Continucare Corporation
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 001-12115
CONTINUCARE CORPORATION
(Exact name of registrant as specified in its charter)
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Florida
(State or other jurisdiction
of incorporation or organization)
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59-2716023
(I.R.S. Employer Identification No.) |
7200 Corporate Center Drive
Suite 600
Miami, Florida 33126
(Address of principal executive offices)
(Zip Code)
(305) 500-2000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90 days. Yes x No
o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act).
Yes o No
x
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes o No
x
At November 3, 2005, the Registrant had 49,782,782 shares of $0.0001 par value common stock
outstanding.
CONTINUCARE CORPORATION
INDEX
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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September 30, |
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June 30, |
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2005 |
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2005 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
5,260,594 |
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$ |
5,780,544 |
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Other receivables, net |
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182,506 |
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144,973 |
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Due from HMOs, net of a liability for incurred but not reported
medical claims expense of approximately $11,583,000 and $11,700,000
at September 30, 2005 and June 30, 2005, respectively |
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5,469,479 |
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3,485,530 |
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Prepaid expenses and other current assets |
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501,493 |
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719,577 |
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Deferred tax assets, net |
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585,571 |
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585,571 |
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Total current assets |
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11,999,643 |
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10,716,195 |
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Certificates of deposit, restricted |
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539,792 |
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530,350 |
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Equipment, furniture and leasehold improvements, net |
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629,571 |
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670,665 |
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Goodwill, net of accumulated amortization of approximately $7,608,000 |
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14,342,510 |
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14,342,510 |
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Managed care contracts, net of accumulated amortization of
approximately $2,510,000 and $2,422,000 at September 30, 2005 and June
30, 2005, respectively |
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1,001,843 |
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1,090,046 |
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Deferred tax assets, net |
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5,961,097 |
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6,721,353 |
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Other assets, net |
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66,816 |
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66,816 |
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Total assets |
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$ |
34,541,272 |
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$ |
34,137,935 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
511,849 |
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$ |
660,139 |
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Accrued expenses and other current liabilities |
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1,869,699 |
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2,489,439 |
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Note payable |
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260,000 |
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520,000 |
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Income taxes payable |
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223,521 |
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131,363 |
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Total current liabilities |
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2,865,069 |
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3,800,941 |
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Capital lease obligations, less current portion |
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25,890 |
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38,361 |
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Total liabilities |
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2,890,959 |
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3,839,302 |
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Commitments and contingencies |
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Shareholders equity: |
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Common stock, $0.0001 par value: 100,000,000 shares authorized;
52,676,795 shares issued and 49,680,602 shares outstanding at
September 30, 2005 and 52,591,895 shares issued and 49,595,702
shares outstanding at June 30, 2005 |
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4,968 |
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4,960 |
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Additional paid-in capital |
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67,836,988 |
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67,924,068 |
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Accumulated deficit |
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(30,766,942 |
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(32,205,694 |
) |
Treasury stock, 2,996,193 shares at September 30, 2005 and June 30, 2005 |
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(5,424,701 |
) |
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(5,424,701 |
) |
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Total shareholders equity |
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31,650,313 |
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30,298,633 |
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Total liabilities and shareholders equity |
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$ |
34,541,272 |
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$ |
34,137,935 |
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
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Three Months Ended |
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September 30, |
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2005 |
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2004 |
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Revenue: |
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Medical services revenue, net |
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$ |
29,729,636 |
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$ |
26,027,422 |
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Management fee revenue and other income |
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141,514 |
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180,595 |
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Total revenue |
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29,871,150 |
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26,208,017 |
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Operating expenses: |
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Medical services: |
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Medical claims |
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21,406,178 |
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19,016,175 |
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Other direct costs |
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3,132,425 |
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3,151,253 |
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Total medical services |
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24,538,603 |
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22,167,428 |
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Administrative payroll and employee benefits |
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1,395,347 |
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1,090,961 |
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General and administrative |
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1,702,206 |
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1,595,303 |
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Total operating expenses |
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27,636,156 |
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24,853,692 |
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Income from operations |
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2,234,994 |
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1,354,325 |
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Other income (expense): |
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Interest income |
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59,141 |
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3,120 |
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Interest expense |
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(2,969 |
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(248,416 |
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Income before income tax provision |
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2,291,166 |
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1,109,029 |
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Income tax provision |
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852,414 |
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- |
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Net income |
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$ |
1,438,752 |
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$ |
1,109,029 |
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Net income per common share: |
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Basic |
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$ |
.03 |
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$ |
.02 |
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Diluted |
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$ |
.03 |
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$ |
.02 |
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Weighted average common shares outstanding: |
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Basic |
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49,859,938 |
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50,300,186 |
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Diluted |
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51,642,853 |
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51,685,339 |
