EX-99.1 2 g02621exv99w1.htm EX-99.1 PRESS RELEASE ISSUED BY HEALTHSPRING, INC. DATED JULY 31, 2006 Ex-99.1
 

(healthspring)
Company Contact:   J. Gentry Barden, Esq.
Senior Vice President & General Counsel
HealthSpring, Inc.
(615) 401-4531
HealthSpring, Inc. Reports 2006 Second Quarter Results;
Increases 2006 GAAP EPS Guidance to $1.26-$1.36
 
Net Income of $21.1 Million, or $.37 per Diluted Share
NASHVILLE, Tenn. (July 31, 2006) — HealthSpring, Inc. (NYSE:HS) today announced its results for the second quarter and six months ended June 30, 2006. Highlights for the 2006 second quarter included:
•   Medicare Advantage members of 107,651 at June 30, 2006; up 36.6% year over year and 3.4% over the 2006 first quarter;
•   2006 second quarter total revenue of $322.8 million; an increase of 64.2% over the 2005 second quarter and 5.3% over the 2006 first quarter; and
•   Net income before preferred dividends for the second quarter of $21.1 million, increasing by $13.2 million compared with $7.9 million in the 2005 second quarter, and by $12.5 million over the 2006 first quarter.
Commenting on 2006 second quarter results, Herb Fritch, Chairman, President, and Chief Executive Officer, said, “We met or exceeded our expectations on membership, MLRs and SG&A margins, the three traditional primary drivers of our earnings. In addition, we continue to experience better-than-expected margins in our Part D business. All of these factors contributed to strong earnings for the quarter. During the quarter we were pleased to announce the signing of a definitive agreement to acquire America’s Health Choice in Florida, and we continue to make progress in our strategic initiatives, including our LivingWell Health Centers clinic initiative. The fundamentals of our business are strong, and we are very excited about the future prospects for our Company.”
Second Quarter Results
Net income available to common stockholders for the quarter ended June 30, 2006, increased to $21.1 million, or $0.37 per diluted share, compared with $3.4 million, or $0.10 per diluted share, in the 2005 second quarter. Second quarter results for 2006 include an after-tax charge of $827,000, or approximately $0.01 per basic and fully diluted share, for stock compensation expense measured in accordance with FAS 123R.
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HS Reports Second Quarter Results
Page 2
July 31, 2006
                         
($ in thousands)            
    Three Months Ended        
    June 30,        
                    Percent  
    2006     2005     Change  
Premium revenue
   $ 314,199     $ 190,649       64.8%  
Total revenue
     322,803       196,622       64.2  
Medical expense
     250,857       153,739       63.2  
SG&A
     35,962       23,584       52.5  
Adjusted EBITDA (1)
     36,047       19,299       86.8  
Net income before preferred dividends
     21,109       7,877       168.0  
 
