EXHIBIT 99.1
Contacts: Daniel J. Thomas Thomas E. Kiraly
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
(972) 364-8111 (972) 364-8217
CONCENTRA OPERATING CORPORATION REPORTS SECOND QUARTER RESULTS
ADDISON, Texas, August 1, 2000 - Concentra Operating Corporation
("Concentra") today announced financial results for the second quarter and six-
month period ended June 30, 2000. Revenues for the second quarter rose 9% to
$190,348,000 from $174,088,000 reported in the same period last year. Operating
income remained essentially unchanged for the second quarter at $23,216,000
versus $23,928,000 in the prior year. As expected, the impact of higher
interest expense, related to new credit facilities put in place to facilitate
Concentra's August 1999 recapitalization, reduced second quarter net income to
$2,397,000 as compared with $11,526,000 in the comparable period last year.
For the six months ended June 30, 2000, revenues increased 13% to
$371,444,000 as compared with $329,499,000 reported for the same period last
year. Operating income increased 4% to $39,585,000 versus $38,144,000 reported
for the first half of 1999. Higher interest expense was the principal reason
for the Company's lower net income of $2,628,000 for the first six months of
2000 as compared to net income of $17,594,000 for same period in the prior year.
Earnings before interest, taxes, depreciation and amortization ("EBITDA"),
as computed in a manner consistent with the definition set forth in the
Company's $190 million Series A Senior Subordinated Notes, increased 4% to
$33,478,000 in the second quarter of 2000 versus $32,180,000 reported for the
comparable 1999 period and was up 28% as compared to the first quarter of 2000.
Through the first half of 2000, EBITDA was $59,664,000, representing an increase
of 10% over the $54,215,000 reported for the same period last year.
Commenting on the results, Daniel J. Thomas, President and Chief Executive
Officer of Concentra, said, "We are pleased to report on the Company's continued
progress. During the second quarter, Concentra's revenue growth exceeded our
previous expectations, largely reflecting the strength of our Health Services
operations and improving stability in our Field Case Management division. These
positive trends, together with improved expense control at all levels of the
Company, helped us expand our operating cash flows."
Thomas explained that Concentra's Health Services division continues to
serve as an important catalyst for the Company's ongoing growth in revenues,
profits and cash flow. With quarterly revenues topping the $100 million mark
for the first time ever, this division accounted for 54% of Concentra's total
second quarter revenues. Concentra Health Services, the nation's largest
network of occupational healthcare centers with 215 centers located in 63
markets in 32 states, witnessed strong internal growth during the second quarter
as same-market revenues rose 9.9% as compared to the same period last year. For
the year-to-date period, same-market revenues increased 8.9%. Increased visits
are driving this growth, with solid gains for injury-related care but even
faster growth in non-injury visits as clients increasingly look to Concentra to
provide pre-employment related testing, such as physical examinations, substance
abuse testing and other similar services. This continues a trend that Concentra
has experienced for several quarters, with non-injury care accounting for 52% of
the visits to Concentra's occupational healthcare centers in the second quarter,
up from 50% in the second quarter of last year.
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"While we are encouraged by the continuing momentum of our Health Services
operations, we also recognize that some of our specialized cost containment
services, which have been among the fastest growing services we offer, did not
sustain this rapid pace in the second quarter," Thomas continued. "As
anticipated, Concentra Preferred Systems produced lower revenues during the
current quarter than it did during the second quarter of 1999, primarily due to
the significant amount of sales from the Company's contract compliance service
offering that were recorded during the prior year. These strong prior-year
sales make the second quarter of this year difficult to compare to the prior
year. While we have been continuing to cultivate new sales of contract
compliance and other post-payment service initiatives during 2000, these sales
were not sufficient in the second quarter to replicate the levels we initially
achieved last year at this time with sales to several large clients," Thomas
said. Thomas also noted that Concentra Preferred Systems' growth strategy
during coming quarters is focused on sales of these new service offerings to
several key clients. "As we approach 2001, and our traditional service
offerings continue to mature, we see the opportunity for sustaining our
traditional growth rates through a strategic broadening of Concentra Preferred
Systems' service offerings," he said.
