-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BpjVq/aElgxjOMNRLFeLRkKJnllCdsIt4TSiw7VUy16glJkZwXPgIhQ8li7PJgUR 9d+GRF/s18mPRSevRluPHg== 0000926236-03-000162.txt : 20031103 0000926236-03-000162.hdr.sgml : 20031103 20031103081023 ACCESSION NUMBER: 0000926236-03-000162 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031103 ITEM INFORMATION: FILED AS OF DATE: 20031103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST HEALTH GROUP CORP CENTRAL INDEX KEY: 0000812910 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 363307583 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15846 FILM NUMBER: 03971387 BUSINESS ADDRESS: STREET 1: 3200 HIGHLAND AVE STREET 2: HEALTH COMPARE CORP CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 6302417900 MAIL ADDRESS: STREET 1: 3200 HIGHLAND AVENUE STREET 2: 3200 HIGHLAND AVENUE CITY: DOWNERS GROVE STATE: IL ZIP: 60515 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHCARE COMPARE CORP/DE/ DATE OF NAME CHANGE: 19920703 8-K 1 fhg03q3-8k.txt FINANCIAL RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2003 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 3, 2003 First Health Group Corp. (Exact name of registrant as specified in its charter) Delaware 0-15846 36-3307583 (State of Incorporation) (Commission (IRS Employer File Number) Identification No.) 3200 Highland Avenue, Downers Grove, IL 60515 (Address of principal executive offices, including zip code) (630) 737-7900 (Registrant's telephone number including area code) Item 12: Results of Operations and Financial Condition The following information is furnished pursuant to Item 12, "Results of Operations and Financial Condition." The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. On November 3, 2003, First Health Group Corp. issued a press release announcing financial results for the quarter ended September 30, 2003. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. First Health Group Corp. November 3, 2003 /s/ Joseph E. Whitters ----------------------- Joseph E. Whitters Vice President, Finance and Chief Financial Officer EX-99.1 3 exh99-1.txt PRESS RELEASE FINANCIAL RESULTS THIRD QUARTER 2003 EXHIBIT 99.1 FIRST HEALTH 3200 Highland Avenue Downers Grove, IL 60515-1223 (630) 737-7900 www.firsthealth.com Investor Contact: Joseph E. Whitters, CFO, 630-737-7511 Media Contact: Erin Gardiner, Public Relations Manager, 630-737-5016 FOR IMMEDIATE RELEASE --------------------- FIRST HEALTH REPORTS RECORD THIRD QUARTER RESULTS ------------------------------------------------- REVISED 2004 OUTLOOK ---------------------------------------------------------------------------- DOWNERS GROVE, IL - November 3, 2003 - Edward L. Wristen, President and Chief Executive Officer of First Health Group Corp. (NASDAQ: FHCC), announced today the results of operations for the third quarter ended September 30, 2003. Highlights for the quarter include: * Record revenue of $220 million, up 7% from 3Q 2002 * Record net income of $41 million, up 20% from 3Q 2002 * Record EPS of $.42 up 31% from 3Q 2002 Diluted earnings per share (EPS) and net income for the three months and nine months ended September 30, 2003, increased 31% to $.42 or $40,656,000 and 26% to $1.17 or $114,668,000 respectively, compared with $.32 or $33,743,000 and $.93 or $97,241,000 respectively, during the same periods last year. Revenues for the three months and nine months ended September 30, 2003, increased 7% to $219,736,000 from $204,928,000 and 19% to $652,140,000 from $550,212,000, respectively, during the same periods last year. Mr. Wristen commented that the record results in the quarter put the Company on track for another record year in 2003. Mr. Wristen noted that the quarterly results were favorably impacted by a change in the Company's annual effective tax rate to 38%, which added $.03 to EPS. For 2003, Mr. Wristen expects continued growth in revenue to approximately $880 million and EPS in the range of $1.55. 2004 Outlook ------------ Mr. Wristen commented that in late October, the Company concluded its budgeting and planning process for 2004 and currently expects revenue to grow to approximately $950 million and EPS to be in the $1.50 - $1.55 area for 2004 before share repurchases. Mr. Wristen noted that the current 2004 revenue and EPS estimates were disappointing, since the overall revenue growth is expected to be in the high single digits and EPS to be essentially flat compared to 2003. Mr. Wristen noted that there are several factors contributing to these expected results: * Loss of corporate clients with higher margin PPO-only business * Continued migration of corporate accounts to lower margin comprehensive services * Fewer new corporate accounts effective in 2004 than previously anticipated * Anticipated loss of federal employee members particularly in the Mail Handlers Health Benefit Plan, due to a significant increase in member contributions * Anticipated loss of PPO revenue in the workers' compensation area from recently-enacted legislation in California that is effective January 1, 2004 * Slower implementation of new clients for the