EXHIBIT 99.1
Contacts: Daniel J. Thomas Thomas E. Kiraly
President and Executive Vice President and
Chief Executive Officer Chief Financia Officer
(972) 364-8111 (972) 364-8217
CONCENTRA OPERATING CORPORATION ANNOUNCES CHANGES IN
BUSINESS SEGMENT REPORTING
ADDISON, Texas, March 27, 2001 - Concentra Operating Corporation
("Concentra") today announced that it will change the way it reports its
business segment results during 2001 to improve the manner in which operating
results are disclosed in its financial statements. Previously, Concentra
divided its financial results into "Health Services," "Cost Containment," and
"Field Case Management" segments. Under the new approach, although the Health
Services segment will remain the same, Concentra's other segments will be
grouped to provide a "Network Services" segment and a "Care Management Services"
segment. The Company believes this change will promote a better understanding
of the underlying nature of its operations by providing a more consistent
representation of similar business units within each of the two newly formed
segments. Further, the Company believes that the enhanced segment reporting
will more effectively communicate Concentra's current operating environment and
business unit strategy.
Commenting on the revised reporting approach, Daniel J. Thomas, President
and Chief Executive Officer, said, "I am pleased that our segment reporting will
provide more clarity to our investors as to the underlying nature of our primary
businesses. We have increasingly been managing the Company in a manner that
differentiates between operations that seek savings from healthcare providers
and those that facilitate returning patients to work. Our new segmentation will
more effectively reflect this distinction." Thomas also noted that the Company
currently plans to make no changes to its internal operating structure in
connection with its introduction of this new financial statement segmentation
approach.
Under the new segmentation, the composition of the Health Services segment
will remain the same. The Health Services segment will continue to reflect the
Company's revenues and business operations that provide specialized injury and
occupational healthcare services to employers. Through 224 nationwide health
centers, Health Services delivers primary and rehabilitative care, including the
diagnosis, treatment and management of work-related injuries and illnesses.
Health Services also provides a full complement of non-injury, employment-
related health services, including physical examinations, pre-placement
substance abuse testing, job-specific return to work evaluations and other
related programs.
The new Network Services segment will reflect those businesses that involve
the review and repricing of provider bills and which are routinely compensated
based on the degree to which Concentra achieves savings for its clients. This
segment will include Concentra's preferred provider organization, provider bill
review business and out-of-network bill review operations. This segment will
also include Concentra's first notice of loss operations.
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Concentra Announces Changes in Business Segment Reporting
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March 27, 2001
Care Management Services will reflect the Company's professional services
aimed at curtailing the cost of workers' compensation and auto claims through
field case management, telephonic case management, independent medical exams and
utilization management. These services are designed to maximize medical
improvement and, where appropriate, to expedite the return to work. These
services also concentrate on monitoring the timing and appropriateness of
medical care.
As a result of the above changes, effective January 1, 2001, the Company
will prospectively report segment performance on its Health Services, Network
Services and Care Management Services groups. Had these segments been reported
in this manner historically, the Company's Statements of Operations on a segment
basis would have been stated as follows:
Years Ended December 31,
--------------------------------------------
2000 1999 1998
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Revenue:
Health Services $399,660 $330,064 $259,481
Network Services 162,596 158,022 135,805
Care Management Services 189,905 193,326 215,770
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752,161 681,412 611,056
Gross profit:
Health Services 77,876 64,981 58,300
Network Services 61,855 62,288 54,431
Care Management Services 19,006 19,654 29,028
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158,737 146,923 141,759
General and administrative expenses 66,491 65,291 45,326
Amortization of intangibles 14,628 12,960 8,119
Non-recurring charges -- 54,419 33,114
--------------------------------------------
Operating income 77,618 14,253 55,200
Interest expense 68,932 35,779 18,021
Interest income (803) (2,900) (4,659)
Loss on change in fair value of hedging arrangements 9,586 -- --
Other, net (725) (391) 44
--------------------------------------------
Income (loss) before income taxes and cumulative
effect of accounting change 628 (18,235) 41,794
Provision for income taxes 4,362 8,269 19,308
--------------------------------------------
Income (loss) before cumulative effect of accounting change (3,734) (26,504) 22,486
Cumulative effect of accounting change, net of tax 2,817 -- --
--------------------------------------------
Net income (loss) $ (6,551) $(26,504) $ 22,486
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Concentra Announces Changes in Business Segment Reporting
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March 27, 2001
Quarters Ended
(Unaudited)
------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
------------------------------------------------------------
Revenue:
Health Services $ 94,260 $103,004 $105,696 $ 96,700
Network Services 40,919 38,862 39,078 43,737
Care Management Services 45,917 48,482 47,990 47,516
------------------------------------------------------------
181,096 190,348 192,764 187,953
Gross profit:
Health Services 17,265 22,891 23,397 14,323
Network Services 15,472 13,933 13,274 19,176
Care Management Services 4,117 6,296 5,682 2,911
------------------------------------------------------------
36,854 43,120 42,353 36,410
General and administrative expenses 16,919 16,246 16,149 17,177
Amortization of intangibles 3,566 3,658 3,689 3,715
------------------------------------------------------------
Operating income 16,369 23,216 22,515 15,518
Interest expense 16,221 17,926 17,857 16,928
Interest income (80) (331) (104) (288)
(Gain) loss on change in fair value of hedging
arrangements (1,537) 2,483 1,818 6,822
Other, net (196) 73 (140) (462)
------------------------------------------------------------
Income (loss) before income taxes and cumulative
effect of accounting change 1,961 3,065 3,084 (7,482)
Provision (benefit) for income taxes 893 1,921 2,279 (731)
------------------------------------------------------------
Income (loss) before cumulative effect of accounting
change 1,068 1,144 805 (6,751)
Cumulative effect of accounting change, net of tax -- -- -- 2,817
------------------------------------------------------------
Net income (loss) $ 1,068 $ 1,144 $ 805 $ (9,568)
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Concentra Announces Changes in Business Segment Reporting
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March 27, 2001
Concentra Operating Corporation, the successor to and a wholly-owned
subsidiary of Concentra 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, 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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