Continucare Reports Positive Income From Operations for the Third Quarter Fiscal 2002.Business Editors/Health & Medical Writers MIAMI--(BUSINESS WIRE)--May 16, 2002 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 ), a leader in the fields of third party management of medical risk and home healthcare services in the 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 market, today reported that revenues for the three months ended March 31, 2002 decreased to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $28.2 million from approximately $29.6 million for the three months ended March 31, 2001. Revenue for the nine months ended March 31, 2002 decreased to approximately $78.2 million from approximately $89.2 million for the nine months ended March 31, 2001. The decrease in revenue was primarily due to the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of unprofitable businesses. Income from operations for the three months ended March 31, 2002 was $378,648 as compared to a loss from operations of approximately $1.8 million, prior to giving effect to a contractual revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. of previously recorded medical claims liability of approximately $4.6 million, for the three months ended March 31, 2001. After giving effect to the contractual revision, income from operations was approximately $2.8 million for the three months ended March 31, 2001. Loss from operations for the nine months ended March 31, 2002 was $991,388 as compared to a loss from operations of approximately $6.8 million, prior to giving effect to a contractual revision of previously recorded medical claims liability of approximately $4.6 million, for the nine months ended March 31, 2001. After giving effect to the contractual revision, the loss from operations was approximately $2.1 million for the nine months ended March 31, 2001. Net loss for the three months ended March 31, 2002 was $2.4 million or a loss of $.06 per share on approximately 39.5 million weighted average shares outstanding, after giving effect to a Provision for 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. Settlement Related to Terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: Operations of approximately $2.4 million, as compared to net income of approximately $2.4 million for the three months ended March 31, 2001. Net loss for the nine months ended March 31, 2002 was $4.6 million or a loss of $.12 per share on approximately 39.5 million weighted average shares outstanding, after giving effect to a Provision for Medicare Settlement Related to Terminated Operations of approximately $2.4 million, as compared to a net loss of approximately $3.4 million for the nine months ended March 31, 2001. The Provision for Medicare Settlement Related to Terminated Operations represents an accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for cost report adjustments that are being sought by the Centers for Medicare and Medicaid Services The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (DHHS) that administers the Medicare program and ("CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. "). Substantially all of these adjustments relate to businesses that were never purchased, owned or operated by Continucare. CMS has sought to charge Continucare with the liability for these non-purchased, owned or operate businesses because they shared a provider number with other businesses that were purchased by Continucare. Continucare has retained the right to dispute the cost report adjustments and continues to review and evaluate all information available to determine the validity of the claims. Net cash provided by operating activities for the nine months ended March 31, 2002 was $212,332, as compared to net cash used in operating activities of approximately $1.8 million for the nine months ended March 31, 2001. Net increase in cash for the nine months ended March 31, 2002 was $105,174, as compared to net decrease in cash of approximately $1.6 million for the nine months ended March 31, 2001. "The continued implementation of our long term business strategy of "Responsible Sustainable Growth" as well as the enhancement of the quality of medical services that we provide to our members has strengthened our medical management capabilities," said Spencer Spencer, city (1990 pop. 11,066), seat of Clay co., NW Iowa, on the Little Sioux River; inc. 1880. The city lies in a fertile farm area. Beef is processed, and Spencer's manufactures include work clothes, machinery, prefabricated buildings, and metal products. J. Angel, President and Chief Executive Officer of Continucare. "The successful implementation of these business strategies is reflected in our improved operational performance." Continucare Corporation, headquartered in Miami, Florida “Miami” redirects here. For the Native American tribe, see Miami tribe. Miami is a major city in southeastern Florida, in the United States. It is the county seat of Miami-Dade County. Miami is a gamma world city with an estimated population of 404,048. , is a holding company with subsidiaries engaged in the business of third party management of medical risk by providing 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. healthcare services through managed care arrangements and home healthcare services. Except for the historical matters contained herein, statements 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 Securities 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. Reform Act of 1995. Investors 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. involve risks and uncertainties that may affect the company's business and prospects, and cause results to differ materially from those set forth in the forward-looking statements. In addition to the factors set forth elsewhere in this release, the economic, competitive, governmental, technological and other factors identified in Continucare's filings with the Securities and Exchange Commission could affect the forward-looking statements contained in this release.
