EX-99.01 2 a5074857ex9901.txt CONTINUCARE CORPORATION EXHIBIT 99.01 Exhibit 99.01 Continucare Corporation Reports Financial Results for Second Fiscal Quarter of Fiscal 2006; Adjusted Second Fiscal Quarter Revenue And Income From Operations Increase 13% And 281%, Respectively MIAMI--(BUSINESS WIRE)--Feb. 9, 2006--Continucare Corporation (AMEX:CNU) today reported financial results for its second quarter of fiscal 2006 and the six-months ended December 31, 2005. Second Quarter Results For the second quarter of fiscal 2006, total revenue increased to $29.4 million compared to $27.1 million for the second quarter of fiscal 2005. Income from operations was $2.3 million for the second quarter of fiscal 2006 and 2005. Income before income taxes in the second quarter of fiscal 2006 was $2.4 million compared to $2.1 million in the year-ago period. Net income for the second quarter of fiscal 2006 was $1.5 million, or $0.03 per diluted share, compared to net income of $2.1 million, or $0.04 per diluted share, one year ago. Six-Month Results For the six-months ended December 31, 2005, total revenue increased to $59.3 million compared to $53.3 million in the same period one year ago. Income from operations during the six-month period increased to $4.5 million compared to $3.7 million for the same period one year ago. Income before income taxes during the six-month period ended December 31, 2005 increased to $4.7 million compared to $3.2 million in the year-ago period. Net income for the six-month period was $2.9 million, or $0.06 per diluted share, compared to $3.2 million, or $0.06 per diluted share. Adjusted Results Both the second quarter of fiscal 2005 and the six-months ended December 31, 2004 include a $1.1 million one-time distribution from one of our HMO affiliates relating to Medicare Advantage funding in revenue and income from operations, and income from operations for those periods also includes a $0.5 million gain on the extinguishment of debt. Without giving effect to these items, revenue for the second quarter of fiscal 2005 and the six-months ended December 31, 2004 was $26.0 million and $52.2 million, respectively, and income from operations was $0.7 million and $2.1 million, respectively. 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 second quarter of fiscal 2006 and the six-months ended December 31, 2005 include $0.4 million and $0.6 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 $2.7 million and $5.2 million for the second quarter of fiscal 2006 and the six-months ended December 31, 2005. Excluding the effect of the three items, revenue for the second quarter of fiscal 2006 and the six-months ended December 31, 2005 increased 13% and 14%, respectively, compared to the same period of fiscal 2005, and income from operations increased approximately 281% and 151%, respectively, compared to the same period a year ago. In addition, the results for the second quarter of fiscal 2006 and the six-month period ended December 31, 2005 include a provision for income taxes of $0.9 million and $1.8 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 $7.2 million at December 31, 2005 compared to $5.8 million at June 30, 2005 while working capital increased to $12.1 million at quarter-end from $6.9 million at June 30, 2005 and total liabilities were reduced to $2.4 million at December 31, 2005 from $3.8 million at June 30, 2005. The long-term portion of debt at December 31, 2005 was $63,000. Shareholders' equity increased to $33.6 million at December 31, 2005 from $30.3 million at June 30, 2005. Commenting on the financial results, Richard C. Pfenniger, Jr., Continucare's Chief Executive Officer, said, "We turned in another solid performance in our second fiscal quarter with our financial results exhibiting continued improvement in our business. Excluding the one-time Medicare Advantage distribution and the gain on extinguishment of debt we recognized in the prior year and the effect of stock option expense in the current year resulting from the adoption of new accounting guidance, our revenues increased a solid 13% over the same quarter of fiscal 2005 and our income from operations increased by a more substantial 281%. At the same time, our financial position as evidenced by our balance sheet continued to strengthen. We have increased our cash position and continued to reduce total liabilities. As we begin the second half of our fiscal year, we remain optimistic and expect further growth of our business." Continucare Corporation (http://www.continucare.com), headquartered in Miami, Florida, is a holding company with subsidiaries engaged in the business of providing primary care physician services on an outpatient basis through a variety of managed care and fee-for-service arrangements. 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 OPERATIONS (Unaudited) Three-Months Ended December 31, ------------------------- 2005 2004 ------------ ------------ Revenue: Medical services revenue, net $29,246,624 $26,693,612 Management fee revenue and other income 136,082 420,063 ------------ ------------ Total revenue 29,382,706 27,113,675 Operating expenses: Medical services: Medical claims 20,147,583 18,600,734 Other direct costs 3,134,753 3,621,073 ------------ ------------ Total medical services 23,282,336 22,221,807 ------------ ------------ Administrative payroll and employee benefits 1,782,539 1,300,388 General and administrative 2,015,741 1,743,731 Gain on extinguishment of debt - (500,000) ------------ ------------ Total operating expenses 27,080,616 24,765,926 ------------ ------------ Income from operations 2,302,090 2,347,749 Other income (expense): Interest income 63,689 18,192 Interest expense (4,832) (227,544) ------------ ------------ Income before income tax provision 2,360,947 2,138,397 Income tax provision 903,097 - ------------ ------------ Net income $ 1,457,850 $ 2,138,397 ============ ============ Net income per common share: Basic $ .03 $ .04 ============ ============ Diluted $ .03 $ .04 ============ ============ Weighted average common shares outstanding: Basic 49,764,617 50,311,780 ============ ============ Diluted 51,134,864 51,887,604 ============ ============ CONTINUCARE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Six-Months Ended December 31, ------------------------- 2005 2004 ------------ ------------ Revenue: Medical services revenue, net $58,976,261 $52,721,141 Management fee revenue and other income 277,596 600,658 ------------ ------------ Total revenue 59,253,857 53,321,799 Operating expenses: Medical services: Medical claims 41,553,762 37,616,515 Other direct costs 6,267,177 6,697,326 ------------ ------------ Total medical services 47,820,939 44,313,841 ------------ ------------ Administrative payroll and employee benefits 3,177,886 2,467,844 General and administrative 3,717,949 3,338,039 Gain on extinguishment of debt - (500,000) ------------ ------------ Total operating expenses 54,716,774 49,619,724 ------------ ------------ Income from operations 4,537,083 3,702,075 Other income (expense): Interest income 122,831 21,311 Interest expense (7,801) (475,960) ------------ ------------ Income before income tax provision 4,652,113 3,247,426 Income tax provision 1,755,511 - ------------ ------------ Net income $ 2,896,602 $ 3,247,426 ============ ============ Net income per common share: Basic $ .06 $ .06 ============ ============ Diluted $ .06 $ .06 ============ ============ Weighted average common shares outstanding: Basic 49,813,860 50,305,983 ============ ============ Diluted 51,192,371 51,786,472 ============ ============ CONTINUCARE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, June 30, ASSETS 2005 2005 ------------- ------------ Current assets: Cash and cash equivalents $ 7,214,215 $ 5,780,544 Other receivables, net 37,275 144,973 Due from HMOs, net of a liability for incurred but not reported medical claims expense of approximately $11,109,000 and $11,700,000 at December 31, 2005 and June 30, 2005, respectively 5,791,738 3,485,530 Prepaid expenses and other current assets 804,676 719,577 Deferred tax assets, net 585,571 585,571 ------------- ------------ Total current assets 14,433,475 10,716,195 Certificates of deposit, restricted 543,900 530,350 Equipment, furniture and leasehold improvements, net 707,946 670,665 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 $2,598,000 and $2,422,000 at December 31, 2005 and June 30, 2005, respectively 913,640 1,090,046 Deferred tax assets, net 5,032,364 6,721,353 Other assets, net 46,021 66,816 ------------- ------------ Total assets $36,019,856 $34,137,935 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 395,523 $ 660,139 Accrued expenses and other current liabilities 1,926,759 2,489,439 Note payable - 520,000 Income taxes payable 57,885 131,363 ------------- ------------ Total current liabilities 2,380,167 3,800,941 Capital lease obligations, less current portion 63,302 38,361 ------------- ------------ Total liabilities 2,443,469 3,839,302 Commitments and contingencies Shareholders' equity: Common stock, $0.0001 par value: 100,000,000 shares authorized; 49,782,782 shares issued and outstanding at December 31, 2005 and 52,591,895 shares issued and 49,595,702 shares outstanding at June 30, 2005 4,978 4,960 Additional paid-in capital 62,880,501 67,924,068 Accumulated deficit (29,309,092) (32,205,694) Treasury stock, 2,996,193 shares at June 30, 2005 - (5,424,701) ------------- ------------ Total shareholders' equity 33,576,387 30,298,633 ------------- ------------ Total liabilities and shareholders' equity $36,019,856 $34,137,935 ============= ============ CONTINUCARE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six-Months Ended December 31, ----------------------- 2005 2004 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $2,896,602 $3,247,426 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including amortization of deferred financing costs 353,507 727,759 Provision for bad debts 19,171 - Stock-based compensation expense 616,438 254,000 Deferred tax expense 1,688,989 - Gain on extinguishment of debt - (500,000) Changes in operating assets and liabilities, excluding the effect of disposals: Other receivables 88,527 279,276 Due from HMOs, net (2,306,208) 623,025 Prepaid expenses and other current assets (85,099) 71,336 Other assets 20,795 27,527 Accounts payable (264,616) 466,160 Accrued expenses and other current liabilities (437,703) 95,589 Income taxes payable (73,478) - ----------- ----------- Net cash provided by continuing operations 2,516,925 5,292,098 Net cash used in discontinued operations (32,512) (58,482) ----------- ----------- Net cash provided by operating activities 2,484,413 5,233,616 CASH FLOWS FROM INVESTING ACTIVITIES (Purchase of) proceeds from maturities of certificates of deposit (13,550) 101,165 Purchase of equipment and furniture (105,276) (216,280) ----------- ----------- Net cash used in investing activities (118,826) (115,115) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from note payable - 1,040,000 Payments on note payable (520,000) - Payments on related party notes - (4,026) Payment of fees related to private placement transaction - (45,000) Principal repayments under capital lease obligations (74,450) (38,654) Proceeds from exercise of stock options 358,668 36,000 Repurchase and retirement of common stock (696,134) - ----------- ----------- Net cash (used in) provided by financing activities (931,916) 988,320 ----------- ----------- Net increase in cash and cash equivalents 1,433,671 6,106,821 Cash and cash equivalents at beginning of period 5,780,544 720,360 ----------- ----------- Cash and cash equivalents at end of period $7,214,215 $6,827,181 =========== =========== CONTACT: Continucare Corporation, Miami Fernando L. Fernandez, 305-500-2105