Company's workers' compensation, insurance and state Medicaid services than previously expected Additionally, Mr. Wristen stated that the anticipated 2004 EPS takes into account a lower effective tax rate of 38%, but does not factor in any accretion from the potential repurchase of the Company's stock. Currently the Company has approximately 4.4 million shares available for repurchase under its current authorization. The Company expects to build on its strengths which include: * Long-term provider and payor contracts * High touch and high service consumer-focused products * Increasing momentum in state Medicaid programs through our comprehensive solutions that combine medical management, PBM and fiscal agent services * Broadened offering in worker's compensation through the Company's recently announced acquisition of Health Net Employer Services, Inc. * Comprehensive disease management solutions * Scalable, integrated infrastructure The Company expects to see more clients look to these types of strengths to effectively manage their health care costs. Conference Call and Webcast --------------------------- First Health Group Corp. will be hosting a conference call and webcast on Monday, November 3 at 8 a.m. Central Standard Time to discuss the Company's third quarter results. The quarterly conference call will be available on a live webcast from the Company's website (www.firsthealth.com). The webcast is open to all interested parties on a listen-only basis. Individuals who listen to the call will be presumed to have read First Health's Annual Report on Form 10-K for the year ended December 31, 2002, and Quarterly Reports on Form 10-Q for the three months ended March 31, 2003 and June 30, 2003. Business Description -------------------- First Health, the premier national health-benefits services company, specializes in providing large payors with integrated managed care solutions. First Health is a unique national managed care company serving the group health, workers' compensation and state agency markets. Using technology to enable service and managed care innovations, First Health sets the bar for industry performance. For more information, visit the company website at www.firsthealth.com. Forward-Looking Statements Notice --------------------------------- Certain statements herein regarding anticipated financial results for 2004 and the Company's business prospects are forward-looking statements that involve substantial risks and uncertainties. In accordance with the Private Securities Litigation Reform Act of 1995, factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the inability of the Company to continue to: (i) enter into contracts with and successfully implement programs for new clients within the time frame established by the Company and achieve the revenue growth expected to result from the addition of such clients, (ii) expand its group health, workers' compensation and public sector business, (iii) control health care benefit expenses and (iv) achieve operation and cost synergies anticipated as a result of the Health Net Employer Services acquisition. All forward-looking statements herein are made as of the date hereof, and the Company undertakes no obligation to update such statements. # # # First Health Group Corp. (000's Omitted Except EPS and Percentages) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- % Increase % Increase 2003 2002 (Decrease) 2003 2002 (Decrease) -------- -------- ----------- -------- -------- ---------- ------------------------------------------------------------------------------------------------ Revenues $ 219,736 $ 204,928 7% $ 652,140 $ 550,212 19% ------------------------------------------------------------------------------------------------ Operating Expenses: Cost of Services 98,642 93,481 6% 294,967 241,522 22% Selling and Marketing 23,188 21,438 8% 65,580 56,271 17% General and Administrative 15,994 15,805 1% 46,648 39,162 19% Health Care Benefits 4,478 3,883 15% 14,029 11,567 21% -------- -------- ---- -------- -------- ---- 142,302 134,607 6% 421,224 348,522 21% ------------------------------------------------------------------------------------------------ Operating Income 77,434 70,321 10% 230,916 201,690 14% ------------------------------------------------------------------------------------------------ Depreciation and Amortization 15,654 14,821 6% 46,334 41,149 13% Interest Income (1,515) (1,917) (21)% (4,242) (5,089) (17)% Interest Expense 1,182 1,411 (16)% 3,870 4,230 (9)% -------- -------- ---- -------- -------- ---- Income Before Income Taxes 62,113 56,006 11% 184,954 161,400 15% Income Taxes (21,457) (22,263) (4)% (70,286) (64,159) 10% -------- -------- ---- -------- -------- ---- Net Income $ 40,656 $ 33,743 20% $ 114,668 $ 97,241 18% ======== ======== ==== ======== ======== ==== Share Information: ------------------ Weighted Average Shares Outstanding - Basic 94,680 101,526 (7)% 95,710 100,972 (5)% ======== ======== ==== ======== ======== ==== Net Income Per Common Share - Basic $ .43 $ .33 30% $ 1.20 $ .96 25% ======== ======== ==== ======== ======== ==== Weighted Average Shares Outstanding - Diluted 97,051 104,972 (8)% 98,178 104,693 (6)% ======== ======== ==== ======== ======== ==== ------------------------------------------------------------------------------------------------ Net Income Per Common Share - Diluted $ .42 $ .32 31% $ 1.17 $ .93 26% ======== ======== ==== ======== ======== ==== ------------------------------------------------------------------------------------------------