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
CONTINUCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
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Three Months Ended |
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September 30, |
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2005 |
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2004 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ |
1,438,752 |
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$ |
1,109,029 |
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Adjustments to reconcile net income to net cash provided by
operating activities: |
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Depreciation and amortization, including amortization of
deferred financing costs |
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157,382 |
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356,898 |
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Provision for bad debts |
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12,463 |
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- |
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Stock-based compensation expense |
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250,394 |
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- |
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Deferred tax expense |
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760,256 |
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- |
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Changes in operating assets and liabilities, excluding the
effect of disposals: |
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Other receivables |
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(49,996 |
) |
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105,094 |
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Due from HMOs, net |
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(1,983,949 |
) |
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295,728 |
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Prepaid expenses and other current assets |
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218,084 |
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413,362 |
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Other assets |
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- |
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12,276 |
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Accounts payable |
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(148,290 |
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(110,288 |
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Accrued expenses and other current liabilities |
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(582,750 |
) |
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(166,266 |
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Income taxes payable |
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92,158 |
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- |
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Net cash provided by continuing operations |
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164,504 |
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2,015,833 |
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Net cash used in discontinued operations |
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(30,972 |
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(20,033 |
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Net cash provided by operating activities |
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133,532 |
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1,995,800 |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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(Purchase of) proceeds from maturities of certificates of deposit |
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(9,442 |
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30,293 |
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Purchase of property and equipment |
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(28,085 |
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(111,248 |
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Net cash used in investing activities |
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(37,527 |
) |
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(80,955 |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Payments on note payable |
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(260,000 |
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- |
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Payment of fees related to private placement transaction |
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- |
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(45,000 |
) |
Principal repayments under capital lease obligations |
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(18,489 |
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(17,549 |
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Proceeds from exercise of stock options |
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358,668 |
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- |
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Repurchase and retirement of common stock |
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(696,134 |
) |
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- |
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Net cash used in financing activities |
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(615,955 |
) |
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(62,549 |
) |
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Net (decrease) increase in cash and cash equivalents |
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(519,950 |
) |
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1,852,296 |
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Cash and cash equivalents at beginning of period |
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5,780,544 |
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720,360 |
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Cash and cash equivalents at end of period |
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$ |
5,260,594 |
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$ |
2,572,656 |
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
NOTE 1
UNAUDITED INTERIM INFORMATION
The accompanying unaudited condensed consolidated financial statements of Continucare Corporation
(Continucare or the Company) have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted in the United States
for complete financial statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended September 30, 2005 are not necessarily
indicative of the results that may be reported for the remainder of the year ending June 30, 2006
or future periods. Except as otherwise indicated by the context, the terms the Company or
Continucare mean Continucare Corporation and its consolidated subsidiaries. All references to a
fiscal year refer to the Companys fiscal year which ends June 30. As used herein, Fiscal 2006
refers to the fiscal year ending June 30, 2006, Fiscal 2005 refers to the fiscal year ended June
30, 2005, and Fiscal 2004 refers to the fiscal year ended June 30, 2004.
The balance sheet at June 30, 2005 has been derived from the audited financial statements at that
date but does not include all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements.
For further information, refer to the consolidated financial statements and footnotes thereto
included in the Companys Annual Report on Form 10-K for Fiscal 2005. These interim condensed
consolidated financial statements should be read in conjunction with the consolidated financial
statements and notes to consolidated financial statements included in that report.
Certain reclassifications have been made to the prior year amounts to conform to the current year
presentation.
NOTE 2
GENERAL
Continucare Corporation is a provider of primary care physician services on an outpatient basis in
Florida. The Company provides medical services to patients through employee physicians, advanced
registered nurse practioners and physicians assistants. Additionally, the Company provides
practice management services to independent physician affiliates (IPAs). Substantially all of
the Companys net medical services revenues are derived from managed care agreements with two
health maintenance organizations, Humana Medical Plans, Inc. (Humana) and Vista Healthplan of
South Florida, Inc. and its affiliated companies (Vista) (collectively, the HMOs). The Company
was incorporated in 1996 as the successor to a Florida corporation formed earlier in 1996.
In an effort to streamline operations and stem operating losses, the Company implemented a plan to
dispose of its home health operations in December 2003. The home health disposition occurred in
three separate transactions and was concluded in February 2004. As a result of these transactions,
the operations of the home health operations are shown as discontinued operations.
During the three-month period ended September 30, 2005, the Companys claims loss ratio (medical
claims expense as a percentage of medical services revenue) improved as compared to the
corresponding period of Fiscal 2004 due in part to an increase in revenue from higher per member
premiums for Medicare members resulting from the Medicare Prescription Drug Improvement and
Modernization Act of 2003 (the Medicare Modernization Act) and the increased phase-in of the
Medicare risk adjustment program. In response to the Medicare Modernization Act, the HMOs enhanced
benefits offered to their Medicare members. The Company anticipates that these benefit changes will
result in an increase in medical claims expense and may result in an increase in the claims loss
ratio in future periods which could reduce the Companys profitability and cash flows. However,
the Company cannot quantify what impact, if any, these developments may have on its future results
of operations.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
NOTE 3 STOCK-BASED COMPENSATION
Prior to July 1, 2005, the Company followed Accounting Principles Board Opinion No. 25, (APB No.
25), Accounting for Stock Issued to Employees, and related Interpretations in accounting for its
employee stock options. Under APB No. 25, when the exercise price of the Companys employee stock
options equaled or exceeded the market price of the underlying stock on the date of grant, no
compensation expense was recognized. Stock options issued to independent contractors or
consultants were accounted for in accordance with Statement of Financial Accounting Standards
(SFAS) No. 123, (SFAS No. 123), Accounting for Stock-Based Compensation. For the three-month
period ended September 30, 2004, no stock-based employee compensation expense was recognized in the
accompanying condensed consolidated Statement of Income.
Effective July 1, 2005, the Company adopted SFAS No. 123(R) (SFAS No. 123(R)), Share-Based
Payment, which is a revision of SFAS No. 123, using the modified prospective transition method.
Under this method, compensation cost recognized for the three-month period ended September 30, 2005
includes: (a) compensation cost for all share-based payments modified or granted prior to, but not
yet vested as of July 1, 2005, based on the grant date fair value estimated in accordance with the
original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted
subsequent to July 1, 2005, based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123(R). Results for periods prior to July 1, 2005 have not been restated.
