Sierra Reports 1st Quarter 2005 Earnings of $0.87 Per Diluted Share; Company Continues Strong Growth in Nevada Market.LAS VEGAS Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. -- Sierra (company, games) Sierra - (Or "Sierra On-Line") A computer game developer founded in the early 1980s by Ken and Roberta Willams in the small mountain town of Oakhurst California. Sierra was named after the local mountian range, 15 miles from the famous Yosemite National Park. Health Services health services Managed care The benefits covered under a health contract Inc. (NYSE NYSE See: New York Stock Exchange :SIE SIE Sierra Health (stock symbol) SIE Serial Interface Engine SIE Serviciul de Informatii Externe (Romanian: Intelligence Service for the Exterior) SIE Società Italiana di Endocrinologia ) 1st Quarter Year Over Year Results --Medical Premium Revenues Up 17% --Operating Income Up 8% --Operating Margin Up 320 Basis Points --EPS from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the Up 13% --2005 EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Guidance Raised to $3.35 to $3.45 Sierra Health Services Inc. (NYSE:SIE) reported today that income from continuing operations for the quarter ended March 31, 2005, was $28.6 million or $0.85 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 $26.3 million or $0.75 per diluted share for the same period in 2004, an earnings per share increase of 13%. For the quarter, a tax benefit for discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. resulted in income of $838,000, compared to a loss of $486,000 for the same period in 2004. Net income for the quarter, after the tax gain from discontinued operations, was $29.4 million, or $0.87 per diluted share, compared to $25.8 million, or $0.74 per diluted share for the same period in 2004, an earnings per share increase of 18%. Assuming dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. , on average, analysts had expected Sierra to post first quarter 2005 earnings per share of $0.79, and annual earnings per share of $3.33. The company had previously announced it expected to earn between $3.20 and $3.30 for the year 2005. Sierra now expects to earn between $3.35 and $3.45 per share for 2005, fully diluted. Revenues from continuing operations for the quarter were $335.8 million, compared to $408.2 million for the same period in 2004. This decrease is due to the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of health care delivery operations in the third quarter of 2004 at the company's military health services subsidiary. Medical premium revenues from Sierra's core managed care operations were $311.4 million for the quarter, compared to $265.4 million for the same period in 2004, an increase of 17%. In the first quarter, Sierra's medical care ratio was 76.3%, a 60 basis point increase from 75.7% for the same period in 2004. The increase is primarily due to higher bed days during the current quarter. Sierra's medical claims payable balance increased to $128.1 million at March 31, 2005, compared to $119.3 million at Dec. 31, 2004. Days in claims payable, which is the medical claims payable balance divided by the average medical expenses per day for the period, were 47 days for the first quarter of 2005, compared to the same number of days from the first quarter of 2004 and 48 days sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . As a percentage of premium revenue, general and administrative expenses for the first quarter improved 70 basis points to 13.3% from 14.0% for the same period in 2004. Excluding the general and administrative expenses related to the sold workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. operations, expenses as a percentage of premium revenue would have been 13.1%, an improvement of 140 basis points from 14.5% for the fourth quarter of 2004. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. from continuing operations was $23.4 million for the quarter, compared to $32.2 million for the same period in 2004. Operating cash flow from continuing operations, adjusted for the timing of payments from 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. ), was $64.2 million for the first quarter of 2005, compared to $65.2 million for the same period in 2004. The company received two monthly payments from CMS in the first three months of 2005 and 2004, with the January January: see month. CMS payments received at the end of December December: see month. . Sierra believes that reflecting three monthly CMS payments for the quarter provides a more useful measure of cash provided by operations. Adjusted cash flow for the quarter represents 218% of net income. During the first quarter, Sierra purchased 178,000 shares of its common stock in the open market or private transactions for $10.4 million, at an average price of $58.14 per share. As of March 31, 2005, including purchases in 2003 and 2004, the company has purchased 8.9 million shares for $243.6 million, at an average price of $27.39. "Once again, as we continue to benefit from a strong local economy, our performance in the first quarter appears to bode bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. well for the remainder of the year," said Anthony M. Marlon Marlon may refer to:
