EXHIBIT 99.01
Continucare Corporation Reports Financial Results for
Third Quarter of Fiscal 2006;
Third Quarter Revenue Grew 26%; Income From Operations Increased 27%
MIAMI--(BUSINESS WIRE)--May 11, 2006--Continucare Corporation
(AMEX:CNU) today reported financial results for its third quarter of
fiscal 2006 and the nine-months ended March 31, 2006. Financial
highlights for the fiscal quarter included:
-- Total revenues of $37.5 million, a 26% increase from $29.8
million in the third quarter of fiscal 2005;
-- Income from operations of $2.1 million, a 27% increase from
$1.7 million for the same period last year;
-- Income before income taxes of $2.2 million, a 48% increase
from $1.5 million in the third quarter of fiscal 2005; and
-- Net income of $1.3 million, or $0.03 per diluted share,
compared to net income of $1.5 million, or $0.03 per diluted
share a year ago.
Nine-Month Results
For the nine-months ended March 31, 2006, total revenue increased
16% to $96.8 million compared to $83.1 million in the same period one
year ago. Income from operations during the nine-month period
increased 24% to $6.6 million compared to $5.4 million for the same
period one year ago. Income before income taxes during the nine-month
period ended March 31, 2006 increased 45% to $6.8 million compared to
$4.7 million in the year-ago period. Net income for the nine-month
period was $4.2 million, or $0.08 per diluted share, compared to $4.7
million, or $0.09 per diluted share.
Adjusted Results
The nine-months ended March 31, 2005 included in revenue and
income from operations a $1.1 million one-time distribution from one
of Continucare's HMO affiliates relating to Medicare Advantage
funding, and also included in income from operations a $0.5 million
gain on the extinguishment of debt. Without giving effect to these
items, revenue for the nine-months ended March 31, 2005 was $81.9
million, and income from operations was $3.7 million. 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 third quarter of fiscal 2006 and the nine-months ended March
31, 2006 included $0.3 million and $0.9 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 $2.4 million
and $7.6 million for the third quarter of fiscal 2006 and the
nine-months ended March 31, 2006, respectively. Excluding the effect
of these items, revenue for the nine-months ended March 31, 2006
increased approximately 18% compared to the same period of fiscal
2005, and income from operations for the third quarter of fiscal 2006
and the nine-months ended March 31, 2006 increased approximately 47%
and 104%, respectively, compared to the same period a year ago.
In addition, the results for the third quarter of fiscal 2006 and
the nine-month period ended March 31, 2006 included a provision for
income taxes of $0.8 million and $2.6 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 $8.8 million at March
31, 2006 compared to $5.8 million at June 30, 2005 while working
capital increased to $14.7 million at quarter-end from $6.9 million at
June 30, 2005 and total liabilities were reduced to $2.6 million at
March 31, 2006 from $3.8 million at June 30, 2005. The long-term
portion of debt at March 31, 2006 was $52,000. Shareholders' equity
increased to $35.5 million at March 31, 2006 from $30.3 million at
June 30, 2005.
"We are proud to have turned in another outstanding quarter which
reflected significant growth in revenues, meaningfully improved
profit, and a solid cash position," said Richard C. Pfenniger, Jr.
Continucare's Chairman and Chief Executive Officer. "We have worked
hard to make our business more competitive in the marketplace and our
third quarter results demonstrate our success. Moving forward we will
continue to actively seek opportunities for growth by leveraging our
infrastructure to serve more patients, expanding our network of IPAs
and complementing our organic efforts with acquisitions."
About Continucare Corporation
Continucare provides primary care physician services on an
outpatient basis through a network of medical facilities and
independent physician affiliates (IPAs) in the State of Florida. The
Company has 15 medical offices equipped with state-of-the-practice
technology and staffed with experienced physicians and a comprehensive
support staff. In addition, Continucare provides health practice
management services to IPAs who practice primary care medicine in
facilities similar to the Company's medical offices. Continucare
assists these physicians with medical utilization and pharmacy
management and specialist network development, freeing them to devote
more time to patient care. Currently, through its network of medical
facilities and IPAs, the Company provides health care services for
approximately 26,000 patients. For more information please visit
http://www.continucare.com.
