NEW YORK, Nov. 24, 2008 (GLOBE NEWSWIRE) -- Aveta Inc., a leader in Medicare Advantage, reported today that revenues for the third quarter of 2008 totaled $514.3 million, up 8.3% from revenues of $474.8 million for the third quarter of 2007. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) totaled $60.7 million in Q3 2008, compared to EBITDA of $64.3 million in Q3 2007. Net income for the third quarter of 2008 was $23.9 million, down 24% from net income of $31.4 million for the third quarter of 2007 due to a higher effective tax rate in 2008 as a result of operating loss carry-forwards utilized in 2007. Aveta's membership base comprised 216,000 enrolled Medicare beneficiaries and 316,000 commercial members as of the end of September 2008.
For the first nine months of 2008, revenues totaled $1.489 billion, compared to $1.476 billion for the first nine months of 2007, an increase of 0.9%. EBITDA for the first nine months of 2008 totaled $175.4 million, an increase of 63% over EBITDA of $107.4 million for the first nine months of 2007. Net income for the first nine months of 2008 reached $74.3 million, up 190% from $25.6 million for the first nine months of 2007.
Premium revenues from the Company's core managed care businesses, totaled $503.6 million in the third quarter of 2008, up 9.1% from $461.8 million for the third quarter of 2007. Premium revenues accounted for more than 97% of the company's total revenues. For the first nine months of 2008, premium revenues were $1.457 billion, an increase of 1.3% from premium revenues of $1.439 billion for the corresponding period of 2007. Aveta continued to grow its senior membership during the first nine months of 2008 and added more than 8,000 net new Medicare members in the 12 months through September 2008.
Medical costs totaled $404.8 million for the quarter, representing a medical loss ratio of 80.4%, compared to a medical loss ratio of 79.9% in the third quarter of 2007. Year-to-date, the company's medical loss ratio stands at 80.2% for the first nine months of 2008, down substantially from a medical loss ratio of 86.1% for the first nine months of 2007. The company largely attributed its improved medical loss ratio in 2008 to the introduction in late 2007 of a Management Services Organization (MSO) in its Puerto Rico operations, modeled on its successful California MSO, to work with the company's provider network of Independent Physician Associations (IPA) to enhance the quality of care to members and manage costs.
Administrative expenses were $48.1 million in the third quarter of 2008, representing an administrative expense ratio of 9.5%, compared to an administrative expense ratio of 8.7% in the third quarter of 2007. For the first nine months of 2008, Aveta's administrative expense ratio was 9.7%, compared to 8.8% for the first nine months of 2007. Administrative expenses increased in 2008 as a result of continued investment in health and member services as well as sales and marketing initiatives.
"Aveta's strong performance through the first nine months of 2008 reflects continued growth in our senior membership and the success of our MSO strategy, which in both Puerto Rico and California allows us to work closely with our provider networks IPAs to better anticipate, address and manage member care needs while effectively controlling medical costs," said Dr. Rick Shinto, President and Chief Executive Officer of Aveta.
Warren Cole, Chief Financial Officer of Aveta, noted that Aveta's strong operating results have allowed it to significantly improve its balance sheet as the company has retired more $80 million of long-term debt thus far in 2008. Aveta's strong performance and improved capital structure were recognized in September when Standard & Poor's upgraded the counterparty credit and senior debt ratings of Aveta and its operating companies in California and Puerto Rico.
The company continues to position itself for future growth, as reflected in its recently disclosed acquisition by its California operating company of Primary Care Associated Medical Group, Inc. (PCAMG), the largest IPA in north San Diego county, California, with 52 primary care physicians and over 300 specialists serving more than 30,000 commercial members and 5,200 Medicare Advantage seniors.
About Aveta
Aveta Inc. is one of the largest health insurance organizations in the United States, caring for approximately 216,000 Medicare beneficiaries and more than 316,000 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.
