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 fourth quarter results
ADDISON, Texas, February 11, 2002 - Concentra Operating Corporation
("Concentra") today announced results for the fourth quarter and year ended
December 31, 2001. Excluding charges incurred in connection with its acquisition
of National Healthcare Resources, Inc. ("NHR"), Concentra reported $27,693,000
in EBITDA for the quarter and $131,095,000 for the year.
Revenue for the fourth quarter was $223,675,000 as compared to
$187,953,000 in the prior year. Including charges of $6,065,000 associated with
the acquisition of NHR, operating income was $8,981,000 compared with
$15,518,000 for the same period last year. Net loss for the quarter was
$6,685,000 compared with $9,777,000 for the fourth quarter of 2000. Revenue for
the full year was $842,908,000 as compared to $752,161,000 for 2000. Including
charges associated with the NHR acquisition, for the year, operating income was
$80,884,000 as compared to $77,618,000 in 2000. Net loss for the year was
$9,720,000 compared with $6,813,000 for the prior year.
In November of 2001, through an exchange of common stock, Concentra
completed its acquisition of NHR, a New York City-based provider of care
management and network services to the workers' compensation and auto
industries. Due to the fact that Concentra's largest shareholder, Welsh, Carson,
Anderson & Stowe, also owned 48% of the equity of NHR, to comply with accounting
rules related to the treatment of acquisitions of "entities under common
control," Concentra was required to expense 48% of the severance expenses,
facilities consolidation costs and asset write-downs that normally would have
been capitalized as "goodwill" in the case of an acquisition accounted for under
the "purchase method" of accounting. During the quarter, Concentra incurred a
charge of $5,519,000 associated with this accounting standard. Additionally,
Concentra incurred a charge of $546,000 in non-recurring expenses related to
severance expenses and facilities consolidation costs associated with the
acquisition that would have been charged to earnings irrespective of the "common
control" nature of the acquisition. Under "common control" accounting rules,
Concentra has also reflected a non-operating share of 48% of the after-tax net
income of NHR for periods prior to the date of the acquisition. In November of
2001, the Company also completed its acquisition of Health Network Systems, Inc.
("HNS"), a provider of network services. For the two months following the
completion of the transactions, Concentra consolidated $25,927,000 in combined
revenues and $2,459,000 in EBITDA from its NHR and HNS acquisitions.
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Concentra Announces Fourth Quarter Results
Page 2
February 11, 2002
Consolidated Earnings Before Interest Taxes Depreciation and
Amortization ("EBITDA"), excluding charges incurred in connection with the
acquisition of NHR, increased to $27,693,000 in the fourth quarter of 2001
versus $26,532,000 in the same quarter last year. For the year, EBITDA increased
to $131,095,000 from $119,300,000 during the prior year.
Commenting on the results, Daniel J. Thomas, President and Chief
Executive Officer of Concentra, said, "We're pleased to have concluded another
year of strong revenue and EBITDA growth. During the past year, our network and
care management businesses contributed greatly to the Company's performance.
Despite the dampening effects that the downturn in the nation's economy has had
on our occupational health services, we were able to compensate for these
pressures through an exceptional performance in our two other primary lines of
service.
"We're well positioned to continue our track record of growth in 2002,"
said Thomas. "Despite the economic slow-down, we were able to sustain
essentially the same earnings performance in our Health Services segment and to
expand the reach of our centers. With the economy showing preliminary signs of
stabilizing, we should be in a position to re-establish the growth we've
traditionally seen in this strategic part of our business. Additionally, with
the revenue and EBITDA growth trends we've been able to establish in our network
and care management services businesses, and the acquisition of NHR, we should
be able to achieve significant growth in our earnings from these other key
business segments in the coming year."
As has been the case throughout 2001, Concentra's growing EBITDA and
focus on working capital management continued to be key drivers in the Company's
ability to achieve increasing cash flows from operations. For the year ended
December 31, 2001, Concentra produced $89,334,000 in positive cash flow from
operations as compared to $38,849,000 generated during 2000. As a result of
these stronger operating cash flows, Concentra had borrowings of only $6 million
outstanding under its $100,000,000 revolving credit facility at the end of the
year, despite its use of $21 million in revolver borrowings in November as a
source for the retirement of pre-existing NHR indebtedness.
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.
Concentra provides its services to over 130,000 employers and 3,000 insurance
companies, health plans and third party administrators nationwide.
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Concentra Announces Fourth Quarter Results
Page 3
February 11, 2002
A public, listen-only simulcast of Concentra's third quarter conference
call will begin at 9:00 a.m. Eastern Daylight Time tomorrow (February 12, 2002)
and may be accessed via the Company's web site, http://www.concentra.com.
