Continucare 8-K Continucare Corporation Reports Results for the Third Quarter Fiscal 2003

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTINUCARE CORPORATION REPORTS RESULTS
FOR THE THIRD QUARTER FISCAL 2003

MIAMI, May 15, 2003 — Continucare Corporation (AMEX: CNU), a provider of outpatient healthcare and home health services through managed care, Medicare direct and fee for service arrangements, in the Florida market, reported results for its third quarter ended March 31, 2003.

Third Quarter Results

For the third quarter, medical services revenue was $25,358,084, compared with $25,202,455 in the last year’s third quarter. Income from operations was $83,724 compared with $491,861 in the same period a year ago. Income from continuing operations was $4,006, or $.00 per share, compared with a loss of $2,309,373 or $.06 per share in the same period last year. The third quarter of fiscal 2002 included in other income and expense a provision of $2,440,971 for a Medicare settlement related to operations terminated in fiscal 1999. Income from discontinued operations was $294,370, or $.01 per share, as compared to a loss of $113,213, or $.00 per share, in the same period last year. Net income for the quarter was $298,376, or $.01 per share, compared with a net loss of $2,442,586 or $.06 per share in the same period last year.

Discontinued operations consists of a group of independent physician contracts terminated effective January 1, 2003.

Spencer Angel, President and CEO of Continucare, commented, “We continue to evaluate our operational performance to further enhance future prospects of our core business.”

Nine-Month Results

For the nine months ended March 31, 2003, medical services revenue was $74,708,832, compared with $70,625,785 in the last year’s nine-month period. The increase was primarily the result of increases in the premium revenue per member and negotiated increases in the percentage of premium revenue we receive for certain of our members. Loss from operations for the nine months was $122,802 compared with a loss of $640,147 in the same period a year ago. Loss from continuing operations for the nine months was $810,732, or $.02 per share, compared with a loss of $4,227,475 or $.11 per share in the same period last year, including the provision of $2,440,971 for a Medicare settlement noted above. Income from discontinued operations for the nine months was $44,982, or $.00 per share, as compared to a loss of $351,241, or $.01 per share, in the same period last year. Net loss for the nine months was $765,750, or $.02 per share, compared with a net loss of $4,578,716 or $.12 per share in the same period last year.

About Continucare Corporation

Continucare Corporation, headquartered in Miami, Florida, is a holding company with subsidiaries engaged in the business of providing outpatient physician care and home healthcare services.

Except for historical matters contained herein, statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors and others are cautioned that forward-looking statements include risks and uncertainties, which may affect our business and prospects and cause actual results to differ materially from those set forth in the forward-looking statements. These factors include, without limitation, our ability to service our indebtedness and respond to capital needs, pricing pressures exerted on us by managed care organizations, the level of payment we receive from governmental programs and other third party payors, future legislation and changes in governmental regulations, general economic conditions and uncertainties generally associated with the health care business. These and other applicable risks, cautionary statements and factors that could cause actual results to differ from the Company’s forward-looking statements are included in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2002 and other filings with the SEC. We undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date hereof.

Contact:

Continucare Corporation, Miami
Spencer J. Angel
305/350-7543
spencer_angel@continucare.com

