NEW YORK, Aug. 17, 2006 (PRIMEZONE) -- Aveta Inc., a company that is a leader in Medicare Advantage and in addressing the healthcare needs of the chronically ill, reported today that revenues for the second quarter of 2006 totaled $354.0 million, an increase of 45.9% over pro forma revenues of $242.7 million for the second quarter of 2005. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 5.1% to a record $38.5 million in Q2 2006, compared to pro forma EBITDA of $36.7 million in Q2 2005. Adjusted second quarter earnings were $0.21 per share excluding stock option expense. Net income for the quarter was $15.1 million or $0.19 per share which includes $0.02 per share for stock option expense. Aveta's membership base of enrolled Medicare beneficiaries grew by more than 11,000 during the second quarter of 2006 to a total of 154,000, up 31% from the corresponding pro forma figure for the second quarter of 2005.
For the first six months of 2006, revenues totaled $647.7 million, up 44.6% from pro forma revenues of $447.8 million for the first six months of 2005. Year-to-date 2006 EBITDA totaled $69.8 million, an increase of 27.5% over pro forma EBITDA of $54.8 million for the first six months of 2005. Adjusted earnings for the first six months of 2006 were $0.39 per share, excluding stock option expenses. Earnings per share including stock option expense totaled $0.35 on net income of $27.3 million for the first six months of 2006.
Premium revenues from the company's core managed care businesses, which focus on meeting the healthcare needs of seniors and the chronically ill, totaled $344.5 million in the second quarter of 2006, up 46.8% over the corresponding pro forma figure for the second quarter in 2005. Premium revenues accounted for more than 97% of the company's total revenues. For the first six months of 2006, premium revenues reached $629.4 million, an increase of 45.7% from pro forma premium revenues of $432.1 million for the corresponding period of 2005.
Medical costs totaled $272.4 million for the quarter, representing a medical loss ratio of 79.1%, compared to a pro forma medical loss ratio of 77.7% in the second quarter of 2005. Year-to-date, the company's medical loss ratio stands at 79.3% for the first six months of 2006, compared to a pro forma medical loss ratio of 80.3% for the first six months of 2005.
Administrative expenses were $43.0 million in the second quarter of 2006, representing an administrative expense ratio of 12.2%, compared to a pro forma administrative expense ratio of 9.7% in the second quarter of 2005. For the first six months of 2006, Aveta's administrative expense ratio was 12.0%, compared to 10.3% for the first six months of 2005. The increase in administrative expenses reflects higher sales and marketing costs for membership growth and costs associated with corporate infrastructure development following Aveta's acquisition of its operating companies in Puerto Rico, California and Illinois.
"Aveta's strong growth in membership and revenues reflects our continued focus on better meeting the healthcare needs of seniors and the chronically ill," said Daniel E. Straus, Chief Executive Officer of Aveta. "Aveta will continue to leverage its expertise in community based medical management, which integrates healthcare prevention and treatment at the local level, to strengthen our position in the Medicare Advantage markets we serve."
"Our operating companies in Puerto Rico, California and Illinois all posted solid gains during the second quarter," continued Mr. Straus. "Aveta's leadership position in Puerto Rico, where our MMM subsidiary was the pioneer in introducing Medicare Advantage to the island, will be further strengthened by the recent closing of our acquisition of PMC Medicare Choice. PMC Medicare Choice will add some 70,000 Medicare beneficiaries to Aveta's senior enrollment and will further enhance our ability to deliver quality care to seniors there."
About Aveta Inc.
Aveta is one of the largest companies focusing on Medicare Advantage and a leader in addressing the unique healthcare needs of the chronically ill. Caring for more than 220,000 Medicare beneficiaries, Aveta is the 3rd largest for-profit Medicare Advantage enterprise, and operates more Chronic Special Needs Plans (SNPs) than any other company. Aveta has a successful track record of managing care for seniors achieved through its core competency of community medical management. Aveta is headquartered in Fort Lee, New Jersey and currently has operating subsidiaries in Southern California, Puerto Rico, and Illinois.
