Continucare 8-K Financial statements and exhibits

Exhibit 99.1

CONTINUCARE CORPORATION REPORTS
FINANCIAL RESULTS FOR SECOND QUARTER
QUARTER OF FISCAL 2004

     Miami, FL February 13, 2004 – Continucare Corporation (AMEX: CNU) today reported financial results for its second quarter of fiscal 2004.

Second Quarter Results

     For the three months ended December 31, 2003, medical services revenue was $24.2 million, compared to $24.0 million for the three months ended December 31, 2002. Income from operations during the second fiscal quarter of 2004 was $722,000 compared to income of $454,000 in the same period one year ago. Income from continuing operations in the second quarter of fiscal 2004 was $479,000 compared to income of $235,000 in the year-ago period. Loss from discontinued operations during the second fiscal quarter was $834,000 compared to a loss of $607,000 in the year-ago period. Net loss for the second quarter of fiscal 2004 was $355,000, or $.01 per diluted share, compared to a net loss of $372,000, or $.01 per diluted share, one year ago.

Six-Month Results

     For the six months ended December 31, 2003, medical services revenue was $49.1 million compared to $47.5 million for the six months ended December 31, 2002. Income from operations during the six-month period was $1.6 million compared to $779,000 in the same period one year ago. Income from continuing operations during the six-month period was $3.3 million compared to $173,000 in the year-ago period. Loss from discontinued operations during the six-month period was $1.2 million compared to a loss of $1.2 million in the same period one year ago. Net income for the six-month period was $2.2 million, or $.04 per diluted share, compared to a loss of $1.1 million, or $.03 per diluted share, one year ago.

     Income from continuing operations during the six months ended December 31, 2003 includes other income of $2.2 million relating to the settlement of a Medicare obligation related to rehabilitation clinics that were previously operated by Continucare and which were sold in 1999. The Centers for Medicare & Medicaid Services (“CMS”) had alleged that Medicare overpayments were made relating to services rendered by these clinics and other related clinics during a period in which they were operated by entities other than Continucare. In an effort to resolve the matter with CMS and avoid aggressive collection efforts that could disrupt its business, in 2002 Continucare entered into a memorandum of understanding pursuant to which it agreed to begin making payments to resolve the liability while also retaining the right to dispute the alleged overpayments. Continucare requested that the liability assessed by CMS be reconsidered and in October 2003 it was notified by the Medicare Fiscal Intermediary that the liability was reduced from the originally asserted amount of $2.4 million to approximately $200,000.

     The discontinued operations reflected in Continucare’s financial results relate to its home health operations which were disposed of in a series of transactions completed in the third fiscal

quarter of fiscal 2004 and a group of independent physician contracts terminated effective January 1, 2003.

     Commenting on the financial results, Richard C. Pfenniger, Jr., Continucare’s Chief Executive Officer said, “The most significant development during our second fiscal quarter relates to the disposition of our home health agencies. These businesses have historically incurred operating losses and experienced negative cash flow. Losses associated with these businesses continued in our second fiscal quarter and will to a lesser extent also continue in the current fiscal quarter. The disposition of these businesses, however, has been completed and we will substantially complete the remaining administrative wrap-up related to these businesses in the current quarter, after which time we should be able to focus all of resources on our core activity of providing primary care medical services.”

     Continucare Corporation (www.continucare.com), headquartered in Miami, Florida, is a holding company with subsidiaries engaged in the business of providing outpatient physician care services through managed care, Medicare direct and fee for service arrangements.

     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, the ability to achieve expected levels of patient volumes and control the costs of providing services, pricing pressures exerted on us by managed care organizations as they seek to contain health care costs, the level of payment we receive from governmental programs and other third party payors, the ability to attract and retain qualified medical professionals, future legislation changes in governmental regulations, including possible changes in Medicare programs that may impact reimbursements to health care providers and insurers, technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health care, changes in revenue mix and the ability to enter into and renew managed care provider arrangements on acceptable terms, delays in receiving payments, the collectibility of uninsured accounts and deductible and co-pay amounts, 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 our forward-looking statements are included in our 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:

Richard C. Pfenniger, Jr.
Chief Executive Officer
Continucare Corporation
80 Southwest 8th Street
Miami, Florida 33130
(305) 350-7557

-tables to follow-

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CONTINUCARE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

				Three-Months Ended						Six-Months Ended
				12/31/03			12/31/02			12/31/03			12/31/02
Medical services revenue, net				$	24,173,674		$	23,988,134		$	49,107,176		$	47,463,982
Management fee revenue					194,562			–			324,459			–
		Subtotal			24,368,236			23,988,134			49,431,635			47,463,982
Expenses
		Medical services:
			Medical claims		18,141,504			18,401,034			36,948,229			36,404,278
			Other direct costs		2,890,296			2,685,495			5,751,879			5,372,822
		Total medical services			21,031,800			21,086,529			42,700,108			41,777,100
		Administrative payroll and employee benefits			993,101			975,856			1,886,316			1,931,484
		Professional fees			246,277			59,085			441,122			308,059
		General and administrative			1,588,967			1,267,112			2,870,480			2,364,887
		Gain on extinguishment of debt			(350,000	)		–			(350,000	)		–
		Depreciation and amortization			136,560			145,766			269,133			303,174
			Subtotal		23,646,705			23,534,348			47,817,159			46,684,704
Income from operations					721,531			453,786			1,614,476			779,278
Other income (expense)
	Interest income				1,421			1,952			2,076			3,727
	Interest expense				(243,712	)		(221,096	)		(488,601	)		(609,942	)
	Medicare settlement related to terminated operations				–			–			2,218,278			–
Income from continuing operations					479,240			234,642			3,346,229			173,063
Income (loss) from discontinued operations:
	Home health operations (including loss on disposal of $457,000)				(834,048	)		(509,231	)		(1,272,778	)		(987,800	)
	Terminated IPA				–			(97,898	)		73,091			(249,386	)
			Subtotal		(834,048	)		(607,129	)		(1,199,687	)		(1,237,186	)
Net income (loss)				$	(354,808	)	$	(372,487	)	$	2,146,542		$	(1,064,123	)
Basic net income (loss) per common share:
	Income from continuing operations			$	.01		$	–		$	.08		$	–
	Loss from discontinued operations				(.02	)		(.01	)		(.03	)		(.03	)
Net income (loss)				$	(.01	)	$	(.01	)	$	.05		$	(.03	)
Diluted net income (loss) per common share:
	Income from continuing operations			$	.01		$	–		$	.07		$	–
	Loss from discontinued operations				(.02	)		(.01	)		(.03	)		(.03	)
Net income (loss)				$	(.01	)	$	(.01	)	$	.04		$	(.03	)
Basic weighted average number of common shares outstanding					42,379,001			40,500,905			42,379,001			40,102,536
Diluted weighted average number of common shares outstanding					48,191,924			40,500,905			47,755,168			40,102,536

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CONTINUCARE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

					December 31, 2003			June 30, 2003
					(Unaudited)
				ASSETS
Current assets:
	Cash and cash equivalents				$	181,365		$	160,743
	Certificates of deposit, current					100,819			101,258
	Accounts receivable, net of allowance for doubtful accounts of $4,890,000 and $4,823,000, respectively					467,748			323,443
	Other receivables					203,347			410,765
	Due from Medicare, net					410,870			258,930
	Due from HMOs, net of a liability for incurred but not reported medical claims expense of $11,892,000 and $13,014,000, respectively					1,984,987			1,414,469
	Prepaid expenses and other current assets					425,888			565,935
			Total current assets			3,775,024			3,235,543
Certificates of deposit						–			30,000
Assets related to home health operations held for sale						9,000			540,398
Equipment, furniture and leasehold improvements, net						449,164			430,382
Goodwill, net of accumulated amortization of approximately $3,581,000						14,342,510			14,342,510
Managed care contracts, net of accumulated amortization of $1,893,000 and $1,717,000, respectively						1,617,025			1,793,431
Deferred financing costs, net of accumulated amortization of $3,849,000 and $3,562,000, respectively						231,563			518,382
Other assets, net						107,387			109,330
			Total assets		$	20,531,673		$	20,999,976
				LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	615,405		$	683,488
	Accrued expenses					2,933,336			2,283,048
	Liabilities related to terminated IPA, net					37,254			110,345
	Credit facility					2,205,911			2,315,000
	Current portion of convertible subordinated notes payable					1,341,536			233,716
	Current portion of long-term debt					402,941			2,640,943
	Current portion of related party notes payable					63,854			63,854
	Accrued interest payable					26,334			51,754
	Current portion of capital lease obligations					65,238			70,913
			Total current liabilities			7,691,809			8,453,061
Deferred gain on extinguishment of debt						3,500,000			3,850,000
Capital lease obligations, less current portion						93,421			125,606
Convertible subordinated notes payable, less current portion						2,877,983			4,122,751
Long term debt, less current portion						1,147,234			1,341,947
Related party notes payable, less current portion						965,406			997,333
			Total liabilities			16,275,853			18,890,698
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 December 31, 2003 and June 30, 2003					4,239			4,239
	Additional paid-in capital					60,279,880			60,279,880
	Accumulated deficit					(50,603,598	)		(52,750,140	)
	Treasury stock (2,996,193 shares)					(5,424,701	)		(5,424,701	)
		Total shareholders’ equity				4,255,820			2,109,278
		Total liabilities and shareholders’ equity			$	20,531,673		$	20,999,976