First Health Group Corp. (000's Omitted Except Percentages) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- % Increase % Increase Revenue Information 2003 2002 (Decrease) 2003 2002 (Decrease) -------- -------- ----------- -------- -------- ---------- ------------------------------------------------------------------------------------------------ Commercial Revenue Group Health: PPO + Administration Services $ 97,063 $ 84,998 14% $ 277,091 $ 151,502 83% PPO Services 36,406 42,035 (13)% 116,201 170,455 (32)% Premiums 4,417 3,833 15% 12,774 11,653 10% -------- -------- ---- -------- -------- ---- Total Group Health 137,886 130,866 5% 406,066 333,610 22% Workers' Compensation: PPO + Administration Services 23,132 27,132 (15)% 73,291 80,421 (9)% PPO Services 15,994 13,706 17% 46,278 41,486 12% -------- -------- ---- -------- -------- ---- Total Workers' Compensation 39,126 40,838 (4)% 119,569 121,907 (2)% Total Commercial Revenue 177,012 171,704 3% 525,635 455,517 15% -------- -------- ---- -------- -------- ---- Public Sector 42,724 33,224 29% 126,505 94,695 34% -------- -------- ---- -------- -------- ---- Total Revenue $ 219,736 $ 204,928 7% $ 652,140 $ 550,212 19% ======== ======== ==== ======== ======== ==== ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ Operating Income Margins* ------------------------------------------------------------------------------------------------ Commercial 41% 39% 41% 43% Public Sector 10% 10% 11% 8% ======================================================================================== *Excludes Depreciation and Amortization September 30, December 31, Summary Balance Sheet Information: 2003 2002 --------------------------------- ------- ------- Assets: -------------------------------------------------------------------- Cash and Investments $161,863 $152,712 Accounts Receivable 87,827 69,981 Reinsurance Recoverable 26,043 27,582 Fixed Assets 218,257 205,503 Goodwill 281,084 279,447 Intangible Assets 50,940 54,086 Deferred Taxes 35,240 35,255 Other Assets 26,192 18,795 ------- ------- Total Assets $887,446 $843,361 ======= ======= Liabilities: -------------------------------------------------------------------- Claims Reserves $ 40,607 $ 40,420 Debt Outstanding 155,000 120,000 Deferred Taxes 114,811 114,692 Purchase Reserve 2,976 5,795 Accounts Payable 67,212 50,841 Accrued Expenses 40,789 47,740 Other Liabilities 62,269 49,727 ------- ------- Total Liabilities 483,664 429,215 Stockholders' Equity: 403,782 414,146 ------- ------- Total Liabilities and Stockholders' Equity $887,446 $843,361 ======= =======
First Health Group Corp. (000's Omitted) (Unaudited) Consolidated Statement of Cash Flows: ------------------------------------- Nine Months Ended September 30, -------------------- 2003 2002 -------- -------- Cash flows from operating activities: Net Income $ 114,668 $ 97,241 -------- -------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 46,334 41,149 Change in allowance for uncollectible receivables (1,500) 3,335 Provision for deferred income taxes (18) (113) Tax benefits from stock options exercised 8,032 14,780 Income from limited partnership (2,094) (2,311) Other, net 140 1,074 Changes in Assets and Liabilities (net of effects of acquired businesses): Accounts receivable (16,838) 4,631 Other current assets (7,473) (2,644) Reinsurance recoverable 1,394 939 Accounts payable and accrued expenses 5,029 7,386 Claims reserves 187 185 Income taxes payable 13,937 29,659 Non-current assets and liabilities (1,174) 2,395 -------- -------- Net cash provided by operating activities 160,624 197,706 -------- -------- Cash flows from investing activities: Purchases of investments (37,046) (62,860) Sales of investments 34,401 57,103 Acquisition of business, net of cash acquired (3,007) (42,959) Assets held for sale -- 923 Purchase of property and equipment (55,988) (42,768) -------- -------- Net cash used in investing activities (61,640) (90,561) -------- -------- Cash flows from financing activities: Purchase of treasury stock (149,831) (33,992) Proceeds from issuance of long-term debt 145,000 185,000 Repayment of long-term debt (110,000) (278,500) Proceeds from issuance of common stock 19,704 27,498 Stock option loans to employees -- (2,272) Stock option loan repayments 287 2,360 Sales of put options on common stock -- 375 -------- -------- Net cash used in financing activities (94,840) (99,531) -------- -------- Net increase in cash and cash equivalents 4,144 7,614 Cash and cash equivalents, beginning of period 20,852 14,001 -------- -------- Cash and cash equivalents, end of period $ 24,996 $ 21,615 ======== ======== -----END PRIVACY-ENHANCED MESSAGE-----