Exhibit 99.01
Continucare Corporation Reports Financial
Results for First Quarter of Fiscal 2005;
Income From Operations Increases 104%
MIAMI--(BUSINESS WIRE)--Nov. 11, 2004--Continucare Corporation
(AMEX:CNU) today reported financial results for the three months ended
September 30, 2004.
For the first quarter of fiscal 2005, total revenue was $26.8 million
compared to $25.1 million for the first quarter of fiscal 2004. Income from
operations during the first quarter of fiscal 2005 was $1.8 million compared to
$0.9 million for the same period one year ago. Income from continuing operations
in the first quarter of fiscal 2005 was $1.6 million compared to $2.9 million in
the year-ago period, but the amount for the fiscal 2004 period included $2.2
million of other income that related to the settlement of an alleged Medicare
obligation, as discussed below. There was no income or loss from discontinued
operations during the first quarter of fiscal 2005 compared to a loss of $0.4
million in the year-ago period. Net income for the first quarter of fiscal 2005
was $1.6 million, or $0.03 per diluted share, compared to a net income of $2.5
million, or $0.05 per diluted share, one year ago.
The alleged Medicare obligation that was settled in the fiscal
2004 period related to rehabilitation clinics that were previously
operated by a former Continucare subsidiary and were sold in 1999. At
Continucare's request, the Centers for Medicare & Medicaid Services
reconsidered the alleged liability and, in October 2003, notified
Continucare that the liability had been reduced from the originally
asserted amount of $2.4 million to approximately $200,000.
The discontinued operations reflected in Continucare's financial
results for the fiscal 2004 period relate to its former 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, "We are extremely pleased
with our first fiscal quarter results. Revenues increased 7% and
income from operations increased 104% as we continued to benefit from
higher per member premiums associated with our Medicare Advantage
patients resulting from the adoption of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 and the increased
phase-in of the Medicare risk adjustment program. Also, with improved
operating profits our cash flow has increased and our financial
position continues to strengthen."
Continucare Corporation (http://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 are subject to risks and uncertainties which may affect our
business and prospects and cause our actual results to differ
materially from those set forth in the forward-looking statements.
These factors include, without limitation, the risk that the current
trend in revenue or income growth may not continue or may be less than
anticipated, the risk that the impact of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 and the Medicare Risk
Adjustment on payments we receive for our managed care operations may
not continue to be positive for us, risks relating to the level of
payment we receive from governmental programs and third party payors,
including any changes that may result from the continuing impact of
the Medicare Prescription Drug, Improvement and Modernization Act of
2003 and the Medicare Risk Adjustment, uncertainties relating to
changes in our revenue mix or claims loss ratio, and the risk that
future legislation, changes in governmental regulations, including
possible changes in Medicare programs, could impact reimbursements to
health care providers and insurers. In addition to the risks set forth
above, the forward-looking statements in this press release may also
be adversely impacted by our ability to achieve expected levels of
patient volumes and control the costs of providing services, pricing
pressures exerted on us by managed care organizations, our ability to
enter into and renew managed care provider arrangements on acceptable
terms, our current dependence on two HMOs for substantially all of our
revenues, our current dependence on the information systems of our
affiliated HMOs for certain information regarding our revenues and
expenses, our ability to attract and retain qualified medical
professionals, technological and pharmaceutical improvements that
increase the cost of providing, or reduce the demand for, health care,
delays in receiving payments, increases in the cost of our insurance
coverage, including our stop-loss coverage, the possible loss of our
insurance coverage, the collectibility of uninsured accounts and
deductible and co-pay amounts, Federal and state investigations,
litigation for medical malpractice and the outcome of any such
litigation; changes in estimates and judgments associated with our
critical accounting policies, impairment charges that could be
required in future periods, our ability to satisfy our liabilities and
respond to our capital needs, 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, 2004 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.
