EXHIBIT 99.01
Continucare Corporation Reports Final
Financial Results for Third Quarter of Fiscal 2005
MIAMI--(BUSINESS WIRE)--May 23, 2005--Continucare Corporation (AMEX:CNU):
-- Final Third Fiscal Quarter Revenue 15% Higher Than One Year
Ago
-- Third Fiscal Quarter Net Income Exceeds Preliminary Estimate
-- Nine-Month Revenues 10% Higher and Net Income 29% Higher
-- Previously Announced Restatement Completed; Final Results Also
Exceed Preliminary Estimate
Continucare Corporation (AMEX:CNU) today reported financial
results for its third quarter of fiscal 2005 and the nine months ended
March 31, 2005.
Third Quarter Results
For the third quarter of fiscal 2005, total revenue was $29.8
million compared to $25.9 million for the third quarter of fiscal
2004. Income from operations during the third quarter of fiscal 2005
was $1.7 million compared to $2.2 million for the same period one year
ago. Income from continuing operations in the third quarter of fiscal
2005 was $1.5 million compared to $1.9 million in the year-ago period.
There was no income or loss from discontinued operations during the
third quarter of fiscal 2005 compared to a loss of $0.4 million in the
year-ago period. Net income for the third quarter of fiscal 2005 was
$1.5 million, or $0.03 per diluted share, compared to net income of
$1.5 million, or $0.03 per diluted share, one year ago.
Nine-Month Results
For the nine months ended March 31, 2005, total revenue was $83.1
million compared to $75.3 million for the nine-month period one year
ago. Income from operations during the nine-month period was $5.4
million compared to $3.8 million for the same period one year ago.
Income from continuing operations during the nine-month period was
$4.7 million compared to $5.3 million in the year-ago period, but the
amount for the fiscal 2004 nine-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 nine-month period compared to a
loss of $1.6 million in the year-ago period. Net income for the
nine-month period was $4.7 million, or $0.09 per diluted share,
compared to net income of $3.7 million, or $0.08 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.
Restatement Completed
Continucare also announced completion of the previously announced
restatement of its financial statements for the fourth quarter of
fiscal 2004 and the first two quarters of fiscal 2005. Continucare's
independent registered public accounting firm has issued an
unqualified opinion on Continucare's restated financial statements for
fiscal 2004, which have been amended and filed with the Securities and
Exchange Commission. As a result of continued analysis of the patient
data submitted to its HMO affiliate during the affected periods, the
ultimate financial impact of the restatement was better than
Continucare's preliminary estimates. During the three fiscal quarters
that were restated, Continucare's actual restated net income exceeded
its preliminary estimate by a total of approximately $0.3 million.
Highlights of Continucare's restated results include:
- -- For the Fiscal Year ended June 30, 2004:
-- Total revenue: $101.8 million
-- Net income: $4.7 million
-- Diluted EPS: $0.09
- -- For the three-months ended September 30, 2004:
-- Total revenue: $26.2 million
-- Net income: $1.1 million
-- Diluted EPS: $0.02
- -- For the three-months ended December 31, 2004:
-- Total revenue: $27.1 million
-- Net income: $2.1 million
-- Diluted EPS: $0.04
- -- For the six-months ended December 31, 2004:
-- Total revenue: $53.3 million
-- Net income: $3.2 million
-- Diluted EPS: $0.06
In addition, Continucare's restated balance sheets reflect
decreases in amounts due from HMOs of approximately $0.6 million, $1.2
million and $1.6 million, as of June 30, September 30, and December
31, 2004, respectively, and decreases in accrued expenses of $0.1
million, and $0.2 million, as of September 30, and December 31, 2004,
respectively. As a result of these changes, shareholders' equity was
reduced to $16.4 million, $17.5 million and $19.9 million of June 30,
September 30, and December 31, 2004, respectively.
"We are pleased to report the results of our third quarter of
fiscal 2005," commented Richard C. Pfenniger, Jr., Continucare's Chief
Executive Officer. "Revenue for the quarter was 15% higher than one
year ago and our actual net income for our third fiscal quarter was
$0.4 million higher than our preliminary estimate. As a result, we
recognized $0.01 of earnings per share more than our initial estimate
for the period. In addition, our nine-month results reflect
significant improvement in our business with revenues and net income
10% and 29% higher, respectively."
