IRVING, Texas, Aug. 14, 2007 (PRIME NEWSWIRE) -- Access Plans USA, Inc. (Nasdaq:AUSA), a nationwide distributor of health insurance and non-insurance healthcare programs that provide access to affordable healthcare for the growing number of uninsured and/or underinsured in the United States, reported its financial results for the quarter and six months ended June 30, 2007.
For the second quarter, the company reported revenue of $10.3 million, an increase of $4.6 million, or 80.7%, compared to $5.7 million during the comparable quarter in 2006. Second quarter 2007 revenue included $5.6 million attributable to the insurance marketing operations acquired in the merger with Insurance Capital Management USA, Inc. on January 30, 2007, which more than offset revenue declines in the company's Consumer Plan and Regional Health Care divisions.
While revenue has increased substantially, the company reported an incurred loss for the quarter, primarily due to the recording of a non-cash charge of $4.1 million, equal to the full amount of the carrying value of goodwill of the company's Regional Health Care Division (Access HealthSource in El Paso) at June 30, 2007. This charge was necessitated by the loss of contract renewals for certain major clients in the El Paso, Texas, market. Additionally, earnings for the quarter were also adversely impacted by $1.3 million of charges related to unsuccessful marketing initiatives and non-recurring legal expenses.
The company's net loss for the second quarter of 2007 was $5.0 million or $(.27) per fully diluted share, compared to a net loss of $179,000 or $(.01) per fully diluted share for the comparable quarter in 2006. Excluding the goodwill charge and other charges noted above, the company would have generated operating income of $398,000 for the second quarter of 2007, compared to an operating loss of $59,000 for the first quarter of 2007. The company generated $111,000 of cash from operating activities during the second quarter of 2007.
For the first six months of 2007, the company reported revenues of $18.5 million compared to $11.7 million for the same period of 2006; a year-over-year increase of 58.1%. Revenue for the first six months of 2007 included $9.0 million attributed to the insurance marketing operations. The Company reported a net loss from continuing operations of $5.1 million, or $(.29) per fully diluted share, compared to net income from continuing operations in the first six months of 2006 of $0.7 million, or $.05 per fully diluted share. Financial results for the first six months of 2007 were impacted by the second quarter goodwill charge and the other charges and non-recurring legal expenses discussed above. Excluding those charges and expenses, the company would have generated operating income of $339,000 in the first six months of 2007. The company has generated year-to-date cash from operating activities of $681,000.
Robert Bintliff, Chief Financial Officer, commented on the company's results: "We are pleased that our Insurance Marketing Division continued to achieve strong operating results, generating $5.6 million of revenue for the quarter, (54% of total revenue for the company) and operating income of $366,000 despite recording a $174,000 charge relating to an unsuccessful marketing initiative. However, we are disappointed with the overall results for the second quarter, which were adversely impacted by the Consumer Plan Division loss and the significant negative developments at our El Paso regional healthcare subsidiary.
"Our Consumer Plan Division had a decrease in revenue of $700,000 primarily as a result of generating insufficient revenue from various new programs launched earlier this year," Bintliff said. "The operating loss of $689,000 for the quarter reflects the impact of unusually high expenses for marketing and product development initiatives that have, to date, been unsuccessful, as well as exceptionally high litigation and regulatory compliance expenses. Excluding $922,000 of expenses attributable to those unsuccessful marketing initiatives and non-recurring legal costs, the division would have generated operating income of $233,000.
"Our Regional Health Care Division revenue decreased $263,000 from the corresponding quarter in 2006, primarily due to a decline in the number of lives covered under the plans administered," Bintliff said. "However, those revenues for the quarter just ended included $912,000 from contracts that will expire by the end of 2007. The non-cash goodwill charge combined with the revenue decrease and legal expenses related to a governmental investigation of certain activities of the subsidiary's former CEO, were the primary drivers of the business segment's $4.1 million operating loss for the quarter. Excluding the non-cash charges and expenses related to the investigation, the division would have generated operating income of $222,000 for the quarter."
Positive Cash Position and Cash from Operations. The company ended the quarter with stockholders' equity of $19.2 million and total assets of $29.4 million, including $5.0 million in cash, cash equivalents and short-term investments and $16.7 million in goodwill and other intangibles. Year-to-date, the company generated cash from operating activities of $681,000.
Re-aligning Marketing Focus and Broadening Customer Base
Peter Nauert, Chief Executive Officer of Access Plans USA, said, "While we are very disappointed with our second quarter results, we have designed a strategy that we expect will improve our results for the future. Our strategy for the second half of this year is to re-align our marketing focus to concentrate on the areas where we have achieved the most success to-date and to utilize the platforms that we have established to broaden our customer base for the products already developed." Mr. Nauert continues to direct the company's operations while recovering from the surgical procedure performed in May of this year.
By division, the Company is implementing the following strategies:
-- Insurance Marketing Division: Continue to expand distribution of major medical and related healthcare products through the America's Health Care/Rx Plan (AHCP) independent agent channel, more narrowly focus tele-sales distribution channels, and determine opportunities and options for marketing products to the senior segment.
"We are pleased with the results from our AHCP distribution of major medical products to individuals and small business owners," Nauert commented. "We have recruited a number of new field sales managers for AHCP, which provides significant market advantages for agent distribution organizations. In addition, we are making some significant adjustments to our tele-sales operations for insurance marketing. Sales through our distribution channels targeting the over-age-65 market continue to be disappointing, and we are reviewing alternative approaches to this part of our program."
-- Consumer Plan Division: Increase revenue through increased sales of the newly launched product line and increased retention of existing discount card members, and reduce expenses.
