Exhibit 99.01
Continucare Corporation Reports Record
Financial Results for Fourth Quarter and Full Fiscal 2005
MIAMI--(BUSINESS WIRE)--Sept. 19, 2005--Continucare Corporation
(AMEX:CNU):
- Fourth Fiscal Quarter and Full Year Revenue 10% Higher Than One
Year Ago
- Fourth Fiscal Quarter and Full Year Income From Operations
Increase 215% and 85%, Respectively
- Fourth Fiscal Quarter and Full Year EPS Significantly Higher
Than One Year Ago
- Balance Sheet Significantly Improved
Continucare Corporation (AMEX:CNU) today reported financial
results for its fourth quarter of fiscal 2005 and fiscal year ended
June 30, 2005.
Fourth Quarter Results
For the fourth quarter of fiscal 2005, total revenue increased 10%
to $29.1 million compared to $26.5 million for the fourth quarter of
fiscal 2004. Income from operations during the fourth quarter of
fiscal 2005 increased 215% to $4.0 million compared to $1.3 million
for the same period one year ago. Income from continuing operations
before tax benefit in the fourth quarter of fiscal 2005 increased 302%
to $4.0 million compared to $1.0 million in the year-ago period. There
was no income or loss from discontinued operations during either the
fourth quarter of fiscal 2005 or in the year-ago period. Net income
for the fourth quarter of fiscal 2005 was $11.2 million, or $0.21 per
diluted share, compared to net income of $1.0 million, or $0.02 per
diluted share, one year ago.
Full Year Results
For the fiscal year ended June 30, 2005, total revenue increased
10% to $112.2 million compared to $101.8 million for fiscal 2004.
Income from operations during fiscal 2005 increased 85% to $9.3
million compared to $5.0 million for the same period one year ago.
Income from continuing operations before tax benefit during fiscal
2005 increased 40% to $8.7 million compared to $6.2 million in the
prior fiscal year. There was no income or loss from discontinued
operations during fiscal 2005 compared to a loss of $1.6 million in
the year-ago period. Net income for fiscal 2005 was $15.9 million, or
$0.31 per diluted share, compared to net income of $4.7 million, or
$0.09 per diluted share, one year ago.
Income from continuing operations during fiscal 2004 included $2.2
million of other income that related to a previously disclosed
settlement of an alleged Medicare obligation. Income from operations
during fiscal 2005 and 2004 and the fourth quarters of both years
included a gain on extinguishment of debt. In fiscal years 2005 and
2004, the gain was $3.0 million and $0.9 million, respectively. In the
fourth quarter of fiscal 2005 and 2004, the gain was $2.5 million and
$0.5 million, respectively. These gains related to a previously
disclosed arrangement to extinguish an obligation to an HMO, and the
obligation to that HMO has now been fully extinguished. Also, income
from continuing operations for the fourth fiscal quarter of 2005 and
the full year includes a one-time tax benefit of $7.2 million which
resulted from the elimination of our valuation allowance for deferred
tax assets. These items will not contribute to Continucare's results
of operations for future periods.
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.
Balance Sheet
Continucare's cash and cash equivalents increased to $5.8 million
at June 30, 2005 from $0.7 million one year earlier, while total
liabilities were reduced to $3.8 million at the end of fiscal 2005
from $5.5 million one year earlier. The long-term portion of long-term
debt at June 30, 2005 was $38,000. Working capital increased by $7.4
million to $6.9 million at June 30, 2005 from a working capital
deficit of $0.5 million one year earlier, and shareholders' equity
increased by $13.9 million to $30.3 million at June 30, 2005 from
$16.4 million one year earlier.
"Fiscal 2005 was a record year for Continucare," commented Richard
C. Pfenniger, Jr., Continucare's Chief Executive Officer. "Revenues
grew and profits increased significantly. At the same time, our
financial position, as evidenced by our balance sheet, improved
dramatically. During the course of the past fiscal year, we completed
the transformation of Continucare. Our company is now a profitable,
prosperous and growing enterprise. In the new fiscal year we intend to
build on the successes of the past two years by pursuing more robust
internal growth and seeking further improvement in operating
efficiencies while continuing our commitment to prudent financial
discipline."