The Company calculates the fair value for employee stock options using a Black-Scholes option
pricing model at the time the stock options are granted and that amount is amortized over the
vesting period of the stock options, which is generally up to four years. The fair value for
employee stock options granted during the three-month period ended September 30, 2005 was
calculated based on the following assumptions: risk-free interest rate ranging from 4.21% to 4.35%;
dividend yield of 0%; volatility factor of the expected market price of the Companys common stock
of 74.8%; and weighted-average expected life of the options ranging from 3 to 6 years, depending on
the vesting provisions of each option. The expected volatility factor is based on the historical
volatility of the market price of the Companys common stock as adjusted for certain events that
management deemed to be non-recurring and non-indicative of future events.
As a result of adopting SFAS No. 123(R) on July 1, 2005, the Companys income before income taxes
and net income for the three-month period ended September 30, 2005 are $0.2 million and $0.1
million lower, respectively, than if it had continued to account for share-based compensation under
APB No. 25. Basic and diluted earnings per share for the three-month period ended September 30,
2005 would have remained unchanged at $.03 and $.03, respectively, if the Company had not adopted
SFAS No. 123(R).
SFAS No. 123(R) requires the tax benefits resulting from tax deductions in excess of the
compensation cost recognized for options (excess tax benefits) to be classified as financing cash
flows. For the three-month periods ended September 30, 2005 and 2004, the Company had net
operating loss carryforwards and did not recognize any tax benefits resulting from the exercise of
stock options because the related tax deductions would not have resulted in a reduction of income
taxes payable. During the three-month period ended September 30, 2005, the Company issued 366,667
shares of common stock resulting from the exercise of stock options.
The following table illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123 to options granted under the
Companys stock option plans for the three-month period ended September 30, 2004. For purposes of
this pro forma disclosure, the fair value of these options was estimated at the date of grant using
a Black-Scholes option pricing model based on the following assumptions for the three-month period
ended September 30, 2004: risk-free interest rate of 4.25%; dividend yield of 0%; volatility factor
of the expected market price of the Companys common stock of 110.1%; and a weighted-average
expected life of the options of 10 years. The Companys pro forma information follows:
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
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Three-months ended |
|
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|
September 30, 2004 |
|
Net income as reported |
|
$ |
1,109,029 |
|
Deduct: |
|
|
|
|
Total stock-based employee compensation expense
determined under SFAS No. 123 for all awards |
|
|
245,820 |
|
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|
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|
Pro forma net income |
|
$ |
863,209 |
|
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Basic net income per common share: |
|
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|
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As reported |
|
$ |
.02 |
|
Pro forma |
|
$ |
.02 |
|
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Diluted net income per common share: |
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|
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As reported |
|
$ |
.02 |
|
Pro forma |
|
$ |
.02 |
|
NOTE 4
CREDIT FACILITY
The Company has in place a credit facility that provides for a revolving loan to the Company of
$3.0 million (the Credit Facility). Effective March 31, 2005, the Company obtained an extension
of the maturity date for the Credit Facility until March 31, 2006. All terms of the Credit Facility
remained substantially unchanged, except for the addition of a requirement that the Company
maintain a minimum cash and cash equivalent balance of $1.0 million and the elimination of the
requirement that Dr. Frost, a principal shareholder of the Company and member of the Board of
Directors, personally guarantee the Companys obligations under the Credit Facility. At September
30, 2005, there was no outstanding principal balance on the Credit Facility. Interest under the
Credit Facility is payable monthly at 2.9% plus the 30-day Dealer Commercial Paper Rate, which was
3.70% at September 30, 2005. All assets of the Company serve as collateral for the Credit
Facility.
NOTE 5 EARNINGS PER SHARE
A reconciliation of the denominator of the basic and diluted earnings per share computation is as
follows:
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|
|
|
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|
|
|
|
Three-Months Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
Basic weighted average number of shares
outstanding |
|
|
49,859,938 |
|
|
|
50,300,186 |
|
Dilutive effect of stock options |
|
|
1,705,270 |
|
|
|
1,292,958 |
|
Dilutive effect of convertible debt |
|
|
77,645 |
|
|
|
92,195 |
|
|
|
|
|
|
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|
Diluted weighted average number of shares
outstanding |
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51,642,853 |
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51,685,339 |
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|
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Not included in calculation of diluted earnings
per share as impact is antidilutive: |
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Stock options outstanding |
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334,000 |
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880,000 |
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Warrants |
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760,000 |
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760,000 |
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NOTE 6 INCOME TAXES
The Company accounts for income taxes under FASB Statement No. 109, Accounting for Income Taxes.
Deferred income tax assets and liabilities are determined based upon differences between the
financial reporting and tax bases
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
of assets and liabilities and are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse.
The Company recorded an income tax provision of $852,414 for the three-month period ended September
30, 2005. No provision for income taxes was recorded for the three-month period ended September
30, 2004 due primarily to the utilization of prior year net operating loss carryforwards. As a
result of the utilization of deferred tax assets during the three-month period ended September 30,
2004, the valuation allowance for deferred tax assets was reduced by $323,421 to offset income tax
liabilities generated from operations.
NOTE 7 CONTINGENCIES
The Company is a party to the case of JOAN LINDAHL v. HUMANA MEDICAL PLAN, INC., COLUMBIA
HOSPITAL CORPORATION OF SOUTH BROWARD d/b/a WESTSIDE REGIONAL MEDICAL CENTER, INPHYNET CONTRACTING
SERVICES, INC., CONTINUCARE MEDICAL MANAGEMENT, INC., LUIS GUERRERO AND JARSLAW PARKOLAP. This
case was filed in January 2002 in the Circuit Court of the 17th Judicial Circuit in and for Broward
County, Florida and served on the companies and individuals in February 2003. The complaint
alleges vicarious liability for medical malpractice. In September 2005, the parties agreed in
principle to the terms of a settlement and the case was resolved pending only the final execution
of formal settlement documents and the entry of an order of dismissal. The Companys liability
under the terms of the settlement will not exceed the accrual recorded for this claim.
