NEW YORK, Aug. 7, 2008 (PRIME NEWSWIRE) -- Aveta Inc., a leader in Medicare Advantage, today reported audited full-year revenues for 2007 grew to $1.972 billion, up 26.6% from $1.558 billion in 2006. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) totaled $213.7 million in 2007, compared to EBITDA of $74.0 million in 2006 reflecting a 189% increase. Net income for 2007 of $65.6 million compared to a net loss of $155.1 million in 2006. The loss in 2006 included a pre-tax charge for an impairment of goodwill and intangible assets of $145.1 million.
Premium revenues from the Company's core managed care businesses totaled $1.923 billion in 2007, up 26.6% from 2006. Growth in premium revenues largely reflected the full year results of PMC in 2007 versus only a partial year of results in 2006 starting on the date of acquisition in August 2006. Additionally, premium revenues included higher risk adjusted payments and increased reimbursement from CMS.
Medical costs totaled $1.581 billion in 2007, representing a medical loss ratio of 82.2%, compared to a medical loss ratio of 86.0% in 2006. Aveta's improved medical loss ratio is the result of lower medical trends in Puerto Rico and continued strong medical management in California. Trends in Puerto Rico were significantly mitigated in 2007 due to Aveta's integration efforts which included the creation of a medical management infrastructure in Puerto that is similar to California operations. This infrastructure better enables the Company to coordinate care through its physician networks and reduce overall medical costs.
Administrative expenses were $179.9 million in 2007, representing an administrative expense ratio of 9.1%, as compared to an administrative expense ratio of 12.2% in 2006.
"We are pleased with continued strong performance of our California operations and of the considerable progress we have made in Puerto Rico," said Dr. Rick Shinto, President and Chief Executive Officer of Aveta. "Through the creation of our medical management network, medical services organization and independent physician networks in Puerto Rico, we can offer enhanced benefits and improved quality of care to our seniors while controlling our medical costs. We believe we are a leader in promoting better medical care in Puerto Rico with enhanced outcomes for our beneficiaries and look forward to improving on our services in the future."
Commenting further on Aveta's 2007 results of operations, Warren Cole, Chief Financial Officer, cited that Aveta's independent auditors, KPMG, issued an unqualified opinion on the Company's 2007 financial statements. He also noted that Aveta's financial performance has continued to improve in 2008, citing the recent announcement by Moody's Investor Service that it has upgraded the senior debt ratings of Aveta's operating companies in Puerto Rico and California and the Company's recent agreement with its lenders to amend its loan agreement, ensuring a strong financial foundation for the Company's continued growth.
About Aveta
Aveta Inc. is one of the largest health insurance organizations in the United States, caring for over 200,000 Medicare beneficiaries and 185,000 commercial members. Aveta specializes in building provider networks and management service organizations that emphasize integration and coordination of healthcare. Aveta is headquartered in Ft. Lee, New Jersey and has operations in Puerto Rico, California and Illinois.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security nor shall any offer, solicitation or sale be deemed to be made by the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Special note regarding forward looking statements:
The matters disclosed in the foregoing release include, and oral statements made from time to time by representatives of the Company may include, forward-looking statements that represent the Company's current expectations of the future. Any such statements are subject to risks and uncertainties that could cause actual outcomes to differ materially from these expectations. These forward-looking statements include statements relating to the Company's anticipated financial performance and business prospects. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and involve a number of risks and uncertainties, some of which may be beyond our control, that could cause actual results to differ materially from those suggested by the forward-looking statements. Such factors include, without limitation, the Company's ability to implement its revised business plan and improve the operating performance of its business, membership enrollment and disenrollment patterns; changes in utilization; changes in medical and prescription drug cost trends; the Company's ability to accurately estimate and calculate Part D risk corridor adjustments; CMS retroactive risk adjustments to Medicare rates; marketing expenses related to limited open enrollment; increasing competition and potential confusion in the marketplace regarding other MA, MA-PD, PDP, and PFFS plan offerings; the Company's ability to accurately estimate incurred but not reported medical claims; contractual disputes with providers; increases in costs or liabilities associated with litigation; legislative and regulatory actions or changes; costs associated with information and data systems conversions and compliance with regulatory mandates; recent management changes; and changes in tax estimates, assets, or liabilities and valuation allowances related thereto. These forward-looking statements speak only as of the date stated and the Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized.
