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FOUNDATION REPORTS SECOND QUARTER RESULTS

 RANCHO CORDOVA, Calif., Jan. 25 /PRNewswire/ -- Foundation Health Corp. (NYSE: FH) today announced that net income for the quarter ended Dec. 31, 1992 -- before one-time charges for acquiring and restructuring two companies, as well as related tax effects -- rose 50.7 percent to $18.8 million, or 62 cents per share, from net income a year ago of $12.5 million or 46 cents per share. The average number of shares outstanding increased to 30.3 million from 27.0 million a year ago.
 After the one-time charge of $12.4 million and the corresponding tax effects related to the acquisitions in October of Century MediCorp Inc. (Century) and Occupational Health Services Inc. (OHS), net income for the quarter was $9.6 million or 32 cents per share. Revenues for the quarter were $334.1 million compared to $320.0 million a year ago.
 Pretax income for the quarter before one-time charges increased 56.1 percent to $30.6 million from $19.6 million a year ago.
 All financial and enrollment data have been restated to reflect the acquisitions of Century and OHS. Each has been accounted for as a pooling of interests.
 For the six months ended Dec. 31, 1992, net income before the one-time charges and the corresponding tax effect was $33.5 million or $1.11 per share, on revenues of $682.9 million versus net income of $24.0 million, or 89 cents per share, on revenues of $627.2 million for the period a year earlier. The average number of shares outstanding rose to 30.2 million from 26.8 million. After the one-time charge and related tax effects, net income for the first half of the fiscal year was $24.3 million or 81 cents per share.
 "The quarterly earnings -- before special charges -- grew despite an increase in both the effective tax rate and the number of shares outstanding," said Daniel D. Crowley, president and chief executive officer of Foundation. "Earnings growth was primarily due to effective medical and administrative cost containment in both the commercial and CHAMPUS operations."
 The medical loss ratio for the company's medical HMOs during the quarter was 73.9 percent compared to 76.1 percent a year ago, and 75.3 percent versus 77.2 percent for the comparable six-month periods. The ratio of CHAMPUS health care and subcontractor costs to CHAMPUS revenues for the quarter was 81.4 percent versus 89.5 percent a year earlier, and 84.4 percent versus 90.6 percent for the comparable six-month periods.
 Crowley added: "The recently acquired OHS, Century and AVP Vision Plans are performing well and posted strong enrollment growth during the past quarter. They are opening doors to new markets and beginning to provide cross-selling opportunities for our existing products."
 Enrollment in the company's health maintenance organization (HMO) and insured medical products was 448,000 on Dec. 31, 1992, compared to 416,000 a year earlier.
 The number of eligible individuals covered by the company's specialty managed care, administrative services and life insurance products was 1.77 million at Dec. 31, 1992, up from 1.53 million a year earlier. This group includes the dental, vision, mental health and employee assistance plan (EAP) products, as well as life insurance and third-party administrative services.
 Enrollment in CHAMPUS Prime at Dec. 31, 1992, increased to 224,000 -- including 7,000 in New Orleans -- compared to a total of 151,000 a year earlier.
 Crowley said that the last quarter was marked by a number of achievements, including completion of three previously announced acquisitions: Century, with 138,000 HMO enrollees at Dec. 31; OHS, with more than 1.1 million eligible beneficiaries of its EAP and managed behavioral health care plan on Dec. 31; and AVP Vision Plans, with 31,000 vision HMO members at Dec. 31.
 In addition, Crowley said that it has now been a full year since the company entered the dental managed care business with the acquisition of DentiCare. During the past 12 months, enrollment in the dental products increased by more than 23 percent to 463,000.
