Exhibit 99.01
Continucare Corporation Reports Financial Results for Second Quarter
of Fiscal 2007
MIAMI--(BUSINESS WIRE)--Feb. 8, 2007--Continucare Corporation
(AMEX:CNU) today reported financial results for its second quarter of
fiscal 2007 and the six months ended December 31, 2006. Financial
highlights for the quarter and other recent events include:
-- Introduction of Continucare ValuClinic(TM);
-- Completion of Miami Dade Health Centers acquisition and
integration proceeding as planned;
-- Total revenue of $55.4 million, an 89% increase from $29.4
million in the second quarter of fiscal 2006;
-- Income from operations of $2.2 million compared to $2.3 million
for the same period last year; and
-- Net income of $1.4 million, or $0.02 per diluted share, as
compared to $1.5 million, or $0.03 per diluted share, for the same
period a year ago.
Results of operations for the second quarter of fiscal 2007
include approximately $0.1 million of charges relating to the
restructuring of the former Miami Dade Health Centers, which we
acquired on October 1, 2006. Continucare had previously estimated that
restructuring charges would be between $0.5 million and $0.7 million.
The lower actual amount is primarily attributable to lower than
estimated lease termination costs. Continucare does not expect to
incur material restructuring charges related to Miami Dade Health
Centers in future periods.
Six-Month Results
For the six-months ended December 31, 2006, total revenue
increased 54% to $91.3 million compared to $59.3 million in the same
period one year ago. Income from operations during the six-month
period was $4.3 million compared to $4.5 million for the same period
one year ago. Net income for the six-month period was $2.8 million, or
$0.05 per diluted share, compared to $2.9 million, or $0.06 per
diluted share, one year earlier.
"Activity is at a high level and we continue to make important
advances with our business," said Richard C. Pfenniger, Jr.,
Continucare's Chairman and Chief Executive Officer. "Our second fiscal
quarter revenues increased substantially with a significant portion of
the improvement relating to the inclusion within our operations of the
recently acquired Miami Dade Health Centers. We are pleased with the
integration effort to date. We have completely integrated the
management teams, consolidated three facilities - two medical centers
and one outpatient diagnostic imaging center - into other existing
facilities, and are working diligently to realize other expected
efficiencies from the combination, including, in particular, those
relating to medical utilization. We continue to believe that the
acquisition will be accretive to earnings during the first full year
of combined operations.
"Our financial position following the acquisition of Miami Dade
Health Centers remains strong and is improving. In connection with the
acquisition, we incurred approximately $7.6 million of consolidated
net indebtedness and used a significant portion of our available cash.
Since the closing, however, we have repaid nearly all of the increased
indebtedness and begun replenishing our cash position.
"We are also continuing to prepare for the opening of our first
Continucare ValuClinic(TM) health centers. We are making good progress
and currently expect to have our first four health centers, which will
be located within Sedano's Pharmacy stores in South Florida, opened
sometime in the Spring of this year," concluded Mr. Pfenniger.
Balance Sheet
Continucare's cash and cash equivalents were $1.8 million at
December 31, 2006 compared to $10.7 million at June 30, 2006, while
working capital was $7.4 million at December 31, 2006 compared to
$15.6 million at June 30, 2006. Total liabilities were $12.8 million
at December 31, 2006 as compared to $4.7 million at June 30, 2006.
Shareholders' equity increased to $99.3 million at December 31, 2006
from $37.0 million at June 30, 2006.
About Continucare ValuClinic(TM)
Continucare ValuClinic(TM) is a new line of consumer-oriented,
retail-based health centers which will offer treatment for common
illnesses such as the flu, bronchitis, strep throat, pink eye, skin
infections and seasonal allergies, in a quick, convenient, and
patient-friendly health care setting. Continucare ValuClinic(TM) will
also offer other high demand health care services such as common
vaccinations, physical examinations and diagnostic screenings. The
clinics will be staffed primarily by certified nurse practitioners and
physician assistants and will be open seven days a week with extended
hours on weekdays. No appointment will be necessary and fees for
services will represent a meaningful discount to care provided in more
traditional health care settings.