Mr. Pfenniger continued, "Although we regret the need for the
restatement, we are relieved to have learned that the financial impact
of the software error on our prior reported results was not as
extensive as we first believed. We remain committed to maintaining
high standards of conduct and now look forward to moving ahead and
continuing to improve our business and profitability. We appreciate
the patience our investors have shown as we worked on making certain
we are in compliance with our public reporting responsibilities."
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, the risk that the software error discussed
above affected other data that we submitted to our HMO affiliate, the
risk that we have not fully corrected that software error or that
other undetected errors may exist in that software or our other
software system, the risk that we may be determined to have a
significant deficiency or material weakness in our internal controls,
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 ability to comply
with applicable laws and regulations and the terms of our agreements
with our HMO affiliates, our ability to work together effectively with
our HMO affiliates, including the fact that we depend upon our HMO
affiliates to determine the payments we receive for certain of our
managed care operations based, in part, on information that we submit
to them; the impact of the Medicare risk adjustment program on
payments we receive for our managed care operations, , 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/A 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 BALANCE SHEETS
March 31, June 30,
2005 2004
------------ ------------
ASSETS (Unaudited) (Restated)
Current assets:
Cash and cash equivalents $7,132,935 $720,360
Certificates of deposit, current - 101,515
Other receivables 223,505 423,215
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $11,450,000 at
March 31, 2005 and June 30, 2004 2,395,324 2,701,878
Prepaid expenses and other current assets 825,715 890,806
------------ ------------
Total current assets 10,577,479 4,837,774
Certificates of deposit, restricted 530,350 30,000
Equipment, furniture and leasehold
improvements, net 724,260 492,054
Goodwill, net 14,342,510 14,342,510
Managed care contracts, net of accumulated
amortization of approximately $2,334,000 and
$2,069,000, respectively 1,178,251 1,442,858
Deferred financing costs, net of accumulated
amortization of approximately $885,000 and
$222,500, respectively - 662,502
Other assets, net 67,305 100,483
------------ ------------
Total assets $27,420,155 $21,908,181
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $529,999 $504,151
Accrued expenses 2,202,454 1,452,598
Due to Medicare, net 14,645 14,645
Liabilities related to discontinued
operations 119,030 208,484
Current portion of related party notes
payable 106,861 8,052
Current portion of capital lease obligations 89,450 81,163
Note payable 780,949 -
Deferred revenue 2,500,000 3,000,000
------------ ------------
Total current liabilities 6,343,388 5,269,093
Capital lease obligations, less current
portion 36,420 101,177
Long term debt, less current portion 29,077 29,077
Related party notes payable, less current
portion - 117,717
------------ ------------
Total liabilities 6,408,885 5,517,064
Commitments and contingencies
Shareholders' equity:
Common stock; $0.0001 par value; 100,000,000
shares authorized, 53,357,895 shares issued
and 50,321,602 shares outstanding at March
31, 2005 and 53,296,379 shares issued and
50,300,186 shares outstanding at June 30,
2004 5,033 5,031
Additional paid-in capital 69,907,581 69,907,973
Accumulated deficit (43,378,305) (48,097,186)
Treasury stock (3,036,293 and 2,996,193
shares, respectively) (5,523,039) (5,424,701)
------------ ------------
Total shareholders' equity 21,011,270 16,391,117
------------ ------------
Total liabilities and shareholders'
equity $27,420,155 $21,908,181
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited)
Three-Months Ended Nine-Months Ended
------------------------ ------------------------
3/31/05 3/31/04 3/31/05 3/31/04
------------------------ ------------------------
Revenue:
Medical services
revenue, net $29,608,640 $25,705,431 $82,329,781 $74,812,607
Management fee
revenue and other
income 166,801 195,274 767,459 519,733
------------------------ ------------------------
Total revenue 29,775,441 25,900,705 83,097,240 75,332,340
Operating expenses:
Medical services:
Medical claims 21,976,703 18,984,500 59,593,218 55,932,729
Other direct costs 3,019,984 3,009,934 9,717,310 8,761,813
------------------------ ------------------------
Total medical
