Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTINUCARE CORPORATION REPORTS RESULTS
FOR THE YEAR ENDED FISCAL 2003
MIAMI, September 29, 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 fiscal year ended June 30, 2003.
Fiscal 2003 Results
In Fiscal 2003, medical services revenue was $101,409,690, compared with $95,350,313 in Fiscal 2002. Income from operations in Fiscal 2003 was $663,287 compared with $818,727 in Fiscal 2002. Loss from continuing operations was $292,098, or $.01 per share in Fiscal 2003, compared with a loss of $3,159,989 or $.08 per share in Fiscal 2002.
Income from discontinued operations in Fiscal 2003 was $350,696, or $.01 per share, as compared to a loss of $486,399, or $.01 per share in Fiscal 2002. Discontinued operations consist of a group of independent physician contracts terminated effective January 1, 2003.
Net income in Fiscal 2003 was $58,598, or $.00 per share, compared with a net loss of $3,646,388 or $.09 per share in Fiscal 2002.
Results for Three Months Ended June 30, 2003
For the three months ended June 30, 2003, medical services revenue was $26,700,858 compared with $24,724,527 for the three months ended June 30, 2002. Income from operations for the three months ended June 30, 2003 was $786,088 compared with $1,458,873 for the three months ended June 30, 2002. Income from continuing operations for the three months ended June 30, 2003 was $518,633, or $.01 per share, compared with income from continuing operations for the three months ended June 30, 2003 of $1,067,485, or $.03 per share.
Income from discontinued operations for the three months ended June 30, 2003 was $305,712, or $.01 per share, as compared to a loss of $135,157, or $.01 per share for the three months ended June 30, 2002.
Net income for the three months ended June 30, 2003 was $824,345, or $.02 per share, compared with $932,328, or $.02 per share, for the three months ended June 30, 2002.
Spencer Angel, President and CEO of Continucare, commented, “In 2003, we focused on enhancing the prospects of our core business. We anticipate that 2004 will involve continued evaluation of our operational performance as well as fine tuning the core business model.”
About Continucare Corporation
Continucare Corporation, www.continucare.com, 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, 2003 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
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CONTINUCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
| June 30, | ||||||||||||
| 2003 | 2002 | |||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 160,743 | $ | 180,410 | ||||||||
| Certificates of deposit, current | 101,258 | 100,813 | ||||||||||
| Accounts receivable, net of allowance for doubtful accounts of $4,823,000 and $4,807,000, respectively | 323,443 | 94,967 | ||||||||||
| Other receivables | 410,765 | 834,227 | ||||||||||
| Due from Medicare, net | 258,930 | — | ||||||||||
| Due from HMOs, net of a liability for incurred but not reported medical claims expense of approximately $13,014,000 and $12,480,000, respectively | 1,414,469 | 1,798,651 | ||||||||||
| Prepaid expenses and other current assets | 572,744 | 548,322 | ||||||||||
| Total current assets | 3,242,352 | 3,557,390 | ||||||||||
| Certificates of deposit | 30,000 | 60,000 | ||||||||||
| Assets related to discontinued operations | — | 6,646 | ||||||||||
| Equipment, furniture and leasehold improvements, net | 632,402 | 580,779 | ||||||||||
| Goodwill, net of accumulated amortization of approximately $3,661,000, | 14,663,392 | 14,663,392 | ||||||||||
| Managed care contracts, net of accumulated amortization of approximately $1,717,000 and $1,364,000, respectively | 1,793,431 | 2,146,243 | ||||||||||
| Deferred financing costs, net of accumulated amortization of $3,562,000 and $2,985,000, respectively | 518,382 | 435,375 | ||||||||||
| Other assets, net | 120,017 | 97,160 | ||||||||||
| Total assets | $ | 20,999,976 | $ | 21,546,985 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 683,488 | $ | 680,443 | ||||||||
| Accrued expenses | 2,283,048 | 2,400,410 | ||||||||||
| Liabilities related to discontinued operations, net | 110,345 | 629,789 | ||||||||||
| Credit Facility | 2,315,000 | 2,315,000 | ||||||||||
| Due to Medicare, net | — | 350,991 | ||||||||||