During the second quarter, the amount outstanding under Concentra's $100
million revolving credit facility declined to $10.0 million at June 30, 2000
from $24.5 million at March 31, 2000, primarily as a result of a significant
increase in cash flows from operating activities during the quarter and a
reduction in the Company's cash balances. Due to seasonal effects on the
Company's accounts receivable, personnel expenditures and interest payments, the
Company currently anticipates an increase in revolver borrowings during the
third quarter.
Concentra Operating Corporation, the successor to and a wholly-owned
subsidiary of Concentra Managed Care, Inc., is the comprehensive outsource
solution for containing healthcare and disability costs. Serving the
occupational, auto, and group healthcare markets, Concentra provides employers,
insurers and payors with a series of integrated services which include
employment-related injury and occupational health care, in-network and out-of-
network medical claims review and re-pricing, provider bill review, access to
specialized preferred provider organizations, first notice of loss services,
case management and other cost containment services.
This press release contains certain forward-looking statements, which the
Company is making in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, and that the
Company's actual results may differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, the potential adverse impact of
governmental regulation on the Company's operations, interruption in its data
processing capabilities, operational financing and strategic risks related to
the Company's capital structure and growth strategy, possible fluctuations in
quarterly and annual operations, possible legal liability for adverse medical
consequences, competitive pressures, adverse changes in market conditions for
the Company's services, and dependence on key management personnel. Additional
factors include those described in the Company's filings with the Securities and
Exchange Commission.
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CONCENTRA OPERATING CORPORATION
a wholly-owned subsidiary of
CONCENTRA MANAGED CARE, INC.
Unaudited Consolidated Statements of Operations
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
REVENUE:
Health services $103,004 $ 81,942 $197,264 $152,564
Specialized cost containment 51,504 54,200 103,175 100,912
Field case management 35,840 37,946 71,005 76,023
-------- -------- -------- --------
Total revenue 190,348 174,088 371,444 329,499
COST OF SERVICES:
Health services 80,113 62,586 157,108 120,386
Specialized cost containment 35,456 34,667 70,835 67,570
Field case management 31,659 32,951 63,527 65,985
-------- -------- -------- --------
Total cost of services 147,228 130,204 291,470 253,941
-------- -------- -------- --------
Gross profit 43,120 43,884 79,974 75,558
General and administrative expenses 16,246 16,841 33,165 31,261
Amortization of intangibles 3,658 3,115 7,224 6,153
-------- -------- ------ ------
Operating income 23,216 23,928 39,585 38,144
Interest expense 17,926 4,714 34,147 9,391
Interest income (331) (1,014) (411) (2,126)
Other expense (income), net 73 182 (123) 280
-------- -------- -------- --------
Income before income taxes 5,548 20,046 5,972 30,599
Provision for income taxes 3,151 8,520 3,344 13,005
-------- -------- -------- --------
Net income $ 2,397 $ 11,526 $ 2,628 $ 17,594
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The consolidated statements of operations above include the post-
recapitalization transaction operating results of Concentra Operating
Corporation, a wholly-owned subsidiary of Concentra Managed Care, Inc. and the
pre-recapitalization transaction operating results of Concentra Managed Care,
Inc. The recapitalization transaction was completed on August 17, 1999.
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CONCENTRA OPERATING CORPORATION
a wholly-owned subsidiary of
CONCENTRA MANAGED CARE, INC.
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2000 1999
-------- ------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,392 $ 14,371
Accounts receivable, net 166,111 156,239
Prepaid expenses, taxes and other current assets 29,861 28,674
-------- --------
Total current assets 199,364 199,284
PROPERTY AND EQUIPMENT, NET 107,027 104,068
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 330,843 324,984
OTHER ASSETS 25,910 25,768
-------- --------
$663,144 $654,104
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facilities $ 10,000 $ 4,000
Current portion of long-term debt 4,031 3,805
Accounts payable, accrued income tax and expenses 85,928 89,109
-------- --------
Total current liabilities 99,959 96,914
LONG-TERM DEBT 557,941 559,942
DEFERRED INCOME TAXES AND OTHER LIABILITIES 41,490 36,521
STOCKHOLDERS' EQUITY (DEFICIT) (36,246) (39,273)
-------- --------
$663,144 $654,104
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