Exhibit 99.1
Continucare Corporation Reports Financial Results for Second Quarter of Fiscal
2005 and Announces Share Repurchase Program
MIAMI--(BUSINESS WIRE)--Feb. 10, 2005--Continucare Corporation (AMEX:CNU):
- Second Fiscal Quarter Revenue Increases 13%
- Second Fiscal Quarter Income From Operations Increases 271%
- Second Fiscal Quarter EPS Improves to $0.05 From Loss of $0.01
- Two Million Share Repurchase Authorized
Continucare Corporation (AMEX:CNU) today reported financial results for its
second quarter of fiscal 2005 and the six-months ended December 31, 2004.
Second Quarter Results
For the second quarter of fiscal 2005, total revenue was $27.5 million
compared to $24.4 million for the second quarter of fiscal 2004. Income from
operations during the second quarter of fiscal 2005 was $2.7 million compared to
$0.7 million for the same period one year ago. Income from continuing operations
in the second quarter of fiscal 2005 was $2.5 million compared to $0.5 million
in the year-ago period. There was no income or loss from discontinued operations
during the second quarter of fiscal 2005 compared to a loss of $0.8 million in
the year-ago period. Net income for the second quarter of fiscal 2005 was $2.5
million, or $0.05 per diluted share, compared to a net loss of $0.4 million, or
$0.01 per diluted share, one year ago.
Six-Month Results
For the six-months ended December 31, 2004, total revenue was $54.3 million
compared to $49.4 million for the six-month period one year ago. Income from
operations during the six-month period was $4.5 million compared to $1.6 million
for the same period one year ago. Income from continuing operations during the
six-month period was $4.0 million compared to $3.3 million in the year-ago
period, but the amount for the fiscal 2004 six-month period included $2.2
million of other income that related to the previously disclosed settlement of
an alleged Medicare obligation. There was no income or loss from discontinued
operations during the six-month period compared to a loss of $1.2 million in the
year-ago period. Net income for the six-month period was $4.0 million, or $0.08
per diluted share, compared to net income of $2.1 million, or $0.04 per diluted
share, one year ago.
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, "Our second fiscal quarter results
demonstrate the progress our business has made. Our results were meaningfully
better than one year ago, and with continued and increasing profitability, our
cash flow has increased and our financial position continues to strengthen. This
improvement continues to be driven by our managed care activities associated
with Medicare Advantage patients which is the central focus of our business."
Share Repurchase Program
Continucare also announced that its board of directors has approved a share
repurchase program authorizing the purchase of up to two million shares or
approximately 4% of its outstanding shares. The program authorizes management,
in its discretion, to repurchase shares from time to time on the open market or
in privately negotiated transactions subject to market conditions and other
factors.
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, the risk that
future legislation, changes in governmental regulations, including possible
changes in Medicare programs, could impact reimbursements to health care
providers and insurers, the risk that we may not conduct repurchases of our
common stock in the full amount authorized under our repurchase program or at
all, and the risk that any repurchases of our common stock that we effect may
adversely impact our future liquidity or capital resources. 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, our
ability to accurately estimate our liability for medical claims incurred but not
reported, 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 except as
required by law.
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited)
Three-Months Ended Six-Months Ended
------------------------ ------------------------
12/31/04 12/31/03 12/31/04 12/31/03
------------------------ ------------------------
Revenue:
Medical services
revenue, net $27,107,151 $24,173,674 $53,717,702 $49,107,176
Management fee
revenue and other
income 420,063 194,562 600,658 324,459
------------------------ ------------------------
Total revenue 27,527,214 24,368,236 54,318,360 49,431,635
Operating expenses:
Medical services:
Medical claims 18,600,734 18,141,504 37,616,515 36,948,229
Other direct costs 3,621,073 2,890,296 6,697,326 5,751,879
------------------------ ------------------------
Total medical
services 22,221,807 21,031,800 44,313,841 42,700,108
Administrative
payroll and
employee benefits 1,383,096 993,101 2,667,156 1,886,316
General and
administrative 1,743,731 1,971,804 3,338,039 3,580,735
Gain on
extinguishment of
debt (500,000) (350,000) (500,000) (350,000)
------------------------ ------------------------
Total operating
expenses 24,848,634 23,646,705 49,819,036 47,817,159
------------------------ ------------------------
Income from
operations 2,678,580 721,531 4,499,324 1,614,476
Other income
(expense):
Interest income 18,192 1,421 21,311 2,076
Interest expense (227,544) (243,712) (475,960) (488,601)
Medicare settlement
related to
terminated
operations - - - 2,218,278
------------------------ ------------------------
Income from
continuing
operations 2,469,228 479,240 4,044,675 3,346,229
Income (loss) from
discontinued
operations:
Home health
operations - (834,048) - (1,272,778)
Terminated IPA - - - 73,091
------------------------ ------------------------
Loss from
discontinued
operations - (834,048) - (1,199,687)
------------------------ ------------------------
Net income (loss) $2,469,228 $(354,808) $4,044,675 $2,146,542