Share Repurchase Plan
Continucare also announced that to date it has repurchased 957,467
shares of its common stock at a total cost of approximately $2.5
million under a previously announced 2,500,000 share stock repurchase
program. An aggregate of 1,542,533 shares remain available for
purchase under the plan. The plan 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.
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 that 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, risks and uncertainties relating to our ability to
implement our growth strategy and to manage future growth, including
our ability to achieve expected levels of patient volumes and control
the costs of providing services, risks relating to pricing and other
pressures exerted on us by managed care organizations, 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, the risk that future legislation, changes in
governmental regulations, including possible changes in Medicare
programs, could adversely impact our operations or reduce
reimbursements to health care providers and insurers, risks and
uncertainties relating to our current dependence on two HMOs for
substantially all of our revenues, including our ability to work
together effectively with our HMO affiliates, uncertainties relating
to technological and pharmaceutical improvements that increase the
cost of providing, or reduce the demand for, health care, the risk
that we may not conduct repurchases of our common stock in the full
amount authorized under our repurchase program, the risk that any
repurchases of our common stock that we effect may adversely impact
our future liquidity or capital resources, and 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, 2005 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
June 30, June 30,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $5,780,544 $720,360
Other receivables, net 144,973 423,215
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $11,700,000 and
$11,450,000 at June 30, 2005 and 2004,
respectively 3,485,530 2,701,878
Prepaid expenses and other current assets 719,577 992,321
Deferred tax assets, net 585,571 -
------------ ------------
Total current assets 10,716,195 4,837,774
Certificates of deposit, restricted 530,350 30,000
Equipment, furniture and leasehold
improvements, net 670,665 492,054
Goodwill, net of accumulated amortization of
approximately $7,608,000 14,342,510 14,342,510
Managed care contracts, net of accumulated
amortization of approximately $2,422,000 and
$2,069,000 at June 30, 2005 and 2004,
respectively 1,090,046 1,442,858
Deferred financing costs, net of accumulated
amortization of $222,500 at June 30, 2004 - 662,502
Deferred tax assets, net 6,721,353 -
Other assets, net 66,816 100,483
------------ ------------
Total assets $34,137,935 $21,908,181
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $660,139 $504,151
Accrued expenses and other current
liabilities 2,620,802 1,794,019
Note payable 520,000 -
Deferred revenue - 3,000,000
------------ ------------
Total current liabilities 3,800,941 5,298,170
Capital lease obligations, less current
portion 38,361 101,177
Related party notes payable, less current
portion - 117,717
------------ ------------
Total liabilities 3,839,302 5,517,064
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0001 par value: 100,000,000
shares authorized; 52,591,895 shares issued
and 49,595,702 shares outstanding at June
30, 2005 and 53,296,379 shares issued and
50,300,186 shares outstanding at June 30,
2004 4,960 5,031
Additional paid-in capital 67,924,068 69,907,973
Accumulated deficit (32,205,694) (48,097,186)
Treasury stock, 2,996,193 shares at June 30,
2005 and 2004 (5,424,701) (5,424,701)
------------ ------------
Total shareholders' equity 30,298,633 16,391,117
------------ ------------
Total liabilities and shareholders'
equity $34,137,935 $21,908,181
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three-Months Ended Year Ended
------------------------ --------------------------
6/30/05 6/30/04 6/30/05 6/30/04
------------------------ --------------------------
Revenue:
Medical services
revenue, net $28,986,500 $26,327,520 $111,316,174 $101,123,346
Management fee
revenue and other
income 147,480 164,242 914,939 700,756
------------------------ --------------------------
Total revenue 29,133,980 26,491,762 112,231,113 101,824,102
Operating expenses:
Medical services:
Medical claims 21,511,053 20,400,851 81,104,665 76,333,580
Other direct
costs 2,855,987 2,904,081 12,648,297 11,665,894
------------------------ --------------------------
Total medical
services 24,367,040 23,304,932 93,752,962 87,999,474
Administrative
payroll and
employee benefits 1,403,358 904,909 5,107,672 3,822,949
General and
administrative 1,910,150 1,525,589 7,059,602 5,821,871