(1)    See “Supplemental Information” note 1 herein for the reconciliation of HealthSpring’s non-GAAP Adjusted EBITDA to GAAP Net Income.
On January 1, 2006, the Company began offering prescription drug benefits in accordance with Medicare Part D, in addition to continuing to provide medical benefits, to its Medicare Advantage plan members. HealthSpring sometimes refers to these plans after January 1, 2006, collectively as Medicare Advantage plans and separately as “MA-only” (in other words, without prescription drug benefits) and “MA-PD” (with prescription drug benefits) plans. As of January 1, 2006, the Company also began offering prescription drug benefits on a stand-alone basis in accordance with Medicare Part D. HealthSpring refers to these as “stand-alone PDP” or “PDP” plans. Accordingly, as of January 1, 2006, HealthSpring began reflecting its membership by distinguishing between Medicare Advantage and PDP plans and the Company’s financial results, including premium revenue and medical expense, by distinguishing between Medicare (without Part D) and Part D.
The Company’s results include pre-tax income for Part D of $11.1 million for the three-month period ended June 30, 2006. Part D pre-tax income for the six months ended June 30, 2006 was $5.5 million and includes expenses for non-HealthSpring members and the offsetting receivable discussed below. Because Part D benefit costs are anticipated to be disproportionately higher in the first half of the contract year under the benefit design, and because premiums are recognized ratably, HealthSpring expects its Part D business operating results to continue to improve in the second half of the year compared to the first half of 2006.
Operating Highlights
Medicare Revenue
•   Medicare Advantage plan membership increased to 107,651 as of the end of the second quarter, up 36.6% year over year and up 3.4% over the prior quarter.
•   Medicare premiums (not including Part D) were $230.6 million for the 2006 second quarter, reflecting an increase of 44.9% over the 2005 second quarter.
•   Medicare Part D premiums were $51.7 million for the 2006 second quarter. For the six months ended June 30, 2006, Part D premiums were $97.6, million, which reflect reductions of approximately $4.8 million related to CMS’s risk corridor adjustment based on HealthSpring’s Part D experience to date.
•   Medicare premiums (including Part D) represented 89.9% of total premium revenue and 87.5% of total revenue for the 2006 second quarter.
•   Medicare (other than Part D) PMPM premiums averaged $725.42 in second quarter 2006, reflecting an increase of 4.0% over the prior year’s second quarter. Medicare Advantage Part D PMPM premiums received from CMS for the 2006 second quarter averaged $86.45. Premiums averaged $103.37 on a PMPM basis for stand-alone PDP members in the quarter.
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HS Reports Second Quarter Results
Page 3
July 31, 2006
Commercial Revenue
•   Commercial membership was 38,113 at June 30, 2006, compared with membership of 41,397 at the end of the 2005 second quarter. This decrease primarily relates to HealthSpring’s commercial membership decrease in Alabama. The Company expects an additional decrease in membership of approximately 5,000 in Alabama beginning October 1, 2006, as a result of the decision by an employer group customer not to renew.
•   Commercial premiums were $31.9 million for the 2006 second quarter, reflecting an increase of 1.3% compared with the 2005 second quarter, primarily attributable to an 8.3% increase in PMPM rates to $273.41.
Medical Expense
•   Medicare Advantage medical loss ratio, or MLR, excluding Part D expense, was 79.2% for the 2006 second quarter, reflecting an increase of 20 basis points compared with the prior year’s second quarter and an increase of 170 basis points over the 2006 first quarter. During the second quarter, the Company accrued additional medical expense of approximately $4.2 million (approximately 90% of which was recorded as Medicare medical expense) related to a proposed settlement of disputed contract claims with a hospital provider in Tennessee. Many of the disputed claims relate to prior-year periods.
•   Medicare Part D MLR was 74.9% for the 2006 second quarter and 90.1% for the six months ended June 30, 2006. Part D medical expense includes additional prescription drug costs incurred by the Company on behalf of persons who were not members of a HealthSpring plan. As previously mentioned, CMS has established a “plan-to-plan reconciliation” process for recovery of these types of payments made between January 1 and April 30, 2006. The Company has recorded a net receivable in the amount of $3.8 million as of quarter-end related to this process. Actual net recoveries could differ from the amounts recorded.
•   Commercial MLR was 92.3% for the 2006 second quarter and 87.9% for the six months ended June 30, 2006.
•   The 2006 second quarter reflects favorable prior-period reserve development, or PPRD, of $8.2 million, compared with favorable PPRD of $12.9 million in the 2006 first quarter and favorable PPRD of $5.2 million in the 2005 second quarter.
SG&A
•   SG&A expense represented 11.1% of total revenue in the 2006 second quarter compared with 12.0% in the comparable prior-year period and 11.3% in the first quarter of 2006.
•   SG&A expense increased in the 2006 second quarter by $12.4 million, or 52.5%, over the 2005 second quarter, primarily as a result of growth, geographic expansion, implementation of Part D, and public company expenses.
Balance Sheet Highlights
•   At June 30, 2006, the Company’s cash and cash equivalents were $320.2 million, $31.6 million of which was held at unregulated subsidiaries. This amount includes approximately $77.7 million of advances from CMS for reinsurance payments and low income cost subsidies for which the Company assumes no risk and which is accounted for as funds held for the benefit of members on the Company’s balance sheet, and $94.8 million for the early receipt of the July CMS premium.
•   Net cash provided by operating activities (adjusted for the early premium payment from CMS) for the first six months of 2006 was $40.1 million, or 1.4x net income.
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HS Reports Second Quarter Results
Page 4
July 31, 2006
•   Days in claims payable was 37 at the end of the 2006 second quarter compared with 36 at the end of the first quarter 2006 and 40 at the end of 2005. The decrease in the days claims payable compared with the prior year is primarily related to Part D claims, which have an inherently shorter pay cycle than the Company’s Medicare Advantage and commercial lines of business.
Retroactive Risk Adjustment