======================== ========================
Basic net income
(loss) per common
share:
Income from
continuing
operations $.05 $.01 $.08 $.08
Loss from
discontinued
operations - (.02) - (.03)
------------------------ ------------------------
Net income (loss) per
common share $.05 $(.01) $.08 $.05
======================== ========================
Diluted net income
(loss) per common
share:
Income from
continuing
operations $.05 $.01 $.08 $.07
Loss from
discontinued
operations - (.02) - (.03)
------------------------ ------------------------
Net income (loss) per
common share $.05 $(.01) $.08 $.04
======================== ========================
Basic weighted
average common
shares outstanding 50,311,780 42,379,001 50,305,983 42,379,001
======================== ========================
Diluted weighted
average common
shares outstanding 51,887,604 48,191,924 51,786,472 47,755,168
======================== ========================
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
2004 June 30,
(Unaudited) 2004
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $6,827,181 $720,360
Certificates of deposit, current - 101,515
Other receivables 143,939 423,215
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $10,460,000 and
$11,450,000, respectively 3,710,829 3,337,293
Prepaid expenses and other current assets 819,470 890,806
------------- ------------
Total current assets 11,501,419 5,473,189
Certificates of deposit 30,350 30,000
Equipment, furniture and leasehold
improvements, net 599,481 492,054
Goodwill, net 14,342,510 14,342,510
Managed care contracts, net of accumulated
amortization of approximately $2,245,000
and $2,069,000, respectively 1,266,452 1,442,858
Deferred financing costs, net of accumulated
amortization of $665,000 and $222,500,
respectively 220,002 662,502
Other assets, net 72,956 100,483
------------- ------------
Total assets $28,033,170 $22,543,596
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $970,311 $504,151
Accrued expenses 1,737,698 1,452,598
Due to Medicare, net 24,446 14,645
Liabilities related to discontinued
operations 150,002 208,484
Current portion of related party notes
payable 121,743 8,052
Current portion of capital lease
obligations 55,620 81,163
Note payable 1,040,000 -
Deferred revenue 2,500,000 3,000,000
------------- ------------
Total current liabilities 6,599,820 5,269,093
Capital lease obligations, less current
portion 88,066 101,177
Long term debt, less current portion 29,077 29,077
Related party note payable, less current
portion - 117,717
------------- ------------
Total liabilities 6,716,963 5,517,064
Commitments and contingencies
Shareholders' equity:
Common stock; $0.0001 par value;
100,000,000 shares authorized, 53,323,045
shares issued and 50,326,852 shares
outstanding at December 31, 2004 and
53,296,379 shares issued and 50,300,186
shares outstanding at June 30, 2004 5,034 5,031
Additional paid-in capital 70,152,970 69,907,973
Accumulated deficit (43,417,096) (47,461,771)
Treasury stock (2,996,193 shares) (5,424,701) (5,424,701)
------------- ------------
Total shareholders' equity 21,316,207 17,026,532
------------- ------------
Total liabilities and shareholders'
equity $28,033,170 $22,543,596
============= ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six-Months Ended
December 31,
------------------------
2004 2003
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,044,675 $2,146,542
Loss from discontinued operations - 1,199,687
------------ -----------
Income from continuing operations 4,044,675 3,346,229
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 727,759 555,952
Recognition of compensation expense related
to issuance of stock options 254,000 -
Gain on extinguishment of debt (500,000) (350,000)
Changes in operating assets and liabilities,
excluding the effect of disposals:
Prepaid expenses and other current assets 71,336 (76,117)
Other receivables 279,276 207,418
Other assets 27,527 (1,445)
Due from HMOs, net (373,536) (570,518)
Due to Medicare, net 9,801 (2,370,219)
Accounts payable and accrued expenses 751,260 556,785
------------ -----------
Net cash provided by continuing operations 5,292,098 1,298,085
Net cash used in discontinued operations (58,482) (714,025)
------------ -----------
Net cash provided by operating activities 5,233,616 584,060
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of certificates of
deposit 101,165 30,439
Purchase of property and equipment (216,280) (53,679)
------------ -----------
Net cash used in continuing operations (115,115) (23,240)
Net cash (used in) provided by discontinued
operations - (9,938)
------------ -----------
Net cash used in investing activities (115,115) (33,178)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 1,040,000 -
Payments on convertible subordinated notes (4,026) (136,948)
Payment of fees related to private placement
transaction (45,000) -
Payments on related party notes - (31,927)
Principal repayments under capital lease
obligation (38,654) (37,860)
Proceeds from exercise of stock options 36,000 -
Net decrease in credit facility - (109,089)
Repayments to Medicare per agreement - (214,436)
------------ -----------
Net cash (used in) provided by continuing
operations 988,320 (530,260)
Net cash (used in) provided by discontinued
operations - -
------------ -----------
Net cash (used in) provided by financing
activities 988,320 (530,260)
------------ -----------
Net increase in cash and cash equivalents 6,106,821 20,622
Cash and cash equivalents at beginning of
fiscal year 720,360 160,743
------------ -----------
Cash and cash equivalents at end of fiscal
year $6,827,181 $181,365
============ ===========
CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105