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United Wisconsin Services, Inc. Announces 2nd Quarter Earnings of $0.37 Per Share

MILWAUKEE, July 23 /PRNewswire/ -- United Wisconsin Services, Inc. (NYSE NYSE

See: New York Stock Exchange
: UWZ) today announced that net income for the second quarter ended June 30, 1998 increased 11.7 percent to $6.2 million, or $0.37 per share, excluding one-time spinoff transaction expenses.

As previously announced, the company expects to separate its 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,
 and Specialty Products business from its American Medical Security (AMS AMS - Andrew Message System ) small group products business in the third quarter. The spinoff involves the creation of a new corporation consisting of the HMO and Specialty Products business and distribution of the shares of that new corporation to UWZ shareholders. United Wisconsin Services has received a private letter ruling from the Internal Revenue Service that the distribution will be tax-free to UWZ shareholders.

Upon completion of the spinoff, AMS will operate under the name American Medical Security Group, Inc. and trade on the New York Stock Exchange New York Stock Exchange (NYSE)

World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City.
 under the ticker symbol Ticker Symbol

An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors
 "AMZ AMZ

see australian Milking Zebu.
"; the HMO and Specialty Products business will operate under the name United Wisconsin Services, Inc. and trade on the New York Stock Exchange under the ticker symbol "UWZ." Accordingly, for the second quarter, the AMS business is being reported as 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
 and the HMO and Specialty Products business is being reported as discontinued operations Discontinued operations

Divisions of a business that have been sold or written off and that no longer are maintained by the business.
. Discontinued results include transaction expenses of $4.9 million.

American Medical Security Small Group Products

American Medical Security, which markets small group insurance products nationally, posted lower operating results and enrollment for the second quarter of 1998 compared with the same quarter in 1997. Health services health services Managed care The benefits covered under a health contract  revenue totaled $231.6 million for the second quarter, a 6.6 percent decrease from the $247.9 million in the second quarter of 1997.

Enrollment in the fully insured AMS medical business in the second quarter of 1998 increased slightly from the first quarter. Overall, medical enrollment decreased to 577,500, principally reflecting a decrease in self-funded business.

Sam Miller Sam Miller is a British television director. He is best known for his work on the BBC television dramas Cardiac Arrest and This Life. [1]

Miller is a keen supporter of the South Sydney Rabbitohs Rugby League team.
, Chairman, President and Chief Executive Officer of AMS, said AMS' plan for improving sales in the fully insured business line is meeting with success. "Since our low point in August 1997, our enrollment of new members has almost doubled," Miller said. "We are pleased that new members in our core business have surpassed terminations in the second quarter. With that turn, AMS is now experiencing incremental growth in our fully insured line."

The overall medical loss ratio for AMS products in the second quarter of 1998 was 78.8 percent, compared to 78.0 percent for the same period in 1997. As previously announced, the loss ratio was adversely affected by the runout run·out  
n.
1. The act or an instance of fleeing so as to evade undesirable consequences.

2. The area where one curved surface merges with another: a snowy runout at the bottom of the ski slope.
 of unprofitable individual dental business which was discontinued June 1 and the delay in regulatory approval of rate increases in the state of Florida.

The combined operating expense Operating Expense

The essential things that a company must purchase in order to maintain business.

Notes:
For example, the payment of employees wages are an operating expense.

Also known as OPEX.
 ratio for AMS medical products continued to decline to 21.4 percent for the second quarter of 1998, compared to 22.5 percent in the same period in 1997.

According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3.
 Miller, AMS continues to take action to improve its financial performance and enhance shareholder value. "We've made considerable progress improving our operating efficiencies, and having new, fully insured sales exceed cancellations for the first time since our turnaround plan was implemented," Miller said. "We will continue our efforts on these fronts while we pursue additional growth through acquisition."

