Exhibit 99.01
Continucare Corporation Reports 61% Increase in
Revenues for Third Quarter of Fiscal 2007
MIAMI--(BUSINESS WIRE)--May 10, 2007--Continucare Corporation
(AMEX:CNU) today reported financial results for its third quarter of
fiscal 2007 and the nine-months ended March 31, 2007. Financial
highlights for the quarter and other recent events include:
-- An agreement to open a fifth Continucare ValuClinic(TM) health
center in Sedano's Pharmacy;
-- Total revenue of $60.4 million, a 61% increase compared to
$37.5 million in the third quarter of fiscal 2006;
-- Income from operations of $1.8 million, compared to $2.1
million for the same period last year; and
-- Net income of $1.1 million, or $0.02 per diluted share, as
compared to $1.3 million, or $0.03 per diluted share, for the
same period a year ago.
Nine-Month Results
For the nine-months ended March 31, 2007, total revenue increased
57% to $151.7 million compared to $96.8 million in the same period one
year ago. Income from operations during the nine-month period was $6.1
million compared to $6.6 million for the same period one year ago. Net
income for the nine-month period was $3.9 million, or $0.06 per
diluted share, compared to $4.2 million, or $0.08 per diluted share,
one year earlier.
"Our third fiscal quarter results reflect the addition of the
recently acquired Miami Dade Health Centers, with revenues
significantly higher than one year ago," said Richard C. Pfenniger,
Jr., Continucare's Chairman and Chief Executive Officer. "Our third
fiscal quarter operating profits and net income, however, did not
reflect corresponding gains. The reasons are several, but include the
recognition in the fiscal 2007 quarter of a retroactive 2006 Medicare
Part D risk corridor adjustment charge of approximately $0.5 million,
and the exclusion from the quarter's operating results of
approximately $2.4 million of payments received or due from our HMO
affiliates primarily relating to Medicare risk adjustments and
pharmacy rebates regarding the operations of the Miami Dade Health
Centers for periods prior to the completion of our acquisition. While
these matters relating to the Miami Dade Health Centers ordinarily are
reflected in our income statement, since they related to periods prior
to our acquisition of the Miami Dade Health Centers, they were instead
treated as purchase accounting adjustments which decreased the amount
of goodwill we recorded for the acquisition.
"Our financial position continues to improve following the
acquisition of the Miami Dade Health Centers. Cash flow from
operations during our third fiscal quarter was $4.7 million and our
balance sheet remains substantially debt free.
"Also, we continue to prepare for the opening of our first
Continucare ValuClinic(TM) health centers. We are pleased to report
that we have recently agreed with Sedano's Pharmacy to open an
additional ValuClinic(TM) health center in Hialeah, bringing our total
currently planned Sedano Pharmacy locations to five. We have, however,
experienced some delays in obtaining necessary building permits and as
a result the anticipated launch of these locations is postponed for
several months."
Balance Sheet
Continucare's cash and cash equivalents were $6.0 million at March
31, 2007 compared to $10.7 million at June 30, 2006, while working
capital was $12.4 million at March 31, 2007 compared to $15.6 million
at June 30, 2006. Total liabilities were $13.7 million at March 31,
2007 as compared to $4.7 million at June 30, 2006. Shareholders'
equity increased to $100.7 million at March 31, 2007 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 and
that risk corridor adjustment charges in future periods may be greater
than in the past, 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 March 31, June 30,
2007 2006
------------- ------------
Current assets:
Cash and cash equivalents $6,004,536 $10,681,685
Other receivables, net 404,477 231,832
Due from HMOs, net of a liability for
incurred but not reported medical claims
expense of approximately $21,965,000 and
$14,207,000 at March 31, 2007 and June
30, 2006, respectively 9,361,783 6,339,526
Prepaid expenses and other current assets 1,583,246 689,096
Deferred tax assets, net 862,900 658,768
------------- ------------
Total current assets 18,216,942 18,600,907
Certificates of deposit, restricted 1,170,382 1,126,987
Property and equipment, net 8,533,682 824,220
Goodwill, net of accumulated amortization
of approximately $7,610,000 74,291,018 14,342,510
Intangible assets, net of accumulated
amortization of $619,000 8,040,667 -
Managed care contracts, net of accumulated
amortization of approximately $3,037,000
and $2,773,000 at March 31, 2007 and June
30, 2006, respectively 472,625 737,234
Deferred tax assets, net 3,660,780 5,519,095
Other assets, net 45,464 551,927
------------- ------------
Total assets $114,431,560 $41,702,880
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,289,347 $575,925
Accrued expenses and other current
liabilities 4,478,839 2,401,933
------------- ------------
Total current liabilities 5,768,186 2,977,858
Capital lease obligations, less current
portion 117,494 112,068
Deferred tax liability 7,796,178 1,638,034
Other liability 42,064 -
------------- ------------
Total liabilities 13,723,922 4,727,960
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0001 par value:
100,000,000 shares authorized;
70,029,817 shares issued and outstanding
at March 31, 2007 and 50,242,478 shares
issued and outstanding at June 30, 2006 7,003 5,024
Additional paid-in capital 123,642,556 63,838,051
Accumulated deficit (22,941,921) (26,868,155)
------------- ------------
Total shareholders' equity 100,707,638 36,974,920