The Company was recently notified by CMS that its retroactive risk adjustment payment for 2006 through July would be approximately $12.6 million, which will be reflected as additional premium in the third quarter ending September 30, 2006. The Company estimates that the net effect, after adjusting for risk-sharing payments to providers and taxes, will be approximately $6.3 million of net income, or $0.10 to $0.11 per share. In addition, the Company estimates that the impact of the risk adjustments on Medicare Advantage premiums for the balance of 2006 will be an increase over year-to-date average premiums by 1.5% to 2.0% PMPM.
Revised 2006 Guidance
•   Membership: The Company maintains its estimates that its Medicare Advantage membership will be in the range of 112,000 to 117,000 by the end of 2006. The Company now estimates that PDP membership will end the year between 85,000 and 90,000 lives. Commercial lives are projected to be 28,000 to 30,000 at year-end. In the event of the closing of the acquisition of America’s Health Choice by year-end, the Company would have an additional 12,000 to 13,000 MA-PD members.
•   Revenue: The Company maintains its estimate that 2006 total revenue will be between $1.25 billion and $1.35 billion, with approximately 90% of total revenue for the year attributable to Medicare Advantage and Part D premiums. Based on MA-PD and PDP membership estimates, the Company believes Part D premium revenue will account for approximately $200.0 million of total revenue.
•   MLRs: The Company is revising its MLR guidance. Medicare (without Part D) MLR is now expected to be below 79.0% for the full year. Part D MLR is now expected to be between 85% and 90% for the full year. Commercial MLR is projected to be between 87% and 89% for the year.
•   EPS: The Company is increasing its estimate of GAAP earnings per share for 2006 to be in the range of $1.26 to $1.36. This estimate does not take into account any impact associated with the closing of the acquisition of America’s Health Choice. On a non-GAAP pro-forma basis (assuming the IPO took place on January 1, 2006), the 2006 EPS range would be $1.32 to $1.42 after adjusting for the elimination of pre-IPO items, including preferred dividends, interest expense, minority interest and tax expense, and adding incremental FAS 123R compensation expense. See “Supplemental Information” Note 2 herein.
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HS Reports Second Quarter Results
Page 5
July 31, 2006
Recapitalization
HealthSpring, Inc. (“HealthSpring” or the “Company”) completed a recapitalization, which was accounted for as a purchase, of NewQuest, LLC (its “Predecessor”) on March 1, 2005, resulting in the Predecessor becoming a wholly owned subsidiary of HealthSpring. The information included in this release compares results for HealthSpring for the six-month period ended June 30, 2006, with the combined results of the Predecessor for the two months ended February 28, 2005, and for HealthSpring for the four-month period from March 1, 2005 to June 30, 2005. Per share amounts for the six-month period ended June 30, 2005, are not comparable with results for the same period in 2006 because the ownership of the Predecessor was composed of member units, and HealthSpring ownership is represented by common stock and common stock equivalents.
Conference Call
A live audio webcast of the conference call regarding first quarter results will begin at 9:00 a.m. ET on Tuesday August 1, 2006. The public may access the conference call through HealthSpring’s website, www.myhealthspring.com, under the Investor Relations tab. The conference call can also be accessed by dialing (913) 981-5540, confirmation number 1770945. An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue for 30 days.
About HealthSpring, Inc.
HealthSpring, Inc. is one of the largest managed care organizations in the United States whose primary focus is the Medicare Advantage market. The Company currently owns and operates Medicare Advantage and stand-alone Medicare prescription drug plans in Tennessee, Texas, Alabama, Illinois, and Mississippi. In addition, the Company uses its infrastructure and provider networks in Tennessee and Alabama to offer commercial health plans to employer groups.
Cautionary Statement Regarding Forward Looking Statements
Statements contained in this release that are not historical fact may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends such statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Statements that are predictive in nature, that depend on or refer to future events or conditions, or that include words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions are forward-looking statements. Such statements include statements regarding future operating and earnings guidance, including Part D operating results in the second half of the year; declines in commercial membership in Alabama; the ability of the Company to settle disputed claims with a Tennessee hospital provider; and amounts recoverable under CMS’s plan-to-plan reconciliation process. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
Additional information concerning important risks and uncertainties can be found under the headings “Special Note Regarding Forward-Looking Statements” and “Item 1A. — Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission, and in the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006. Except as required by law, the Company assumes no obligation to update any forward-looking statement publicly, or to update the reasons actual results could differ materially from those predicted in any forward-looking statement, even if new information becomes available in the future.
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HS Reports Second Quarter Results
Page 6
July 31, 2006
Supplemental Information
The Company believes that the non-GAAP measures used in this release, when presented in conjunction with comparable GAAP measures, are useful to both management and investors in analyzing financial and business trends regarding the Company’s ongoing business and operating performance. These non-GAAP measures should be considered in addition to, but not as a substitute for, items prepared in accordance with GAAP.
This press release includes a presentation of the following non-GAAP financial measures:
1)   The Company uses Adjusted EBITDA, or adjusted earnings before interest, taxes, depreciation, amortization, and minority interest, to assess business performance among its health plans and related management companies. Although some excluded items may recur, management believes that this measure provides a more useful comparison of its business performance from period to period.
 
