EXHIBIT 99.01
Continucare Corporation Reports Financial Results for Fourth Quarter and
Fiscal Year 2006; Fourth Quarter and Full Year Adjusted Income from Operations
Increased 13% and 78%, Respectively, from Same Periods One Year Ago
MIAMI--(BUSINESS WIRE)--Sept. 18, 2006--Continucare Corporation (AMEX:CNU)
today reported financial results for its fourth quarter of fiscal 2006 and
fiscal year ended June 30, 2006. Financial highlights for the fiscal quarter
included:
-- Total revenue of $36.2 million, a 24% increase from $29.1 million in
the fourth quarter of fiscal 2005;
-- Income from operations of $1.3 million compared to $4.0 million for
the same period last year;
-- Income before income taxes of $1.4 million compared to $4.0 million in
the fourth quarter of fiscal 2005; and
-- Net income of $1.1 million, or $0.02 per diluted share, compared to
net income of $11.2 million, or $0.21 per diluted share a year ago.
Full Year Results
For the fiscal year ended June 30, 2006, total revenue was $133.0 million
compared to $112.2 million in the same period one year ago. Income from
operations during fiscal 2006 was $7.9 million compared to $9.3 million for the
same period one year ago. Income before income taxes during fiscal 2006 was $8.3
million compared to $8.7 million in the year-ago period. Net income for fiscal
2006 was $5.3 million, or $0.10 per diluted share, compared to $15.9 million, or
$0.31 per diluted share for fiscal 2005.
Adjusted Results
During both the fourth quarter of fiscal 2005 and the full fiscal year
ended June 30, 2005 events occurred that impacted Continucare's reported
financial results for those periods but which did not have a corresponding
impact on the corresponding periods of fiscal 2006. Likewise, Continucare's
reported financial results for the fourth quarter of fiscal 2006 and the full
fiscal year ended June 30, 2006 were impacted by events which did not impact the
corresponding periods of fiscal 2005. Continucare believes it is helpful to
investors to discuss those events and to compare Continucare's financial results
without giving effect to those items.
Fiscal 2005 Items
-- For the fourth quarter of fiscal 2005 Continucare's income from
operations included a gain on the extinguishment of debt of $2.5
million.
-- For the fiscal year ended June 30, 2005, Continucare's revenue and
income from operations included a $1.1 million one-time distribution
from one of Continucare's HMO affiliates related to Medicare Advantage
funding, and Continucare's income from operations included a gain on
the extinguishment of debt of $3.0 million.
-- Without giving effect to these fiscal 2005 items, revenue for the
fiscal year ended June 30, 2005 would have been $111.1 million, and
income from operations would have been $1.5 million and $5.2 million
for the fourth quarter of fiscal 2005 and the fiscal year ended June
30, 2005, respectively.
Changes in Stock Option Accounting
-- Continucare's results for the fourth quarter of fiscal 2006 and the
fiscal year ended June 30, 2006 included $0.3 million and $1.3
million, respectively, of compensation expense related to stock
options resulting from adoption of accounting guidance that became
effective for the first quarter of fiscal 2006.
-- Without giving effect to the adoption of this new stock option
accounting guidance, income from operations would have been $1.6
million and $9.2 million for the fourth quarter of fiscal 2006 and the
fiscal year ended June 30, 2006, respectively.
Comparison of Adjusted Results
-- Without giving effect to the items discussed above, revenue for the
fiscal year ended June 30, 2006 would have increased approximately 20%
compared to the same period of fiscal 2005, and income from operations
for the fourth quarter of fiscal 2006 and the fiscal year ended June
30, 2006 would have increased approximately 13% and 78%, respectively,
compared to the same period a year ago.
Income Tax Provision
-- In addition, the results for the fourth quarter of fiscal 2006 and the
full fiscal year ended June 30, 2006 included a provision for income
taxes of $0.3 million and $2.9 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 and recognized a tax benefit of
$7.2 million.
Balance Sheet
Continucare's cash and cash equivalents were $10.7 million at June 30, 2006
compared to $5.8 million at June 30, 2005 while working capital increased to
$15.6 million at fiscal year end from $6.9 million at June 30, 2005 and total
liabilities were reduced to $3.1 million at June 30, 2006 from $3.8 million at
June 30, 2005. The long-term portion of debt at June 30, 2006 was $112,000.
Shareholders' equity increased to $37.0 million at June 30, 2006 from $30.3
million at June 30, 2005.
"We are pleased with our fiscal 2006 financial results," stated Richard C.
Pfenniger, Jr., Continucare's Chairman and Chief Executive Officer. "Our
adjusted operating results demonstrate the strong progress we made during the
year. We remain optimistic in our ability to expand upon the opportunities
available to us as a result of the current favorable market conditions in the
Medicare arena."
