NEW YORK, Nov. 28, 2006 (PRIME NEWSWIRE) -- Aveta Inc., a leader in Medicare Advantage and in addressing the healthcare needs of the chronically ill, reported today that revenues for the third quarter of 2006 totaled $501.8 million, an increase of 86.5% over pro forma revenues of $269.1 million for the third quarter of 2005. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 20.3% to $35.1 million in Q3 2006, compared to pro forma EBITDA of $29.2 million in Q3 2005. Adjusted third quarter earnings were $0.13 per share excluding stock option expense. Net income for the quarter was $5.8 million or $0.07 per share which includes $0.06 per share for stock option expense. Aveta's membership base of enrolled Medicare beneficiaries stood at 229,200 as of the end of the third quarter of 2006, up 54% from the corresponding pro forma figure for the third quarter of 2005.
For the first nine months of 2006, revenues totaled $1,400.2 million, up 86.6% from pro forma revenues of $750.4 million for the first nine months of 2005. Year-to-date 2006 EBITDA totaled $146.3 million, an increase of 73.0% over pro forma EBITDA of $84.6 million for the first nine months of 2005. Adjusted earnings for the first nine months of 2006 were $0.93 per share, excluding stock option expenses. Earnings per share including stock option expense totaled $0.84 per share on net income of $65.5 million for the first nine 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 $492.3 million in the third quarter of 2006, up 88.5% over the corresponding pro forma figure for the third quarter of 2005. Premium revenues accounted for more than 98% of the company's total revenues. For the first nine months of 2006, premium revenues reached $1,370.3 million, an increase of 88.8% from pro forma premium revenues of $725.8 million for the corresponding period of 2005.
Medical costs totaled $421.7 million for the quarter, representing a medical loss ratio of 85.7%, compared to a pro forma medical loss ratio of 79.9% in the third quarter of 2005. The higher medical loss ratio in the third quarter reflects increased medical costs and utilization trends in Puerto Rico. Year-to-date, the company's medical loss ratio stands at 80.5% for the first nine months of 2006, an increase from a pro forma medical loss ratio of 79.9% for the first nine months of 2005.
Administrative expenses were $52.8 million in the third quarter of 2006, representing an administrative expense ratio of 10.5%, compared to a pro forma administrative expense ratio of 12.3% in the third quarter of 2005. For the first nine months of 2006, Aveta's administrative expense ratio was 11.3%, compared to 11.8% for the first nine months of 2005.
"Puerto Rico continues to be the backbone of the company's strong growth even as Aveta's operations in California posted solid results for the quarter," said Daniel E. Straus, Chairman and Chief Executive Officer of Aveta. "During the third quarter, Aveta successfully closed on the acquisition of PMC Medicare Choice, which added an additional 72,000 members to our total in Puerto Rico and further strengthened our leadership position there. Through PMC Medicare Choice and our MMM subsidiary, Aveta now serves over 200,000 members in Puerto Rico. As we manage our rapid growth in Puerto Rico, we are developing new medical management program initiatives to address rising medical costs and provide cost efficient and continued high quality medical care to all of our beneficiaries. Puerto Rico exemplifies the effectiveness of Aveta's community based medical management approach, which integrates preventative healthcare and treatment at the local level and enhances our ability to deliver quality care to seniors and the chronically ill."
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 229,200 Medicare beneficiaries, Aveta is the 3rd largest for-profit Medicare Advantage enterprise and 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 Puerto Rico, Southern California, and Illinois.
