Exhibit 99.01
Continucare Corporation Reports Financial Results for Second Fiscal Quarter of
Fiscal 2006; Adjusted Second Fiscal Quarter Revenue And Income From Operations
Increase 13% And 281%, Respectively
MIAMI--(BUSINESS WIRE)--Feb. 9, 2006--Continucare Corporation
(AMEX:CNU) today reported financial results for its second quarter of
fiscal 2006 and the six-months ended December 31, 2005.
Second Quarter Results
For the second quarter of fiscal 2006, total revenue increased to
$29.4 million compared to $27.1 million for the second quarter of
fiscal 2005. Income from operations was $2.3 million for the second
quarter of fiscal 2006 and 2005. Income before income taxes in the
second quarter of fiscal 2006 was $2.4 million compared to $2.1
million in the year-ago period. Net income for the second quarter of
fiscal 2006 was $1.5 million, or $0.03 per diluted share, compared to
net income of $2.1 million, or $0.04 per diluted share, one year ago.
Six-Month Results
For the six-months ended December 31, 2005, total revenue
increased to $59.3 million compared to $53.3 million in the same
period one year ago. Income from operations during the six-month
period increased to $4.5 million compared to $3.7 million for the same
period one year ago. Income before income taxes during the six-month
period ended December 31, 2005 increased to $4.7 million compared to
$3.2 million in the year-ago period. Net income for the six-month
period was $2.9 million, or $0.06 per diluted share, compared to $3.2
million, or $0.06 per diluted share.
Adjusted Results
Both the second quarter of fiscal 2005 and the six-months ended
December 31, 2004 include a $1.1 million one-time distribution from
one of our HMO affiliates relating to Medicare Advantage funding in
revenue and income from operations, and income from operations for
those periods also includes a $0.5 million gain on the extinguishment
of debt. Without giving effect to these items, revenue for the second
quarter of fiscal 2005 and the six-months ended December 31, 2004 was
$26.0 million and $52.2 million, respectively, and income from
operations was $0.7 million and $2.1 million, respectively. Also, as
required by accounting guidance relating to stock options that became
effective for the first quarter of fiscal 2006, Continucare's results
for the second quarter of fiscal 2006 and the six-months ended
December 31, 2005 include $0.4 million and $0.6 million, respectively,
of compensation expense related to stock options resulting from
adoption of this accounting guidance. Without giving effect to the
adoption of this new accounting guidance, income from operations was
$2.7 million and $5.2 million for the second quarter of fiscal 2006
and the six-months ended December 31, 2005. Excluding the effect of
the three items, revenue for the second quarter of fiscal 2006 and the
six-months ended December 31, 2005 increased 13% and 14%,
respectively, compared to the same period of fiscal 2005, and income
from operations increased approximately 281% and 151%, respectively,
compared to the same period a year ago.
In addition, the results for the second quarter of fiscal 2006 and
the six-month period ended December 31, 2005 include a provision for
income taxes of $0.9 million and $1.8 million, respectively. The
fiscal 2005 periods did not reflect a provision for income tax expense
because, in fiscal 2005, Continucare reduced its valuation allowance
for deferred tax assets to offset income tax liabilities generated
from operations. As previously announced, Continucare eliminated its
valuation allowance for its deferred tax assets during the fourth
quarter of fiscal 2005.
Balance Sheet
Continucare's cash and cash equivalents were $7.2 million at
December 31, 2005 compared to $5.8 million at June 30, 2005 while
working capital increased to $12.1 million at quarter-end from $6.9
million at June 30, 2005 and total liabilities were reduced to $2.4
million at December 31, 2005 from $3.8 million at June 30, 2005. The
long-term portion of debt at December 31, 2005 was $63,000.
Shareholders' equity increased to $33.6 million at December 31, 2005
from $30.3 million at June 30, 2005.
Commenting on the financial results, Richard C. Pfenniger, Jr.,
Continucare's Chief Executive Officer, said, "We turned in another
solid performance in our second fiscal quarter with our financial
results exhibiting continued improvement in our business. Excluding
the one-time Medicare Advantage distribution and the gain on
extinguishment of debt we recognized in the prior year and the effect
of stock option expense in the current year resulting from the
adoption of new accounting guidance, our revenues increased a solid
13% over the same quarter of fiscal 2005 and our income from
operations increased by a more substantial 281%. At the same time, our
financial position as evidenced by our balance sheet continued to
strengthen. We have increased our cash position and continued to
reduce total liabilities. As we begin the second half of our fiscal
year, we remain optimistic and expect further growth of our business."
