First Health Reports Record Results
Awarded The Mail Handlers Benefit
Plan Pharmacy Benefit Management Contract
Contact:
Edward L. Wristen, President and CEO
or
Joseph E. Whitters, CFO
First Health 630-737-7511
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DOWNERS GROVE, IL - July 29, 2002 - Edward L. Wristen, President
and Chief Executive Officer of First Health Group Corp. (NASDAQ:
FHCC), announced today the results of operations for the second
quarter ended June 30, 2002.
Diluted earnings per share (EPS) and net income for the three
months and six months ended June 30, 2002 increased 24% to
$.31 or $32,484,000 and 24% to $.61 or $63,498,000 respectively,
compared with $.25 or $25,329,000 and $.49 or $49,729,000
respectively, during the same periods last year. Revenues
for the three months and six months ended June 30, 2002 increased
27% to $175,923,000 from $138,949,000 and 25% to $345,284,000
from $275,933,000, respectively, during the same periods last
year.
Mr. Wristen commented that the second quarter results reflect
a continuing strong growth in revenue and operating income
that was led by the PPO business. During the quarter the PPO
business grew 41% to $110,078,000 from $78,104,000 during
the second quarter last year. Additionally, Mr. Wristen noted
that he expects continued strong growth in 2002 as the Company
integrates its addition of the Mail Handlers administration
business.
The company also announced it has been awarded the Mail Handlers
Benefit Plan pharmacy benefit management (PBM) contract effective
January 1, 2003. Pharmacy benefit management services are
an integral component of the Company's patient-centered approach
to medical cost management. This additional contract enables
the Company to provide Mail Handlers with a fully integrated,
comprehensive medical management program that utilizes pharmacy
data to identify chronic and high cost conditions earlier
and manage these cases more effectively. Mr. Wristen commented
that the addition of First Health® Rx also allows the
Company to provide seamless 24/7 services to members of the
Mail Handlers Benefit Plan while controlling overall medical
cost for the Plan. The award of the Mail Handlers Benefit
Plan contracts affirms First Health's continuing investment
in developing and delivering nationwide fully integrated,
member-focused health benefit solutions.
First Health, the nation's premier full-service national
health benefits company, specializes in providing large employers
with one integrated source for group health and workers' compensation.
By combining pioneering technology with expert industry knowledge,
First Health delivers comprehensive, cost-effective solutions
for its clients nationally. For more information, visit the
company web site at www.firsthealth.com.
Certain statements herein regarding anticipated financial
results for 2002 and the Company's business prospects are
forward-looking statements that involve substantial risks
and uncertainties. In accordance with the Private Securities
Litigation Reform Act of 1995, factors that could cause the
Company's actual results to differ materially from those expressed
or implied by such forward-looking statements include, among
others, the inability of the Company to continue to: (i) enter
into contracts with and successfully implement programs for
new clients within the time frame established by the Company
and achieve the revenue growth expected to result from the
addition of such clients, (ii) expand its group health, workers'
compensation and public sector business, (iii) control healthcare
benefit expenses, (iv) achieve operation and cost synergies
anticipated as a result of the CCN acquisition, (v) add CCN's
contracted providers to the First Health Medical Network on
a timely basis, or (vi) successfully integrate the recently
acquired Mail Handlers benefit Plan administrative assets.
All forward-looking statements herein are made as of the date
hereof and the Company undertakes no obligation to update
such statements.