The Aveta logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2340
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 STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
---------- ---------- ------------ ------------
Premiums earned $503,639 $461,829 $1,457,472 $1,438,980
Management fees 8,470 8,168 24,244 23,822
Investment income 2,235 4,817 7,502 13,045
---------- ---------- ------------ ------------
Total Revenues 514,344 474,814 1,489,218 1,475,847
---------- ---------- ------------ ------------
Medical costs and
claims 404,826 369,012 1,169,595 1,238,623
Selling, general
and administra-
tive expenses 48,057 40,899 141,964 128,145
Noncash equity
compensation
charges 1,817 1,059 3,930 3,094
Restructuring and
other charges 308 5,511 3,391 10,014
Depreciation &
amortization 6,289 6,306 18,718 18,777
Interest expense 9,524 12,082 28,319 34,820
---------- ---------- ------------ ------------
Total costs and
expenses 470,821 434,869 1,365,917 1,433,473
---------- ---------- ------------ ------------
Income before
income taxes
and minority
interests 43,523 39,945 123,301 42,374
Provision for
income taxes 18,933 7,959 46,751 15,052
Minority interests 736 585 2,275 1,708
---------- ---------- ------------ ------------
Net income (loss) $23,854 $31,401 $74,275 $25,614
========== ========== ============ ============
Other Operating
and Financial
Information:
Membership
(in 000s) (1)
Senior 216.3 210.4 216.3 210.4
Commercial 316.3 336.1 316.3 336.1
EBITDA (2) $60,725 $64,318 $175,384 $107,371
Medical Loss
Ratio 80.4% 79.9% 80.2% 86.1%
Administrative
Cost Ratio 9.5% 8.7% 9.7% 8.8%
Notes:
1) Membership includes Professional Risk, Full Risk and Managed lives.
Note that previously disclosed Membership did not include Managed
Lives.
2) 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
(In thousands except per share data)
September 30, December 31,
2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $313,342 $329,646
Investments 97,977 70,005
---------- ----------
Total cash and investments 411,319 399,651
Receivable, net 27,283 89,773
Deferred income taxes 16,754 4,760
Prepaid expenses and other
current assets 11,497 5,390
---------- ----------
Total current assets 466,853 499,574
Investments held to maturity 4,200 4,200
Property and equipment, net 12,832 13,670
Goodwill 259,593 259,593
Other intangible assets, net 63,117 75,019
Debt issue costs, net 8,454 8,110
Other assets 9,458 2,839
---------- ----------
Total assets $824,507 $863,005
========== ==========
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Medical claims liabilities $217,377 $192,031
Accounts payable and accrued expenses 80,511 74,477
Current maturities of long-term debt 4,137 74,143
Income taxes payable 29,806 45,045
Advanced Premiums 1,123 85,320
Risk Sharing payable to CMS 5,142 --
Funds held for the benefit of members 10,981 --
---------- ----------
Total current liabilities 349,077 471,016
Long-term debt, less current
installments 399,266 402,370
Deferred income taxes 30,014 22,707
Minority interests 1,334 945
---------- ----------
Total liabilities $779,691 $897,038
---------- ----------
Stockholders' equity (deficit) and
members' equity (deficit):
Preferred stock, par value $0.001
per share, 5,000,000 shares
authorized; none issued and
outstanding -- --
Common Stock, par value $0.001 per
share, 250,000,000 shares authorized,
92,700,094 and 92,030,363 shares
issued, 78,950,094 and 78,280,363
outstanding at June 30, 2008 and
December 31, 2007 respectively 93 92
Additional paid-in capital 234,530 230,999
Accumulated deficit (16,130) (90,405)
Accumulated other comprehensive income (223) (231)
Less treasury stock at cost,
13,750,000 shares at June 30, 2008
and December 31, 2007, respectively (173,454) (174,488)
---------- ----------
Total stockholders' equity
(deficit) $44,816 ($34,033)
---------- ----------
Total liabilities and stock-
holders' equity (deficit) $824,507 $863,005
========== ==========