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HEALTHSOURCE, INC. REPORTS 26 PERCENT INCREASE IN EARNINGS PER SHARE AND 54 PERCENT INCREASE IN NET INCOME FOR 1991

 HEALTHSOURCE, INC. REPORTS 26 PERCENT INCREASE IN EARNINGS PER SHARE
 AND 54 PERCENT INCREASE IN NET INCOME FOR 1991
 CONCORD, N.H., Feb. 12 /PRNewswire/ -- Healthsource, Inc. (NASDAQ: HLTH), a leading operator of HMOs and managed health care services, today reported record earnings and earnings per share for the fourth quarter and year ended Dec. 31, 1991, on a 28 percent increase in outstanding shares resulting from a 1.75 million share public offering in May 1991.
 Fourth Quarter Earnings -- 1991
 Net income for the three month period ended Dec. 31, 1991 was up 38 percent to $3.4 million from the $2.4 million earned in the three month period ended Dec. 31, 1990. Earnings per share on a fully diluted basis increased 8 percent to 42 cents per share vs. 39 cents per share a year ago. Total revenues for the fourth quarter reached $23.9 million compared with $17.2 million for the fourth quarter in 1990.
 Year Ended Dec. 31, 1991
 For the 12 month period ended Dec. 31, 1991, net income increased 54 percent to $12.7 million from $8.3 million in the previous year and earnings per share on a fully diluted basis increased 26 percent to $1.70 compared with $1.35 in 1990. Revenues for the period reached $87.5 million, up 43 percent from $61.4 million for the comparable period of 1990.
 January Enrollment
 The company has completed its January enrollment and reported an overall increase of 33 percent in its HMO risk and indemnity businesses from 113,000 members in January 1991 to 150,600 members in January 1992 (including members at recently acquired Tennessee First Health Plan for both periods). January is the month in which most of the company's new enrollment and renewal activity takes place. Healthsource New Hampshire, the company's largest wholly owned subsidiary, increased membership by 19 percent. The average premium rate increase among the plans was approximately 10 percent. In addition to the 150,600 HMO risk and indemnity members, the company's non-risk PPO and point-of-service membership increased 67 percent to more than 50,000 individuals.
 Commenting on the company's financial performance and January 1992 enrollment, Norman C. Payson, MD, president and chief executive officer said, "Our earnings in 1991 reflect the company's continued success in controlling health care costs. This was demonstrated once again by our ability to achieve medical loss ratios which are among the very best in the industry. The earnings results were accomplished in spite of some extraordinary medical cases at the end of 1991 and legal costs associated with successfully defending an antitrust lawsuit. On a per share basis, earnings growth was not as rapid due to the company's 1.75 million share equity offering on May 1, 1991."
 The company intends to use its strengthened equity capital base to pursue additional investment in secondary markets where the company can apply its methodology as recently demonstrated in North Carolina. "There, after our first year of investment in Coordinated Medical Services of North Carolina, the medical loss ratio improved from 88 percent to 77 percent," said Dr. Payson.
 In reviewing the company's outlook for 1992, Dr. Payson said, "The company is well positioned for growth in 1992 since our flexible benefit options and health care costs containment systems give us a significant competitive pricing advantage. We have seen this at work in the January enrollment growth as employers are now more sensitive to premium pricing in the current difficult economic climate. The economy is a double-edge sword, however, and we have maintained a conservative outlook for 1992 because of the effects of lower interest rates on our interest income and the potential for layoffs by New England employers. The economic conditions in the other areas in which we operate are stronger and mitigate the effects of the economy in our New Hampshire and Maine companies."
 Healthsource, Inc. sponsors or manages HMOs in New England, upstate New York and the Southeastern United States. It owns EBPA, one of the largest third-party claims administrators in New England. Healthsource also provides utilization review services and preferred provider networks primarily to self-insured employer plans and Blue Cross and Blue Shield of Vermont. In December 1991, Healthsource announced a letter of intent to purchase a 40,000 member PPO and HMO subsidiary of the United Farm Bureau Life Insurance Company in Indianapolis, Ind.