 Crowley also noted that quarterly revenues from non-HMO specialty services subsidiaries grew to $12.9 million, a 136.3-percent increase from a year ago.
 "Foundation now touches more than 3 million eligible individuals through our commercial and government managed care programs," Crowley said. "Just 18 months ago, at the beginning of our last fiscal year and before our acquisitions, we served only about a million eligible individuals. We are beginning to realize our goal of becoming a diversified managed care company that is positioned to benefit from government and private sector efforts to contain health care costs."
 Foundation is a leading managed health care company serving industry and government. Through its HMO, specialty services and government contracting subsidiaries, the company administers a variety of health benefits for more than 3 million eligible individuals.
 FOUNDATION HEALTH CORP.
 (Unaudited, dollars in thousands, except per share amounts)
 CONSOLIDATED STATEMENT OF OPERATIONS
 Quarter Ended Six Months Ended
 Dec. 31: 1992 1991 1992 1991
 REVENUES:
 Commercial
 premiums $161,616 $140,877 $317,278 $277,868
 Government
 contracts 145,880 159,926 313,022 313,922
 Patient service
 revenue, net 10,755 10,861 21,054 19,649
 Specialty services
 revenue 12,935 5,474 25,198 9,920
 Interest and other
 income 2,930 2,878 6,329 5,877
 Total 334,116 320,016 682,881 627,236
 EXPENSES:
 Commercial and specialty
 health care
 services 119,774 107,348 238,825 214,634
 Government contracts
 health care
 services 44,445 43,587 87,453 86,425
 Government contracts
 subcontractor costs 73,035 99,471 174,220 198,065
 Selling, general and
 administrative 61,617 45,316 118,101 85,076
 Amortization and
 depreciation 4,217 3,933 8,362 7,554
 Interest expense 436 760 1,106 1,479
 Provision for
 restructuring 12,413 --- 12,413 ---
 Total 315,937 300,415 640,480 593,233
 Income before income
 taxes 18,179 19,601 42,401 34,003
 Provision for income
 taxes 8,545 7,120 18,055 10,028
 Net income $ 9,634 $ 12,481 $ 24,346 $ 23,975
 Earnings per common
 share $ 0.32 $ 0.46 $ 0.81 $ 0.89
 Weighted average common
 and common stock
 equivalent shares
 outstanding 30,311,851 26,951,065 30,240,764 26,811,453
 CONDENSED CONSOLIDATED BALANCE SHEET
 Dec. 31, June 30,
 1992 1992
 Assets:
 Current assets $ 403,063 $ 327,923
 Intangible assets 73,402 74,590
 Other assets 68,620 60,640
 Total assets $ 545,085 $ 463,153
 Liabilities
 Current liabilities $ 275,294 $ 210,773
 Long-term obligations 10,305 24,150
 Deferred income taxes payable 6,498 3,803
 Total liabilities 292,097 238,726
 Stockholders' equity 252,988 224,427
 Total liabilities and
 stockholders' equity $ 545,085 $ 463,153
 Stockholders' equity
 per share $ 8.36 $ 7.50
 EARNINGS IMPACT OF PROVISION FOR RESTRUCTURING
 (Dollars in thousands, except per share amounts)
 Quarter Ended
 Dec. 31, 1992
 PRO FORMA EARNINGS PER SHARE
 Income before provision for
 restructuring and income
 taxes $ 30,596
 Provision for income taxes
 at 38.7 percent 11,841
 Pro forma net income (exclusive
 of provision for restructuring) $ 18,755
 Weighted average shares
 outstanding 30,311,851
 Pro Forma Earnings Per Share $ 0.62
 IMPACT OF PROVISION FOR RESTRUCTURING
 Provision for restructuring $ 12,413
 Less income taxes on restructuring
 charges at 38.7 percent 4,804
 Add back tax effect of $4 million
 nondeductible restructuring
 charges (at 38.7 percent) 1,548
 Total $ 9,157
 Weighted average shares
 outstanding 30,311,851
 Earnings Per Share Impact of
 Restructuring Charge $ 0.30
 -0- 1/25/93
 /CONTACT: Jeffrey L. Elder, senior vice president and chief financial officer, 916-631-5381, or Kurt D. Davis, director of investor relations, 916-631-5288, both of Foundation Health/
 (FH)


CO: Foundation Health Corp. ST: California IN: HEA SU: ERN

SG-TM -- SF004 -- 8432 01/25/93 11:28 EST
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Date:Jan 25, 1993
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