    The following tables provide a reconciliation of Adjusted EBITDA as used in this release to net income before preferred dividends calculated in accordance with GAAP (in thousands).
                 
    Three Months Ended  
    June 30,  
    2006     2005  
Net income before preferred dividends
   $ 21,109     $ 7,877  
Plus: income tax expense
     12,398       5,199  
Plus: interest expense
     96       4,167  
Plus: depreciation and amortization
     2,444       1,715  
 
            
EBITDA
     36,047       18,958  
 
            
 
                
Plus: minority interest
     —       341  
 
            
Adjusted EBITDA
   $ 36,047     $ 19,299  
 
            
2)   The following table adjusts projected GAAP EPS to projected pro-forma EPS, giving pro-forma effect to the IPO as if it had occurred on January 1, 2006 (in thousands, except per share data):
                 
    GAAP   Pro-forma
Net income available to common stockholders
   $ 68,850 - $74,600     $ 68,850 - $74,600  
 
Adjustments:
                
Preferred dividends
             2,021  
Minority interest (after tax)
             190  
Pre-IPO interest expense (after tax)
             5,214  
Incremental FAS 123R expense (after tax)
             (231 )
 
                
 
                
Pro-forma net income
           $ 76,044 - $81,794  
 
                
Weighted average shares outstanding for year
     54,700       57,400  
 
                
EPS
   $ 1.26 - $1.36     $ 1.32 - $1.42  
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HS Reports Second Quarter Results
Page 7
July 31, 2006
HealthSpring, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Information
June 30, 2006 and December 31, 2005
(in thousands)
(Unaudited)
                 
    June 30,     December 31,  
    2006     2005  
Assets
                
Current Assets:
                
Cash and cash equivalents
   $ 320,205     $ 110,085  
A/R, net of allowance for doubtful accounts
     34,720       7,248  
Investment securities available for sale
     8,332       8,646  
Current portion of investment securities held to maturity
     13,228       14,313  
Deferred income tax asset
     12,501       5,778  
Prepaid expenses and other assets
     2,890       3,148  
 
            
Total current assets
     391,876       149,218  
Investment securities held to maturity, less current portion
     23,027       22,993  
Property and equipment, net
     4,806       4,287  
Goodwill
     341,619       315,057  
Intangible assets, net
     84,943       87,675  
Investment in and receivable from unconsolidated affiliate
     1,372       1,469  
Deferred financing fee
     896       5,487  
Restricted investments
     6,715       5,652  
 
            
Total assets
   $ 855,254     $ 591,838  
 
            
Liabilities and Stockholders’ Equity
                
Current Liabilities:
                
Medical claims liability
   $ 103,827     $ 82,645  
Current portion of long-term debt
     —       16,500  
A/P and accrued expenses
     27,071       17,408  
Deferred revenue
     94,752       365  
Funds held for the benefit of members
     77,719       —  
Other current liabilities
     831       362  
 
            
Total current liabilities
     304,200       117,280  
Long-term debt, less current portion
     —       172,026  
Deferred tax liability
     30,010       29,782  
Other long-term liabilities
     297       316  
 
