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Aveta Announces Recent Business Developments in Puerto Rico

2006 Fourth Quarter: Increased Medical Costs and Management Realignment

| Source: Aveta Inc.

NEW YORK, Feb. 1, 2007 (PRIME NEWSWIRE) -- Aveta Inc., a leader in Medicare Advantage with over 200,000 members in Puerto Rico, released today updates on its financial results and estimates of future results.

Although the Company has not finalized its 2006 financial results, it expects that it will report fourth quarter and fiscal year 2006 results which are materially below its prior guidance of pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of $36 million to $46 million and $182 million to $192 million for fiscal year 2006 primarily due to the higher medical costs and lower membership growth in its Puerto Rico operations than previously forecasted. The Company indicated that the trend of higher medical costs and medical utilization reported for its third quarter continued to accelerate in the fourth quarter of 2006 and is the primary factor in a very significant decline in profitability during the fourth quarter of 2006.

Any guidance that the Company had previously provided to its investors and lenders for 2007 and future periods is no longer valid and should not be relied upon. The Company has also ended its previously announced exploration of various capital transactions.

While actual results will depend on final year end financial adjustments and audit, the Company's current estimate for fiscal year 2006 pro forma EBITDA is $137 million to $152 million and EBITDA for the fourth quarter is estimated to be between a loss of $9 million and a profit of $6 million. Results for the fourth quarter include significant estimates for asset and liability purchase accounting adjustments related to the August 2006 acquisition of Preferred Medicare Choice and additional accruals for higher medical costs incurred in prior periods. Actual 2006 results may differ materially from these estimates and the Company does not expect to provide actual financial results until completion of its 2006 financial audit.

The Company is required to meet a number of financial covenants under its bank loan agreement, including reaching a pro forma 2006 EBITDA target of approximately $148 million to meet the requirement for its maximum level of debt to cash flow financial covenant as well as other requirements. The Company's range of estimates for pro forma 2006 EBITDA noted above, indicate that the Company may fail to meet one or more of such covenants after completion of its fiscal year 2006 financial audit. In that event, the Company would request a waiver from its lenders of such covenants requirements.

"We are extremely disappointed by our financial results and the continued and accelerating increase in medical utilization and medical costs in Puerto Rico during the fourth quarter," said Daniel E. Straus, Chairman and Chief Executive Officer of Aveta. "In response to these developments, we made significant changes to our management team in the fourth quarter including the appointment of Dr. Richard A. Shinto to lead our healthcare plans in Puerto Rico. Dr. Shinto has previously led our NAMM operations, which have relied heavily on medical management and other cost management programs to attain its recent record levels of profit. Dr. Shinto has begun to implement a revised business plan and strategy in Puerto Rico including new medical management programs to rationalize healthcare costs while continuing to provide high quality medical care to all of our beneficiaries in Puerto Rico," concluded Mr. Straus.

About Aveta

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 over 220,000 Medicare beneficiaries, Aveta is the 3rd largest for-profit Medicare Advantage enterprise. Aveta is headquartered in Fort Lee, New Jersey and currently has operating subsidiaries in Southern California, Puerto Rico, and Illinois.

Hill & Knowlton (New York)
Peter Poulos
(212) 885 0588