The Company is a party to the case of MAUREEN MCCANN, AS PERSONAL REPRESENTATIVE OF THE ESTATE
OF WALTER MCCANN v. AJAIB MANN, M.D. AND CONTINUCARE CORPORATION. This case was filed in April
2005, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida.
The complaint alleges vicarious liability for medical malpractice. The Company intends to defend
itself against this case vigorously, but its outcome cannot be predicted. The Companys ultimate
liability, if any, with respect to the lawsuit is presently not determinable.
The Company is also involved in other legal proceedings incidental to its business that arise from
time to time out of the ordinary course of business including, but not limited to, claims related
to the alleged malpractice of employed and contracted medical professionals, workers compensation
claims and other employee-related matters, and minor disputes with equipment lessors and other
vendors. The Company has recorded an accrual for claims, which includes amounts for insurance
deductibles and projected exposure, based on managements estimate of the ultimate outcome of such
claims.
9
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q
to we, us, our, Continucare or the Company refers to Continucare Corporation and its
consolidated subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We caution our investors that certain important factors may affect our actual results and
could cause such results to differ materially from any forward-looking statement which may have
been deemed to have been made in this report or which are otherwise made by us or on our behalf.
For this purpose, any statements contained in this report that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the generality of the
foregoing, words such as may, will, expect, believe, anticipate, intend, plan,
predict, should, potential, could, would, estimate, continue or pursue, or the
negative other variations thereof or comparable terminology are intended to identify
forward-looking statements. Such statements include, but are not limited to the following:
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Our ability to make capital expenditures and respond to capital needs; |
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Our ability to enhance the services we provide to our patients; |
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Our ability to strengthen our medical management capabilities; |
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Our ability to improve our physician network; |
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Our ability to enter into or renew our managed care agreements and negotiate terms which are favorable to us and
affiliated physicians; |
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Our ability to respond to future changes in Medicare reimbursement levels and reimbursement rates from other third
parties; |
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Our compliance with applicable laws and regulations; |
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Our ability to establish relationships and expand into new geographic markets; |
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Our ability to expand our network through additional medical centers or facilities; |
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The potential impact on our claims loss ratio as a result of the Medicare Risk Adjustments (MRA) and the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Modernization Act); |
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Our ability to utilize our net operating losses for Federal income tax purposes; |
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The application and impact of SFAS 123(R) on our results of operations; and |
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Our intent to repurchase our common stock under our stock repurchase program. |
Forward-looking statements involve risks and uncertainties that cannot be predicted or
quantified and, consequently, actual results may differ materially from those expressed or implied
by such forward-looking statements. Such risks and uncertainties include, but are not limited to
the following:
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Our dependence on two HMOs for substantially all of our revenues; |
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Our ability to enter into and renew managed care provider arrangements on acceptable terms; |
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Our ability to respond to capital needs; |
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Our ability to achieve expected levels of patient volumes and control the costs of providing services; |
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Pricing pressures exerted on us by managed care organizations; |
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The level of payments we receive from governmental programs and other third party payors; |
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Our ability to successfully recruit and retain qualified medical professionals; |
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Future legislative changes in governmental regulations, including possible changes in Medicare programs that may impact
reimbursements to health care providers and insurers; |
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Our ability to comply with applicable laws and regulations; |
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The impact of the Medicare Modernization Act and MRA on payments we receive for our managed care operations; |
10
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Technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health
care; |
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Changes in our revenue mix and claims loss ratio; |
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Changes in the range of medical services we provide or for which our HMO affiliates offer coverage; |
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Our ability to enter into and renew managed care provider agreements on acceptable terms; |
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Loss of significant contracts, including the Humana PGP Agreement; |
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The ability of our compliance program to detect and prevent regulatory compliance problems; |
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Delays in receiving payments; |
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Increases in the cost of insurance coverage, including our stop-loss coverage, or the loss of insurance coverage; |
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The collectibility of our uninsured accounts and deductible and co-pay amounts; |
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Federal and state investigations; |
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Lawsuits for medical malpractice and the outcome of any such litigation; |
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Changes in estimates and judgments associated with our critical accounting policies, including newly adopted SFAS
123(R); |
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Our dependence on our information processing systems and the management information systems of our HMO affiliates; |
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Impairment charges that could be required in future periods; |
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The impact on us if our internal controls over financial reporting required under
Section 404 of the Sarbanes-Oxley Act are found not to be effective; |
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The impact on our liquidity of any repurchases of our common stock that we may effect; |
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General economic conditions; and |
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Uncertainties generally associated with the health care business. |
We assume no responsibility to update our forward-looking statements as a result of new
information, future events or otherwise. Additional information concerning these and other risks
and uncertainties is contained in our filings with the Securities and Exchange Commission,
including the section entitled Risk Factors in our Annual Report on Form 10-K for Fiscal 2005.
General
We are a provider of primary care physician services. Through our network of 15 medical
centers, we provide primary care medical services on an outpatient basis. We also provide practice
management services to 27 IPAs. All of our medical centers and IPAs are located in Miami-Dade,
Broward and Hillsborough Counties, Florida. As of September 30, 2005, we provided services to or
for approximately 13,400 patients on a full risk basis and approximately 14,600 patients on a
limited or non-risk basis. For the three-months ended September 30, 2005, approximately 96% of our
revenue was generated by providing services to Medicare-eligible members under full risk
arrangements that require us to assume responsibility to provide and pay for all of our patients
medical needs in exchange for a capitated fee, typically a percentage of the premium received by an
HMO from various payor sources.