 HEALTHSOURCE, INC. (NASDAQ)
 Three Months Ended Year Ended
 Dec. 31 Dec. 31
 1991 1990 1991 1990
 (unaudited) (unaudited) (unaudited)
 Revenues:
 Premiums $19,758,077 $13,284,784 $70,875,189 $52,999,042
 Administrative fees 2,579,056 2,404,376 10,017,723 3,995,502
 Management fees 1,522,126 1,502,914 6,624,023 4,403,730
 Total revenue 23,859,259 17,192,074 87,516,935 61,398,274
 Expenses:
 Health care 14,653,307 9,327,405 50,700,114 38,240,157
 Premium tax 391,186 265,688 1,397,346 1,059,973
 Selling, general
 & administrative 6,392,031 5,036,333 23,977,433 13,564,396
 Total expenses 21,436,524 14,629,426 76,074,893 52,864,526
 Operating income 2,422,735 2,562,648 11,442,042 8,533,748
 Interest and
 other income 1,224,561 590,607 4,011,297 2,712,855
 Interest and
 other expenses (17,231) 86,471 (72,193) (226,635)
 Income bef. equity item,
 provision for income
 taxes and minority
 interest 3,630,065 3,239,726 15,381,146 11,019,968
 Equity in income
 of unconsolidated
 affiliates 777,217 351,029 2,097,742 1,036,838
 Income bef. provision
 for income taxes and
 minority interest 4,407,282 3,590,755 17,478,888 12,056,806
 Provision for income
 taxes (1,036,000) (1,092,938) (4,646,000)(3,690,000)
 Minority interest in net
 earnings of consolidated
 entity --- (56,483) (132,888) (99,502)
 Net income $3,371,282 $2,441,334 $12,700,000 $8,267,304
 Net income per share
 Primary 42 cents 39 cents $1.70 $1.42
 Fully diluted 42 cents 39 cents 1.70 1.35
 Weighted avg. number
 of common and common
 equivalent shares
 outstanding:
 Primary 8,056,000 6,245,666 7,466,000 5,825,540
 Fully diluted 8,099,000 6,255,471 7,483,000 6,249,900
 HEALTHSOURCE, INC. (NASDAQ)
 Selected Balance Sheet Data
 Dec. 31, Dec. 31,
 1991(a) 1990
 (unaudited)
 Cash, cash equivalents, and
 current marketable securities $63,103,514 $22,517,563
 Current assets 69,927,651 26,260,121
 Long-term marketable securities 18,535,321 9,332,131
 Total assets 115,240,060 50,713,540
 Medical claims payable 9,049,181 4,933,340
 Current liabilities 13,341,685 8,334,672
 Shareholders' equity 101,099,932 40,160,621
 (a) The selected balance sheet data includes the following amounts
 related to Tennessee First Health Plan: Cash, $2,942,165;
 current assets, $3,818,856; total assets, $4,054,388;
 medical claims payable, $2,559,714; and current liabilities,
 $3,223,349.
 Commonly Used Ratios Dec. 31, Dec. 31,
 1991 1990
 (unaudited) (unaudited)
 Book value per common shares
 outstanding (7,955,000 at
 Dec. 31, 1991 and 6,199,000
 at Dec. 31, 1990) $12.71/share $6.48/share
 Working capital $56.6 million $17.9 million
 Current ratio 5.2 3.2
 Days of health care expense
 in medical claims payable
 at Healthsource New Hampshire
 (medical claims payable
 divided by average daily
 health care expenses for the
 twelve months ended Dec. 31,
 1991 and the year ended
 Dec. 31, 1990) 47.4 days 47.1 days
 -0- 2/12/92
 /CONTACT: Thomas Congoran, chief financial officer, or Tracey Turner, shareholder relations, 603-225-5077, both of Healthsource, Inc.; or Kerry Thalheim, 212-661-8030, or Kathy Waller, 312-266-7800, of The Financial Relations Board, Inc./
 (HLTH) CO: Healthsource, Inc. ST: New Hampshire IN: HEA SU: ERN


DD-EG -- NE007 -- 9227 02/12/92 12:04 EST
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