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News and Information Article
Reports Diluted Earnings per Share of $0.06 on Total Revenues
of $4.5 million;
Company Continues Record of Sustained Profitability
DETROIT, Jan. 26 /-FirstCall/ -- United American Healthcare
Corporation (Nasdaq: UAHC), a leading healthcare management company servicing
the Medicaid community, today announced financial results for the Companys
fiscal second quarter of 2006.
Total revenues for the fiscal second quarter of 2006 ended Dec. 31, 2005
were $4.5 million, compared with revenues of $5.4 million in the fiscal second
quarter of 2005. The year-on-year decline in revenue was primarily
attributable to a reduction in administrative fees received from TennCare
effective July 1, 2005, pursuant to a contract amendment between the Companys
subsidiary, UAHC Health Plan of Tennessee, Inc. (UAHC-TN), and the State of
Tennessee, doing business as TennCare. Through the contract amendment,
TennCare implemented a plan to reduce administrative fees and began a modified
risk arrangement for the compensation of TennCares contracted managed care
organizations (MCOs), including UAHC-TN. Under the current modified risk
arrangement, all MCOs doing business with TennCare are at risk of losing up to
10 percent of their administrative fee revenue with the understanding that, in
turn, they are also eligible to receive up to 15 percent incentive bonus
revenue, based on performance relative to certain benchmarks.
Further contributing to the decline in revenue was the impact of
TennCares disenrollment of non-medically needy adults not eligible for
Medicaid under TennCare coverage standards throughout Tennessee. As the
Company had expected, UAHC-TN lost approximately 10,000 members in the first
half of fiscal year 2006. As of Dec. 31, 2005, its Tennessee-based enrollment
included approximately 123,500 members. At present, the Company expects this
membership number to remain relatively stable.
Net income from continuing operations for the fiscal second quarter of
2006 was $0.44 million, or $0.06 per diluted share, compared to $0.40 million,
or $0.05 per diluted share, in the preceding quarter ended September 30, 2005,
and $1.93 million or $0.26 per diluted share, in the year-ago fiscal second
quarter. The decline in year-over-year net income was adversely impacted by a
decrease in administrative fee revenues, coupled with an increase in general
and administrative (G&A) expenses. The increase in G&A expense is
attributable to three primary cost centers, including expenses associated with
the administrative supervision order previously in effect for UAHC-TN, legal
expenses associated with ongoing litigation and an increase in claims
processing costs.
"Overall, we are very encouraged by our performance this quarter. Despite
a decline in revenue, we exceeded our expectations for profitability in the
quarter, as outlined within our financial guidance at the end of the first
fiscal quarter of 2006," said William C. Brooks, president, chairman and CEO
of United American Healthcare. "We continue to exercise a high degree of
prudence and conservatism within our operating model, driven by a focus on
effective cost management and streamlined internal processes. As revenue
expansion opportunities continue to emerge for our Company and the industry as
a whole, we believe our ongoing efforts to advance a flexible yet cost-
conscious operating model will contribute to sustained growth in our
profitability."
As of Dec. 31, 2005, United American Healthcare reported cash, cash
equivalents and short-term marketable securities of $6.4 million compared to
$10.2 million in the year-ago period. The decline in cash and cash
equivalents is primarily due to an increase in TennCare statutory reserve
requirements and funding of restricted assets.
"As we begin the back half of our fiscal year 2006, we are encouraged by
the strength of United Americans capital structure. With ongoing efforts to
manage costs internally, no long-term debt obligations and positive cash flow
from operations, we believe incremental growth in top-line revenue has the
potential to translate directly to growth in bottom-line profitability," said
Stephen Harris, CFO of United American Healthcare.
Fiscal Third Quarter 2006 Financial Outlook
The following statements are based on the Companys current expectations.
These statements are forward-looking, and actual results may differ
materially. Except as expressly set forth below, these statements do not
include the potential impact of any mergers, acquisitions or other business
combinations that may be closed or entered into after Dec. 31, 2005.
UAHC anticipates fiscal third quarter 2006 revenue to be in the range of
$4.3-4.5 million and net income from continuing operations to be in the range
of $0.06 - $0.08 per diluted share.
"As we consider the strategic direction of our Company over the next
several quarters, we remain encouraged by the opportunities for revenue
expansion on the horizon, particularly in new markets in the southeastern
United States," concluded Brooks. "We are entering a period of careful
assessment and targeting in our business strategy. We look forward to
focusing our energies on managing the core operations of our business, while
also evaluating new opportunities in the managed care arena within the context
of the TennCare modified risk arrangement as well as in new markets where we
may leverage our healthcare solutions to benefit new members."