In an effort to streamline and stem operating losses, we implemented a plan to dispose of our
home health operations in December 2003. The home health disposition occurred in three separate
transactions and was concluded in February 2004. As a result of these transactions, the operations
of our home health operations are shown as discontinued operations.
Medicare Considerations
Substantially all of our net medical services revenue from continuing operations is based upon
Medicare funded programs. The federal government from time to time explores ways to reduce medical
care costs through Medicare reform and through health care reform generally. Any changes that
would limit, reduce or delay receipt of Medicare funding or any developments that would disqualify
us from receiving Medicare funding could have a material adverse effect on our business, results of
operations, prospects, financial results, financial condition or cash
11
flows. Due to the diverse range of proposals put forth and the uncertainty of any proposals
adoption, we cannot predict what impact any Medicare reform proposal ultimately adopted may have on
our business, financial position or results of operations.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2 to the consolidated financial
statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2005,
which were prepared in accordance with accounting principles generally accepted in the United
States of America. Included within these policies are certain policies which contain critical
accounting estimates and, therefore, have been deemed to be critical accounting policies.
Critical accounting estimates are those which require management to make assumptions about matters
that were uncertain at the time the estimate was made and for which the use of different estimates,
which reasonably could have been used, or changes in the accounting estimates that are reasonably
likely to occur from period to period, could have a material impact on the presentation of our
financial condition, changes in financial condition or results of operations.
We base our estimates and assumptions on historical experience, knowledge of current events
and anticipated future events, and we continuously evaluate and update our estimates and
assumptions. However, our estimates and assumptions may ultimately prove to be incorrect or
incomplete and our actual results may differ materially. We believe the following critical
accounting policies involve the most significant judgments and estimates used in the preparation of
our consolidated financial statements.
Revenue Recognition
Under our full risk contracts with HMOs, we receive a percentage of premium or other capitated
fee for each patient that chooses one of our physicians as their primary care physician. Revenue
under these agreements is generally recorded in the period services are rendered at the rates then
in effect as determined by the respective contract. As part of the Medicare Advantage program, the
Centers for Medicare and Medicaid Services (CMS) periodically recomputes the premiums to be paid
to the HMOs based on updated health status of participants and updated demographic factors. We
record any adjustments to this revenue at the time that the information necessary to make the
determination of the adjustment is received from the HMO or CMS.
Under our full risk agreements, we assume responsibility for the cost of all medical services
provided to the patient, even those we do not provide directly, in exchange for a percentage of
premium or other capitated fee. To the extent that patients require more frequent or expensive
care, our revenue under a contract may be insufficient to cover the costs of care provided. When
it is probable that expected future health care costs and maintenance costs under a contract or
group of existing contracts will exceed anticipated capitated revenue on those contracts, we
recognize losses on our prepaid health care services with HMOs. No contracts were considered loss
contracts at September 30, 2005 because we have the right to terminate unprofitable physicians and
close unprofitable centers under our managed care contracts.
Under our limited risk and no-risk contracts with HMOs, we receive a management fee based on
the number of patients for which we are providing services on a monthly basis. The management fee
is recorded as revenue in the period in which services are provided as determined by the respective
contract.
Medical Claims Expense Recognition
The cost of health care services provided or contracted for is accrued in the period in which
the services are provided. This cost includes our estimate of the related liability for medical
claims incurred in the period but not yet reported, or IBNR. IBNR represents a material portion of
our medical claims liability which is presented in the balance sheet net of amounts due from HMOs.
Changes in this estimate can materially affect, either favorably or unfavorably, our results from
operations and overall financial position.
12
We develop our estimate of IBNR primarily based on historical claims incurred per member per
month. We adjust our estimate if we have unusually high or low utilization or if benefit changes
provided under the HMO plans are expected to significantly increase or reduce our claims exposure.
We also adjust our estimate for differences between the estimated claims expense recorded in prior
months to actual claims expense as claims are paid by the HMO and reported to us.
To further corroborate our estimate of medical claims, an independent actuarial calculation is
performed for us on a quarterly basis. This independent actuarial calculation indicates that IBNR
as of September 30, 2005 was between approximately $11.0 million and $12.1 million. Based on our
internal analysis and the independent actuarial calculation, as of September 30, 2005, we recorded
a liability of approximately $11.6 million for IBNR.
Consideration of Impairment Related to Goodwill and Other Intangible Assets
Our balance sheet includes intangible assets, including goodwill and other separately
identifiable intangible assets, which represented approximately 44% of our total assets at
September 30, 2005. Under Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets, goodwill and intangible assets with indefinite useful lives are no
longer amortized, but are reviewed for impairment on an annual basis or more frequently if certain
indicators of permanent impairment arise. Intangible assets with definite useful lives are
amortized over their respective useful lives to their estimated residual values and also reviewed
for impairment annually, or more frequently if certain indicators of permanent impairment arise.
Indicators of a permanent impairment include, among other things, a significant adverse change in
legal factors or the business climate, the loss of a key HMO contract, an adverse action by a
regulator, unanticipated competition, the loss of key personnel or allocation of goodwill to a
portion of business that is to be sold.
Because we operate in a single segment of business, we have determined that we have a single
reporting unit and we perform our impairment test for goodwill on an enterprise level. In
performing the impairment test, we compare the total current market value of all of our outstanding
common stock, to the current carrying value of our total net assets, including goodwill and
intangible assets. Depending on the market value of our common stock at the time that an
impairment test is required, there is a risk that a portion of our intangible assets would be
considered impaired and must be written-off during that period. We completed our annual impairment
test on May 1, 2005, and determined that no indicators of impairment existed. In addition, no
indicators of impairment were noted for the three-month period ended September 30, 2005 and no
impairment charges were recognized. Should we later determine that an indicator of impairment
exists, we would be required to perform an additional impairment test.