Investors are requested to access the call at least 15 minutes before the
scheduled start time in order to complete a brief registration form and receive
an access password. Listening via the Internet requires Windows Media Player
Version 7, which may be downloaded free of charge from the Company's website. An
online replay will be available shortly after the conclusion of the live
broadcast using the same link and will continue through March 12, 2002.
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 Reports Fourth Quarter Results
Page 4
February 11, 2002
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Unaudited Consolidated Statements of Operations
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------------------- -------------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
REVENUE:
Health Services $ 101,746 $ 96,700 $ 429,326 $ 399,660
Network Services 52,422 43,737 185,267 162,596
Care Management Services 69,507 47,516 228,315 189,905
------------ ------------- ------------- -------------
Total revenue 223,675 187,953 842,908 752,161
COST OF SERVICES:
Health Services 88,497 82,377 348,767 321,784
Network Services 30,904 24,561 110,187 100,741
Care Management Services 60,856 44,605 200,166 170,899
------------ --------------- ------------- -------------
Total cost of services 180,257 151,543 659,120 593,424
------------ ------------- ------------- -------------
Total gross profit 43,418 36,410 183,788 158,737
General and administrative expenses 23,946 17,177 81,098 66,491
Amortization of intangibles 4,426 3,715 15,741 14,628
Non-recurring charge 546 - 546 -
Charges for acquisition of affiliate 5,519 - 5,519 -
------------ ------------- ------------- -------------
Operating income 8,981 15,518 80,884 77,618
Interest expense, net 16,442 16,640 66,669 68,129
(Gain) loss on fair value of hedging
arrangements (2,951) 6,822 13,602 9,586
Loss of acquired affiliate, net of tax 3,224 209 5,833 262
Other, net 133 (462) 743 (725)
------------ ------------- ------------- -------------
Income (loss) before income taxes (7,867) (7,691) (5,963) 366
Provision (benefit) for income taxes (1,182) (731) 3,757 4,362
------------ -------------- ------------- -------------
Loss before effect of accounting change (6,685) (6,960) (9,720) (3,996)
Cumulative effect of accounting
change, net of tax - 2,817 - 2,817
------------ ------------- ------------- -------------
Net loss $ (6,685) $ (9,777) $ (9,720) $ (6,813)
============ ============== ============== ==============
Prior-year revenue and cost of services have been reclassified to conform to the
Company's current reporting of business segments.
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Concentra Reports Fourth Quarter Results
Page 5
February 11, 2002
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Unaudited Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2001 2000
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,308 $ 6,549
Accounts receivable, net 181,023 160,418
Prepaid expenses and other current assets 38,760 24,679
------------- -------------
Total current assets 227,091 191,646
PROPERTY AND EQUIPMENT, NET 132,302 109,110
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 475,500 323,162
OTHER ASSETS 32,072 58,751
------------- -------------
$ 866,965 $ 682,669
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LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Revolving credit facility $ 6,000 $ --
Current portion of long-term debt 4,211 5,228
Accounts payable and accrued expenses 133,908 70,189
------------- -------------
Total current liabilities 144,119 75,417
LONG-TERM DEBT, NET 552,270 556,334
LONG-TERM DEFERRED TAX AND OTHER LIABILITIES 67,094 51,589
FAIR VALUE OF HEDGING ARRANGEMENTS 25,883 9,586
STOCKHOLDER'S EQUITY (DEFICIT) 77,599 (10,257)
-------------- -------------
$ 866,965 $ 682,669
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Concentra Reports Fourth Quarter Results
Page 6
February 11, 2002
CONCENTRA OPERATING CORPORATION
a wholly owned subsidiary of
CONCENTRA INC.
Reconciliation of Net Loss to EBITDA, Excluding Acquisition Charges
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------------------- -------------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
Net loss $ (6,685) $ (9,777) $ (9,720) $ (6,813)
Cumulative effect of accounting
change, net of tax - 2,817 - 2,817
Provision (benefit) for income taxes (1,182) (731) 3,757 4,362
Interest expense, net 16,442 16,640 66,669 68,129
(Gain) loss on fair value of hedging
arrangements (2,951) 6,822 13,602 9,586
Loss of acquired affiliate, net of tax 3,224 209 5,833 262
Other, net 133 (462) 743 (725)
------------- ------------- ------------- -------------
Operating income 8,981 15,518 80,884 77,618
Charges for acquisition of affiliate 5,519 - 5,519 -
Non-recurring charge 546 - 546 -
Depreciation expense 8,268 6,881 29,086 26,193
Amortization of intangibles 4,426 3,715 15,741 14,628
Minority interest (47) 418 (681) 861
------------- ------------- ------------- -------------
EBITDA, excluding acquisition charges $ 27,693 $ 26,532 $ 131,095 $ 119,300
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