-tables to follow-

CONTINUCARE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

				March 31, 2003			June 30, 2002
				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	116,194		$	180,410
	Restricted cash related to leases, current				30,757			100,813
	Accounts receivable, net of allowance for doubtful accounts of $4,819,000 and $4,807,000, respectively				252,118			94,967
	Due from Medicare, net				189,841			–
	Other receivables				418,743			834,227
	Due from HMOs, net of a liability for incurred but not reported medical claims expense of approximately $12,480,000 and $11,818,000, respectively				1,327,022			1,798,651
	Prepaid expenses and other current assets				574,258			548,322
			Total current assets		2,908,933			3,557,390
Assets related to discontinued operations					–			6,646
Equipment, furniture and leasehold improvements, net					513,573			580,779
Restricted cash related to leases					30,000			60,000
Goodwill, net of accumulated amortization of approximately $3,661,000 at March 31, 2003 and June 30, 2002					14,663,392			14,663,392
Managed care contracts, net of accumulated amortization of approximately $1,628,000 and $1,364,000, respectively					1,881,634			2,146,243
Cost in excess of intangible assets acquired, net of accumulated amortization of approximately $4,017,000 and $4,012,000, respectively					10,711			15,788
Deferred financing costs, net of accumulated amortization of approximately $3,420,000 and $2,985,000, respectively					645,542			435,375
Other assets, net					101,528			81,372
			Total assets	$	20,755,313		$	21,546,985
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	542,730		$	680,443
	Accrued expenses				1,864,391			1,841,360
	Accrued salaries and benefits				1,024,451			559,050
	Liabilities related to discontinued operations, net				416,322			629,789
	Credit Facility				1,800,000			2,315,000
	Due to Medicare, net				–			350,991
	Current portion of convertible subordinated notes payable				253,806			273,896
	Current portion of long term debt				6,743,337			4,375,329
	Current portion of related party notes payable				63,854			63,854
	Accrued interest payable				22,185			10,708
	Current portion of capital lease obligations				47,593			107,479
			Total current liabilities		12,778,669			11,207,899
Capital lease obligations, less current portion					55,786			42,171
Convertible subordinated notes payable, less current portion					4,171,135			4,356,468
Long term debt, less current portion					1,435,534			3,597,122
Related party notes payable, less current portion					1,029,259			1,061,186
			Total liabilities		19,470,383			20,264,846
Commitments and contingencies
Shareholders’ equity:
	Common stock; $0.0001 par value; 100,000,000 shares authorized 45,375,194 shares issued and 42,379,001 shares outstanding at March 31, 2003 and 42,630,794 shares issued and 39,634,601 shares outstanding at June 30, 2002				4,239			3,964
	Additional paid-in capital				60,279,880			59,511,614
	Accumulated deficit				(53,574,488	)		(52,808,738	)
	Treasury stock (2,996,193 shares)				(5,424,701	)		(5,424,701	)
		Total shareholders’ equity			1,284,930			1,282,139
		Total liabilities and shareholders’ equity		$	20,755,313		$	21,546,985

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

				Three Months Ended March 31,
				2003			2002
Medical services revenue, net				$	25,358,084		$	25,202,455
Expenses
		Medical services:
			Medical claims		18,345,344			18,004,434
			Other		3,364,276			3,406,549
		Total medical services			21,709,620			21,410,983
		Payroll and employee benefits			1,633,576			1,426,863
		Provision for bad debts			(37,755	)		24,023
		Professional fees			200,034			686,147
		General and administrative			1,622,033			993,208
		Depreciation and amortization			146,852			169,370
			Subtotal		25,274,360			24,710,594
Income from operations					83,724			491,861
Other income (expense)
		Interest income			1,341			3,551
		Interest expense			(81,059	)		(363,814	)
		Provision for Medicare settlement related to terminated operations			–			(2,440,971	)
Income (loss) from continuing operations					4,006			(2,309,373	)
Income (loss) from discontinued operations					294,370			(113,213	)
Net income (loss)				$	298,376		$	(2,422,586	)
Basic and diluted income (loss) per common share
	Income (loss) from continuing operations			$	–		$	(.06	)
	Income from discontinued operations				.01			–
Net income (loss)				$	.01		$	(.06	)
Basic weighted average number of common shares outstanding					40,555,094			39,479,045
Diluted weighted average number of common shares outstanding					45,380,289			39,479,045