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
2004 2003
------------ ------------
Revenue:
Medical services revenue, net $26,610,444 $24,927,130
Management fee revenue and other income 180,595 136,269
------------ ------------
Total revenue 26,791,039 25,063,399
Operating expenses:
Medical services:
Medical claims 19,016,175 18,806,725
Other direct costs 3,151,253 2,861,583
------------ ------------
Total medical services 22,167,428 21,668,308
------------ ------------
Administrative payroll and employee
benefits 1,207,565 893,215
General and administrative 1,595,303 1,608,208
------------ ------------
Total operating expenses 24,970,296 24,169,731
------------ ------------
Income from operations 1,820,743 893,668
Other income (expense):
Interest income 3,120 655
Interest expense (248,416) (245,613)
Medicare settlement related to terminated
operations - 2,218,278
------------ ------------
Income from continuing operations 1,575,447 2,866,988
Income (loss) from discontinued operations:
Home health operations - (438,729)
Terminated IPAs - 73,091
------------ ------------
Loss from discontinued operations - (365,638)
------------ ------------
Net income $1,575,447 $2,501,350
============ ============
Basic net income (loss) per common share:
Income from continuing operations $.03 $.07
Loss from discontinued operations - (.01)
------------ ------------
Net income per common share $.03 $.06
============ ============
Diluted net income (loss) per common share:
Income from continuing operations $.03 $.06
Loss from discontinued operations - (.01)
------------ ------------
Net income per common share $.03 $.05
============ ============
Weighted average common shares outstanding:
Basic 50,300,186 42,379,001
============ ============
Diluted 51,685,339 47,318,412
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS September 30, June 30,
2004 2004
------------ ------------
(Unaudited)
Current assets:
Cash and cash equivalents $2,572,656 $720,360
Certificates of deposit, current 71,222 101,515
Other receivables 318,121 423,215
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $11,259,000 and
$11,450,000, respectively 3,624,587 3,337,293
Prepaid expenses and other current assets 477,444 890,806
------------ ------------
Total current assets 7,064,030 5,473,189
Certificates of deposit 30,000 30,000
Equipment, furniture and leasehold
improvements, net 555,857 492,054
Goodwill 14,342,510 14,342,510
Managed care contracts, net of accumulated
amortization of approximately $2,157,000
and $2,069,000, respectively 1,354,655 1,442,858
Deferred financing costs, net of accumulated
amortization of approximately $443,750 and
$222,500, respectively 441,252 662,502
Other assets, net 88,207 100,483
------------ ------------
Total assets $23,876,511 $22,543,596
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $393,863 $504,151
Accrued expenses 1,393,134 1,452,598
Due to Medicare, net 24,447 14,645
Liabilities related to discontinued
operations 188,451 208,484
Current portion of related party note
payable 8,052 8,052
Current portion of capital lease
obligations 81,163 81,163
Deferred revenue 3,000,000 3,000,000
------------ ------------
Total current liabilities 5,089,110 5,269,093
Capital lease obligations, less current
portion 83,628 101,177
Long-term debt 29,077 29,077
Related party note payable, less current
portion 117,717 117,717
------------ ------------
Total liabilities 5,319,532 5,517,064
Commitments and contingencies
Shareholders' equity:
Common stock; $0.0001 par value;
100,000,000 shares authorized, 53,296,379
shares issued and 50,300,186 shares
outstanding at September 30, 2004 and June
30, 2004 5,031 5,031
Additional paid-in capital 69,862,973 69,907,973
Accumulated deficit (45,886,324) (47,461,771)
Treasury stock (2,996,193 shares) (5,424,701) (5,424,701)
------------ ------------
Total shareholders' equity 18,556,979 17,026,532
------------ ------------
Total liabilities and shareholders'
equity $23,876,511 $22,543,596
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
-----------------------
2004 2003
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,575,447 $2,501,350
Loss from discontinued operations - 365,638
----------- -----------
Income from continuing operations 1,575,447 2,866,988
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 356,898 275,983
Medicare settlement related to terminated
operations - (2,218,278)
Changes in operating assets and liabilities,
excluding the effect of disposals:
Prepaid expenses and other current assets 413,362 159,886
Other receivables 105,094 12,902
Other assets 12,276 (1,446)
Due from HMO's, net (287,294) (786,527)
Due to Medicare, net 9,802 3,935
Accounts payable and accrued expenses (169,752) 414,076
----------- -----------
Net cash provided by continuing operations 2,015,833 727,519
Net cash used in discontinued operations (20,033) (118,636)
----------- -----------
Net cash provided by operating activities 1,995,800 608,883
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of certificates of
deposit 30,293 31,050
Purchase of property and equipment (111,248) (59,869)
----------- -----------
Net cash used in continuing operations (80,955) (28,819)
Net cash used in discontinued operations - -
----------- -----------
Net cash used in investing activities (80,955) (28,819)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on convertible subordinated notes - (68,474)
Payment of fees related to private placement
transaction (45,000) -
Principal repayments under capital lease
obligation (17,549) (19,238)
Net decrease in credit facility - (434,388)
Repayments to Medicare per agreement - (115,699)
----------- -----------
Net cash used in continuing operations (62,549) (637,799)
Net cash used in discontinued operations - -
----------- -----------
Net cash used in financing activities (62,549) (637,799)
Net increase (decrease) in cash and cash
equivalents 1,852,296 (57,735)
Cash and cash equivalents at beginning of
period 720,360 160,743
----------- -----------
Cash and cash equivalents at end of period $2,572,656 $103,008
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CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105