services 24,996,687 21,994,434 69,310,528 64,694,542
Administrative
payroll and
employee benefits 1,312,965 1,031,724 3,780,809 2,918,040
General and
administrative 1,810,418 716,270 5,148,457 4,297,005
Gain on
extinguishment
of debt - - (500,000) (350,000)
------------------------ ------------------------
Total operating
expenses 28,120,070 23,742,428 77,739,794 71,559,587
------------------------ ------------------------
Income from
operations 1,655,371 2,158,277 5,357,446 3,772,753
Other income
(expense):
Interest income 40,223 716 61,534 2,792
Interest expense (224,139) (253,602) (700,099) (742,203)
Medicare settlement
related to
terminated
operations - - - 2,218,278
------------------------ ------------------------
Income from
continuing
operations 1,471,455 1,905,391 4,718,881 5,251,620
Income (loss) from
discontinued
operations:
Home health
operations - (394,156) - (1,666,934)
Terminated IPA - - - 73,091
------------------------ ------------------------
Loss from
discontinued
operations - (394,156) - (1,593,843)
------------------------ ------------------------
Net income $1,471,455 $1,511,235 $4,718,881 $3,657,777
======================== ========================
Basic net income
(loss) per common
share:
Income from
continuing
operations $.03 $.05 $.09 $.12
Loss from
discontinued
operations - (.01) - (.03)
------------------------ ------------------------
Net income per
common share $.03 $.04 $.09 $.09
======================== ========================
Diluted net income
(loss) per common
share:
Income from
continuing
operations $.03 $.04 $.09 $.11
Loss from
discontinued
operations - (.01) - (.03)
------------------------ ------------------------
Net income per
common share $.03 $.03 $.09 $.08
======================== ========================
Basic weighted
average common
shares outstanding 50,345,997 42,599,649 50,319,126 42,452,016
======================== ========================
Diluted weighted
average common
shares outstanding 52,373,915 49,256,367 51,982,091 48,255,033
======================== ========================
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine-Months Ended
March 31,
-----------------------
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,718,881 $3,657,777
Loss from discontinued operations - 1,593,843
----------- -----------
Income from continuing operations 4,718,881 5,251,620
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 1,101,481 838,467
Recognition of compensation expense related
to issuance of stock options 261,627 -
Gain on extinguishment of debt (500,000) (350,000)
Provision for bad debt - 104,296
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 65,091 (16,076)
Other receivables 199,710 24,215
Other assets 33,178 (1,507)
Due from HMO's, net 306,554 (1,635,615)
Due to Medicare, net - 103,926
Accounts payable and accrued expenses 753,753 427,368
----------- -----------
Net cash provided by continuing operations 6,940,275 2,528,416
Net cash used in discontinued operations (89,454) (1,182,540)
----------- -----------
Net cash provided by operating activities 6,850,821 1,345,876
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificate of deposit (500,000) -
Proceeds from maturities of certificates of
deposit 101,165 30,353
Purchase of property and equipment (406,578) (64,070)
----------- -----------
Net cash used in continuing operations (805,413) (33,717)
Net cash used in discontinued operations - (938)
----------- -----------
Net cash used in investing activities (805,413) (34,655)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 1,040,000 -
Payments on notes payable (259,051) -
Payments on convertible subordinated notes - (185,332)
Payment of fees related to private placement
transaction (98,244) -
Payments on related party notes (4,358) (31,927)
Principal repayments under capital lease
obligation (56,470) (51,277)
Proceeds from exercise of stock options 91,700 351,369
Net decrease in credit facility - (27,396)
Repurchase of common stock (346,410) -
Payment of deferred financing costs - (15,000)
Repayments to Medicare per agreement - (306,399)
----------- -----------
Net cash provided by (used in) continuing
operations 367,167 (265,962)
Net cash used in discontinued operations - -
----------- -----------
Net cash provided by (used in) financing
activities 367,167 (265,962)
----------- -----------
Net increase in cash and cash equivalents 6,412,575 1,045,259
Cash and cash equivalents at beginning of
period 720,360 160,743
----------- -----------
Cash and cash equivalents at end of period $7,132,935 $1,206,002
=========== ===========
CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105