| First Health Group Corp. |
| (000's Omitted Except EPS
and Percentages) |
| (Unaudited) |
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
| |
|
2002 |
2001 |
% Increase (Decrease) |
|
2002 |
2001 |
% Increase (Decrease) |
| Revenues |
|
$175,923 |
$138,949 |
27% |
|
$345,284 |
$275,933 |
25% |
| Operating Expenses: |
|
|
|
|
|
|
|
|
| Cost of Services |
|
75,077 |
60,438 |
24% |
|
148,049 |
120,175 |
23% |
| Selling and Marketing |
|
17,755 |
13,233 |
34% |
|
34,833 |
26,177 |
33% |
| General and Administrative |
|
11,956 |
8,622 |
39% |
|
23,349 |
16,992 |
37% |
| Healthcare Benefits |
|
3,903 |
3,396 |
15% |
|
7,684 |
7,099 |
8% |
| |
|
108,691 |
85,689 |
27% |
|
213,915 |
170,443 |
26% |
| |
|
|
|
|
|
|
|
|
| Operating Income |
|
67,232 |
53,260 |
26% |
|
131,369 |
105,490 |
25% |
| |
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
13,356 |
11,285 |
18% |
|
26,328 |
21,887 |
20% |
| |
|
|
|
|
|
|
|
|
| Interest Income |
|
(1,544) |
(1,714) |
(10)% |
|
(3,172) |
(3,565) |
(11)% |
| Interest Expense |
|
1,503 |
1,119 |
34% |
|
2,819 |
3,590 |
(21)% |
| Income Before Income Taxes |
|
53,917 |
42,570 |
27% |
|
105,394 |
83,578 |
26% |
| Income Taxes |
|
(21,433) |
(17,241) |
24% |
|
(41,896) |
(33,849) |
24% |
| Net Income |
|
$32,484 |
$25,329 |
28% |
|
$63,498 |
$49,729 |
28% |
| Weighted Average |
|
|
|
|
|
|
|
|
| Shares Outstanding - Basic |
|
101,217 |
97,765 |
4% |
|
100,759 |
97,270 |
4% |
| Net Income Per |
|
|
|
|
|
|
|
|
| Common Share - Basic |
|
$ .32 |
$ .26 |
23% |
|
$ .63 |
$ .51 |
24% |
| Weighted Average |
|
|
|
|
|
|
|
|
| Shares Outstanding - Diluted |
|
104,735 |
102,396 |
2% |
|
104,584 |
102,034 |
2% |
| Net Income Per |
|
|
|
|
|
|
|
|
| Common Share - Diluted |
|
$ .31 |
$ .25 |
24% |
|
$ .61 |
$ .49 |
24% |
| First Health Group Corp. |
| (000's Omitted Except Percentages) |
| (Unaudited) |
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
June30, |
|
Six Months Ended
June 30, |
| |
|
2002 |
2001 |
% Increase (Decrease) |
|
2002 |
2001 |
% Increase (Decrease) |
| Revenue Information: |
|
|
|
|
|
|
|
|
| PPO Services |
|
$110,078 |
78,104 |
41% |
|
$214,999 |
$153,815 |
40% |
| Claims Administration |
|
44,491 |
42,529 |
5% |
|
88,311 |
84,074 |
5% |
| Fee Schedule Services |
|
10,583 |
7,759 |
36% |
|
20,614 |
16,513 |
25% |
| Clinical Management Services |
|
6,961 |
6,824 |
2% |
|
13,540 |
13,911 |
(3)% |
| Premiums |
|
3,810 |
3,733 |
2% |
|
7,820 |
7,620 |
3% |
| Total Revenue |
|
$175,923 |
$138,949 |
27% |
|
$345,284 |
$275,933 |
25% |
Summary Balance Sheet Information:
| |
|
|
June 30, |
December 31, |
| |
|
|
2002 |
2001 |
Assets:
Cash and Investments |
|
|
$157,765 |
$137,353 |
| Accounts Receivable |
|
|
75,689 |
78,793 |
| Reinsurance Recoverable |
|
|
26,588 |
27,068 |
| Fixed Assets |
|
|
184,344 |
182,509 |
| Goodwill |
|
|
280,105 |
255,855 |
| Intangible Assets |
|
|
47,025 |
42,859 |
| Assets Held for Sale |
|
|
-- |
6,958 |
| Deferred Taxes |
|
|
27,540 |
27,429 |
| Other Assets |
|
|
19,480 |
21,910 |
| Total Assets |
|
|
$818,536 |
$780,734 |
Liabilities: |
|
|
|
|
| Claims Reserves |
|
|
$ 39,022 |
$ 38,448 |
| Debt Outstanding |
|
|
130,000 |
197,500 |
| Deferred Taxes |
|
|
84,579 |
84,828 |
| Purchase Reserve |
|
|
28,590 |
32,337 |
| Accounts Payable |
|
|
43,225 |
33,257 |
| Accrued Expenses |
|
|
36,512 |
34,047 |
| Other Liabilities |
|
|
34,765 |
21,018 |
| Total Liabilities |
|
|
396,693 |
441,435 |
Stockholders' Equity: |
|
|
421,843 |
339,299 |
Total Liabilities and
Stockholders' Equity |
|
|
$818,536 |
$780,734 |
|
