GREEN BAY, Wis., Nov. 3 /PRNewswire-FirstCall/ -- American Medical Security Group, Inc. (AMS), today reported net income for the third quarter of 2004 of $5.3 million or $0.36 per diluted share, including a charge of $2.6 million or $0.18 per diluted share for transaction costs related to the company’s proposed merger with PacifiCare Health Systems, Inc. .
Adjusted net income(1) for the third quarter of 2004, which excludes transaction costs related to the proposed merger, was $7.9 million or $0.54 per diluted share. That compares to adjusted net income of $7.0 million or $0.49 per diluted share for the third quarter of 2003, excluding realized investment gains and income from discontinued operations.
On September 15, 2004, PacifiCare and AMS jointly announced the signing of a definitive merger agreement whereby PacifiCare will acquire all of the outstanding shares of common stock of the company through a cash merger in which AMS will become a wholly owned subsidiary of PacifiCare. The AMS shareholder meeting to approve the merger agreement is scheduled for December 2, 2004. It is anticipated that the acquisition will be completed after shareholder approval and state and federal regulatory and other customary approvals are received.
GAAP net income and net income per share for the quarter and first nine months reconcile to adjusted net income and adjusted net income per share as follows:
Income Reconciliation Three Months Ended Nine Months Ended September 30 September 30 2004 2003 2004 2003 Income: (in millions) GAAP Net Income $5.3 $8.8 $24.0 $22.0 Adjustments: Income from Discontinued Operations - (0.9) - (0.7) PBM Settlement, Net of Tax - - (3.4) - Transaction Costs 2.6 - 2.6 - Realized Investment Gains, Net of Tax - (0.9) - (1.2) Adjusted Net Income $7.9 $7.0 $23.3 $20.1 Income per Share, Diluted: GAAP Net Income $0.36 $0.61 $1.64 $1.58 Adjustments: Income from Discontinued Operations - (0.06) - (0.05) PBM Settlement, Net of Tax - - (0.23) - Transaction Costs 0.18 - 0.18 - Realized Investment Gains, Net of Tax - (0.06) - (0.08) Adjusted Net Income $0.54 $0.49 $1.59 $1.44 (Per share amounts may not total due to rounding)
“In-force membership in our individual business has increased for four consecutive quarters, while the environment for our group business remains very competitive,” said Samuel V. Miller, Chairman, President and Chief Executive Officer of AMS. “We continue to maximize the opportunity in both business areas with new product designs and refinements to our distribution systems.”
AMS has introduced Health Savings Account (HSA) products and other high- deductible, consumer-driven plans for both market segments. In the past two quarters, the company has also more than doubled the number of its MedOne specialists, sales representatives specializing in facilitating MedOne sales through the company’s independent agents.
Revenues
Total revenues for the third quarter of 2004 were $183.4 million compared to $184.0 million for the second quarter of 2004 and $185.3 million for the third quarter of 2003. For the first three quarters of 2004, total revenues were $553.0 million compared to $558.2 million for the same period of 2003.
AMS said that the trend toward lower-cost, higher-deductible health plans in both its group and individual business is reducing growth in premium per member per month. However, AMS anticipates that these plans will attract customers who will have lower over-all utilization.
Membership
The company’s medical membership was up slightly to 315,358 at the end of the third quarter of 2004, compared to 315,076 at the end of the second quarter and 314,259 at the end of the third quarter of 2003. The membership trend reflects growing individual business offset by declining group membership.
Total health membership, which includes medical and dental membership, was down slightly on a sequential basis due to a decline in dental membership. Total health membership was 530,022 at the end of the third quarter of 2004. That compares to 533,834 at the end of the second quarter of 2004, and 540,993 at the end of the third quarter of 2003.
Health segment operating ratios for the quarter and nine months on a GAAP and adjusted basis are as follows:
Health Segment Ratios Three Months Ended Nine Months Ended September 30 September 30 2004 2003 2004 2003 Health Loss Ratio: GAAP 67.7% 68.2% 66.5% 67.9% PBM Settlement - - 1.0 - Adjusted Ratio(1) 67.7% 68.2% 67.5% 67.9% Health Expense Ratio: GAAP 27.2% 27.0% 27.5% 27.6% Health Combined Ratio: GAAP 94.9% 95.3% 93.9% 95.5% PBM Settlement - - 1.0 - Adjusted Ratio 94.9% 95.3% 95.0% 95.5% Cash Flow & Balance Sheet
Net cash provided by operations in the third quarter of 2004 was $4.7 million. Cash flow in the period was reduced by payments of litigation settlements and by merger-related costs. Cash from operations was $9.1 million for the third quarter of 2003. For the first nine months of 2004, cash from operations was $11.5 million, including $5.9 million received from a settlement with the company’s former pharmacy benefit manager (PBM) in the first quarter. For the first nine months of 2003, cash from operations was $7.5 million.
At September 30, 2004, AMS had a book value per share of $17.78. That compares to $15.71 at the end of the third quarter of 2003, and $17.16 at the end of the second quarter of 2004.