In the first quarter of 2005, same store commercial membership in the company's core Las Vegas market grew by 6.2%, or 13,600 lives. Sierra continues to benefit from a mix of new business and in-group in-group n. A group of people united by common beliefs, attitudes, or interests and characteristically excluding outsiders; a clique. growth, across all account sizes and segments. In the quarter 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. membership grew by 1%, or 700 lives. Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. membership, while increasing 3.1%, or 1,500 lives year over year, is down 600 lives sequentially, due to a state reconciliation adjustment. Sierra will host a conference call with investors, analysts and the general public on Tuesday Tuesday: see week. , April 26 at noon (Eastern time). Interested parties can access the call by dialing 888-988-9162 (using the passcode: EARNINGS). Listeners may also access the call free over 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 by visiting the investors page of Sierra's Web site at www.sierrahealth.com. Sierra Health Services Inc., based in Las Vegas, is a diversified diversified (di·verˑ·s health care services company that operates health maintenance organizations, indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. insurers, preferred provider organizations pre·ferred provider organization n. Abbr. PPO A medical insurance plan in which members receive more coverage if they choose health care providers approved by or affiliated with the plan. and multispecialty medical groups. Sierra's subsidiaries serve more than 570,000 people through health benefit plans for employers, government programs and individuals. For more information, visit the company's Web site at www.sierrahealth.com. Statements in this news release that are not historical facts 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 based on management's projections, assumptions and estimates; actual results may vary materially. 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 certain risks and uncertainties, which include but are not limited to: 1) potential adverse changes in government regulations, contracts and programs, including Medicare, Medicaid and legislative proposals to eliminate or reduce ERISA See Employee Retirement Income Security Act. ERISA See Employee Retirement Income Security Act (ERISA). pre-emption PRE-EMPTION, intern. law. The right of preemption is the right of a nation to detain the merchandise of strangers passing through her territories or seas, in order to afford to her subjects the preference of purchase. 1 Chit. Com. Law, 103; 1 Bl. Com. 287. 2. of state laws that would increase potential managed care 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. exposure; 2) competitive forces that may affect pricing, enrollment, renewals and benefit levels; 3) unpredictable medical costs, malpractice malpractice, failure to provide professional services with the skill usually exhibited by responsible and careful members of the profession, resulting in injury, loss, or damage to the party contracting those services. exposure, reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. costs and inflation; 4) impact of economic conditions; 5) changes in health care reserves; and 6) the amount of actual proceeds to be realized from the note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. related to the sale of the workers' compensation insurance operation. Further factors concerning financial risks and results may be found in documents filed with the Securities and Exchange Commission and which are incorporated herein by reference. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Sierra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Sierra or its business or operations. Sierra assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.
SIERRA HEALTH SERVICES INC. AND SUBSIDIARIES
Earnings Report
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
--------------------
2005 2004
--------- ---------
Medical premiums $311,355 $265,438
Military contract revenues 6,359 127,624
Professional fees 9,853 9,478
Investment and other revenues 8,271 5,650
--------- ---------
Total Revenues 335,838 408,190
--------- ---------
Medical expenses 244,962 208,065
Medical Care Ratio 76.3% 75.7%
(Medical Expenses/Premiums and Professional Fees)
Military contract expenses 4,107 120,797
General and administrative expenses 41,445 37,168
--------- ---------
Operating Income From Continuing Operations 45,324 42,160
Interest expense (1,631) (1,165)
Other income (expense), net 99 122
--------- ---------
Income From Continuing Operations Before Income
Taxes 43,792 41,117
Provision for income taxes (15,225) (14,802)
--------- ---------
Income From Continuing Operations 28,567 26,315
Income (loss) from discontinued operations 838 (486)
--------- ---------
Net Income $ 29,405 $ 25,829
========= =========
Earnings Per Common Share:
--------------------------
Income from continuing operations $1.07 $0.97
Income (loss) from discontinued operations 0.03 (0.01)
--------- ---------
Net Income $1.10 $0.96
