Achieves 45% Increase in Net Income for Fiscal 2010
Sep. 9, 2010 (Business Wire) -- Continucare Corporation (NYSE Amex:CNU) today reported strong financial results for its fourth quarter and fiscal year ended June 30, 2010. Financial highlights for the quarter include:
- Total revenue increased 5% to $79.3 million, compared to $75.3 million in the fourth quarter of fiscal 2009;
- Income from operations increased 18% to $9.1 million, compared to $7.8 million in the fourth quarter of fiscal 2009; and
- Net income increased 18% to $5.7 million, or $0.09 per diluted share, compared to $4.8 million, or $0.08 per diluted share, in the fourth quarter of fiscal 2009.
Full Year Results
For the fiscal year ended June 30, 2010, total revenue increased 10% to $310.8 million compared to $281.3 million in the prior fiscal year. Income from operations for fiscal 2010 increased 46% to $36.1 million compared to $24.7 million for fiscal 2009. Net income for fiscal 2010 increased 45% to $22.2 million, or $0.36 per diluted share, compared to $15.3 million, or $0.24 per diluted share for fiscal 2009.
Balance Sheet
Continucare’s cash and cash equivalents increased to $37.5 million at June 30, 2010 compared to $13.9 million at June 30, 2009, while working capital increased to $49.5 million at June 30, 2010 compared to $25.5 million at June 30, 2009. Total liabilities were $17.8 million at June 30, 2010 compared to $14.1 million at June 30, 2009. Shareholders’ equity increased to $136.0 million at June 30, 2010 from $111.2 million at June 30, 2009.
“We delivered outstanding financial results in our fourth quarter, our 13th consecutive quarter of year-over-year improvement and a strong conclusion to another record year,” said Richard C. Pfenniger, Jr., Continucare’s Chairman and Chief Executive Officer. “Revenue increased, margins improved and our financial position was further strengthened. At fiscal year-end, our cash and working capital positions reached new record levels and our balance sheet remained virtually free of long-term indebtedness.”
About Continucare Corporation
Continucare provides primary care physician services on an outpatient basis through a network of medical facilities 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 medical management services to independent physician affiliates who practice primary care medicine in South Florida. Also, through its subsidiary, Seredor Corporation, Continucare operates sleep diagnostic centers in seven states. For more information on Continucare please visit www.continucare.com, and for more information on Seredor please visit www.Seredor.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 including the following: our operations are dependent on three health maintenance organizations; under our most important contracts we are responsible for the cost of medical services to our patients in return for a capitated fee; our revenues will be affected by the Medicare Risk Adjustment program; if we are unable to manage medical benefits expense effectively, our profitability will likely be reduced; a failure to estimate incurred but not reported medical benefits expense accurately will affect our profitability; we compete with many health care providers for patients and HMO affiliations; we may not be able to successfully recruit or retain existing relationships with qualified physicians and medical professionals; our business exposes us to the risk of medical malpractice lawsuits; we primarily operate in Florida; a significant portion of our voting power is concentrated; we are dependent on our executive officers and other key employees; we depend on the management information systems of our affiliated HMOs; we depend on our information processing systems; the volatility of our stock price; a failure to successfully implement our business strategy could materially and adversely affect our operations and growth opportunities; our intangible assets represent a substantial portion of our total assets; competition for acquisition targets and acquisition financing and other factors may impede our ability to acquire other businesses and may inhibit our growth; our acquisitions could result in integration difficulties, unexpected expenses, diversion of management’s attention and