AVETA, INC. AND SUBSIDIARIES
(Formerly known as Aveta Holdings, LLC and Green Field, II, LLC)
CONSOLIDATED STATEMENT OF OPERATIONS
As of December 31, 2007 and December 31, 2006
(In thousands)
December 31, December 31,
2007 2006
------------------- ------------------
Premiums earned $1,923,249 $1,518,992
Management fees 31,373 28,188
Investment income 17,388 10,386
------------------- ------------------
Total Revenue $1,972,010 $1,557,566
------------------- ------------------
Medical costs and claims 1,580,517 1,307,081
Selling, general and
administrative expenses 175,805 174,405
Noncash equity compensation
charges 4,126 15,189
Restructuring and other
charges 17,333 7,035
Depreciation & amortization 25,050 24,480
Impairment of goodwill and
intangible assets 0 145,139
Interest expense 46,744 30,701
------------------- ------------------
Total costs and expenses 1,849,575 1,704,030
------------------- ------------------
Income (loss) before
income taxes and
minority interests 122,435 (146,464)
Provision for income taxes 54,817 6,614
Minority interests 2,025 2,035
------------------- ------------------
Net income $65,593 ($155,113)
------------------- ------------------
Other Operating and Financial
Information:
Membership (in 000s)
Senior 197.0 231.7
Commercial 184.6 195.8
EBITDA (1) $213,663 $74,045
Medical Loss Ratio 82.2% 86.0%
Administrative Cost Ratio 9.1% 12.2%
Note 1: EBITDA reflects net income with the following
items added back: interest expense, taxes, depreciation
and amortization, noncash equity compensation charges and
restructuring and other charges.
AVETA, INC. AND SUBSIDIARIES
(Formerly known as Aveta Holdings, LLC and Green Field, II, LLC)
CONSOLIDATED BALANCE SHEETS
As of December 31, 2007 and December 31, 2006
(In thousands)
December 31, December 31,
2007 2006
------------ ------------
Assets
Current assets:
Cash and cash equivalents $329,646 $218,968
Investments 70,005 82,181
------------ ------------
Total cash and investments 399,651 301,149
Receivable, net 89,773 37,971
Deferred income taxes 4,760 4,065
Prepaid expenses and other current assets 5,390 3,521
Prepaid income taxes 0 2,922
------------ ------------
Total current assets $499,574 $349,628
Investments held to maturity 4,200 4,200
Property and equipment, net 13,670 15,603
Goodwill 259,593 265,176
Other intangible assets, net 75,019 93,186
Debt issue costs, net 8,110 10,359
Other assets 2,839 3,357
------------ ------------
Total assets $863,005 $741,509
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Liabilities and Stockholders'
Equity (Deficit)
Current liabilities:
Medical claims liabilities $192,031 $219,254
Accounts payable and accrued expenses 74,477 57,167
Current maturities of long-term debt 74,143 481,362
Income taxes payable 45,045 0
Advanced Premiums 85,320 938
Risk Sharing payable to CMS 0 29,853
Funds held for the benefit of members 0 30,342
------------ ------------
Total current liabilities $471,016 $818,916
Long-term debt, less current installments 402,370 0
Deferred income taxes 22,707 25,505
Minority interests 945 1,208
------------ ------------
Total liabilities $897,038 $845,629
------------ ------------
Stockholders' equity and members' equity:
Preferred stock, par value $0.001 per
share, 5,000,000 shares authorized;
none issued and outstanding 0 0
Common Stock, par value $0.001 per share,
250,000,000 shares authorized,
92,030,363 and 91,952,613 shares issued,
78,280,363 and 78,202,613 outstanding at
December 31, 2007 and December 31, 2006,
respectively 92 92
Additional paid-in capital 230,999 226,873
Accumulated deficit (90,405) (155,998)
Accumulated other comprehensive income (231) (599)
Less treasury stock at cost, 13,750,000
at December 31, 2007 and December 31,
2006, respectively (174,488) (174,488)
Total stockholders' equity (deficit) ($34,033) ($104,120)
------------ ------------
Total liabilities and stockholders'
equity (deficit) $863,005 $741,509
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