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CONTINUCARE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

					Six Months Ended December 31,
					2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES
			Net income (loss)		$	2,146,542		$	(1,064,123	)
			Loss from discontinued operations			1,199,687			1,237,186
			Income from continuing operations			3,346,229			173,063
			Adjustments to reconcile net income (loss) to cash provided by operating activities:
				Depreciation and amortization, including amortization of deferred loan costs		555,952			735,837
				Gain on extinguishment of debt		(350,000	)		–
				Provision for bad debts		71,859			50,112
				Director compensation paid through the issuance of restricted common stock		–			123,000
			Changes in operating assets and liabilities:
				Increase in accounts receivable		(216,164	)		(104,076	)
				Decrease in prepaid expenses and other current assets		140,047			187,605
				Decrease in other receivables		207,418			396,890
				Increase in other assets		(1,445	)		(1,972	)
				(Increase) decrease in due from HMO’s, net		(570,518	)		16,130
				(Increase) decrease in due to/from Medicare, net		(2,370,219	)		301,290
				Increase in accounts payable and accrued expenses		582,205			176,367
				Decrease in accrued interest payable		(25,420	)		(2,601	)
		Net cash provided by continuing operations				1,369,944			2,051,645
		Net cash used in discontinued operations				(785,884	)		(962,603	)
Net cash provided by operating activities						584,060			1,089,042
CASH FLOWS FROM INVESTING ACTIVITIES
				Proceeds from maturities of restricted cash, net		30,439			100,374
				Property and equipment additions		(53,679	)		(50,484	)
			Net cash (used in) provided by continuing operations			(23,240	)		49,890
			Net cash used in discontinued operations			(9,938	)		(10,530	)
Net cash (used in) provided by investing activities						(33,178	)		39,360
CASH FLOWS FROM FINANCING ACTIVITIES
			Payments on convertible subordinated notes			(136,948	)		(136,949	)
			Payments on related party notes			(31,927	)		(31,927	)
			Principal repayments under capital lease obligation			(37,860	)		(58,769	)
			Third party assumption of capital lease obligation			–			(1,789	)
			Net decrease in credit facility			(109,089	)		(315,000	)
			Advances from HMOs			–			75,000
			Payment on advances from HMOs			–			(75,000	)
			Repayments to Medicare per agreement			(214,436	)		(330,333	)
	Net cash used in continuing operations					(530,260	)		(874,767	)
	Net cash used in discontinued operations					–			(81,506	)
Net cash used in financing activities						(530,260	)		(956,273	)
Net increase in cash and cash equivalents						20,622			172,129
Cash and cash equivalents at beginning of period						160,743			180,410
Cash and cash equivalents at end of period					$	181,365		$	352,539
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITY:
Note payable issued for refunds due to Medicare for overpayments						–			694,800
Purchase of furniture and fixtures with proceeds of capital lease obligations						–			40,122

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