AVETA INC. AND SUBSIDIARIES
Condensed Statements of Income (a)
Unaudited
($ in 000s) Quarter Ended June 30, YTD June 30,
2006 2005 2006 2005
Actual Pro Forma Actual Pro Forma
-------- -------- -------- --------
Premium revenue $344,460 $234,569 $629,391 $432,066
Management fees & other 7,193 6,933 14,336 13,837
Investment income 2,371 1,192 3,985 1,909
-------- -------- -------- --------
Total Revenue $354,024 $242,694 $647,712 $447,812
-------- -------- -------- --------
Medical costs 272,366 182,295 499,317 346,846
Selling, general and
administrative 43,032 23,625 77,934 46,258
Depreciation &
amortization 4,783 3,760 9,286 7,760
-------- -------- -------- --------
Total Operating Expenses $320,181 $209,680 $586,537 $400,864
-------- -------- -------- --------
Operating income 33,843 33,014 61,175 46,948
Interest expense 5,983 3,850 12,251 7,213
Stock option and related
expense 2,311 314 4,749 628
Minority interests 459 590 1,021 981
-------- -------- -------- --------
Pre-tax Income $ 25,090 $ 28,260 $ 43,154 $ 38,126
Taxes 10,024 15,156 15,828 19,520
-------- -------- -------- --------
Net income $ 15,066 $ 13,104 $ 27,326 $ 18,606
-------- -------- -------- --------
Other Operating and
Financial Information:
Membership (in 000s)
Senior 153.5 117.1 153.5 117.1
Commercial 200.1 208.1 200.1 208.1
EBITDA (b) $ 38,534 $ 36,672 $ 69,823 $ 54,779
Medical Loss Ratio 79.1% 77.7% 79.3% 80.3%
Administrative Cost Ratio 12.2% 9.7% 12.0% 10.3%
Total Cash and
Investments $259,494 $119,874 $259,494 $119,874
Total Assets $688,911 $389,054 $688,911 $389,054
Total Debt $299,250 $148,279 $299,250 $148,279
Shareholders' Equity $ 68,151 $ 98,342 $ 68,151 $ 98,342
Earnings per share-
Diluted $ 0.19 N/A $ 0.35 N/A
Adjusted Earnings per
share-Diluted (c) $ 0.21 N/A $ 0.39 N/A
Weighted Average Common
Shares Outstanding-
Diluted 78,062 N/A 78,008 N/A
Note a: The financial information for 2005 was prepared on a pro
forma basis as if Aveta Inc. owned all of its operating subsidiaries
for the entire year of 2005. NAMM California and NAMM Illinois were
acquired by Aveta in August 2005.
Note b: EBITDA reflects net income with the following items added
back: interest expense, taxes, depreciation and amortization,
noncash stock options and related charges and restructuring charges
included in selling, general and administrative expenses.
Note c: 2006 Adjusted Earnings per Share is prior to noncash stock
option related expense of $2,311 pre-tax, or $1,387 after tax for
the quarter ended June 30, 2006 and expense of $4,749 pre-tax, or
$ 2,849 after tax for the YTD ended June 30, 2006
AVETA, INC. AND SUBSIDIARIES
(Formerly known as Aveta Holdings, LLC and Green Field, II, LLC)
CONSOLIDATED BALANCE SHEETS
As of June 30, 2006 and December 31, 2005
(In thousands)
June 30, Dec. 31,
2006 2005
--------- ---------
Unaudited
Assets
Current assets:
Cash and cash equivalents $ 181,887 $ 67,135
Investments 77,607 38,930
--------- ---------
Total cash and investments 259,494 106,065
Premiums receivable, net 82,773 48,271
Deferred income taxes 10,038 2,241
Prepaid expenses and other current assets 6,781 4,760
Prepaid taxes 6,108 --
--------- ---------
Total current assets $ 365,194 $ 161,337
Property and equipment, net 8,902 8,093
Goodwill 210,781 218,955
Other intangible assets, net 92,158 99,483
Debt issue costs, net 8,186 8,734
Other assets 3,690 2,166
--------- ---------
Total assets $ 688,911 $ 498,768
========= =========
Liabilities and Stockholders' Equity and
Members' Equity
Current liabilities:
Medical claims liabilities $ 116,433 $ 91,559
Accounts payable and accrued expenses 36,425 26,626
Current maturities of long-term debt 3,100 4,200
Income taxes payable 20,131 11,403
Due to Aveta Health, Inc. 4,256 4,315
Other current liabilities 25,746 --
Unearned premiums 82,919 --
--------- ---------
Total current liabilities $ 289,010 $ 138,103
Long-term debt, excluding current
installments 296,150 282,800
Deferred income taxes 34,747 38,096
Minority interests 853 1,548
--------- ---------
Total liabilities $ 620,760 $ 460,547
--------- ---------
Stockholders' equity and members' equity:
Preferred stock, par value $0.001 per
share, 5,000,000 shares authorized;
-0- shares issued and outstanding -- --
Common Stock, par value $0.001 per
share, 250,000,000 shares authorized,
91,779,775 and 88,000,000 shares issued
and outstanding at June 30, 2006 and
December 31, 2005 respectively 92 88
Additional paid in capital 217,226 166,712
Retained earnings 26,443 (885)
Accumulated other comprehensive income (1,122) (56)
Less treasury stock at cost, 13,750,000
and 10,000,000 shares at June 30, 2006
and December 31, 2005, respectively (174,488) (126,900)
Unearned compensation -- (738)
--------- ---------
Total stockholders' equity and members'
equity (deficit) $ 68,151 $ 38,221
--------- ---------
Total liabilities, minority interest,
and stockholders' equity and members'
equity $ 688,911 $ 498,768
========= =========