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DETROIT, April 27, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- United American Healthcare Corporation (Nasdaq-SC: UAHC), a pioneer in health care services for Medicaid recipients, today announced financial results for the Company's third quarter of fiscal 2006.
Total revenues for the fiscal third quarter ended March 31, 2006 were $4.3 million, compared with revenues of $5.6 million in the third quarter of fiscal 2005. The year-over-year decline in revenue was primarily attributable to a reduction in administrative fees received from the State of Tennessee, doing business as TennCare, effective July 1, 2005, pursuant to a contract amendment between the Company's subsidiary, UAHC Health Plan of Tennessee, Inc. (UAHC- TN), and TennCare. Through the contract amendment, TennCare implemented a plan to reduce administrative fees and began a modified risk arrangement for the compensation of TennCare's contracted managed care organizations (MCOs), including UAHC-TN. Under the current modified risk arrangement, all MCOs doing business with TennCare are at risk of losing up to 10 percent of their administrative fee revenue with the understanding that, in turn, they are also eligible to receive up to 15 percent incentive bonus revenue, based on performance relative to certain benchmarks.
Further contributing to the decline in revenue was the impact of TennCare's disenrollment of non-medically needy adults not eligible for Medicaid under TennCare coverage standards throughout Tennessee. For fiscal 2006, the Company has lost approximately 16,000 members. As of March 31, 2006, its total enrollment included approximately 116,500 members.
Net income from continuing operations for the third quarter of fiscal 2006 was $0.43 million, or $0.06 per diluted share, compared to $0.44 million, or $0.06 per diluted share, in the preceding quarter ended Dec. 31, 2005, and $1.51 million, or $0.20 per diluted share, in the year-ago fiscal third quarter. The decline in year-over-year net income was adversely impacted by a decrease in administrative fee revenues and the disenrollment of non-medically needy adults.
"We are pleased to announce another consecutive quarter of profitability, consistent with the financial guidance we provided at the conclusion of the December quarter," said William C. Brooks, president, chairman and CEO of United American Healthcare. "Although our membership in the fiscal third quarter declined slightly from the previous quarter due to continued TennCare reform disenrollment and attrition, we anticipate that this will stabilize in the current fourth quarter of fiscal 2006. We continue to exercise a high degree of prudence and conservatism within our operating model, driven by a focus on effective cost management and streamlined internal processes. With multiple revenue opportunities on the horizon, we are confident a prudent cost structure will help contribute to improved profitability over the long-term."
As of March 31, 2006, United American Healthcare reported cash, cash equivalents and short-term marketable securities of $6.7 million compared to $11.7 million in the year-ago period. The decline in cash and cash equivalents is primarily due to an increase in TennCare statutory reserve requirements and funding of restricted assets. The Company remains debt-free.
"Upon entering the final quarter of our fiscal year 2006, we remain encouraged by the strength of our operations, particularly as it relates to our ongoing efforts to develop a culture of cost efficiency throughout the Company. As we consider attempting to leverage our managed care expertise in and around the Southeastern United States, we remain committed to executing on a strategy of disciplined, opportunistic growth, guided by the mandate to build value for our shareholders," said Stephen Harris, CFO of United American Healthcare.
Application To Serve The Medicare Special Needs ("Dual-Eligible") Population
On March 20, 2006, the Company applied for contract approval from the Centers for Medicare & Medicaid Services to operate a "Special Needs Plan" in Western Tennessee. Subject to receiving regulatory approval, the contract would allow the Company to serve members enrolled in the Tennessee Medicaid and Medicare programs, commonly referred to as "dual-eligibles." United American Healthcare anticipates final action on its application by late July 2006.
"We believe our certification as a full-service, multi-line managed care organization would allow us to provide enhanced services to certain sub- segments of our existing membership, most notably within our special needs population," said Brooks. "Although this segment of our membership remains relatively small at present, we believe this population represents a higher- margin business opportunity when compared to the margin of our traditional, primarily Medicaid business. Strategically, we believe this certification could represent the opportunity for incremental profitability over time, particularly as we look to expand our managed care footprint beyond Western Tennessee."
Fiscal Fourth Quarter 2006 Financial Outlook
The following statements are based on the Company's current expectations. These statements are forward-looking, and actual results may differ materially. Except as expressly set forth below, these statements do not include the potential impact of any mergers, acquisitions or other business combinations that may be closed or entered into after March 31, 2006.
UAHC anticipates fiscal fourth quarter 2006 revenue to be in the range of $4.2 to $4.5 million and net income from continuing operations to be in the range of $0.06 - $0.08 per diluted share.