other negative consequences; recently enacted health care reform, including The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010, could have a material adverse effect on our business; a decrease to our Medicare capitation payments may have a material adverse effect on our results of operations, financial position and cash flows; we are subject to government regulation; the health care industry is subject to continued scrutiny; our insurance coverage may not be adequate, and rising insurance premiums could negatively affect our profitability; deficit spending and economic downturns could negatively impact our results of operations; and many factors that increase health care costs are largely beyond our ability to control. 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 most recent annual report on Form 10-K and other filings with the SEC and we urge you to read those documents. 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 | ||||||
| June 30, | ||||||
| ASSETS | 2010 | 2009 | ||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 37,542,445 | $ | 13,895,823 | ||
| Certificate of deposit | 668,755 | - | ||||
| Due from HMOs, net of a liability for incurred but not reported medical claims expense of approximately $23,394,000 and $23,719,000 at June 30, 2010 and 2009, respectively | 18,920,388 | 17,323,599 | ||||
| Prepaid expenses and other current assets | 2,631,136 | 812,970 | ||||
| Deferred income tax assets | 140,057 | 141,420 | ||||
| Total current assets | 59,902,781 | 32,173,812 | ||||
| Certificates of deposit, restricted | - | 1,233,653 | ||||
| Property and equipment, net | 12,728,184 | 10,489,383 | ||||
| Goodwill | 73,994,444 | 73,204,582 | ||||
| Intangible assets, net of accumulated amortization of approximately $4,705,000 and $3,406,000 at June 30, 2010 and 2009, respectively | 4,296,507 | 5,253,666 | ||||
| Deferred income tax assets | 2,830,929 | 2,795,588 | ||||
| Other assets, net | 112,747 | 152,702 | ||||
| Total assets | $ | 153,865,592 | $ | 125,303,386 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 810,376 | $ | 652,305 | ||
| Accrued expenses and other current liabilities | 9,041,162 | 4,455,675 | ||||
| Income taxes payable | 590,673 | 1,575,511 | ||||
| Total current liabilities | 10,442,211 | 6,683,491 | ||||
| Deferred income tax liabilities | 7,145,507 | 6,435,732 | ||||
| Other liabilities | 249,248 | 981,640 | ||||
| Total liabilities | 17,836,966 | 14,100,863 | ||||
| Commitments and contingencies | ||||||
| Shareholders’ equity: | ||||||
| Common stock, $0.0001 par value: 100,000,000 shares authorized; 60,504,012 shares issued and outstanding at June 30, 2010 and 59,391,049 shares issued and outstanding at June 30, 2009 | 6,050 | 5,939 | ||||
| Additional paid-in capital | 107,860,204 | 105,210,519 | ||||
| Accumulated earnings | 28,162,372 | 5,986,065 | ||||
| Total shareholders’ equity | 136,028,626 | 111,202,523 | ||||
| Total liabilities and shareholders’ equity | $ | 153,865,592 | $ | 125,303,386 | ||
| CONTINUCARE CORPORATION | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Unaudited) | Year Ended June 30, | |||||||
| Three-Months Ended June 30, | ||||||||
| 2010 | 2009 | 2010 | 2009 | |||||
| Revenue | $ 79,288,452 | $ 75,270,033 | $ 310,791,463 | $ 281,270,360 | ||||
| Operating expenses: | ||||||||
| Medical services: | ||||||||
| Medical claims | 53,795,138 | 53,483,994 | 208,857,229 | 199,167,856 | ||||
| Other direct costs | 8,059,502 | 6,921,562 | 31,484,513 | 28,456,121 | ||||
| Total medical services | 61,854,640 | 60,405,556 | 240,341,742 | 227,623,977 | ||||
| Administrative payroll and employee benefits | 4,048,112 | 3,262,322 | 16,308,854 | 12,655,975 | ||||
| General and administrative | 4,249,594 | 3,850,991 | 18,021,123 | 16,261,750 | ||||
| Total operating expenses | 70,152,346 | 67,518,869 | 274,671,719 | 256,541,702 | ||||
| Income from operations | 9,136,106 | 7,751,164 | 36,119,744 | 24,728,658 | ||||
| Other income (expense): | ||||||||
| Interest income | 19,266 | 22,405 | 65,957 | 174,039 | ||||
| Interest expense | (4,922) | (4,070) | (116,041) | (21,255) | ||||
| Income before income tax provision | 9,150,450 | 7,769,499 | 36,069,660 | 24,881,442 | ||||
| Income tax provision | 3,471,772 | 2,970,823 | 13,893,353 | 9,600,321 | ||||