------------- ------------
Total liabilities and shareholders'
equity $114,431,560 $41,702,880
============= ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
-------------------------
2007 2006
------------ ------------
Revenue:
Medical services revenue, net $60,345,970 $37,460,690
Management fee revenue and other income 25,185 64,114
------------ ------------
Total revenue 60,371,155 37,524,804
Operating expenses:
Medical services:
Medical claims 45,287,174 28,086,314
Other direct costs 6,775,987 3,497,134
------------ ------------
Total medical services 52,063,161 31,583,448
Administrative payroll and employee
benefits 2,538,479 1,815,775
General and administrative 3,935,456 2,028,805
------------ ------------
Total operating expenses 58,537,096 35,428,028
------------ ------------
Income from operations 1,834,059 2,096,776
Other income (expense):
Interest income 64,422 86,398
Interest expense (5,817) (2,779)
------------ ------------
Income before income tax provision 1,892,664 2,180,395
Income tax provision 744,225 847,630
------------ ------------
Net income $1,148,439 $1,332,765
============ ============
Net income per common share:
Basic $.02 $.03
============ ============
Diluted $.02 $.03
============ ============
Weighted average common shares outstanding:
Basic 70,014,831 49,832,351
============ ============
Diluted 71,328,916 51,046,373
============ ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended
March 31,
--------------------------
2007 2006
------------- ------------
Revenue:
Medical services revenue, net $151,503,964 $96,436,949
Management fee revenue and other income 200,396 341,710
------------- ------------
Total revenue 151,704,360 96,778,659
Operating expenses:
Medical services:
Medical claims 112,471,473 69,640,075
Other direct costs 16,480,682 9,764,311
------------- ------------
Total medical services 128,952,155 79,404,386
Administrative payroll and employee
benefits 6,903,862 4,993,661
General and administrative 9,704,488 5,746,754
------------- ------------
Total operating expenses 145,560,505 90,144,801
------------- ------------
Income from operations 6,143,855 6,633,858
Other income (expense):
Interest income 269,165 209,229
Interest expense (44,938) (10,580)
------------- ------------
Income before income tax provision 6,368,082 6,832,507
Income tax provision 2,441,848 2,603,141
------------- ------------
Net income $3,926,234 $4,229,366
============= ============
Net income per common share:
Basic $.06 $.08
============= ============
Diluted $.06 $.08
============= ============
Weighted average common shares outstanding:
Basic 63,451,322 49,820,024
============= ============
Diluted 64,694,489 51,143,705
============= ============
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
------------------------
2007 2006
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,926,234 $4,229,366
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,375,002 518,897
Loss on disposal of fixed assets 35,924 -
Provision for bad debts 120,934 159,518
Compensation expense related to issuance
of stock options 1,253,217 959,140
Deferred tax expense 2,324,328 2,507,218
Changes in operating assets and liabilities,
excluding the effects of disposals:
Other receivables, net (293,579) (215,306)
Due from HMOs, net 1,930,500 (3,382,697)
Prepaid expenses and other current assets (924,151) (77,981)
Other assets, net 890,885 (4,206)
Accounts payable 651,166 (227,983)
Accrued expenses and other current
liabilities (921,171) (357,990)
------------ -----------
Net cash provided by continuing operations 10,369,289 4,107,976
Net cash used in discontinued operations - (32,512)
------------ -----------
Net cash provided by operating activities 10,369,289 4,075,464
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit (43,395) (18,023)
Proceeds from sales of fixed assets 25,000 -
Acquisition of MDHC Companies, net of cash
acquired (6,121,722) -
Purchase of property and equipment (703,412) (229,587)
Acquisition costs related to MDHC Companies (359,147) (80,336)
------------ -----------
Net cash used in investing activities (7,202,676) (327,946)
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 6,917,808 -
Repayment on long-term debt (14,684,848) -
Principal repayments under capital lease
obligations (74,020) (98,697)
Proceeds from exercise of stock options 41,699 589,718
Payment of fees related to issuance of stock (44,401) -
Repurchase and retirement of common stock - (696,134)
------------ -----------
Net cash used in financing activities (7,843,762) (725,113)
------------ -----------
Net increase (decrease) in cash and cash
equivalents (4,677,149) 3,022,405
Cash and cash equivalents at beginning of
period 10,681,685 5,780,544
------------ -----------
Cash and cash equivalents at end of period $6,004,536 $8,802,949
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for taxes $266,000 $140,000
============ ===========
Cash paid for interest $44,938 $10,580
============ ===========
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
------------------------
2007 2006
------------ -----------
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 $21,944,563 $-
Liabilities assumed (15,597,874) -
------------ -----------
Net assets acquired 6,346,689 -
------------ -----------
Purchase price:
Cash paid to principal owners of MDHC 5,529,352 -
Acquisition costs 989,878 -
Cash to be paid related to acquisition 1,220,000 -
Fair market value of stock issued 58,555,967 -
------------ -----------
Total 66,295,197 -
------------ -----------
Goodwill $59,948,508 $-
============ ===========
CONTACT: Continucare Corporation, Miami
Fernando L. Fernandez, Senior Vice President - Finance,
305-500-2105