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HEALTHSOURCE, INC. REPORTS 38 PERCENT INCREASE IN EARNINGS PER SHARE;

HEALTHSOURCE, INC. REPORTS 38 PERCENT INCREASE IN EARNINGS PER SHARE;
 NET INCOME INCREASES 40 PERCENT; REVENUE INCREASES 135 PERCENT
 CONCORD, N.H., Nov. 5 /PRNewswire/ -- Healthsource, Inc. (NASDAQ: HLTH), a leading operator of HMOs and managed health care services, today reported that net income for the three month period ended Sept. 30, 1992 was up 40.3 percent to $4.5 million from the $3.2 million earned in the three month period ended Sept. 30, 1991. Revenues Reach Record Levels
 Earnings per share on a fully diluted basis increased 37.5 percent to 55 cents for the three months ended Sept. 30, 1992 vs. 40 cents for the same period a year ago. Total revenues for the quarter increased 135.1 percent to $50.8 million compared with $21.6 million for the third quarter in 1991.
 For the nine month period ended Sept. 30, 1992, net income increased 31.9 percent to $12.3 million from $9.3 million in the previous year and earnings per share on a fully diluted basis increased 18.0 percent to $1.51 compared with $1.28 in 1991. Weighted average shares outstanding on a fully diluted basis increased 12.0 percent primarily as a result of the sale of 1.75 million shares of common stock in a public offering during May 1991. Revenues for the period reached $125.6 million, up 97.3 percent from $63.7 million for the comparable period of 1991. Membership Increased 93 Percent
 Norman C. Payson, M.D., chief executive officer of Healthsource, Inc. said today, "The quarter's financial results reflect the company's successful implementation of its growth strategy, which combines membership growth in our existing plans and growth through acquisition of other health plans. This has resulted in an overall increase in membership of 93 percent since the third quarter last year. Enrollment has grown 40 percent from the existing plans alone. Despite this rapid growth pace, our medical loss ratios remain among the best in the industry. The company's growth momentum and ability to control health care costs will likely serve us well as employers and governmental agencies more aggressively seek managed care strategies for health care affordability in the underpenetrated markets we serve."
 On a separate matter, the company reported that its previously announced intention to acquire the Delmarva Health Plan has been indefinitely postponed. Dr. Payson said, "While we believe Delmarva Health Plan has potential, we have determined that its purchase does not currently fit with our corporate objectives. We may, however, reconsider such a potential purchase at a future date."
 Healthsource, Inc. sponsors or manages HMOs in New Hampshire, Maine, South Carolina, North Carolina, Tennessee, Indiana and New York and 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.
 HEALTHSOURCE, INC.
 Financial Summary
 (unaudited)
 Three Months Ended
 Sept. 31,
 1992 1991
 Revenue:
 Premiums $45,079,075 $17,705,271
 Administrative and managed care fees 3,919,128 2,350,022
 Management fees 1,810,712 1,551,959
 Total revenue 50,808,915 21,607,252
 Expenses:
 Health care 34,693,210 12,312,980
 Premium tax 558,155 337,915
 Selling, general and administrative 9,973,003 5,632,305
 Depreciation and amortization 947,270 521,914
 Total expenses 46,171,638 18,805,114
 Operating income 4,637,277 2,802,138
 Interest and other income 1,217,932 1,617,021
 Interest and other expense (3,074) (19,421)
 Income before provision
 for income taxes and equity
 items 5,852,135 3,949,738
 Equity in income of unconsolidated
 affiliates 693,509 313,864
 Provision for income taxes (2,066,000) (1,088,000)
 Minority interest in net earnings
 of consolidated entity (24,180) ----
 Net income $4,455,464 $3,175,602
 Net income per share:
 Primary 55 cents 40 cents
 Fully diluted 55 cents 40 cents
 Weighted average number of common
 and common equivalent shares
 outstanding:
 Primary 8,132,000 8,035,000
 Fully diluted 8,155,000 8,035,000
 Nine Months Ended
 Sept. 30,
 1992 1991
 Revenue:
 Premiums $109,814,849 $51,117,112
 Administrative and managed care fees 10,306,924 7,438,667
 Management fees 5,443,163 5,101,897
 Total revenue 125,564,936 63,657,676

 Expenses:
 Health care 83,624,974 36,046,807
 Premium tax 1,638,612 1,006,160
 Selling, general and administrative 25,966,173 16,271,503
 Depreciation and amortization 2,590,395 1,313,899
 Total expenses 113,820,154 54,638,369
 Operating income 11,744,782 9,019,307
 Interest and other income 3,532,391 2,786,736
 Interest and other expense (16,457) (54,962)
 Income before provision
 for income taxes and equity
 items 15,260,716 11,751,081
 Equity in income of unconsolidated
 affiliates 2,130,165 1,320,525
 Provision for income taxes (5,031,000) (3,610,000)
 Minority interest in net earnings
 of consolidated entity (51,223) (132,888)
 Net income $12,308,658 $9,328,718
 Net income per share:
 Primary $1.51 $1.28
 Fully diluted 1.51 1.28
 Weighted average number of common
 and common equivalent shares
 outstanding:
 Primary 8,131,000 7,268,600
 Fully diluted 8,150,000 7,276,700
 SELECTED BALANCE SHEET
 Sept. 30, Dec. 31,
 1992 1991
 (Unaudited)
 Cash, cash equivalents, and
 current marketable securities $64,491,762 $63,103,514
 Current assets 73,441,292 69,927,651
 Long-term marketable securities 26,974,231 18,535,321
 Total assets 139,176,236 115,240,060
 Medical claims payable 18,767,072 9,049,181
 Current liabilities 24,610,891 13,341,685
 Shareholders' equity 113,649,540 101,099,932
 COMMON USED RATIOS
 (Unaudited) Sept. 30, Dec. 31,
 1992 1991
 Book value per common shares
 outstanding (7,971,000) at
 Sept. 30, 1992 and
 7,955,000 at Dec. 31, 1991 $14.26/share $12.71/share
 Working capital $48.8 million $56.6 million
 Current ratio 3.0 5.2
 Days of health care expense
 in medical claims payable
 (medical claims payable divided 49.8 days 47.4 days(a)
 by average daily health care
 expenses for the three months
 ended Sept. 30, 1992 and the
 year ended Dec. 31, 1991)
 ---
 NOTE: (a) Dec. 31, 1991 calculation includes medical claims payable and medical expenses for Healthsource New Hampshire, Inc. only.
 -0- 11/05/92
 /CONTACT: Thomas Congoran, chief financial officer, or Tracey Turner, shareholder relations, of Healthsource, 603-225-5077; or Kerry Thalheim, 212-661-8030, or Kathy Waller, 312-266-7800, of The Financial Relations Board, Inc. for Healthsource/
 (HLTH) CO: Healthsource, Inc. ST: New Hampshire IN: HEA SU: ERN


CH -- NE009 -- 3031 11/05/92 11:15 EST
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Date:Nov 5, 1992
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