HMO & Specialty Managed Care Products And Services

Health services revenue for HMO and Specialty Managed Care Products and Services increased 8.9 percent to $157.8 million in the second quarter of 1998, compared to $144.9 million in the same period in 1997.

Thomas R. Hefty, Chairman, President and Chief Executive Officer of United Wisconsin Services, Inc., said, "We are pleased with the solid growth and balanced performance of our HMO and Specialty Products units. Following completion of the spinoff, we anticipate gaining significant marketing leverage through the power of the Blue Cross & Blue Shield brand in Wisconsin and with Blue Cross plans in other states."

HMO products revenue increased 7.6 percent to $128.1 million in the second quarter of 1998, compared to $119.0 million in the same period in 1997. HMO enrollment at the end of the second period totaled 297,900, a 3.5 percent increase over the second quarter of 1997. The second quarter 1998 HMO loss ratio decreased to 88.3 percent from 90.7 percent in the second quarter of 1997.

Revenue in the Specialty Managed Care business was $33.7 million in the second quarter of 1998, compared to $29.8 million for the second quarter of 1997, a 13.1 percent increase. The Specialty Risk segment revenue, including workers' compensation, life, disability and dental insurance Dental insurance is insurance designed to pay the costs associated with dental care. Dental insurance pays a portion of the bills from dentists, hospitals, and other providers of dental services.  products, grew to $23.5 million in the second quarter of 1998, from $19.9 million in the same period of 1997. Revenue in the Specialty Services segment, including behavioral health Behavioral health was first used in the 1980's to name the combination of the fields mental health and substance abuse. As an example, an organization serving both mental health and substance abuse clients might refer to its practice as behavioral health or , electronic claims, audit/subrogation, and managed care services, totaled $10.2 million for the second quarter of 1998, compared to $9.9 million in the second quarter of 1997.

Corporate Profiles

AMERICAN MEDICAL SECURITY markets health care benefits and other insurance products to small businesses, families and individuals. AMS serves customers in 34 states through partnerships with professional, independent agents and high-quality health care providers. AMS provides coverage to 1.2 million lives. AMS' Internet address There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name.  is http://www.amschoices.com

UNITED WISCONSIN SERVICES, INC. is a leading managed care company with the largest health maintenance organization membership in Wisconsin, and substantial operations in specialty managed care products and services, including a large dental HMO, as well as life, workers' compensation, managed behavioral health services, and health care information services See Information Systems. . United Wisconsin Services' Internet address is http://www.uwz.com

The total number of lives served by United Wisconsin Services operations as of June 30, 1998 include:

AMS Small Group Products
     Medical                  577,520
     Dental                   411,364
     Life                     228,832
     Other                     25,539
     HMO Products             297,908


Specialty Managed Care Products
     Behavioral Health        913,479
     Dental HMO               168,044
     Life                     154,033
     Disability                99,457
     Workers' Compensation     53,509


Cautionary Statement: This news release contains forward-looking statements with respect to the financial condition, results of operations and business of United Wisconsin Services, Inc. and the proposed spinoff. Such forward-looking statements are subject to inherent risks and uncertainties that may cause actual results of events to differ materially from those contemplated by such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include rising health care costs, business conditions and competition in the managed care industry, developments in health care reform, inability to market products as described and other regulatory issues.

UNITED WISCONSIN SERVICES, INC. (UWZ)
                                                       1998            1997


Quarter ending June 30:
     Health Services Revenues                    $231,631,000    $247,915,000
     Net Income Continuing Operations                 392,000       1,471,000
     Net Income Discontinued Operations (a)         5,822,000       4,092,000
     Net Income                                     6,214,000       5,563,000


Share earnings (diluted):
          Net Income Continuing Operations               0.02            0.09
          Net Income (a)                                 0.37            0.33


Six months ending June 30:
     Health Services Revenues                    $471,390,000    $508,293,000
     Net Income Continuing Operations               1,943,000         640,000
     Net Income Discontinued Operations (a)        10,662,000       8,293,000
     Net Income                                    12,605,000       8,933,000