Realization of Deferred Tax Assets
We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes
(SFAS 109) which requires that deferred tax assets and liabilities be recognized using enacted
tax rates for the effect of temporary differences between the book and tax bases of recorded assets
and liabilities. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred tax asset will not
be realized.
As part of the process of preparing our consolidated financial statements, we estimate our
income taxes based on our actual current tax exposure together with assessing temporary differences
resulting from differing treatment of items for tax and accounting purposes. We also recognize as
deferred tax assets the future tax benefits from net operating loss carryforwards. We evaluate the
realizability of these deferred tax assets by assessing their valuation allowances and by adjusting
the amount of such allowances, if necessary. During the fourth quarter of Fiscal 2005, we
determined that no valuation allowance for deferred tax assets was necessary and we decreased our
valuation allowance by $10.2 million for Fiscal 2005. This decision had the effect of increasing
our Fiscal 2005 net income by approximately $7.2 million. Among the factors used to assess the
likelihood of realization are our projections of future taxable income streams, the expected timing
of the reversals of existing temporary differences, and the impact of tax planning strategies that
could be implemented to avoid the potential loss of future tax benefits. However, changes in tax
codes, statutory tax rates or future taxable income levels could materially impact our valuation of
tax accruals and assets and could cause our provision for income taxes to vary significantly from
period to period.
13
At September 30, 2005, we had deferred tax assets in excess of deferred tax liabilities of
approximately $6.5 million. During the three-month period ended September 30, 2005, we determined
that it is more likely than not that those assets will be realized (although realization is not
assured), resulting in no valuation allowance at September 30, 2005.
Stock-Based Compensation Expense
Effective July 1, 2005, we adopted SFAS 123(R) using the modified prospective transition
method. SFAS 123(R) requires us to recognize compensation costs related to our share-based payment
transactions with employees in our financial statements. SFAS 123(R) requires us to calculate this
cost based on the grant date fair value of the equity instrument. Consistent with our prior
disclosures under SFAS 123, we have elected to calculate the fair value of our employee stock
options using the Black-Scholes option pricing model. Using this model we calculated the fair
value for employee stock options granted during the three-month period ended September 30, 2005 on
the basis of the following assumptions: risk-free interest rate
ranging from 4.21% to 4.35%;
dividend yield of 0%; volatility factor of the expected market price of the Companys common stock
of 74.8%; and weighted-average expected life of the options ranging from 3 to 6 years, depending on
the vesting provisions of each option. Based on the Black-Scholes model and our assumptions, we
recognized stock-based employee compensation expense of $0.2 million for the three months ended
September 30, 2005.
SFAS 123(R) does not require the use of any particular option valuation model. Because our
stock options have characteristics significantly different from traded options and because changes
in the subjective input assumptions can materially affect the fair value estimate, in managements
opinion, it is possible that existing models may not necessarily provide a reliable measure of the
fair value of our employee stock options. We selected the Black-Scholes model based on our prior
experience with it, its wide use by issuers comparable to us, and our review of alternate option
valuation models. Based on these factors, we believe that the Black-Scholes model and the
assumptions we made in applying it provide a reasonable estimate of the fair value of our employee
stock options.
The effect of applying the fair value method of accounting for stock options on reported net
income for any period may not be representative of the effects for future periods because our
outstanding options typically vest over a period of several years and additional awards may be made
in future periods.
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto appearing elsewhere in this Form
10-Q.
COMPARISON OF THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 TO THE THREE- MONTH PERIOD ENDED
SEPTEMBER 30, 2004
Revenue
Medical services revenue increased by $3.7 million, or 14.2%, to $29.7 million for the
three-month period ended September 30, 2005 from $26.0 million for the three-month period ended
September 30, 2004 due primarily to increases in our Medicare revenue. The most significant
component of our medical services revenue is the revenue we generate from Medicare patients under
full risk arrangements. During the three month period ended September 30, 2005, revenue generated
by our Medicare full risk arrangements increased approximately 16.5% on a per patient per month
basis and Medicare patient months increased by approximately 0.1% over the comparable period of
Fiscal 2005. The increase in Medicare revenue was primarily due to higher per patient per month
premiums resulting from the Medicare Modernization Act and the increased phase-in of the Medicare
risk adjustment program, both of which became effective in January 2004. Under the Medicare risk
adjustment program, the health status of Medicare Advantage participants is taken into account in
determining premiums paid for each participant rather than merely demographic factors, as was
historically the case. CMS periodically recomputes the premiums to be paid to the HMOs based on
updated health status of participants and updated demographic factors. Due to the timing of
14
when the updated premium amounts are paid to the HMOs, the per patient per month premiums we
receive from the HMOs may include retroactive adjustments to amounts previously paid. Included in
medical services revenue for each of the three-month periods ended September 30, 2005 and 2004 are
retroactive Medicare risk adjustments of approximately $0.6 million.
Management fee revenue and other income of $0.1 million and $0.2 million for the three-month
periods ended September 30, 2005 and 2004, respectively, related primarily to revenue generated
under our limited risk and non-risk contracts with Humana under the PGP Agreement.
Revenue generated by our managed care entities under contracts with Humana accounted for
approximately 78% and 77% of our medical services revenue for the three-month periods ended
September 30, 2005 and 2004, respectively. Revenue generated by our managed care entities under
contracts with Vista accounted for approximately 21% and 23% of our medical services revenue for
the three-month periods ended September 30, 2005 and 2004, respectively.