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 24,000 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 and uncertainties relating to our proposed acquisition of Miami Dade
Health Centers, Inc. and its affiliated companies, including the risk that we
may not realize the expected benefits of the acquisition and the risk that we
may be unable to successfully integrate the Miami Dade Health Centers companies
into our business and achieve expected synergies, 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, 2006 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, 2006 June 30, 2005
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 10,681,685 $ 5,780,544
Other receivables, net 231,832 144,973
Due from HMOs, net 6,339,526 3,485,530
Prepaid expenses and other current
assets 689,096 719,577
Deferred tax assets, net 658,768 585,571
------------ ------------
Total current assets 18,600,907 10,716,195
Certificates of deposit, restricted 1,126,987 530,350
Equipment, furniture and leasehold
improvements, net 824,220 670,665
Goodwill, net 14,342,510 14,342,510
Managed care contracts, net 737,234 1,090,046
Deferred tax assets, net 3,881,061 6,721,353
Other assets, net 551,927 66,816
------------ ------------
Total assets $ 40,064,846 $ 34,137,935
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 575,925 $ 660,139
Accrued expenses and other current
liabilities 2,401,933 2,620,802
Note payable - 520,000
------------ ------------
Total current liabilities 2,977,858 3,800,941
Capital lease obligations, less current
portion 112,068 38,361
------------ ------------
Total liabilities 3,089,926 3,839,302
Commitments and contingencies
Shareholders' equity:
Common stock 5,024 4,960
Additional paid-in capital 63,838,051 67,924,068
Accumulated deficit (26,868,155) (32,205,694)
Treasury stock - (5,424,701)
------------ ------------
Total shareholders' equity 36,974,920 30,298,633
------------ ------------
Total liabilities and shareholders'
equity $ 40,064,846 $ 34,137,935
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three-Months Ended Year Ended
-------------------------- ---------------------------
6/30/06 6/30/05 6/30/06 6/30/05
-------------------------- ---------------------------
Revenue:
Medical
services
revenue, net $36,192,717 $ 28,986,500 $132,629,665 $111,316,174
Management fee
revenue and
other income 19,535 147,480 361,247 914,939
-------------------------- ---------------------------
Total
revenue 36,212,252 29,133,980 132,990,912 112,231,113
Operating
expenses:
Medical
services:
Medical
claims 28,141,372 21,511,053 97,781,447 81,104,665
Other direct
costs 3,373,086 2,855,987 13,137,396 12,648,297
-------------------------- ---------------------------
Total
medical
services 31,514,458 24,367,040 110,918,843 93,752,962
Administrative
payroll and
employee
benefits 1,544,635 1,403,358 6,538,295 5,107,672
General and
administrative 1,837,454 1,910,150 7,584,205 7,059,602
Gain on
extinguishment
of debt - (2,500,000) - (3,000,000)
-------------------------- ---------------------------
Total
operating
expenses 34,896,547 25,180,548 125,041,343 102,920,236
-------------------------- ---------------------------
Income from
operations 1,315,705 3,953,432 7,949,569 9,310,877
Other income
(expense):
Interest income 121,778 46,465 331,001 108,000
Interest
expense (2,291) (2,847) (12,870) (702,946)
-------------------------- ---------------------------
Income before
income tax
provision
(benefit) 1,435,192 3,997,050 8,267,700 8,715,931
Income tax
provision
(benefit) 327,020 (7,175,561) 2,930,161 (7,175,561)
-------------------------- ---------------------------
Net income $ 1,108,172 $ 11,172,611 $ 5,337,539 $ 15,891,492
========================== ===========================
Net income per
common share:
Basic $ .02 $ .22 $ .11 $ .32
========================== ===========================
Diluted $ .02 $ .21 $ .10 $ .31
========================== ===========================
Weighted average
common shares
outstanding:
Basic 50,197,034 49,971,498 49,907,898 50,231,870
========================== ===========================
Diluted 51,516,141 52,079,377 51,230,435 52,006,064
========================== ===========================
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30,
---------------------------
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,337,539 $ 15,891,492
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization,
including amortization of deferred
financing costs 695,095 1,258,289
Provision for bad debts 163,105 15,787
Recognition of compensation expense
related to issuance of stock options 1,292,235 264,802
Gain on extinguishment of debt - (3,000,000)
Deferred tax expense (benefit) 2,767,095 (7,306,924)
Changes in operating assets and
liabilities, excluding the effect of
disposals:
Other receivables (249,964) 262,455
Due from HMOs, net (2,853,996) (783,652)
Prepaid expenses and other current
assets 30,481 171,230
Other assets (125,965) 33,667
Accounts payable (84,214) 155,988
Accrued expenses and other current
liabilities (98,580) 894,710
------------ ------------
Net cash provided by continuing
operations 6,872,831 7,857,844
Net cash used in discontinued operations (32,512) (151,399)
------------ ------------
Net cash provided by operating activities 6,840,319 7,706,445
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificate of deposit (596,637) (500,000)
Proceeds from maturity of certificates
of deposit - 101,165
Purchase of property and equipment (280,675) (421,586)
Other assets (359,147) -
------------ ------------
Net cash used in continuing operations (1,236,459) (820,421)
Net cash used in discontinued operations - -
------------ ------------
Net cash used in investing activities (1,236,459) (820,421)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - 1,040,000
Repayments on note payable (520,000) (520,000)
Payment of fees related to private
placement transactions - (98,244)
Payments on related party notes - (7,882)
Principal repayments under capital lease
obligations (127,053) (74,630)
Proceeds from exercise of stock options 640,468 91,699
Repurchase and retirement of common
stock (696,134) (2,256,783)
------------ ------------
Net cash used in financing activities (702,719) (1,825,840)
------------ ------------
Net increase in cash and cash equivalents 4,901,141 5,060,184
Cash and cash equivalents at beginning of
fiscal year 5,780,544 720,360
------------ ------------
Cash and cash equivalents at end of
fiscal year $ 10,681,685 $ 5,780,544
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING TRANSACTIONS:
Retirement of treasury stock $ 5,424,701 $ 2,256,783
============ ============
Stock issued upon conversion of related
party notes payable $ 102,180 $ 14,550
============ ============
Purchase of equipment, furniture and
fixtures with proceeds of capital lease
obligations $ 215,162 $ -
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for taxes $ 270,000 $ -
============ ============
Cash paid for interest $ 12,870 $ 40,229
============ ============
CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, 305-500-2105