Share earnings (diluted):
          Net Income Continuing Operations               0.12            0.04
          Net Income (a)                                 0.75            0.54


(a) Excludes transaction costs of $4.9 million associated with the spin
         off of the HMO and Specialty business operations.
                       UNITED WISCONSIN SERVICES, INC.
                      CONSOLIDATED STATEMENTS OF INCOME
                                 (UNAUDITED)
                                  Three months ended      Six months ended
                                       June 30,                June 30,
                                   1998        1997        1998        1997
                               (in thousands, except share and per share data)


Revenues:

Health services revenues:
        Premium revenue          $226,956    $240,722    $461,915    $493,915
        Other revenue               4,675       7,193       9,475      14,378
    Investment results              5,723       5,461      11,804      10,538
      Total Revenues              237,354     253,376     483,194     518,831


Expenses:
      Medical and other benefits  174,325     183,279     353,610     378,062


Selling, general and
       administrative expenses     57,693      62,964     116,735     130,311
      Interest expense (a)          2,336       2,409       4,707       4,627


Amortization of goodwill
      and other intangibles         2,195       2,023       4,435       4,024
      Total Expenses              236,549     250,675     479,487     517,024


Income From Continuing

Operations, Before
     Income Taxes                     805       2,701       3,707       1,807
    Income Tax Expense                413       1,230       1,764       1,167


Income From Continuing
     Operations (AMS)                 392       1,471       1,943         640


Income From Discontinued Operations:

Income from HMO and Specialty
       Operations, Net of Tax       5,822       4,092      10,662       8,293


Transaction Costs Associated
       with Spin Off                4,948           0       4,948           0
    Net Income                     $1,266      $5,563      $7,657      $8,933


Basic Earnings Per Common Share:
      Income from AMS Operations    $0.03       $0.09       $0.12       $0.04


Income from HMO and
       Specialty Operations          0.35        0.25        0.64        0.51


Income before Transaction
       Costs                         0.38        0.34        0.76        0.55


Transaction Costs Associated
       with Spin Off                 0.30        0.00        0.30        0.00
      Net Income Per Common Share   $0.08       $0.34       $0.46       $0.55


Basic Weighted average common
       shares outstanding      16,546,176  16,422,332  16,531,108  16,380,208


Diluted Earnings Per Common Share:
      Income from AMS Operations    $0.02       $0.09       $0.12       $0.04


Income from HMO and
       Specialty Operations          0.35        0.25        0.64        0.50


Income before Transaction
       Costs                         0.37        0.33        0.75        0.54


Transaction Costs Associated
       with Spin Off                 0.29        0.00        0.29        0.00


Diluted Net Income Per
       Common Share                 $0.08       $0.33       $0.46       $0.54


Diluted weighted average common
       shares outstanding      16,722,101  16,629,854  16,704,779  16,519,735
    Note (a):    Interest expense in AMS operations includes amounts related to a note which will be transferred to the HMO and Specialty Product business effective with the distribution. The interest expense on this note approximates $1.2 million per quarter, or $0.05 per share.


SOURCE United Wisconsin Services, Inc.
    -0-                             7/23/98


/CONTACT: Tom Lu1jak, Director, Corporate Communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise.  of United Wisconsin Services, 414-226-5756/

/Company News On-Call: http://www.prnewswire.com or fax, 800-758-5804, ext. 914096/

(UWZ)

CO: United Wisconsin Services, Inc.; American Medical Security Group, Inc. ST: Wisconsin IN: INS INS
abbr.
1. Immigration and Naturalization Service

2. International News Service

Noun 1. INS
 HEA SU: ERN

KG-JW -- MNTH023 -- 4799 07/23/98 14:23 EDT EDT
abbr.
Eastern Daylight Time


EDT Eastern Daylight Time

EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York

EDT 
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