| Current portion of convertible subordinated notes payable | 233,716 | 273,896 | ||||||||||
| Current portion of long-term debt | 2,640,943 | 4,375,329 | ||||||||||
| Current portion of related party note payable | 63,854 | 63,854 | ||||||||||
| Accrued interest payable | 51,754 | 10,708 | ||||||||||
| Current portion of capital lease obligations | 70,913 | 107,479 | ||||||||||
| Total current liabilities | 8,453,061 | 11,207,899 | ||||||||||
| Deferred revenue | 3,850,000 | — | ||||||||||
| Capital lease obligations, less current portion | 125,606 | 42,171 | ||||||||||
| Convertible subordinated notes payable | 4,122,751 | 4,356,468 | ||||||||||
| Long-term debt, less current portion | 1,341,947 | 3,597,122 | ||||||||||
| Related party note payable, less current portion | 997,333 | 1,061,186 | ||||||||||
| Total liabilities | 18,890,698 | 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 June 30, 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 | (52,750,140 | ) | (52,808,738 | ) | ||||||||
| Treasury stock (2,996,192 shares at June 30, 2003 and 2002) | (5,424,701 | ) | (5,424,701 | ) | ||||||||
| Total shareholders’ equity | 2,109,278 | 1,282,139 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 20,999,976 | $ | 21,546,985 | ||||||||
CONTINUCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Periods Ended June 30 | ||||||||||||||||||||||||||||
| 2003 | 2002(1) | |||||||||||||||||||||||||||
| 4th Quarter | Year to Date | 4th Quarter | Year to Date | |||||||||||||||||||||||||
| Medical services revenue, net | $ | 26,700,858 | $ | 101,409,690 | $ | 24,724,527 | $ | 95,350,313 | ||||||||||||||||||||
| Other income | — | — | 150,000 | 150,000 | ||||||||||||||||||||||||
| Subtotal | 26,700,858 | 101,409,690 | 24,874,527 | 95,500,313 | ||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||
| Medical services: | ||||||||||||||||||||||||||||
| Medical claims | 19,296,643 | 74,046,265 | 16,816,730 | 69,340,067 | ||||||||||||||||||||||||
| Other | 3,230,593 | 12,953,301 | 3,268,703 | 12,457,814 | ||||||||||||||||||||||||
| Total medical services | 22,527,236 | 86,999,566 | 20,085,433 | 81,797,881 | ||||||||||||||||||||||||
| Payroll and employee benefits | 1,301,775 | 6,070,398 | 1,352,807 | 5,312,498 | ||||||||||||||||||||||||
| Provision for bad debts | 31,976 | 44,333 | 5,196 | 65,668 | ||||||||||||||||||||||||
| Professional fees | 278,717 | 807,222 | 210,478 | 1,404,337 | ||||||||||||||||||||||||
| General and administrative | 1,622,728 | 6,188,525 | 1,585,830 | 5,073,980 | ||||||||||||||||||||||||
| Depreciation and amortization | 152,338 | 636,359 | 175,910 | 1,027,222 | ||||||||||||||||||||||||
| Subtotal | 25,914,770 | 100,746,403 | 23,415,654 | 94,681,586 | ||||||||||||||||||||||||
| Income from operations | 786,088 | 663,287 | 1,458,873 | 818,727 | ||||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||||
| Interest income | 1,500 | 6,647 | 2,688 | 36,124 | ||||||||||||||||||||||||
| Interest expense | (268,955 | ) | (962,032 | ) | (394,076 | ) | (1,573,869 | ) | ||||||||||||||||||||
| Provision for Medicare settlement related to terminated operations | — | — | — | (2,440,971 | ) | |||||||||||||||||||||||
| Income (loss) from continuing operations | 518,633 | (292,098 | ) | 1,067,485 | (3,159,989 | ) | ||||||||||||||||||||||
| Income (loss) from discontinued operations | 305,712 | 350,696 | (135,157 | ) | (486,399 | ) | ||||||||||||||||||||||
| Net income (loss) | $ | 824,345 | $ | 58,598 | $ | 932,328 | $ | (3,646,388 | ) | |||||||||||||||||||
| Basic and diluted income (loss) per common share: | ||||||||||||||||||||||||||||
| Income (loss) from continuing operations per common share | $ | .01 | $ | (.01 | ) | $ | .03 | $ | (.08 | ) | ||||||||||||||||||
| Income (loss) from discontinued operations per common share | .01 | .01 | (.01 | ) | (.01 | ) | ||||||||||||||||||||||
| Net income (loss) per common share | $ | .02 | $ | — | $ | .02 | $ | (.09 | ) | |||||||||||||||||||
| (1) | These amounts have been adjusted to reflect the termination of certain lines of business as discontinued operations which are more fully discussed in Note 1—General of our Consolidated Financial Statements. |
CONTINUCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Year Ended June 30, | ||||||||||||
| 2003 | 2002 | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) | $ | 58,598 | $ | (3,646,388 | ) | |||||||