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 INCOME (Unaudited)
Three-Months Ended
March 31,
------------------------
2006 2005
----------- -----------
Revenue:
Medical services revenue, net $37,460,690 $29,608,640
Management fee revenue and other income 64,114 166,801
----------- -----------
Total revenue 37,524,804 29,775,441
Operating expenses:
Medical services:
Medical claims 28,086,314 21,976,703
Other direct costs 3,497,134 3,019,984
----------- -----------
Total medical services 31,583,448 24,996,687
----------- -----------
Administrative payroll and employee benefits 1,815,775 1,312,965
General and administrative 2,028,805 1,810,418
----------- -----------
Total operating expenses 35,428,028 28,120,070
----------- -----------
Income from operations 2,096,776 1,655,371
Other income (expense):
Interest income 86,398 40,223
Interest expense (2,779) (224,139)
----------- -----------
Income before income tax provision 2,180,395 1,471,455
Income tax provision 847,630 -
----------- -----------
Net income $ 1,332,765 $ 1,471,455
=========== ===========
Net income per common share:
Basic $ .03 $ .03
=========== ===========
Diluted $ .03 $ .03
=========== ===========
Weighted average common shares outstanding:
Basic 49,832,351 50,345,997
=========== ===========
Diluted 51,046,373 52,373,915
=========== ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Nine-Months Ended
March 31,
------------------------
2006 2005
----------- -----------
Revenue:
Medical services revenue, net $96,436,949 $82,329,781
Management fee revenue and other income 341,710 767,459
----------- -----------
Total revenue 96,778,659 83,097,240
Operating expenses:
Medical services:
Medical claims 69,640,075 59,593,218
Other direct costs 9,764,311 9,717,310
----------- -----------
Total medical services 79,404,386 69,310,528
----------- -----------
Administrative payroll and employee benefits 4,993,661 3,780,809
General and administrative 5,746,754 5,148,457
Gain on extinguishment of debt - (500,000)
----------- -----------
Total operating expenses 90,144,801 77,739,794
----------- -----------
Income from operations 6,633,858 5,357,446
Other income (expense):
Interest income 209,229 61,534
Interest expense (10,580) (700,099)
----------- -----------
Income before income tax provision 6,832,507 4,718,881
Income tax provision 2,603,141 -
----------- -----------
Net income $ 4,229,366 $ 4,718,881
=========== ===========
Net income per common share:
Basic $ .08 $ .09
=========== ===========
Diluted $ .08 $ .09
=========== ===========
Weighted average common shares outstanding:
Basic 49,820,024 50,319,126
=========== ===========
Diluted 51,143,705 51,982,091
=========== ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS March 31, June 30,
2006 2005
------------ -------------
Current assets:
Cash and cash equivalents $ 8,802,949 $ 5,780,544
Other receivables, net 200,761 144,973
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $13,700,000 and
$11,700,000 at March 31, 2006 and
June 30, 2005, respectively 6,868,227 3,485,530
Prepaid expenses and other current assets 797,558 719,577
Deferred tax assets, net 585,571 585,571
------------ ------------
Total current assets 17,255,066 10,716,195
Certificates of deposit, restricted 548,373 530,350
Equipment, furniture and leasehold
improvements, net 755,070 670,665
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 $2,687,000
and $2,422,000 at March 31, 2006 and
June 30, 2005, respectively 825,436 1,090,046
Deferred tax assets, net 4,214,135 6,721,353
Other assets, net 151,358 66,816
------------ ------------
Total assets $ 38,091,948 $ 34,137,935
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 432,156 $ 660,139
Accrued expenses and other current
liabilities 2,037,561 2,489,439
Note payable - 520,000
Income taxes payable 87,286 131,363
------------ ------------
Total current liabilities 2,557,003 3,800,941
Capital lease obligations, less current
portion 52,043 38,361
------------ ------------
Total liabilities 2,609,046 3,839,302
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0001 par value:
100,000,000 shares authorized; 50,130,812
shares issued and outstanding at
March 31, 2006 and 52,591,895 shares
issued and 49,595,702 shares outstanding
at June 30, 2005 5,013 4,960
Additional paid-in capital 63,454,217 67,924,068
Accumulated deficit (27,976,328) (32,205,694)
Treasury stock, 2,996,193 shares at
June 30, 2005 - (5,424,701)
------------ ------------
Total shareholders' equity 35,482,902 30,298,633
------------ ------------
Total liabilities and shareholders'
equity $ 38,091,948 $ 34,137,935
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine-Months Ended
March 31,
-----------------------
2006 2005
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,229,366 $4,718,881
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
amortization of deferred financing costs 518,897 1,101,481
Provision for bad debts 159,518 -
Stock-based compensation expense 959,140 261,627
Deferred tax expense 2,507,218 -
Gain on extinguishment of debt - (500,000)
Changes in operating assets and liabilities,
excluding the effect of disposals:
Other receivables (215,306) 199,710
Due from HMOs, net (3,382,697) 306,554
Prepaid expenses and other current assets (77,981) 65,091
Other assets (4,206) 33,178
Accounts payable (227,983) 25,848
Accrued expenses and other current
liabilities (313,913) 727,905
Income taxes payable (44,077) -
----------- -----------
Net cash provided by continuing operations 4,107,976 6,940,275
Net cash used in discontinued operations (32,512) (89,454)
----------- -----------
Net cash provided by operating activities 4,075,464 6,850,821
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (18,023) (398,835)
Purchase of equipment and furniture (229,587) (406,578)
Other assets (80,336) -
----------- -----------
Net cash used in investing activities (327,946) (805,413)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - 1,040,000
Payments on note payable (520,000) (259,051)
Payment of fees related to private placement
transaction - (98,244)
Payments on related party notes - (4,358)
Principal repayments under capital lease
obligations (98,697) (56,470)
Proceeds from exercise of stock options 589,718 91,700
Repurchase and retirement of common stock (696,134) (346,410)
----------- -----------
Net cash (used in) provided by financing
activities (725,113) 367,167
----------- -----------
Net increase in cash and cash equivalents 3,022,405 6,412,575
Cash and cash equivalents at beginning of
period 5,780,544 720,360
----------- -----------
Cash and cash equivalents at end of period $8,802,949 $7,132,935
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CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105