Continucare Corporation (http://www.continucare.com),
headquartered in Miami, Florida, is a holding company with
subsidiaries engaged in the business of providing primary care
physician services on an outpatient basis through a variety of managed
care 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 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, 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 STATEMENTS OF OPERATIONS (Unaudited)
Three-Months Ended
December 31,
-------------------------
2005 2004
------------ ------------
Revenue:
Medical services revenue, net $29,246,624 $26,693,612
Management fee revenue and other income 136,082 420,063
------------ ------------
Total revenue 29,382,706 27,113,675
Operating expenses:
Medical services:
Medical claims 20,147,583 18,600,734
Other direct costs 3,134,753 3,621,073
------------ ------------
Total medical services 23,282,336 22,221,807
------------ ------------
Administrative payroll and employee benefits 1,782,539 1,300,388
General and administrative 2,015,741 1,743,731
Gain on extinguishment of debt - (500,000)
------------ ------------
Total operating expenses 27,080,616 24,765,926
------------ ------------
Income from operations 2,302,090 2,347,749
Other income (expense):
Interest income 63,689 18,192
Interest expense (4,832) (227,544)
------------ ------------
Income before income tax provision 2,360,947 2,138,397
Income tax provision 903,097 -
------------ ------------
Net income $ 1,457,850 $ 2,138,397
============ ============
Net income per common share:
Basic $ .03 $ .04
============ ============
Diluted $ .03 $ .04
============ ============
Weighted average common shares outstanding:
Basic 49,764,617 50,311,780
============ ============
Diluted 51,134,864 51,887,604
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six-Months Ended
December 31,
-------------------------
2005 2004
------------ ------------
Revenue:
Medical services revenue, net $58,976,261 $52,721,141
Management fee revenue and other income 277,596 600,658
------------ ------------
Total revenue 59,253,857 53,321,799
Operating expenses:
Medical services:
Medical claims 41,553,762 37,616,515
Other direct costs 6,267,177 6,697,326
------------ ------------
Total medical services 47,820,939 44,313,841
------------ ------------
Administrative payroll and employee benefits 3,177,886 2,467,844
General and administrative 3,717,949 3,338,039
Gain on extinguishment of debt - (500,000)
------------ ------------
Total operating expenses 54,716,774 49,619,724
------------ ------------
Income from operations 4,537,083 3,702,075
Other income (expense):
Interest income 122,831 21,311
Interest expense (7,801) (475,960)
------------ ------------
Income before income tax provision 4,652,113 3,247,426
Income tax provision 1,755,511 -
------------ ------------
Net income $ 2,896,602 $ 3,247,426
============ ============
Net income per common share:
Basic $ .06 $ .06
============ ============
Diluted $ .06 $ .06
============ ============
Weighted average common shares outstanding:
Basic 49,813,860 50,305,983
============ ============
Diluted 51,192,371 51,786,472
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31, June 30,
ASSETS 2005 2005
------------- ------------
Current assets:
Cash and cash equivalents $ 7,214,215 $ 5,780,544
Other receivables, net 37,275 144,973
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $11,109,000 and
$11,700,000 at December 31, 2005 and
June 30, 2005, respectively 5,791,738 3,485,530
Prepaid expenses and other current assets 804,676 719,577
Deferred tax assets, net 585,571 585,571
------------- ------------
Total current assets 14,433,475 10,716,195
Certificates of deposit, restricted 543,900 530,350
Equipment, furniture and leasehold
improvements, net 707,946 670,665
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 $2,598,000
and $2,422,000 at December 31, 2005 and
June 30, 2005, respectively 913,640 1,090,046
Deferred tax assets, net 5,032,364 6,721,353
Other assets, net 46,021 66,816
------------- ------------
Total assets $36,019,856 $34,137,935
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 395,523 $ 660,139
Accrued expenses and other current
liabilities 1,926,759 2,489,439
Note payable - 520,000
Income taxes payable 57,885 131,363
------------- ------------
Total current liabilities 2,380,167 3,800,941
Capital lease obligations, less current
portion 63,302 38,361
------------- ------------
Total liabilities 2,443,469 3,839,302
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0001 par value:
100,000,000 shares authorized; 49,782,782
shares issued and outstanding at
December 31, 2005 and 52,591,895 shares
issued and 49,595,702 shares outstanding
at June 30, 2005 4,978 4,960
Additional paid-in capital 62,880,501 67,924,068
Accumulated deficit (29,309,092) (32,205,694)
Treasury stock, 2,996,193 shares at
June 30, 2005 - (5,424,701)
------------- ------------
Total shareholders' equity 33,576,387 30,298,633
------------- ------------
Total liabilities and shareholders'
equity $36,019,856 $34,137,935
============= ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six-Months Ended
December 31,
-----------------------
2005 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,896,602 $3,247,426
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 353,507 727,759
Provision for bad debts 19,171 -
Stock-based compensation expense 616,438 254,000
Deferred tax expense 1,688,989 -
Gain on extinguishment of debt - (500,000)
Changes in operating assets and liabilities,
excluding the effect of disposals:
Other receivables 88,527 279,276
Due from HMOs, net (2,306,208) 623,025
Prepaid expenses and other current assets (85,099) 71,336
Other assets 20,795 27,527
Accounts payable (264,616) 466,160
Accrued expenses and other current
liabilities (437,703) 95,589
Income taxes payable (73,478) -
----------- -----------
Net cash provided by continuing operations 2,516,925 5,292,098
Net cash used in discontinued operations (32,512) (58,482)
----------- -----------
Net cash provided by operating activities 2,484,413 5,233,616
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase of) proceeds from maturities of
certificates of deposit (13,550) 101,165
Purchase of equipment and furniture (105,276) (216,280)
----------- -----------
Net cash used in investing activities (118,826) (115,115)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - 1,040,000
Payments on note payable (520,000) -
Payments on related party notes - (4,026)
Payment of fees related to private placement
transaction - (45,000)
Principal repayments under capital lease
obligations (74,450) (38,654)
Proceeds from exercise of stock options 358,668 36,000
Repurchase and retirement of common stock (696,134) -
----------- -----------
Net cash (used in) provided by financing
activities (931,916) 988,320
----------- -----------
Net increase in cash and cash equivalents 1,433,671 6,106,821
Cash and cash equivalents at beginning of
period 5,780,544 720,360
----------- -----------
Cash and cash equivalents at end of period $7,214,215 $6,827,181
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CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105