| (Income) loss from discontinued operations | (350,696 | ) | 486,399 | |||||||||
| Loss from continuing operations | (292,098 | ) | (3,159,989 | ) | ||||||||
| Depreciation and amortization, including amortization of deferred loan costs | 1,236,645 | 2,317,906 | ||||||||||
| Provision for bad debts | 44,333 | 65,668 | ||||||||||
| Gain on disposal of property and equipment and release from asset related liabilities | 500 | (28,642 | ) | |||||||||
| Director compensation paid through the issuance of restricted common stock | 123,000 | — | ||||||||||
| Gain on early extinguishment of debt | — | — | ||||||||||
| Changes in assets and liabilities, excluding the effect of acquisitions and disposals: | ||||||||||||
| Increase in accounts receivable | (272,809 | ) | (79,503 | ) | ||||||||
| (Increase) decrease in prepaid expenses and other current assets | (24,422 | ) | (242,061 | ) | ||||||||
| Decrease (increase) in other receivables | 423,462 | (70,590 | ) | |||||||||
| Increase in other assets | (29,629 | ) | (6,641 | ) | ||||||||
| Decrease in accounts payable and accrued expenses | (114,317 | ) | (399,151 | ) | ||||||||
| Decrease (increase) in Due from HMOs, net | 384,182 | (1,158,598 | ) | |||||||||
| Increase in due to/from Medicare, net | (137,695 | ) | 3,118,054 | |||||||||
| Increase (decrease) in accrued interest payable | 41,046 | (6,995 | ) | |||||||||
| Net cash provided by (used in) continuing operations | 1,382,198 | 349,458 | ||||||||||
| Net cash (used in) provided by discontinued operations | (84,189 | ) | (97,865 | ) | ||||||||
| Net cash provided by (used in) operating activities | 1,298,009 | 251,593 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Cash proceeds from disposal of property and equipment | 500 | — | ||||||||||
| Purchase of certificate of deposit | (70,000 | ) | — | |||||||||
| Proceeds from maturity of certificates of deposit | 99,555 | 26,187 | ||||||||||
| Property and equipment additions | (170,273 | ) | (185,599 | ) | ||||||||
| Net cash (used in) provided by continuing operations | (140,218 | ) | (159,412 | ) | ||||||||
| Net cash provided by discontinued operations | 3,593 | — | ||||||||||
| Net cash (used in) provided by investing activities | (136,625 | ) | (159,412 | ) | ||||||||
Continued on next page.
CONTINUCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
| For the Year Ended June 30, | ||||||||||
| 2003 | 2002 | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
| Payments on Convertible Subordinated Notes | (273,897 | ) | (273,896 | ) | ||||||
| Payments on Related Party Notes | (63,853 | ) | (63,854 | ) | ||||||
| Principal repayments under capital lease obligation | (112,256 | ) | (106,251 | ) | ||||||
| Payment of deferred financing costs | (15,000 | ) | (15,000 | ) | ||||||
| Repayment of Term and Revolving Notes | — | — | ||||||||
| Net increase in Credit Facility | — | 1,815,000 | ||||||||
| Advances from HMOs | 75,000 | — | ||||||||
| Payments on advances from HMOs | (75,000 | ) | (450,000 | ) | ||||||
| Third party assumption of capital lease obligation | (1,789 | ) | — | |||||||
| Repayments to Medicare per agreement | (632,750 | ) | (770,746 | ) | ||||||
| Net cash (used in) provided by continuing operations | (1,099,545 | ) | 135,253 | |||||||
| Net cash used in discontinued operations | (81,506 | ) | (418,494 | ) | ||||||
| Net cash used in financing activities | (1,181,051 | ) | (283,241 | ) | ||||||
| Net decrease in cash and cash equivalents | (19,667 | ) | (191,060 | ) | ||||||
| Cash and cash equivalents at beginning of fiscal year | 180,410 | 371,470 | ||||||||
| Cash and cash equivalents at end of fiscal year | $ | 160,743 | $ | 180,410 | ||||||
| SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||
| Stock issued for deferred financing costs | $ | 645,541 | $ | — | ||||||
| Stock issued as final consideration for a prior business combination | $ | — | $ | 18 | ||||||
| Repayment plans issued for refunds due to Medicare for overpayments | $ | 694,800 | $ | 3,267,108 | ||||||
| Medicare repayment plan canceled due to settlement of cost report reopening | $ | 222,574 | $ | — | ||||||
| Purchase of furniture and fixtures with proceeds of capital lease obligations | $ | 167,258 | $ | 48,784 | ||||||
| Cash paid for interest | $ | 325,337 | $ | 266,945 | ||||||