            
Total liabilities
     334,507       319,404  
 
            
Minority Interest
     —       11,890  
 
            
 
                
Stockholders’ Equity:
                
Preferred stock
     —       2  
Common stock
     573       322  
Additional paid in capital
     481,617       249,317  
Retained earnings
     38,604       10,943  
Treasury Stock
     (47 )      (40 ) 
 
            
Total stockholders’ equity
     520,747       260,544  
 
            
Total liabilities and stockholders’ equity
   $ 855,254     $ 591,838  
 
            
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HS Reports Second Quarter Results
Page 8
July 31, 2006
HealthSpring, Inc. and Subsidiaries
Condensed Consolidated Statement of Income Information
(in thousands, except share data)
(Unaudited)
                                 
    Three-Month Period Ended     Six-Month Period Ended  
    June 30,     June 30,  
    2006     2005     2006     2005  
 
                        
Revenue:
                           (Combined) (1)
Premium:
                                
Medicare
   $ 282,347     $ 159,194     $ 549,034     $ 303,346  
Commercial
     31,852       31,455       64,086       62,411  
 
                        
Total premium revenue
     314,199       190,649       613,120       365,757  
Management and fee revenue
     6,112       5,213       11,747       10,323  
Investment income
     2,492       760       4,558       1,500  
 
                        
Total revenue
     322,803       196,622       629,425       377,580  
 
                        
Operating Expenses:
                                
Medical Expense:
                                
Medicare
     221,451       125,778       441,884       240,938  
Commercial
     29,406       27,961       56,345       51,891  
 
                        
Total medical expenses
     250,857       153,739       498,229       292,829  
Selling, general and administrative
     35,962       23,584       70,571       52,976  
Depreciation and amortization
     2,444       1,715       4,867       2,890  
Interest
     96       4,167       8,457       5,816  
 
                        
Total operating expenses
     289,359       183,205       582,124       354,511  
 
                        
 
Income before equity in earnings of unconsolidated affiliate, minority interest and income taxes
     33,444       13,417       47,301       23,069  
Equity in earnings of unconsolidated affiliate
     63       —       170       —  
 
                        
Income before minority interest and income taxes
     33,507       13,417       47,471       23,069  
Minority interest
     —       (341 )     (303 )     (1,672 )
 
                        
Income before income taxes
     33,507       13,076       47,168       21,397  
Income taxes
     (12,398 )     (5,199 )     (17,486 )     (8,944 )
 
                        
Net income
     21,109       7,877       29,682       12,453  
Preferred dividends
     —       (4,514 )     (2,021 )     (6,057 )
 
                        
Net income available to common stockholders and members
   $ 21,109     $ 3,363     $ 27,661     $ 6,396  
 
                        
 
Net Income per common share:
                                
Basic
   $ 0.37     $ 0.10     $ 0.53       —  
 
                          
Diluted
   $ 0.37     $ 0.10     $ 0.53       —  
 
                          
Weighted average common shares outstanding:
                                
Basic
     57,271,044       32,184,436       51,984,926       —  
 
                          
Diluted
     57,364,519       32,184,436       52,082,017       —  
 
                          
(1) — Includes the combined results of operations of the Predecessor from January 1, 2005 through February 28, 2005, and of the Company from March 1, 2005 through June 30, 2005. The Company has included this non-GAAP financial measure because it believes that it permits a more meaningful comparison of the Company’s operating performance between the periods presented. See “Condensed Consolidated Statement of Income information” herein on page 10.
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HS Reports Second Quarter Results
Page 9
July 31, 2006
HealthSpring, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flow Information
(in thousands)
(Unaudited)
                         
                    Predecessor  
    Six-Month     Four-Month     Two-Month  
    Period Ended     Period ended     Period ended  
    June 30, 2006     June 30, 2005     February 28, 2005  
Cash flows from operating activities:
                        
Net income
   $ 29,682     $ 9,747     $ 2,706  
Adjustments to reconcile net income to net cash provided by (used in)
                        
