First Health Reports Record Third Quarter
Results
Contact:
Edward L. Wristen, President and COO
or
Joseph E. Whitters, CFO
First Health
630-737-7511
FOR IMMEDIATE RELEASE
DOWNERS GROVE, Illinois, November 5, 2001 - James C.
Smith, Chairman and Chief Executive Officer of First Health
Group Corp. (NASDAQ: FHCC), announced today the results
of operations for the third quarter ended September 30, 2001,
which includes the results from the Company’s acquisition
of CCN Managed Care effective August 16, 2001.
Diluted earnings per share (EPS) and net income for the three
months and nine months ended September 30, 2001 increased
19% to $.25 or $26.4 million and 21% to $.74 or $76.1 million,
respectively, compared with $.21 or $20.8 million and $.61
or $60.9 million, respectively, during the same periods last
year. Revenues for the three months and nine months
ended September 30, 2001 increased 19% to $152.2 million from
$128.1 million and 14% to $428.1 million from $376.4 million,
respectively, during the same periods last year.
Mr. Smith commented that the record revenue, net income and
EPS in the quarter was led by the continued strong growth
in the Company’s PPO business. During the quarter, PPO
revenue grew 32% to $91.1 million from $68.8 million during
the same period last year. Additionally, Mr. Smith noted
that the integration of CCN Managed Care is progressing on
schedule and he has been quite pleased with the response from
CCN’s clients and contracted medical providers.
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 fiscal 2001 and the Company’s business and growth
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) achieve the growth in the group health area
that is anticipated as a result of the Company’s strategy
of focusing on larger, multi-sited national employers, (iv)
control health care benefit expenses, (v) achieve operation
and cost synergies anticipated as a result of the CCN acquisition,
or (vi) add CCN’s contracted providers to The First Health®
Network on a timely basis. 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.
(In Thousands Except EPS and Percentages)
(Unaudited)
|
Three Months Ended September 30,
Nine Months Ended September 30, |
|
|
|
|
%
Increase |
|
%
Increase |
|
|
2001 |
2000 |
(Decrease) |
2001 |
2000 |
(Decrease) |
|
|
|
|
|
|
|
|
|
| Revenues |
|
$152,207 |
$128,065 |
19% |
$428,140 |
$376,424 |
14% |
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
Cost of Services |
66,818 |
56,846 |
18% |
186,993 |
168,245 |
11% |
|
|
Selling and Marketing |
15,150 |
12,359 |
23% |
41,327 |
35,746 |
16% |
|
General and
Administrative |
10,764 |
8,530 |
26% |
27,756 |
25,765 |
8% |
|
|
Healthcare Benefits |
3,121 |
3,412 |
(9)% |
10,220 |
9,145 |
12% |
|
|
|
95,853 |
81,147 |
18% |
266,296 |
238,901 |
11% |
|
|
|
|
|
|
|
|
|
|
| Operating
Income |
56,354 |
46,918 |
20% |
161,844 |
137,523 |
18% |
|
|
|
|
|
|
|
|
|
|
Depreciation
and
Amortization |
12,076 |
9,878 |
22% |
33,963 |
28,365 |
20% |
|
|
|
|
|
|
|
|
|
|
| Interest
Income |
(1,727) |
(1,466) |
18% |
(5,292) |
(4,864) |
9% |
|
| Interest
Expense |
1,694 |
3,627 |
(53)% |
5,284 |
11,672 |
(55)% |
|
Income
Before Income
Taxes |
44,311 |
34,879 |
27% |
127,889 |
102,350 |
25% |
|
|
|
|
|
|
|
|
|
|
| Income
Taxes |
(17,947) |
(14,126) |
27% |
(51,796) |
(41,452) |
25% |
|
| Net
Income |
$26,364 |
$20,753 |
27% |
$76,093 |
$60,898 |
25% |
|
| Weighted
Average |
|
|
|
|
|
|
|
Shares Outstanding –
Basic |
99,280 |
95,788 |
4% |
97,908 |
95,656 |
2% |
|
| Net
Income Per |
|
|
|
|
|
|
|
|
Common Share –
Basic |
$0.27 |
$0.22 |
23% |
$0.78 |
$0.64 |
22% |
|
| Weighted
Average |
|
|
|
|
|
|
|
Shares Outstanding –
Diluted |
103,946 |
99,750 |
4% |
102,660 |
99,510 |
3% |
|
| Net
Income Per |
|
|
|
|
|
|
|
Common Share –
Diluted |
$0.25 |
$0.21 |
19% |
$0.74 |
$0.61 |
21% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Health Group Corp.
(In Thousands Except Percentages)
(Unaudited) |
|
|
|
Three Months Ended September 30,
Nine Months Ended September 30, |
|
|
|
|
%
Increase |
|
%
Increase |
|
|
2001 |
2000 |
(Decrease) |
2001 |
2000 |
(Decrease) |
| Revenue
Information: |
|
|
|
|
|
|
|
PPO Services |
$91,112 |
$68,778 |
32% |
$244,927 |
$201,378 |
22% |
|
|
Claims Administration |
41,793 |
38,100 |
10% |
125,867 |
113,026 |
11% |
|
Clinical Management
Services |
7,267 |
8,460 |
(14)% |
21,178 |
24,291 |
(13)% |
|
|
Fee Schedule Services |
8,541 |
9,288 |
(8)% |
25,054 |
27,989 |
(10)% |
|
|
Premiums |
3,494 |
3,270 |
7% |
11,114 |
8,892 |
25% |
|
|
Service |
-- |
169 |
(100)% |
-- |
848 |
(100)% |
|
| Total
Revenue |
$152,207 |
$128,065 |
19% |
$428,140 |
$376,424 |
14% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Summary
Balance Sheet Information: |
|
|
September
30, |
December 31, |
|
|
| Assets: |
|
2001 |
|
2000 |
|
|
|
|
Cash and Investments |
$136,819 |
|
$127,582 |
|
|
|
|
Accounts Receivable |
85,034 |
|
57,137 |
|
|
|
Reinsurance
Recoverable |
28,623 |
|
31,282 |
|
|
|
|
Fixed Assets |
180,546 |
|
155,717 |
|
|
|
|
Goodwill |
259,049 |
|
89,975 |
|
|
|
|
Intangible Assets |
43,575 |
|
-- |
|
|
|
|
Assets Held for Sale |
15,520 |
|
-- |
|
|
|
|
Other Assets |
46,806 |
|
29,903 |
|
|
|
|
Total Assets |
$795,972 |
|
$491,596 |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
Claims Reserves |
$40,834 |
|
$41,228 |
|
|
|
|
Long-Term Debt |
240,000 |
|
127,500 |
|
|
|
|
Other Liabilities |
210,455 |
|
141,455 |
|
|
|
|
Total Liabilities |
491,289 |
|
310,183 |
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’
Equity: |
304,683 |
|
181,413 |
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and
Stockholders’ Equity |
$795,972 |
|
$491,596 |
|
|
|
|