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS March 31, 2002 June 30, 2001
-------------- -------------
(Unaudited)
Current assets
Cash and cash equivalents $ 630,656 $ 525,482
Accounts receivable, net of allowance
for doubtful accounts of approximately
$5,863,000 at March 31, 2002 and
$5,802,000 at June 30, 2001 149,190 81,132
Other receivables 558,520 763,637
Due from HMOs, net 164,663 622,666
Prepaid expenses and other current
assets 475,867 306,261
----------- -----------
Total current assets 1,978,896 2,229,178
Equipment, furniture and leasehold
improvements, net 629,508 703,494
Goodwill, net of accumulated amortization
of approximately $3,661,000 at
March 31, 2002 and June 30, 2001 14,663,392 14,663,392
Intangible assets, net of accumulated
amortization of approximately
$5,286,000 at March 31, 2002 and
approximately $4,685,000 at
June 30, 2001 2,251,926 2,853,359
Deferred financing costs, net of
accumulated amortization of
approximately $2,667,000 at
March 31, 2002 and $1,706,000 at
June 30, 2001 738,281 1,698,750
Other assets, net 79,197 74,731
----------- -----------
Total assets $20,341,200 $22,292,904
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 630,422 $ 739,506
Accrued expenses 2,115,806 2,270,695
Accrued salaries and benefits 902,623 579,805
Credit Facility 1,800,000 500,000
Advances from HMO - 450,000
Due to Medicare, net 100,470 500,045
Current portion of convertible
subordinated notes payable 273,896 273,896
Current portion of long term debt 5,262,303 4,952,076
Current portion of related party
notes payable 63,854 53,211
Accrued interest payable 15,024 17,703
Current portion of capital lease
obligations 151,574 149,915
------------ ------------
Total current liabilities 11,315,972 10,486,852
Capital lease obligations, less current
portion 8,279 99,774
Convertible subordinated notes payable,
less current portion 4,424,942 4,630,364
Long term debt, less current portion 3,149,083 1,011,704
Related party notes payable, less current
portion 1,093,113 1,135,683
----------- -----------
Total liabilities 19,991,389 17,364,377
Commitments and contingencies
Shareholders' equity
Common stock; $0.0001 par value;
100,000,000 shares authorized:
42,630,794 shares issued and
39,634,601 shares outstanding at
March 31, 2002; 42,455,794 shares
issued and 39,459,601 shares
outstanding at June 30, 2001 3,964 3,946
Additional paid-in capital 59,511,614 59,511,632
Accumulated deficit (53,741,066) (49,162,350)
Treasury stock (2,996,193 shares) (5,424,701) (5,424,701)
----------- -----------
Total shareholders' equity 349,811 4,928,527
----------- -----------
Total liabilities and shareholders'
equity $20,341,200 $22,292,904
============ ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31,
----------------------------
2002 2001
---- ----
Medical services revenue, net $28,169,950 $29,589,882
Expenses:
Medical services:
Medical claims 20,579,273 23,290,468
Contractual revision of previously
recorded medical claims liability - (4,638,205)
Other 3,810,889 4,275,068
Payroll and employee benefits 1,524,666 1,494,662
Provision for bad debts 24,023 -
Professional fees 686,147 256,581
General and administrative 996,014 1,348,147
Depreciation and amortization 170,290 727,900
----------- -----------
Subtotal 27,791,302 26,754,621
Income from operations 378,648 2,835,261
Other income (expense):
Interest income 3,551 6,733
Interest expense (363,814) (448,083)
Provision for Medicare settlement
related to terminated operations (2,440,971) -
----------- -----------
Net (loss) income $(2,422,586) $2,393,911
=========== ==========
Basic and diluted (loss) income
per common share $ (.06) $ .07
=========== ==========
Basic and diluted weighted average
number of common shares
outstanding 39,479,045 33,240,090
========== ==========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended March 31,
---------------------------
2002 2001
---- ----
Medical services revenue, net $78,163,253 $89,149,934
Expenses:
Medical services:
Medical claims 58,984,978 71,478,867
Contractual revision of previously
recorded medical claims liability - (4,638,205)
Other 10,332,878 12,816,254
Payroll and employee benefits 4,227,327 4,402,353
Provision for bad debts 60,472 -
Professional fees 1,193,679 851,187
General and administrative 3,501,234 4,167,640
Depreciation and amortization 854,073 2,180,035
----------- -----------
Subtotal 79,154,641 91,258,131
Loss from operations (991,388) (2,108,989)
Other income (expense):
Interest income 33,436 31,142
Interest expense (1,179,793) (1,280,989)
Provision for Medicare settlement
related to terminated operations (2,440,971) -
Other - 304
----------- -----------
Net loss $(4,578,716) $(3,357,740)
=========== ===========
Basic and diluted loss per common
share $ (.12) $ (.10)
=========== ===========
Basic and diluted weighted average
number of common shares outstanding 39,465,988 33,240,090
=========== ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended March 31,
---------------------------
2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,578,716) $(3,357,740)
Adjustments to reconcile net loss
to cash provided by (used in)
operating activities:
Depreciation and amortization,
including amortization of
deferred loan costs 1,826,850 3,270,480
Provision for bad debts 60,472 -
Contractual revision of previously
recorded medical claims liability - (4,638,205)
(Gain) loss on disposal of assets
and release from asset related
liabilities (28,642) 33,426
Changes in operating assets and
liabilities, excluding the effect of
acquisitions and disposals:
Increase in accounts receivable (128,530) (52,778)
(Increase) decrease in prepaid
expenses and other current assets (169,606) 61,295
Decrease in other receivables 205,117 220,164
Increase in other assets (4,466) (21,828)
Increase in due to/from HMO's, net 458,003 1,899,430
Increase in due to Medicare 2,515,684 548,866
Decrease in accounts payable and
accrued expenses 58,845 258,740
(Decrease) increase in accrued
interest payable (2,679) 6,172
----------- -----------
Net cash provided by (used in)
operating activities 212,332 (1,771,978)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of equipment - 1,500
Property and equipment additions (156,331) (215,580)
----------- -----------
Net cash used in investing activities (156,331) (214,080)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on convertible subordinated
notes (205,422) (350,000)
Payments on related party notes (31,927) -
Principal repayments under capital
lease obligation (83,516) (66,276)
Net borrowings on Credit Facility 1,300,000 600,000
Advances from HMO's - 1,450,000
Payment on advances from HMOs (450,000) (563,311)
Repayments to Medicare per agreement (479,962) (501,965)
Repayments on notes payable - (150,000)
----------- -----------
Net cash provided by financing
activities 49,173 418,448
----------- -----------
Net increase (decrease) in cash and
cash equivalents 105,174 (1,567,610)
----------- -----------
Cash and cash equivalents at
beginning of period 525,482 2,535,540
----------- -----------
Cash and cash equivalents at end
of period $ 630,656 $ 967,930
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Note payable issued for refunds due
to Medicare for overpayments $ 2,915,259 $ 370,622
=========== ===========
Purchase of furniture and fixtures
with proceeds of capital lease
obligations $ 36,252 $ 166,621
=========== ===========
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