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

				Nine Months Ended March 31,
				2003			2002
Medical services revenue, net				$	74,708,832		$	70,625,785
Expenses
		Medical services:
			Medical claims		54,749,621			52,523,307
			Other		9,722,708			9,189,141
		Total medical services			64,472,329			61,712,448
		Payroll and employee benefits			4,768,623			3,959,691
		Provision for bad debts			12,357			60,472
		Professional fees			528,508			1,193,859
		General and administrative			4,565,797			3,488,150
		Depreciation and amortization			484,020			851,312
			Subtotal		74,831,634			71,265,932
Loss from operations					(122,802	)		(640,147	)
Other income (expense)
		Interest income			5,147			33,436
		Interest expense			(693,077	)		(1,179,793	)
		Provision for Medicare settlement related to terminated operations			–			(2,440,971	)
Loss from continuing operations					(810,732	)		(4,227,475	)
Income (loss) from discontinued operations					44,982			(351,241	)
Net loss				$	(765,750	)	$	(4,578,716	)
Basic and diluted loss per common share
	Loss from continuing operations			$	(.02	)	$	(.11	)
	Loss from discontinued operations				–			(.01	)
Net loss				$	(.02	)	$	(.12	)
Basic and diluted weighted average number of common shares outstanding					40,251,186			39,465,988

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

					Nine Months Ended March 31,
					2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES
			Net loss		$	(765,750	)	$	(4,578,716	)
			(Income) loss from discontinued operations			(44,982	)		351,241
			Loss from continuing operations			(810,732	)		(4,224,475	)
			Adjustments to reconcile net loss to cash provided by operating activities:
				Depreciation and amortization, including amortization of deferred loan costs		921,183			1,824,089
				Provision for bad debts		12,357			60,472
				Loss (gain) on disposal of assets and release from capital lease		500			(28,642	)
				Director compensation paid through the issuance of restricted common stock		123,000			–
			Changes in operating assets and liabilities:
				Increase in accounts receivable		(169,508	)		(128,530	)
				Increase in prepaid expenses and other current assets		(25,936	)		(169,606	)
				Decrease in other receivables		415,484			205,117
				Increase in other assets		(20,156	)		(4,466	)
				Decrease in due from HMO’s, net		471,629			321,459
				Increase in due to/from Medicare, net		153,968			2,515,684
				Increase in accounts payable and accrued expenses		350,719			(9,180	)
				Increase (decrease) in accrued interest payable		11,477			(2,679	)
		Net cash provided by continuing operations				1,433,985			356,243
		Net cash used in discontinued operations				(80,333	)		(206,872	)
Net cash provided by operating activities						1,353,652			149,371
CASH FLOWS FROM INVESTING ACTIVITY
			Proceeds from equipment disposals			500			–
			Proceeds from maturities of restricted cash			100,056			27,738
			Property and equipment additions			(99,798	)		(156,331	)
Net cash provided by (used in) investing activity						758			(128,593	)
CASH FLOWS FROM FINANCING ACTIVITIES
			Payments on convertible subordinated notes			(205,423	)		(205,422	)
			Payments on related party notes			(31,927	)		(31,927	)
			Principal repayments under capital lease obligation			(94,601	)		(83,516	)
			Third-party assumption of capital lease obligation			(1,789	)		–
			Net (decrease) increase in Credit Facility			(515,000	)		1,300,000
			Advances from HMOs			75,000			–
			Payment on advances from HMOs			(75,000	)		(450,000	)
			Repayments to Medicare per agreement			(488,380	)		(479,962	)
	Net cash (used in) provided by continuing operations					(1,337,120	)		49,173
	Net cash used in discontinued operations					(81,506	)		–
Net cash (used in) provided by financing activities						(1,418,626	)		49,173
Net (decrease) increase in cash and cash equivalents						(64,216	)		69,951
Cash and cash equivalents at beginning of period						180,410			371,470
Cash and cash equivalents at end of period					$	116,194		$	441,421
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Stock issued for deferred financing costs					$	645,540		$	–
Note payable issued for refunds due to Medicare for overpayments					$	694,800		$	2,915,259
Purchase of furniture and fixtures with proceeds of capital lease obligations					$	56,463		$	36,252