AVETA INC. AND SUBSIDIARIES
Condensed Statements of Income (a)
Unaudited
($ in 000s) Quarter Ended September 30, YTD September 30,
2006 2005 2006 2005
Pro Forma Pro Forma Pro Forma Pro Forma
--------- --------- ---------- ---------
Premium revenue $492,314 $261,241 $1,370,266 $725,750
Management fees &
other 6,444 6,797 22,143 21,681
Investment income 3,045 1,076 7,774 2,985
--------- --------- ---------- ---------
Total Revenue $501,803 $269,114 $1,400,183 $750,416
--------- --------- ---------- ---------
Medical costs 421,706 208,790 1,103,663 579,583
Selling, general and
administrative 52,837 33,028 157,637 88,268
Depreciation &
amortization 6,583 4,530 16,073 12,438
--------- --------- ---------- ---------
Total Operating
Expenses $481,126 $246,348 $1,277,373 $680,289
--------- --------- ---------- ---------
Operating income 20,677 22,766 122,810 70,127
Interest expense 8,339 16,235 19,910 23,448
Stock option and
related expense 7,299 314 12,048 942
Minority interests 391 506 1,413 1,487
--------- --------- ---------- ---------
Pre-tax Income $4,648 $5,711 $89,439 $44,250
Taxes (1,146) 5,507 23,914 25,125
--------- --------- ---------- ---------
Net income $5,794 $204 $65,525 $19,125
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Other Operating and
Financial Information:
Membership (in 000s)
Senior 229.2 148.8 229.2 148.8
Commercial 194.2 207.0 194.2 207.0
EBITDA (b) $35,148 $29,226 $146,284 $84,566
Medical Loss Ratio 85.7% 79.9% 80.5% 79.9%
Administrative Cost
Ratio 10.5% 12.3% 11.3% 11.8%
Total Cash and
Investments $239,512 $261,791 $239,512 $261,791
Total Assets $910,037 $637,132 $910,037 $637,132
Total Debt $482,575 $450,500 $482,575 $450,500
Shareholders' Equity $72,815 ($24,618) $72,815 ($24,618)
Earnings per
share-Diluted $0.07 N/A $0.84 N/A
Adjusted Earnings per
share-Diluted (c) $0.13 N/A $0.93 N/A
Outstanding
shares-Diluted 78,168 N/A 78,061 N/A
Note (a): The Proforma Statements of Income for 2006 and 2005 were
prepared on a pro forma basis as if Aveta Inc. owned all of its
operating subsidiaries for both years. NAMM California and NAMM
Illinois were acquired by Aveta in August 2005. PMC Medicare Choice
and PHM were acquired by Aveta in August 2006. The Balance Sheet
information reflects the Aveta, Inc. September 30, 2006 and 2005
unaudited Balance Sheets.
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. Restructuring
charges were $3,179 and $2,436 for the quarters ended September 30,
2006 and 2005 respectively, and $3,714 and $3,488 for the years to
date ended September 30, 2006 and 2005 respectively. EBITDA for the
2006 periods includes a $5,100 addition for a Medicaid revenue
reduction booked in the third quarter of 2006 attributable to 2004
and 2005 prior periods.
Note (c): 2006 Adjusted Earnings per Share is prior to noncash stock
option related expense of $7,299 pre-tax, or $4,379 after tax for the
quarter ended September 30, 2006 and expense of $12,048 pre-tax, or
$7,229 after tax for the YTD ended September 30, 2006.
AVETA, INC. AND SUBSIDIARIES
(Formerly known as Aveta Holdings, LLC and Green Field, II, LLC)
CONSOLIDATED BALANCE SHEETS
As of September 30, 2006 and December 31, 2005
(In thousands)
Sept. 30, 2006 Dec. 31, 2005
-------------- -------------
Unaudited
Assets
Current assets:
Cash and cash equivalents $145,856 $67,135
Investments 93,656 38,930
-------- --------
Total cash and investments 239,512 106,065
Premiums receivable, net 110,914 48,271
Deferred income taxes 8,149 2,241
Prepaid expenses and other
current assets 12,393 4,760
-------- --------
Total current assets $370,968 $161,337
Property and equipment, net 12,550 8,093
Goodwill 393,562 218,955
Other intangible assets, net 119,198 99,483
Debt issue costs, net 11,015 8,734
Other assets 2,744 2,166
-------- --------
Total assets $910,037 $498,768
======== ========
Liabilities and Stockholders' Equity
and Members' Equity
Current liabilities:
Medical claims liabilities $178,695 $91,559
Accounts payable and accrued
expenses 70,023 30,941
Current maturities of
long-term debt 4,468 4,200
Income taxes payable 7,908 11,403
Risk Sharing Payable 28,683 --
Reinsurance Payable 22,659 --
-------- --------
Total current liabilities $312,436 $138,103
Long-term debt, excluding current
installments 478,107 282,800
Deferred income taxes 45,760 38,096
Minority interests 919 1,548
-------- --------
Total liabilities $837,222 $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
September 30, 2006 and
December 31, 2005 respectively 92 88
Additional paid in capital 220,726 166,712
Retained earnings 26,790 (885)
Accumulated other comprehensive
income (305) (56)
Less treasury stock at cost,
13,750,000 and 10,000,000 shares at
September 30, 2006 and
December 31, 2005, respectively (174,488) (126,900)
Unearned compensation -- (738)
-------- --------
Total stockholders' equity and
members' equity (deficit) $72,815 $38,221
-------- --------
Total liabilities, minority
interest, and stockholders'
equity and members' equity $910,037 $498,768
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