NEW YORK, Aug. 14, 2008 (PRIME NEWSWIRE) -- Aveta Inc., a leader in Medicare Advantage, reported today that revenues for the second quarter of 2008 totaled $490.1 million, virtually unchanged from revenues of $491.4 million for the second quarter of 2007. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) totaled $59.4 million in Q2 2008, up 49.8% from EBITDA of $39.7 million in Q2 2007. Net income for the second quarter of 2008 was $30.0 million, up 198% from net income of $10.1 million for the second quarter of 2007. Aveta's membership base comprised 201,000 enrolled Medicare beneficiaries and 180,000 commercial members as of the end of June 2008.
For the first six months of 2008, revenues totaled $974.9 million, compared to $1,002.8 million for the first six months of 2007, a decline of 2.8%. EBITDA for the first six months of 2008 totaled $114.7 million, an increase of 157% over EBITDA of $44.6 million for the first six months of 2007. Net income for the first six months of 2008 reached $50.4 million, compared to a loss of $5.3 million for the first six months of 2007.
Premium revenues from the Company's core managed care businesses, totaled $480.0 million in the second quarter of 2008, up 0.6% over the corresponding figure of $477.0 million for the second quarter of 2007. Premium revenues accounted for more than 97% of the company's total revenues. For the first six months of 2008, premium revenues were $953.8 million, a decrease of 2.4% from premium revenues of $976.8 million for the corresponding period of 2007. Although partially offset by reimbursement increases, premium revenues were negatively impacted by lower Medicare membership in the six months of 2008 versus the comparable period in 2007. However, since December 2007, Aveta has reversed the negative membership trends experienced in 2007 and has gained more than 4,000 net new Medicare members in 2008.
Medical costs totaled $383.2 million for the quarter, representing a medical loss ratio of 79.8%, compared to a medical loss ratio of 86.0% in the second quarter of 2006. Year-to-date, the company's medical loss ratio stands at 80.2% for the first six months of 2008, compared to a loss ratio of 89.1% for the first six months of 2007. Aveta's medical loss ratio continued to improve during the first six months of 2008 as the result of the introduction in late 2007 of a medical management infrastructure in Puerto Rico similar to the successful medical management model long used by Aveta in California. This infrastructure enables the Company to better coordinate care through its physician networks and reduce overall medical costs.
Administrative expenses were $46.6 million in the second quarter of 2008, representing an administrative expense ratio of 9.7%, compared to an administrative expense ratio of 8.5% in the first quarter of 2007. For the first six months of 2008, Aveta's administrative expense ratio was 9.8%, compared to 8.8% for the first six months of 2007. The increase in the administrative expense ratio in 2008 is partially attributable to higher spending in medical management and lower total revenues.
"During the first six months of 2008 we continued to build on our strong 2007 performance in both California and Puerto Rico," said Dr. Rick Shinto, President and Chief Executive Officer of Aveta. "Our medical management approach in Puerto Rico, patterned on our successful model in California and adapted to the needs of the Puerto Rico healthcare environment, has allowed us to offer enhanced benefits and improved quality of care to our seniors while controlling our medical costs and maintaining the open access that many seniors value." "
Warren Cole, Chief Financial Officer of Aveta, noted that Aveta's improved 2008 financial performance and membership growth cap a series of positive recent developments, including: the Company's solid full-year 2007 results that received an unqualified opinion from Aveta's independent auditors, KPMG; the recent upgrading of the senior debt ratings of Aveta's operating companies in Puerto Rico and California by Moody's Investor Service; the Company's recent agreement with its lenders to amend its loan agreement; and the repayment of more than $70 million of long term debt in the last six months, 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 STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Premiums earned $479,950 $477,042 $953,833 $976,792
Management fees 8,189 10,319 15,774 17,821
Investment income 2,004 4,023 5,266 8,228
--------- --------- --------- ---------
Total Revenues 490,143 491,384 974,873 1,002,841
--------- --------- --------- ---------
Medical costs and claims 383,239 410,285 764,769 870,514
Selling, general and
administrative expenses 46,624 40,978 93,905 86,637
Noncash equity
compensation charges 1,057 936 2,114 2,035
Restructuring and other
charges 2,812 3,725 3,083 5,115
Depreciation &
amortization 6,251 3,772 12,429 12,469
Interest expense 8,847 12,291 18,795 22,738
--------- --------- --------- ---------
Total costs and expenses 448,830 471,987 895,096 999,508
--------- --------- --------- ---------
Income before income
taxes and minority
interests 41,313 19,397 79,777 3,333
Provision for income
taxes 10,418 8,864 27,818 7,462
Minority interests 868 468 1,539 1,123
--------- --------- --------- ---------
Net income (loss) $30,027 $10,065 $50,420 ($5,252)
--------- --------- --------- ---------
Other Operating and
Financial Information:
Membership (in 000s)
Senior 201.1 209.2 201.1 209.2
Commercial 179.6 188.9 179.6 188.9
EBITDA (1) $59,412 $39,653 $114,659 $44,567
Medical Loss Ratio 79.8% 86.0% 80.2% 89.1%
Administrative Cost
Ratio 9.7% 8.5% 9.8% 8.8%
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
(In thousands except per share data)
June 30, December 31,
2008 2007
----------- -----------
Assets
Current assets:
Cash and cash equivalents $261,884 $329,646
Investments 60,454 70,005
----------- -----------
Total cash and investments 322,338 399,651
Receivable, net 112,267 89,773
Deferred income taxes 16,499 4,760
Prepaid expenses and other current
assets 4,774 5,390
----------- -----------
Total current assets 455,878 499,574
Investments held to maturity 4,200 4,200
Property and equipment, net 13,527 13,670
Goodwill 259,593 259,593
Other intangible assets, net 67,799 75,019
Debt issue costs, net 7,044 8,110
Other assets 9,319 2,839
----------- -----------
Total assets $817,360 $863,005
=========== ===========
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Medical claims liabilities $220,248 $192,031
Accounts payable and accrued expenses 60,916 74,477
Current maturities of long-term debt 54,137 74,143
Income taxes payable 12,420 45,045
Advanced Premiums 1,123 85,320
Risk Sharing payable to CMS 4,534 --
Funds held for the benefit of members 11,519 --
----------- -----------
Total current liabilities 364,897 471,016
Long-term debt, less current
installments 400,301 402,370
Deferred income taxes 31,396 22,707
Minority interests 1,690 945
----------- -----------
Total liabilities $798,284 $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 233,748 230,999
Accumulated deficit (39,985) (90,405)
Accumulated other comprehensive income (292) (231)
Less treasury stock at cost, 13,750,000
shares at June 30, 2008 and December
31, 2007, respectively (174,488) (174,488)
----------- -----------
Total stockholders' equity (deficit) $19,076 ($34,033)
----------- -----------
Total liabilities and stockholders'
equity (deficit) $817,360 $863,005
=========== ===========