Operating activities
                        
Depreciation and amortization
     4,867       2,575       315  
Amortization of deferred financing cost
     148       —       —  
Amortization of accrued loss on assumed lease
     —       —       (97 )
Equity in earnings of unconsolidated affiliate
     (170 )     —       —  
Minority Interest
     303       424       1,248  
PIK Interest
     116       357       —  
Stock-based compensation
     2,164       164       —  
Deferred tax benefit
     (6,363 )     1,747       93  
Write off of deferred financing cost
     5,375       —       —  
Increase (decrease) in cash and cash equivalents due to changes in:
                        
Accounts receivable
     (27,472 )     8,366       (2,470 )
Prepaid expenses and other current assets
     254       (934 )     1,240  
Medical claims payable
     21,182       (4,151 )     5,829  
Accounts payable, accrued expenses and other current liabilities
     10,002       (21,061 )     6,202  
Other long-term liabilities
     (18 )     —       11  
Deferred revenue
     94,386       343       (113 )
 
                  
Net cash provided by (used in) operating activities
     134,456       (2,423 )     14,964  
 
                  
 
                        
Cash flows from investing activities:
                        
Purchase of PPE
     (1,633 )     (1,221 )     (149 )
Purchase of investment securities
     (5,885 )      (10,252 )     (5,942 )
Sale / maturity of investment securities
     7,251       8,632       836  
Purchase of restricted investments
     (1,063 )     (147 )     (214 )
Distributions from affiliates
     106       —       —  
Purchase of minority interest
     —       (44,358 )     —  
Acquisition, net of cash acquired
     —       (230,463 )     —  
 
                  
Net cash used in investing activities
     (1,224 )     (277,809 )     (5,469 )
 
                  
 
                        
Cash flows from financing activities:
                        
Payments on borrowings
     (188,642 )     (9,483 )     (117 )
Proceeds from issuance of common stock and preferred stock
     188,749       139,977       —  
Funds received for the benefit of members
     77,720       —       —  
Purchase of treasury stock
     (7 )     —       —  
Deferred financing cost
     (932 )     350       —  
Proceeds from issuance of notes payable
     —       200,000       —  
Proceeds from sale of units in consolidated subsidiary
     —       7,875       —  
Distribution to minority stockholders
     —       —       (1,771 )
Cash advanced in recapitalization
     —       —     1,000  
 
                  
Net cash provided by (used in) financing activities
     76,888       338,719       (888 )
 
                  
Net increase in cash and cash equivalents
     210,120       58,487       8,607  
Cash and cash equivalents at beginning of period
     110,085       —       67,834  
 
                  
Cash and cash equivalents at end of period
   $ 320,205     $ 58,487     $ 76,441  
 
                  
-MORE-

 

 

HS Reports Second Quarter Results
Page 10
July 31, 2006
HealthSpring, Inc. and Subsidiaries
Condensed Consolidated Statement of Income Information
(in thousands)
(Unaudited)
                         
    Predecessor     HealthSpring, Inc.     Combined  
    Period from     Period from        
    January 1, 2005 to     March 1, 2005 to     Six Months Ended  
    February 28, 2005     June 30, 2005     June 30, 2005  
Revenue:
                        
Premium:
                        
Medicare premiums
   $ 94,764     $ 208,582     $ 303,346  
Commercial premiums
     20,704       41,707       62,411  
 
                  
Premium revenue
     115,468       250,289       365,757  
Management fee revenue
     3,461       6,862       10,323  
Investment income
     461       1,039       1,500  
 
                  
Total revenue
     119,390       258,190       377,580  
 
                        
Operating Expenses:
                        
Medical expenses
     90,843       201,986       292,829  
Selling, general and administrative
     21,608       31,368       52,976  
Depreciation and amortization
     315       2,575       2,890  
Interest
     42       5,774       5,816  
 
                  
Total operating expenses
     112,808       241,703       354,511  
 
                        
Income before minority interest and income taxes
     6,582       16,487       23,069  
Minority interest
     (1,248 )     (424 )     (1,672 )
 
                  
 
                        
Income before income taxes
     5,334       16,063       21,397  
Income tax expense
     2,628       6,316       8,944  
 
                  
 
                        
Net income before preferred dividends
     2,706       9,747       12,453  
Preferred dividends
     —       6,057       6,057  
 
                  
 
                        
Net income available to members and common stockholders
   $ 2,706     $ 3,690     $ 6,396  
 
                  
-END-