Gain on
extinguishment of
debt (2,500,000) (500,000) (3,000,000) (850,000)
------------------------ --------------------------
Total
operating
expenses 25,180,548 25,235,430 102,920,236 96,794,294
------------------------ --------------------------
Income from
operations 3,953,432 1,256,332 9,310,877 5,029,808
Other income
(expense):
Interest income 46,465 2,000 108,000 4,793
Interest expense (2,847) (263,155) (702,946) (1,006,082)
Medicare
settlement
related to
terminated
operations - - - 2,218,278
------------------------ --------------------------
Income from
continuing
operations
before income
tax benefit 3,997,050 995,177 8,715,931 6,246,797
Income tax benefit 7,175,561 - 7,175,561 -
------------------------ --------------------------
Income from
continuing
operations 11,172,611 995,177 15,891,492 6,246,797
Income (loss) from
discontinued
operations:
Home health
operations - - - (1,666,934)
Terminated IPA - - - 73,091
------------------------ --------------------------
Loss from
discontinued
operations - - - (1,593,843)
------------------------ --------------------------
Net income $11,172,611 $995,177 $15,891,492 $4,652,954
======================== ==========================
Basic net income
(loss) per common
share:
Income from
continuing
operations $.22 $.02 $.32 $.14
Loss from
discontinued
operations - - - (.03)
------------------------ --------------------------
Net income per
common share $.22 $.02 $.32 $.11
======================== ==========================
Diluted net income
(loss) per common
share:
Income from
continuing
operations $.21 $.02 $.31 $.12
Loss from
discontinued
operations - - - (.03)
------------------------ --------------------------
Net income per
common share $.21 $.02 $.31 $.09
======================== ==========================
Basic weighted
average common
shares outstanding 49,971,498 47,728,126 50,231,870 43,763,835
======================== ==========================
Diluted weighted
average common
shares outstanding 52,079,377 52,194,597 52,006,064 49,232,716
======================== ==========================
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30,
------------------------
2005 2004
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $15,891,492 $4,652,954
Loss from discontinued operations - 1,593,843
------------ -----------
Income from continuing operations 15,891,492 6,246,797
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 1,258,289 1,201,675
Provision for bad debts 15,787 104,296
Recognition of compensation expense related
to issuance of stock options 264,802 -
Medicare settlement related to terminated
operations - (2,218,278)
Gain on extinguishment of debt (3,000,000) (850,000)
Deferred tax benefit (7,306,924) -
Changes in operating assets and liabilities,
excluding the effect of disposals:
Other receivables 262,455 (12,450)
Due from HMOs, net (783,652) (1,287,409)
Prepaid expenses and other current assets 171,230 (105,724)
Other assets 33,667 3,763
Accounts payable 155,988 (179,337)
Accrued expenses and other current
liabilities 894,710 (608,629)
------------ -----------
Net cash provided by continuing operations 7,857,844 2,294,704
Net cash used in discontinued operations (151,399) (998,872)
------------ -----------
Net cash provided by operating activities 7,706,445 1,295,832
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificate of deposit (500,000) (30,000)
Proceeds from maturity of certificates of
deposit 101,165 29,743
Purchase of property and equipment (421,586) (144,585)
------------ -----------
Net cash used in continuing operations (820,421) (144,842)
Net cash used in discontinued operations - (938)
------------ -----------
Net cash used in investing activities (820,421) (145,780)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 1,040,000 -
Payments on note payable (520,000) -
Proceeds from issuance of stock in private
placement transaction - 3,464,609
Payment of fees related to private placement
transactions (98,244) -
Payments on convertible subordinated notes - (233,716)
Payments on related party notes (7,882) (35,953)
Principal repayments under capital lease
obligations (74,630) (76,000)
Payment of deferred financing costs - (15,000)
Proceeds from exercise of stock options 91,699 351,370
Repurchase of common stock (2,256,783) -
Payments on credit facility - (2,315,000)
Repayments to Medicare per agreement - (1,730,745)
------------ -----------
Net cash used in financing activities (1,825,840) (590,435)
------------ -----------
Net increase in cash and cash equivalents 5,060,184 559,617
Cash and cash equivalents at beginning of
fiscal year 720,360 160,743
------------ -----------
Cash and cash equivalents at end of fiscal
year $5,780,544 $720,360
============ ===========
CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105