis through a network of medical facilities and independent physician affiliates (IPAs) in the State of Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and . The Company has 15 medical offices equipped with state-of-the-practice technology and staffed with experienced physicians and a comprehensive support staff. In addition, Continucare provides health practice management services to IPAs who practice primary care medicine in facilities similar to the Company's medical offices. Continucare assists these physicians with medical utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and 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. management and specialist network development, freeing them to devote more time to patient care. Currently, through its network of medical facilities and IPAs, the Company provides health care services for approximately 26,000 patients. For more information please visit http://www.continucare.com. Except for historical matters contained herein, statements made in this press release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and are made pursuant to 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. provisions 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. Investors and others are cautioned that 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. are subject to risks and uncertainties that may affect our business and prospects and cause our actual results to differ materially from those set forth in the forward-looking statements. These factors include, without limitation, the risk that the current trend in revenue or income growth may not continue or may be less than anticipated, risks and uncertainties relating to our ability to implement our growth strategy and to manage future growth, including our ability to achieve expected levels of patient volumes and control the costs of providing services, risks relating to pricing and other pressures exerted on us by managed care organizations, the risk that the impact of the Medicare 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, , Improvement and Modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Act of 2003 and the Medicare Risk Adjustment on payments we receive for our managed care operations may not continue to be positive for us, the risk that future legislation, changes in governmental regulations, including possible changes in Medicare programs, could adversely impact our operations or reduce reimbursements to health care providers and insurers, risks and uncertainties relating to our current dependence on two HMOs for substantially all of our revenues, including our ability to work together effectively with our HMO affiliates, uncertainties relating to technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health care, and general economic conditions and uncertainties generally associated with the health care business. These and other applicable risks, cautionary statements and factors that could cause actual results to differ from our forward-looking statements are included in our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended June 30, 2005 and other filings with the SEC. We undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" except as required by law.
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three-Months Ended
March 31,
------------------------
2006 2005
----------- -----------
Revenue:
Medical services revenue, net $37,460,690 $29,608,640
Management fee revenue and other income 64,114 166,801
----------- -----------
Total revenue 37,524,804 29,775,441
Operating expenses:
Medical services:
Medical claims 28,086,314 21,976,703
Other direct costs 3,497,134 3,019,984
----------- -----------
Total medical services 31,583,448 24,996,687
----------- -----------
Administrative payroll and employee benefits 1,815,775 1,312,965
General and administrative 2,028,805 1,810,418
----------- -----------
Total operating expenses 35,428,028 28,120,070
----------- -----------
Income from operations 2,096,776 1,655,371
Other income (expense):
Interest income 86,398 40,223
Interest expense (2,779) (224,139)
----------- -----------
Income before income tax provision 2,180,395 1,471,455
Income tax provision 847,630 -
----------- -----------
Net income $ 1,332,765 $ 1,471,455
=========== ===========
Net income per common share:
Basic $ .03 $ .03
=========== ===========
Diluted $ .03 $ .03
=========== ===========
Weighted average common shares outstanding:
Basic 49,832,351 50,345,997
=========== ===========
Diluted 51,046,373 52,373,915
=========== ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Nine-Months Ended
March 31,
------------------------
2006 2005
----------- -----------
Revenue:
Medical services revenue, net $96,436,949 $82,329,781
Management fee revenue and other income 341,710 767,459
----------- -----------
Total revenue 96,778,659 83,097,240
Operating expenses:
Medical services:
Medical claims 69,640,075 59,593,218
Other direct costs 9,764,311 9,717,310
----------- -----------