========= =========
Earnings Per Common Share Assuming Dilution:
--------------------------------------------
Income from continuing operations $0.85 $0.75
Income (loss) from discontinued operations 0.02 (0.01)
--------- ---------
Net Income $0.87 $0.74
========= =========
Weighted average common shares outstanding 26,622 27,041
Weighted average common shares outstanding
assuming dilution 34,125 35,542
PERIOD END MEMBERSHIP
At March 31,
--------------------
2005 2004
--------- ----------
HMO:
Commercial 241,300 212,000
Medicare 54,000 51,700
Medicaid 49,900 48,400
Managed indemnity 26,000 23,900
Medicare supplement 16,300 17,000
Administrative services 184,600 180,100
--------- ----------
Subtotal 572,100 533,100
TRICARE eligibles -- 710,000
--------- ----------
Total Members 572,100 1,243,100
========= ==========
SIERRA HEALTH SERVICES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, Dec. 31,
2005 2004
--------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $112,400 $205,290
Investments 279,525 147,264
Accounts receivable 14,379 15,150
Military accounts receivable 5,679 25,452
Current portion of deferred tax asset 19,680 17,560
Prepaid expenses and other current assets 57,719 36,106
Assets of discontinued operations 3,961 4,152
--------- ----------
Total Current Assets 493,343 450,974
Property and equipment, net 69,669 71,152
Restricted cash and investments 15,436 20,353
Goodwill 14,782 14,782
Deferred tax asset (less current portion) 12,251 13,275
Note receivable 47,000 47,000
Other assets 73,472 72,244
--------- ----------
Total Assets $725,953 $689,780
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued and other current liabilities $ 109,738 $ 75,646
Trade accounts payable 8,026 7,123
Accrued payroll and taxes 23,236 27,668
Medical claims payable 128,135 119,337
Unearned premium revenue 13,925 50,763
Military health care payable 16,500 17,061
Current portion of long-term debt 97 100
Liabilities of discontinued operations 1,961 610
--------- ----------
Total Current Liabilities 301,618 298,308
Long-term debt (less current portion) 125,374 125,395
Other liabilities 61,798 64,380
--------- ----------
Total Liabilities 488,790 488,083
--------- ----------
Commitments and contingencies
Stockholders' Equity:
Common stock 180 178
Treasury stock (246,993) (237,876)
Additional paid-in capital 302,610 286,571
Deferred compensation -- (288)
Accumulated other comprehensive loss (684) (245)
Retained earnings 182,050 153,357
--------- -----------
Total Stockholders' Equity 237,163 201,697
--------- -----------
Total Liabilities And Stockholders' Equity $ 725,953 $ 689,780
========= ===========
SIERRA HEALTH SERVICES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2005 2004
--------- ----------
Cash Flows From Operating Activities:
Net Income $ 29,405 $ 25,829
Adjustments To Reconcile Net Income To Net
Cash
Provided By Operating Activities:
(Gain) loss from discontinued
operations (838) 486
Depreciation 3,714 4,075
Other adjustments 1,647 467
Unearned premium revenue (36,838) (23,914)
Changes in other assets and
liabilities 26,312 25,284
--------- ----------
Net Cash Provided By Operating Activities of
Continuing Operations 23,402 32,227
--------- ----------
Cash Flows From Investing Activities:
Capital expenditures, net of dispositions (2,252) (1,491)
Change in investments (115,469) 19,401
--------- ----------
Net Cash (Used For) Provided By Investing
Activities Of Continuing Operations (117,721) 17,910
--------- ----------
Cash Flows From Financing Activities:
Payments on debt and capital leases (24) (1,490)
Purchase of treasury stock (10,354) (31,944)
Exercise of stock in connection with stock
plans 9,432 9,846
--------- ----------
Net Cash Used For Financing Activities Of
Continuing Operations (946) (23,588)
--------- ----------
Net cash provided by discontinued operations 2,375 3,414
--------- ----------
Net (Decrease) Increase In Cash And Cash
Equivalents (92,890) 29,963
Cash And Cash Equivalents At Beginning Of Period 205,290 118,473
--------- ----------
Cash And Cash Equivalents At End Of Period $ 112,400 $ 148,436
========= ==========
Reconciliation of Non-GAAP Financial Measures
In this press release, the company presented cash flow from continuing
operations, adjusted for the timing of payments from the Centers for
Medicare and Medicaid Services (CMS) for both 2005 and 2004. These are
non-GAAP financial measures. The company received two monthly payments
from CMS in the first three months of 2005 and 2004 as the January CMS
payments were received at the end of December. The company believes
that reflecting three monthly CMS payments provides a more useful
measure of cash provided by operations during the three-month period.
The following is a reconciliation to the most directly comparable GAAP
financial measure:
Three Months Ended
March 31,
--------------------
2005 2004
--------- ---------
GAAP net cash provided by operating activities of
continuing operations $23,402 $32,227
Add: January CMS payment received in December 40,845 32,924
--------- ---------
Cash Flow From Continuing Operations Adjusted For
The Timing Of Payments From CMS $64,247 $65,151
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