Second Quarter 2006 Conference Call
United American Healthcare Corporation will host a conference call at 4:30
p.m. Eastern time today to discuss these results and current business trends.
To access the live conference call, please dial (800) 510-0146 and provide the
conference passcode 50747311. A replay of the call will be available through
Thurs., Feb. 9, 2006. To access the replay, please call (888) 286-8010 and
provide the conference passcode 19808870.
About United American Healthcare Corporation
United American Healthcare Corporation (UAHC) is a full-service healthcare
management company, pioneering the delivery of healthcare services to Medicaid
recipients since 1985. UAHC owns and manages UAHC Health Plan, which is based
in western Tennessee and includes the Memphis market. UAHC provides access to
more than 900 primary and specialty care physicians and more than 19 hospitals
to the 123,500 members of UAHC Health Plan. For more information, please
visit the Companys web site at http://www.uahc.com .
United American Healthcare Corporation Safe Harbor Statement
Forward-looking statements by United American Healthcare Corporation,
including those in this announcement, involve known and unknown risks, which
may cause actual results and corporate developments to differ materially from
those expected. Factors that could cause results and developments to differ
materially from expectations include, without limitation, the effects of state
and federal regulations, the effects of acquisitions and divestitures, and
other risks described from time to time in each of United American
Healthcares SEC reports, including quarterly reports on Form 10-Q, annual
reports on Form 10-K, and reports on Form 8-K.
United American Healthcare Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except share data)
Three months ended Six months ended
December 31, December 31,
2005 2004 2005 2004
Revenues
Fixed administrative fees $4,308 $5,253 $8,798 $10,381
Medical premiums - 2 - 21
Interest and other income 183 144 201 405
Total revenues 4,491 5,399 8,999 10,807
Expenses
Medical services - 3 - 22
General and administrative 3,968 3,421 7,986 7,158
Depreciation and amortization 29 45 62 94
Interest expense - - - 8
Total expenses 3,997 3,469 8,048 7,282
Earnings from continuing
operations before income taxes 494 1,930 951 3,525
Income tax expense 54 - 108 -
Earnings from continuing
operations 440 1,930 843 3,525
Discontinued operations
Loss from discontinued operations - - - (129)
Net earnings $440 $1,930 $843 $3,396
Net earnings per common share
- basic
Earnings from continuing
operations $0.06 $0.26 $0.11 $0.48
Loss from discontinued operations 0 0 0 (0.02)
Net earnings per common share $0.06 $0.26 $0.11 $0.46
Weighted average shares
outstanding 7,474 7,409 7,464 7,400
Net earnings per common share
- diluted
Earnings from continuing
operations $0.06 $0.26 $0.11 $0.47
Loss from discontinued operations 0 0 0 (0.02)
Net earnings per common share $0.06 $0.26 $0.11 $0.45
Weighted average shares
outstanding 7,604 7,486 7,593 7,476
United American Healthcare Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, June 30,
2005 2005
(Unaudited)
Assets
Current assets
Cash and cash equivalents $3,796 $9,843
Marketable securities 2,605 3,730
Accounts receivable - State of Tennessee 1,098 1,360
Other receivables 460 583
Prepaid expenses and other 161 172
Deferred income taxes 2,290 1,950
Total current assets 10,410 17,638
Property and equipment, net 135 179
Goodwill 3,452 3,452
Marketable securities 7,140 2,380
Restricted Assets 2,721 -
Other assets 586 586
Total assets $24,444 $24,235
Liabilities and Shareholders Equity
Current liabilities
Medical claims payable $156 $172
Accounts payable and accrued expenses 965 1,096
Accrued compensation and related benefits 407 711
Accrued rent 33 235
Other current liabilities 1,440 1,538
Total current liabilities 3,001 3,752
Total liabilities 3,001 3,752
Shareholders equity
Preferred stock, 5,000,000 shares
authorized; none issued - -
Common stock, no par, 15,000,000 shares
authorized; 7,475,235 and 7,450,235
issued and outstanding at December 31,
2005 and June 30, 2005, respectively 12,665 12,476
Retained earnings 8,890 8,047
Accumulated other comprehensive loss,
net of income taxes (112) (40)
Total shareholders equity 21,443 20,483
$24,444 $24,235
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