Operating Expenses
Medical services expenses are comprised of medical claims expense and other direct costs
related to the provision of medical services to our patients. Because our full risk contracts with
HMOs provide that we are financially responsible for all medical services provided to our patients
under those contracts, medical claims expenses include the costs of medical services provided to
patients under our full risk contracts by providers other than us. Other direct costs include the
salaries, taxes and benefits of our health professionals providing primary care services, medical
malpractice insurance costs, capitation payments to our IPA physicians and other costs related to
the provision of medical services to our patients.
Primarily as a result of higher medical costs and an increase in utilization of health care
services by our Medicare patients, medical services expenses for the three-month period ended
September 30, 2005 increased by $2.3 million, or 10.7%, to $24.5 million from $22.2 million for the
three-month period ended September 30, 2004. However, because the increase in our revenue more
than offset the growth of our medical services expenses during the first quarter of Fiscal 2006,
our medical services expenses decreased to 82.1% of total revenue for the three-month period ended
September 30, 2005 as compared to 84.6% for the three-month period ended September 30, 2004.
Medical claims expense increased by $2.4 million, or 12.6%, to $21.4 million for the three-month
period ended September 30, 2005 from $19.0 million for the three-month period ended September 30,
2004 primarily as a result of higher medical costs and an increase in utilization of health care
services by our Medicare patients. As a result of these developments, for the three-month period
ended September 30, 2005 our medical claims expenses related to our Medicare patients increased on
a per patient per month basis by approximately 17.2% over the comparable period of Fiscal 2005.
Notwithstanding the increase in the amount of our medical services expenses and claims expense
during the three-month period ended September 30, 2005, the increase in our medical services
revenue more than offset the increase in our medical services expenses and claims expense. As a
result, our claims loss ratio (medical claims expense as a percentage of medical services revenue)
decreased to 72.0% in the three-month period ended September 30, 2005, from 73.1% in the
three-month period ended September 30, 2004. However, in response to the Medicare Modernization
Act, certain benefits offered to Medicare patients were enhanced by the HMOs. We anticipate that
these benefit changes will result in an increase in our medical claims expense and may result in an
increase in our claims loss ratio in future periods which could reduce our profitability and cash
flows. However, we cannot quantify what impact, if any, these developments may have on our claims
loss ratio (which fluctuates from period to period) or results of operations in future periods.
Other direct costs remained relatively constant at $3.1 million and $3.2 million for the
three-month periods ended September 30, 2005 and 2004, respectively. As a percentage of total
revenue, other direct costs decreased to 10.5% for the three-month period ended September 30, 2005
from 12.0% for the three-month period ended September 30, 2004.
15
Administrative payroll and employee benefits expense increased by $0.3 million, or 27.9%, to
$1.4 million for the three-month period ended September 30, 2005 from $1.1 million for the
three-month period ended September 30, 2004. As a percentage of total revenue, administrative
payroll and employee benefits expense increased to 4.7% for the three-month period ended September
30, 2005 from 4.2% for the three-month period ended September 30, 2004. The increase in
administrative payroll and employee benefits expense was primarily due to the recognition of
stock-based employee compensation expense and an increase in incentive plan accruals.
General and administrative expenses increased by $0.1 million or 6.7%, to $1.7 million for the
three-month period ended September 30, 2005 from $1.6 million for the three-month period ended
September 30, 2004. As a percentage of total revenue, general and administrative expenses
decreased to 5.7% for the three-month period ended September 30, 2005 from 6.1% for the three-month
period ended September 30, 2004. The increase in general and administrative expenses was primarily
due to an increase in professional fees.
Income from Operations
Income from operations for the three-month period ended September 30, 2005 increased by $0.8
million to $2.2 million, or 7.5% of total revenue, from $1.4 million, or 5.2% of total revenue, for
the three-month period ended September 30, 2004.
Interest Expense
Interest expense decreased by $0.2 million, or 98.8%, to $3,000 for the three-month period
ended September 30, 2005 from $0.2 million for the three-month period ended September 30, 2004.
For the three-month period ended September 30, 2004, we recorded interest expense of $0.2 million
related to the amortization of deferred financing costs that were incurred in connection with Dr.
Frosts personal guarantee of the Companys Credit Facility. The deferred financing costs were
fully amortized as of March 31, 2005 and, accordingly, no related interest expense was recorded
during the three-month period ended September 30, 2005.
Taxes
An income tax provision of $0.9 million was recorded for the three-month period ended
September 30, 2005. No provision for income taxes was recorded for the three-month period ended
September 30, 2004 due primarily to the utilization of prior year net operating loss carryforwards.
As a result of our utilization of deferred tax assets during the three-month period ended
September 30, 2004, we reduced the valuation allowance for deferred tax assets by $0.3 million to
offset income tax liabilities that were generated from current operations.
Net Income
Net income for the three-month period ended September 30, 2005 increased by $0.3 million to
$1.4 million from $1.1 million for the three-month period ended September 30, 2004.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2005, working capital was $9.1 million, an increase of $2.2 million from $6.9
million at June 30, 2005. The increase in working capital for the three-month period ended
September 30, 2005 was primarily due to operating income of $2.2 million. Cash and cash
equivalents were $5.3 million at September 30, 2005 compared to $5.8 million at June 30, 2005.
Net cash of $0.1 million was provided by operating activities from continuing operations for
the three-month period ended September 30, 2005 compared to $2.0 million for the three-month period
ended September 30, 2004. The decrease of $1.9 million in cash provided by operating activities
for the three-month period ended September 30, 2005 was primarily due to an increase in amounts due
from HMOs of $2.3 million.