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.
Continucare has 18 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
South Florida. 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,
Continucare provides health care services for approximately 40,000
patients. For more information please visit 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 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 that the acquisition may not
ultimately be accretive to earnings, the risk that we may be unable to
successfully complete the integration of the Miami Dade Health Centers
companies into our business and achieve expected synergies, and the
risk that further restructuring or other acquisition-related charges
may be required in future periods, risks relating to the timely
opening of Continucare ValuClinic health centers as currently
scheduled, 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
(Unaudited)
ASSETS December 31, June 30,
2006 2006
------------- ------------
Current assets:
Cash and cash equivalents $1,819,324 $10,681,685
Other receivables, net 274,820 231,832
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $20,436,000 and
$14,207,000 at December 31, 2006 and June
30, 2006, respectively 9,006,113 6,339,526
Prepaid expenses and other current assets 1,504,565 689,096
Deferred tax assets, net 1,263,118 658,768
------------- ------------
Total current assets 13,867,940 18,600,907
Certificates of deposit, restricted 1,157,727 1,126,987
Property and equipment, net 8,509,630 824,220
Goodwill, net of accumulated amortization of
approximately $7,610,000 76,309,510 14,342,510
Intangible assets, net of accumulated
amortization of $360,000 7,070,168 -
Managed care contracts, net of accumulated
amortization of approximately $2,949,000
and $2,773,000 at December 31, 2006 and
June 30, 2006, respectively 560,828 737,234
Deferred tax assets, net 4,456,762 5,519,095
Other assets, net 173,610 551,927
------------- ------------
Total assets $112,106,175 $41,702,880
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $978,830 $575,925
Accrued expenses and other current
liabilities 5,484,325 2,401,933
------------- ------------
Total current liabilities 6,463,155 2,977,858
Capital lease obligations, less current
portion 136,695 112,068
Deferred tax liability 6,181,504 1,638,034
Other liability 39,068 -
------------- ------------
Total liabilities 12,820,422 4,727,960
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0001 par value:
100,000,000 shares authorized; 70,003,567
shares issued and outstanding at December
31, 2006 and 50,242,478 shares issued and
outstanding at June 30, 2006 7,000 5,024
Additional paid-in capital 123,369,117 63,838,051
Accumulated deficit (24,090,364) (26,868,155)
------------- ------------
Total shareholders' equity 99,285,753 36,974,920
------------- ------------
Total liabilities and shareholders' equity$112,106,175 $41,702,880
============= ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
December 31,
-------------------------
2006 2005
------------ ------------
Revenue:
Medical services revenue, net $55,276,078 $29,246,624
Management fee revenue and other income 123,529 136,082
------------ ------------
Total revenue 55,399,607 29,382,706
Operating expenses:
Medical services:
Medical claims 40,123,259 20,147,583
Other direct costs 6,393,501 3,134,753
------------ ------------
Total medical services 46,516,760 23,282,336
------------ ------------
Administrative payroll and employee
benefits 2,740,149 1,782,539
General and administrative 3,932,673 2,015,741
------------ ------------
Total operating expenses 53,189,582 27,080,616
------------ ------------
Income from operations 2,210,025 2,302,090
Other income (expense):
Interest income 50,621 63,689
Interest expense (36,187) (4,832)
------------ ------------
Income before income tax provision 2,224,459 2,360,947
Income tax provision 843,784 903,097
------------ ------------
Net income $1,380,675 $1,457,850
============ ============
Net income per common share:
Basic $.02 $.03
============ ============
Diluted $.02 $.03
============ ============
Weighted average common shares outstanding:
Basic 70,091,102 49,764,617
============ ============
Diluted 71,232,537 51,134,864
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended
December 31,
-------------------------
2006 2005
------------ ------------
Revenue:
Medical services revenue, net $91,157,993 $58,976,261
Management fee revenue and other income 175,211 277,596
------------ ------------
Total revenue 91,333,204 59,253,857
Operating expenses:
Medical services:
Medical claims 67,184,301 41,553,762
Other direct costs 9,704,695 6,267,177
------------ ------------
Total medical services 76,888,996 47,820,939
------------ ------------
Administrative payroll and employee
benefits 4,365,384 3,177,886
General and administrative 5,769,032 3,717,949
------------ ------------
Total operating expenses 87,023,412 54,716,774
------------ ------------
Income from operations 4,309,792 4,537,083
Other income (expense):
Interest income 204,743 122,831
Interest expense (39,121) (7,801)
------------ ------------
Income before income tax provision 4,475,414 4,652,113
Income tax provision 1,697,623 1,755,511
------------ ------------
Net income $2,777,791 $2,896,602
============ ============
Net income per common share:
Basic $.05 $.06
============ ============
Diluted $.05 $.06
============ ============
Weighted average common shares outstanding:
Basic 60,169,568 49,813,860
============ ============
Diluted 61,377,276 51,192,371
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31,
------------------------
2006 2005
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,777,791 $2,896,602
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 830,052 353,507
Loss on disposal of fixed assets 35,924 -
Provision for bad debts 105,795 19,171
Recognition of compensation expense
related to issuance of stock options 752,258 616,438
Deferred tax expense 1,296,780 1,688,989
Changes in operating assets and liabilities,
excluding the effects of disposals:
Other receivables, net (148,783) 88,527
Due from HMOs, net (418,791) (2,306,208)
Prepaid expenses and other current assets (815,469) (85,099)
Other assets, net 762,739 20,795
Accounts payable 340,649 (264,616)
Accrued expenses and other current
liabilities 114,091 (511,181)
------------ -----------
Net cash provided by continuing operations 5,633,036 2,516,925
Net cash used in discontinued operations - (32,512)
------------ -----------
Net cash provided by operating activities 5,633,036 2,484,413
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (30,740) (13,550)
Proceeds from sales of fixed assets 25,000 -
Acquisition of MDHC Companies, net of cash
acquired (6,033,017) -
Purchase of property and equipment (512,114) (105,276)
Acquisition costs related to MDHC Companies (359,147) -
------------ -----------
Net cash used in investing activities (6,910,018) (118,826)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 1,813,317 -
Repayments on note payable (1,813,317) (520,000)
Proceeds from long-term debt 6,916,079 -
Repayment on long-term debt (14,679,439) -
Excess tax benefit from exercise of stock
options 249,362 -
Principal repayments under capital lease
obligations (46,836) (74,450)
Proceeds from exercise of stock options 17,275 358,668
Payment of fees related to issuance of stock (41,820) -
Repurchase and retirement of common stock - (696,134)
------------ -----------
Net cash used in financing activities (7,585,379) (931,916)
------------ -----------
Net increase (decrease) in cash and cash
equivalents (8,862,361) 1,433,671
Cash and cash equivalents at beginning of
period 10,681,685 5,780,544
------------ -----------
Cash and cash equivalents at end of period $1,819,324 $7,214,215
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for taxes $164,000 $-
============ ===========
Cash paid for interest $39,121 $ 7,801
============ ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31,
------------------------
2006 2005
------------ -----------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Purchase of equipment, furniture and
fixtures with proceeds of capital lease
obligations $81,736 $109,106
============ ===========
Retirement of treasury stock $ - $5,424,701
============ ===========
Stock issued upon conversion of related
party notes payable (102,180 shares) $ - $102,180
============ ===========
Information with respect to MDHC acquisition
accounted for under the purchase method of
accounting is summarized as follows:
Fair value of assets acquired $18,035,473 $ -
Liabilities assumed (13,795,841) -
------------ -----------
Net assets acquired 4,239,632 -
------------ -----------
Purchase price:
Cash paid to principal owners of MDHC 5,529,352 -
Acquisition costs 901,313 -
Cash to be paid related to acquisition 1,220,000 -
Fair market value of stock issued 58,555,967 -
------------ -----------
Total 66,206,632 -
------------ -----------
Goodwill $61,967,000 $ -
============ ===========
CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, Senior Vice President - Finance
305-500-2105