"Recruiting of sales representatives in this division has increased since the product launch during the second quarter," Nauert said. "In addition, we are implementing a program designed to retain customers through increased communication and customer service interaction. We also expect expenses to be lower during the second half of the year, compared to the first half of the year when we experienced higher costs related to the development of products and marketing materials."
-- Regional Health Care Division: Broaden the customer base, expand the geographic market served and work to retain existing clients in the El Paso area.
"This division of our company has experienced significant challenges and setbacks during the past few months," Nauert said. "A number of our major clients in El Paso have become extraordinarily concerned about the previously disclosed ongoing investigations into this operating unit and its former CEO, and some of them have chosen not to renew their contracts with us. In light of the adverse developments during the second quarter of 2007, we have changed the leadership of this unit with the appointment of Michael Puestow as President of our Regional Health Care Division and have commenced an analysis of options to replace some of the revenue we expect to lose in 2008 with new revenue from a broadened client base.
"We have begun to rebuild Access HealthSource, but it is clear that we have much to accomplish. While this division has historically achieved exceptional results for its clients by providing efficient service, lower administrative costs, and enhanced savings as well as unique health and wellness programs for covered employees, to return to profitability, it is imperative that we broaden our customer base," Nauert said.
About Access Plans USA
Access Plans USA provides access to affordable healthcare to individuals and families. Our health insurance products and our non-insurance healthcare discount programs are designed as affordable solutions for the growing number of uninsured and underinsured seeking a way to address rising healthcare costs. We also offer third party claims administration, provider network management, and utilization management services to employers and groups that choose to utilize partially self funded strategies to finance their benefit programs. We are committed to assuring that our clients have access to the healthcare that they need at prices they can afford. For more information on Access Plans USA, Inc. please visit www.accessplansusa.com.
The Access Plans USA, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3487
Disclaimer
Certain statements included in this news release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believes", "expects", "may", "will", or "should", or other variations thereon, and by discussions of strategies that involve risks and uncertainties. Access Plans USA, Inc. actual results or industry results may be materially different from any future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include general economic and business conditions; the ability of Access Plans USA to implement its business strategies; competition; availability of key personnel; increasing operating costs; unsuccessful promotional efforts; changes in brand awareness; acceptance of new product offerings; retention of members, independent marketing representatives and agents; and changes in, or the failure to comply with, government regulations. The Company undertakes no obligation to update any forward-looking statements or to make any other forward-looking statement, whether as a result of new information, future events, or otherwise.
Access Plans USA, Inc.
Condensed Consolidated Statement of Operations and Balance Sheet Data
(Dollars in Thousands, Except Per Share Amounts)
For the Quarter For the First Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
2007 2006 2007 2006
-------- -------- -------- --------
Statement of
Operations Data:
Revenues $ 10,261 $ 5,650 $ 18,461 $ 11,743
Total operating
expenses 15,296* 5,793 23,555* 11,681
-------- -------- -------- --------
Operating (loss)
earnings (5,035) (143) (5,094) 62
-------- -------- -------- --------
(Loss) earnings before
income taxes (4,996) (52) (5,022) 226
Provision for income tax
expense (benefit) 22 (461) 52 (465)
-------- -------- -------- --------
(Loss) earnings from
continuing operations (5,018) 409 (5,074) 691
Loss for discontinued
operations -- (588) -- (909)
-------- -------- -------- --------
Net loss $ (5,018) $ (179) $ (5,074) $ (218)
======== ======== ======== ========
(Loss) earnings per
share:
Basic
Continuing operations $ (0.27) $ 0.03 $ (0.29) $ 0.05
======== ======== ======== ========
Discontinued
operations $ -- $ (0.04) $ -- $ (0.07)
======== ======== ======== ========
Diluted
Continuing operations $ (0.27) $ 0.03 $ (0.29) $ 0.05
======== ======== ======== ========
Discontinued
operations $ -- $ (0.04) $ -- $ (0.07)
======== ======== ======== ========
* Includes charges of $5.4 million: $4.1 million to reduce the carrying
value of goodwill in the company's Regional Health Care Division (due
to a loss of contract renewals for certain major clients in the El
Paso, Texas, market); and $.1.3 million for other charges (related to
unsuccessful marketing initiatives) and non-recurring legal charges.
December 31,
June 30, 2007 2006
------------- -------------
Balance Sheet Data:
Cash and cash equivalents and
short-term investments $ 4,697 $ 4,852
------------- -------------
Working capital $ 1,904 $ 3,996
------------- -------------
Total assets $ 29,374 $ 16,244
------------- -------------
Total liabilities $ 10,200 $ 2,852
------------- -------------
Stockholders' equity $ 19,174 $ 13,392
------------- -------------
Access Plans USA, Inc.
Reconciliation of Non-GAAP Financial Measures to
Comparable GAAP Measures
(Dollars in Thousands)
For the Three For the Six
Months Ended Months Ended
Data June 30, 2007 June 30, 2007
----------------------------------- ------------ -------------
Operating loss applicable to
shareholders (GAAP) $ (5,035) $ (5,094)
Goodwill impairment charge -
Regional Healthcare 4,092 4,092
Other charges (related to unsuccessful
marketing initiatives and
non-recurring legal charges):
Legal
- Consumer Plan 400 400
- Regional Healthcare (El Paso) 245 245
------------- -------------
Total legal 645 645
Marketing
- Insurance Marketing 174 174
- Consumer Plan 522 522
------------- -------------
Total marketing 696 696
------------- -------------
Total other charges 1,341 1,341
------------- -------------
Adjusted earnings from continuing
operations (Non-GAAP) $ 398 $ 339
------------- -------------