First American Health Concepts Inc. Reports 27% Increase in Second Quarter Revenues.

Business Editors/Health & Medical Writers

PHOENIX--(BW HealthWire)--March 16, 2000

First American Health Concepts Inc. (AMEX:FAH), Thursday reported net income from operations of $105,000 or $0.04 per share, for the second quarter of its fiscal 2000 that ended Jan. 31, 2000.

Net income for the second quarter of fiscal 1999 was $27,000, or $0.01 per share.

Revenues increased 27% to $2.6 million from $2.0 million one year ago. The company expects this trend to continue in the third and fourth quarters.

First American, which markets and administers third-party managed vision care plans nationwide under the trade name Eye Care Plan of America (ECPA), attributes its increase in revenues and operating income to its indemnity book of business.

Revenues on the indemnity book increased to $1.5 million for the quarter ending Jan. 31, 2000 versus $0.7 million for the comparable quarter in fiscal 1999. The increase is the result of increased sales and new contract terms with First American's primary insurance carrier.

"We have just completed a very successful new business and contract renewal sales period," said First American Chief Operating Officer Jim Hyman. "Many companies maintain calendar year benefit plans, therefore the first calendar quarter is our busiest sales period.

"We are excited about our current success and continue to be optimistic as we look toward a strong finish to our fiscal year. Proposal activity remains high for benefit plans beginning in the second half."

Total operating expenses increased to $2.5 million versus $2.0 million in the prior year. The increase corresponds to the increase in revenues. The company expects operating margins to decrease in the second half of the year due to the start up costs of its new California subsidiary, as well as additional offices scheduled to open in other areas.

"Our California subsidiary, Eye Care Plan of America-California Inc., received its license to operate as a Specialized Knox-Keene Health Care Services Organization in January," explained First American Chairman John R. Behrmann.

"We are now implementing our marketing and administration plan and will therefore be increasing both staff and overhead costs. However, we are not projecting a significant contribution to revenue until the third quarter of next fiscal year."

First American's overall financial condition and liquidity remained strong with $1.5 million in cash and marketable securities and working capital at $3.9 million. Total assets were $7.4 million as of Jan. 31, 2000.

This release contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause actual results and performance to be materially different from any future results or performance suggested by these statements.

First Quarter Recap(a)                        Fiscal 2000  Fiscal 1999
Revenues                                        $ 2,606      $ 2,048
Operating Expense                               $ 2,454      $ 2,028
Net Income/(Loss)
 from Operations                                $   105      $    27
Net Income/(Loss)
 from Operations Per Share                      $  0.04      $  0.01

Six Month Recap
Revenues                                        $ 5,194      $ 3,884
Operating Expense                               $ 4,825      $ 3,998
Net Income/(Loss)
 from Operations                                $   259      ($   13)
Net Income/(Loss)
 from Operations Per Share                      $  0.10      ($ 0.01)
Net Income/(Loss) After Change
 In Accounting Principle                        ($  468)
Net Income Per Share After
 Change in Accounting Principle                 ($ 0.18)

(a) Figures in thousands, except per share data