"With several strategic initiatives already underway, our focus remains on fostering measured, profitable growth," concluded Brooks. "As before, our efforts stand aligned with a series of longer-term operational objectives, each of which ultimately hinges on our ability to achieve cost-effective growth in plan membership. Looking ahead, our ability to bridge the gap between strategy and execution remains critical to our continued success."
Fiscal Third Quarter 2006 Conference Call
United American Healthcare Corporation will host a conference call at 4:30 p.m. Eastern time today to discuss these results and current business trends. To access the live conference call, please dial (866) 510-0704 and provide the conference passcode 16295991. A replay of the call will be available through May 11, 2006. To access the replay, please call (888) 286- 8010 and provide the conference passcode 95025193.
About United American Healthcare Corporation
United American Healthcare Corporation (UAHC) is a full-service healthcare management company, pioneering the delivery of healthcare services to Medicaid recipients since 1985. UAHC owns and manages UAHC Health Plan, which is based in western Tennessee and includes the Memphis market. UAHC provides access to more than 900 primary and specialty care physicians and more than 19 hospitals for the members of UAHC Health Plan. For more information, please visit the Company's web site at http://www.uahc.com .
United American Healthcare Corporation Safe Harbor Statement
Forward-looking statements by United American Healthcare Corporation, including those in this announcement, involve known and unknown risks, which may cause actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from expectations include, without limitation, the effects of state and federal regulations, the effects of acquisitions and divestitures, and other risks described from time to time in each of United American Healthcare's SEC reports, including quarterly reports on Form 10-Q, annual reports on Form 10-K, and reports on Form 8-K.
United American Healthcare Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share data)
Three months ended Nine months ended
March 31, March 31,
2006 2005 2006 2005
Revenues
Fixed administrative fees $4,158 $5,201 $12,956 $15,582
Medical premiums - - - 22
Interest and other income 121 372 322 776
Total revenues 4,279 5,573 13,278 16,380
Expenses
Medical services - - - 22
General and administrative 3,759 3,705 11,745 10,863
Depreciation and amortization 33 40 95 134
Interest expense - - - 8
Total expenses 3,792 3,745 11,840 11,027
Earnings from continuing
operations before income taxes 487 1,828 1,438 5,353
Income tax expense 54 312 162 312
Earnings from continuing
operations 433 1,516 1,276 5,041
Discontinued operations
Loss from discontinued operations - (129)
Net earnings $433 $1,516 $1,276 $4,912
Net earnings per common share -
basic
Earnings from continuing
operations $0.06 $0.20 $0.17 $0.68
Loss from discontinued operations 0.00 0.00 0.00 (0.02)
Net earnings per common share $0.06 $0.20 $0.17 $0.66
Weighted average shares
outstanding 7,476 7,435 7,467 7,412
Net earnings per common share -
diluted
Earnings from continuing
operations $0.06 $0.20 $0.17 $0.67
Loss from discontinued operations 0.00 0.00 0.00 (0.02)
Net earnings per common share $0.06 $0.20 $0.17 $0.65
Weighted average shares
outstanding 7,607 7,516 7,598 7,488
*See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements found in the 10Q
United American Healthcare Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, June 30,
2006 2005
(Unaudited)
Assets
Current assets
Cash and cash equivalents $4,091 $9,843
Marketable securities 2,605 3,730
Accounts receivable - State of Tennessee 1,162 1,360
Other receivables 493 583
Prepaid expenses and other 200 172
Deferred income taxes 2,421 1,950
Total current assets 10,972 17,638
Property and equipment, net 168 179
Intangible assets, net 3,452 3,452
Marketable securities 7,109 2,380
Restricted Assets 2,721 -
Other assets 586 586
Total assets $25,008 $24,235
Liabilities and Shareholders' Equity
Current liabilities
Medical claims payable $156 $172
Accounts payable and accrued expenses 834 1,096
Accrued compensation and related benefits 380 711
Accrued rent 33 235
Other current liabilities 1,655 1,538
Total current liabilities 3,058 3,752
Total liabilities 3,058 3,752
Shareholders' equity
Preferred stock, 5,000,000 shares authorized;
none issued - -
Common stock, no par, 15,000,000 shares
authorized; 7,490,235 and 7,450,235 issued
and outstanding at March 31, 2006 and June 30,
2005, respectively 12,774 12,476
Retained earnings 9,323 8,047
Accumulated other comprehensive loss, net of
income taxes (147) (40)
Total shareholders' equity 21,950 20,483
$25,008 $24,235
SOURCE United American Healthcare Corporation
Company: Stephen D. Harris, CFO of United American Healthcare Corp., +1-313-393-4571, Investor_relations@uahc.com ; or Investor Relations: Noel R. Ryan III of Lambert, Edwards & Associates, +1-616-233-0500, nryan@lambert-edwards.com
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