| Net income | $ 5,678,678 | $ 4,798,676 | $ 22,176,307 | $ 15,281,121 | ||||
| Net income per common share: | ||||||||
| Basic | $ .09 | $ .08 | $ .37 | $ .25 | ||||
| Diluted | $ .09 | $ .08 | $ .36 | $ .24 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 60,144,343 | 59,385,410 | 59,777,789 | 61,405,620 | ||||
| Diluted | 61,675,272 | 60,536,072 | 61,565,397 | 62,488,340 | ||||
| CONTINUCARE CORPORATION | |||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| For the Year Ended June 30, | |||||||||||||
| 2010 | 2009 | 2008 | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||
| Net income | $ | 22,176,307 | $ | 15,281,121 | $ | 11,269,654 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
| ||||||||||||
| Depreciation and amortization | 2,895,621 | 2,303,327 | 2,507,535 | ||||||||||
| Loss on impairment of fixed assets | 96,000 | - | 171,515 | ||||||||||
| Loss on disposal of fixed assets | 18,668 | 65,760 | - | ||||||||||
| Provision for bad debts | 118,895 | - | 181,081 | ||||||||||
| Compensation expense related to issuance of stock options | 1,391,768 | 1,163,472 | 1,332,786 | ||||||||||
| Excess tax benefits related to exercise of stock options | (1,374,921 | ) | (116,593 | ) | – | ||||||||
| Deferred income tax expense | 675,796 | 230,923 | (198,598 | ) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||||
| Due from HMOs, net | (1,596,789 | ) | (1,997,816 | ) | (1,251,657 | ) | |||||||
| Prepaid expenses and other current assets | 88,596 | (104,129 | ) | 676,782 | |||||||||
| Other assets, net | 56,365 | 42,735 | (128,743 | ) | |||||||||
| Accounts payable | 137,270 | 249,587 | (605,151 | ) | |||||||||
| Accrued expenses and other current liabilities | 3,270,660 | (33,689 | ) | 145,851 | |||||||||
| Income taxes payable | (984,838 | ) | 549,398 | 1,131,324 | |||||||||
| Net cash provided by operating activities | 26,969,398 | 17,634,096 | 15,232,379 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||
| Purchases of certificates of deposit | (10,705 | ) | (682,948 | ) | (112,512 | ) | |||||||
| Proceeds from maturities of certificates of deposit | 575,603 | 723,442 | 15,000 | ||||||||||
| Acquisition of sleep diagnostic centers, net of cash acquired | (1,507,858 | ) | - | - | |||||||||
| Purchase of property and equipment | (3,337,260 | ) | (3,100,935 | ) | (939,270 | ) | |||||||
| Net cash used in investing activities | (4,280,220 | ) | (3,060,441 | ) | (1,036,782 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||
| Principal repayments under capital lease obligations | (300,584 | ) | (115,225 | ) | (113,249 | ) | |||||||
| Repayment on long-term debt | - | - | (6,083 | ) | |||||||||
| Proceeds from exercise of stock options | 1,417,287 | 23,375 | 64,375 | ||||||||||
| Shares withheld in connection with exercise of stock options | (1,408,079 | ) | - | - | |||||||||
| Excess tax benefits related to exercise of stock options | 1,374,921 | 116,593 | – | ||||||||||
| Payment of fees related to issuance of stock | - | - | (45,000 | ) | |||||||||
| Purchase of noncontrolling interest in sleep diagnostic centers | (126,101 | ) | - | - | |||||||||
| Repurchase of common stock | - | (10,608,315 | ) | (11,452,147 | ) | ||||||||
| Net cash provided by (used in) financing activities | 957,444 | (10,583,572 | ) | (11,552,104 | ) | ||||||||
| Net increase in cash and cash equivalents | 23,646,622 | 3,990,083 | 2,643,493 | ||||||||||
| Cash and cash equivalents at beginning of fiscal year | 13,895,823 | 9,905,740 | 7,262,247 | ||||||||||
| Cash and cash equivalents at end of fiscal year | $ | 37,542,445 | $ | 13,895,823 | $ | 9,905,740 | |||||||
| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING TRANSACTIONS: | |||||||||||||
| Purchase of equipment, furniture and fixtures with proceeds of capital lease obligations | $ | 228,413 | $ | 123,831 | $ | 38,922 | |||||||
| Retirement of treasury stock | $ | - | $ | 10,608,315 | $ | 11,452,147 | |||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||||
| Cash paid for taxes | $ | 13,870,000 | $ | 8,820,000 | $ | 6,200,000 | |||||||
| Cash paid for interest | $ | 19,041 | $ | 16,255 | $ | 20,898 | |||||||
Continucare Corporation, Miami
Fernando L. Fernandez, Senior Vice
President – Finance, 305-500-2105