Total medical services 79,404,386 69,310,528
----------- -----------
Administrative payroll and employee benefits 4,993,661 3,780,809
General and administrative 5,746,754 5,148,457
Gain on extinguishment of debt - (500,000)
----------- -----------
Total operating expenses 90,144,801 77,739,794
----------- -----------
Income from operations 6,633,858 5,357,446
Other income (expense):
Interest income 209,229 61,534
Interest expense (10,580) (700,099)
----------- -----------
Income before income tax provision 6,832,507 4,718,881
Income tax provision 2,603,141 -
----------- -----------
Net income $ 4,229,366 $ 4,718,881
=========== ===========
Net income per common share:
Basic $ .08 $ .09
=========== ===========
Diluted $ .08 $ .09
=========== ===========
Weighted average common shares outstanding:
Basic 49,820,024 50,319,126
=========== ===========
Diluted 51,143,705 51,982,091
=========== ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS March 31, June 30,
2006 2005
------------ -------------
Current assets:
Cash and cash equivalents $ 8,802,949 $ 5,780,544
Other receivables, net 200,761 144,973
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $13,700,000 and
$11,700,000 at March 31, 2006 and
June 30, 2005, respectively 6,868,227 3,485,530
Prepaid expenses and other current assets 797,558 719,577
Deferred tax assets, net 585,571 585,571
------------ ------------
Total current assets 17,255,066 10,716,195
Certificates of deposit, restricted 548,373 530,350
Equipment, furniture and leasehold
improvements, net 755,070 670,665
Goodwill, net of accumulated amortization
of approximately $7,608,000 14,342,510 14,342,510
Managed care contracts, net of accumulated
amortization of approximately $2,687,000
and $2,422,000 at March 31, 2006 and
June 30, 2005, respectively 825,436 1,090,046
Deferred tax assets, net 4,214,135 6,721,353
Other assets, net 151,358 66,816
------------ ------------
Total assets $ 38,091,948 $ 34,137,935
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 432,156 $ 660,139
Accrued expenses and other current
liabilities 2,037,561 2,489,439
Note payable - 520,000
Income taxes payable 87,286 131,363
------------ ------------
Total current liabilities 2,557,003 3,800,941
Capital lease obligations, less current
portion 52,043 38,361
------------ ------------
Total liabilities 2,609,046 3,839,302
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0001 par value:
100,000,000 shares authorized; 50,130,812
shares issued and outstanding at
March 31, 2006 and 52,591,895 shares
issued and 49,595,702 shares outstanding
at June 30, 2005 5,013 4,960
Additional paid-in capital 63,454,217 67,924,068
Accumulated deficit (27,976,328) (32,205,694)
Treasury stock, 2,996,193 shares at
June 30, 2005 - (5,424,701)
------------ ------------
Total shareholders' equity 35,482,902 30,298,633
------------ ------------
Total liabilities and shareholders'
equity $ 38,091,948 $ 34,137,935
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine-Months Ended
March 31,
-----------------------
2006 2005
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,229,366 $4,718,881
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 518,897 1,101,481
Provision for bad debts 159,518 -
Stock-based compensation expense 959,140 261,627
Deferred tax expense 2,507,218 -
Gain on extinguishment of debt - (500,000)
Changes in operating assets and liabilities,
excluding the effect of disposals:
Other receivables (215,306) 199,710
Due from HMOs, net (3,382,697) 306,554
Prepaid expenses and other current assets (77,981) 65,091
Other assets (4,206) 33,178
Accounts payable (227,983) 25,848
Accrued expenses and other current
liabilities (313,913) 727,905
Income taxes payable (44,077) -
----------- -----------
Net cash provided by continuing operations 4,107,976 6,940,275
Net cash used in discontinued operations (32,512) (89,454)
----------- -----------
Net cash provided by operating activities 4,075,464 6,850,821
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (18,023) (398,835)
Purchase of equipment and furniture (229,587) (406,578)
Other assets (80,336) -
----------- -----------
Net cash used in investing activities (327,946) (805,413)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - 1,040,000
Payments on note payable (520,000) (259,051)
Payment of fees related to private placement
transaction - (98,244)
Payments on related party notes - (4,358)
Principal repayments under capital lease
obligations (98,697) (56,470)
Proceeds from exercise of stock options 589,718 91,700
Repurchase and retirement of common stock (696,134) (346,410)
----------- -----------
Net cash (used in) provided by financing
activities (725,113) 367,167
----------- -----------
Net increase in cash and cash equivalents 3,022,405 6,412,575
Cash and cash equivalents at beginning of
period 5,780,544 720,360
----------- -----------
Cash and cash equivalents at end of period $8,802,949 $7,132,935
=========== ===========
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