16
Net cash of approximately $38,000 was used for investing activities for the three-month period
ended September 30, 2005 compared to approximately $81,000 for the three-month period ended
September 30, 2004. Net cash used for investing activities primarily related to the purchase of
equipment.
Net cash of approximately $0.6 million was used in financing activities for the three-month
period ended September 30, 2005 compared to net cash used of $63,000 for the three-month period
ended September 30, 2004. The increase in cash used in financing activities of $0.6 million for
the three-month period ended September 30, 2005 was primarily due to the repurchase of common stock
of $0.7 million.
In May 2005, our Board of Directors increased our previously announced program to repurchase
shares of our common stock to a total of 2,500,000 shares. Any such repurchases will be made from
time to time at the discretion of our management in the open market or in privately negotiated
transactions subject to market conditions and other factors. We anticipate that any such
repurchases of shares will be funded through cash from operations. As of November 1, 2005, we had
repurchased 1,157,467 shares of our common stock for approximately $3.0 million.
We believe that we will be able to fund our capital commitments, our anticipated operating
cash requirements for the foreseeable future and satisfy any remaining obligations from our working
capital, anticipated cash flows from operations, and our Credit Facility.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At September 30, 2005, we had only certificates of deposit and cash equivalents invested in
high grade, short-term securities, which are not typically subject to material market risk. We
have loans outstanding at fixed rates. For loans with fixed interest rates, a hypothetical 10%
change in interest rates would have no impact on our future earnings and cash flows related to
these instruments and would have an immaterial impact on the fair value of these instruments. Our
Credit Facility is interest rate sensitive, however, we had no amount outstanding under this
facility at September 30, 2005. We have no material risk associated with foreign currency exchange
rates or commodity prices.
ITEM 4. CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer and Chief Financial
Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end
of the period covered by this report. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that the disclosure controls and procedures are effective.
However, that conclusion should be considered in light of the various limitations described below
on the effectiveness of those controls and procedures, some of which pertain to most if not all
business enterprises, and some of which arise as a result of the nature of our business. Our
management, including our Chief Executive Officer and our Chief Financial Officer, does not expect
that our disclosure controls and procedures will prevent all errors and all improper conduct. A
control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of improper conduct, if any, have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management override of the control.
Further, the design of any system of controls also is based in part upon assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected. In addition, we depend
on our HMO affiliates for certain financial and other information that we receive concerning the
medical services revenue and expenses that we earn and incur. Because our HMO affiliates generate
that
17
information for us we have less control over the manner in which that information is
generated. There were no changes in our internal controls or other
factors during the first
quarter of our fiscal year, nor were there any corrective actions required with regard to
significant deficiencies and material weaknesses.
Provided with this quarterly report on Form 10-Q are certifications of our Chief Executive
Officer and our Chief Financial Officer. We are required to provide those certifications by Section
302 of the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commissions implementing
regulations. Item 4 of this quarterly report on Form 10-Q is the information concerning the
evaluation referred to in those certifications, and you should read this information in conjunction
with those certifications for a more complete understanding of the topics presented.
PART
II OTHER INFORMATION
Item 1. Legal Proceedings
See Note 7 of our Condensed Consolidated Financial Statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In May 2005, we announced that we had increased our previously announced stock repurchase
program to authorize the buy back of up to 2,500,000 shares of our common stock. Any such
repurchases will be made from time to time at the discretion of our management in the open market
or in privately negotiated transactions subject to market conditions and other factors. We
anticipate that any such repurchases of shares will be funded through cash from operations. There
is no expiration date specified for this program. The following table provides information with
respect to our stock repurchases during the first quarter of Fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Maximum Number of |
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased as |
|
|
Shares that May Yet |
|
|
|
Total Number of |
|
|
Average Price Paid |
|
|
Part of Publicly |
|
|
Be Purchased Under |
|
Period |
|
Shares Purchased |
|
|
per Share |
|
|
Announced Plan |
|
|
the Plan |
|
July 1 to July 31, 2005 |
|
|
81,767 |
|
|
$ |
2.40 |
|
|
|
81,767 |
|
|
|
1,542,533 |
|
August 1 to August 31, 2005 |
|
|
- |
|
|
|
N/A |
|
|
|
- |
|
|
|
1,542,533 |
|
September 1 to September
30, 2005 |
|
|
200,000 |
|
|
$ |
2.50 |
|
|
|
200,000 |
|
|
|
1,342,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals |
|
|
281,767 |
|
|
$ |
2.47 |
|
|
|
281,767 |
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not Applicable
Item 6. Exhibits
|
|
|
Exhibits |
|
|
|
|
|
31.1
|
|
Section 302 Certification of the Chief Executive Officer. |
|
|
|
31.2
|
|
Section 302 Certification of the Chief Financial Officer. |
|
|
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
|
|
|
|
|
|
CONTINUCARE CORPORATION
|
|
Dated: November 14, 2005 |
By: |
/s/ Richard C. Pfenniger, Jr.
|
|
|
|
Richard C. Pfenniger Jr. |
|
|
|
Chairman of the Board, Chief Executive
Officer and President |
|
|
|
|
|
|
By: |
/s/ Fernando L. Fernandez
|
|
|
|
Fernando L. Fernandez |
|
|
|
Senior Vice President Finance, Chief Financial
Officer, Treasurer and Secretary |
|
19
EXHIBIT INDEX
|
|
|
|
|
Description |
|
Exhibit Number |
|
|
|
|
|
Section 302 Certification of the Chief Executive Officer.
|
|
|
31.1 |
|
|
|
|
|
|
Section 302 Certification of the Chief Financial Officer.
|
|
|
31.2 |
|
|
|
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1 |
|
|
|
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2 |
|