Earnings Guidance
The company anticipates that net income per diluted share will be approximately $0.56 for the fourth quarter of 2004. That would bring full-year 2004 net income per diluted share to approximately $2.20. Excluding the merger-related costs and the gain from the PBM settlement, the company anticipates adjusted net income per diluted share would be approximately $2.15 for full-year 2004.
Notes
(1) The company uses the non-GAAP measurements “adjusted net income” and “adjusted ratio” in this release. AMS management believes that these measurements, which exclude, where applicable, the impact of merger-related transaction costs, net realized investment gains, the one-time PBM settlement, and income from discontinued operations, provide a meaningful presentation of the underlying earnings of the company’s continuing operations.
AMS will host a conference call to discuss its financial results on Thursday, November 4, 2004, at 9:00 a.m. (Central Time). Interested parties may listen to the conference call live via the Investor Section of the company’s website at http://www.eams.com/ . Listen-only access to the live conference call is also available by dialing 785-832-2422. Following the live call, a replay will be available until midnight, Saturday, November 6, 2004, by dialing 402-530-0413. This press release, accompanying financial information and other statistical information contained in the conference call will appear in the Investor Section of the company’s website at http://www.eams.com/ .
Cautionary Statement: Some of the statements contained in this press release are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements express expectations for or about the future, rather than historical fact. Forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such statements. Such risks and uncertainties include, among others, the timing (including any possible delays) and receipt of regulatory approvals (including any conditions, limitations or restrictions placed on these approvals), and the risk that one or more governmental agencies may deny approval of the merger; any delays in securing the approval of our shareholders of the merger, and the risk that our shareholders do not approve the merger; unexpected increases in health care costs; the company’s ability to predict future health care costs and adequately price its products; the company’s ability to expand its distribution network, generate new sales, sell new products and retain existing members; the company’s ability to control expenses; legislative and regulatory matters, including delays in regulatory approvals, changes in government regulation, regulatory action resulting from market conduct activity; general business conditions, including competitive practices and demand for the company’s existing and new products; adverse outcomes of legal proceedings; publicity about the company; development of and changes in claims or litigation reserves; general economic conditions that impact the performance of the company’s investment portfolio or decisions of consumers to purchase our products; and other factors that may be referred to in American Medical Security Group, Inc.'s reports filed with the Securities and Exchange Commission from time to time. Forward- looking statements made in this release express expectations only as of the date they are made. The company does not undertake any obligation to update or revise such statements as a result of new information or future events.
PacifiCare Health Systems and American Medical Security Group and their respective officers and directors may be deemed to be participants in the solicitation of proxies from shareholders of American Medical Security Group, Inc. with respect to the transactions contemplated by the merger agreement between PacifiCare and American Medical Security Group. Information regarding the companies’ officers and directors is included in their respective Definitive Proxy Statements for their 2004 Annual Meetings of Stockholders filed with the Securities and Exchange Commission in April 2004. These documents are available free of charge at the Securities and Exchange Commission web site at http://www.sec.gov/ , from PacifiCare at pacificare.com and from AMS at eAMS.com. Investors and security holders may obtain more detailed information about who may be deemed participants in the solicitation of proxies by reading the AMS proxy statement when it becomes available.
Furthermore, investors and security holders of American Medical Security Group are urged to read American Medical Security Group’s definitive proxy statement regarding the proposed merger filed with the Securities & Exchange Commission on November 1, 2004. It contains important information about the merger and the transactions contemplated by the Merger Agreement. Investors and securities holders of American Medical Security Group may obtain a free copy of American Medical Security Group’s proxy statement and other documents filed with the Securities and Exchange Commission at the Commission’s web site at http://www.sec.gov/ . American Medical Security Group’s proxy statement and these other documents may also be obtained for free from American Medical Security Group at eAMS.com in the “Investors” section.
AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES INCOME DATA (in thousands, except earnings per share) 2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD REVENUES Premiums $179,055 $178,776 $176,735 $177,852 $712,418 Investment income 3,402 3,345 3,211 3,573 13,531 Realized investment gain (loss) 375 91 1,416 28 1,910 Fees & other 4,040 3,845 3,899 4,073 15,857 Total revenues 186,872 186,057 185,261 185,526 743,716 EXPENSES Benefits 120,598 119,315 119,218 119,366 478,497 General and administrative 29,284 29,244 26,908 27,989 113,425 Commissions and selling 24,042 24,294 24,292 24,455 97,083 Interest expense 339 324 309 283 1,255 Depreciation 1,777 1,664 1,673 1,660 6,774 Amortization 238 239 238 188 903 Total expenses 176,278 175,080 172,638 173,941 697,937 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,594 10,977 12,623 11,585 45,779 Income taxes 3,997 4,151 4,735 4,318 17,201 INCOME FROM CONTINUING OPERATIONS 6,597 6,826 7,888 7,267 28,578 PBM settlement, net of tax - - - - - Acquisition transaction costs - - - - - Income (loss) from discontinued operations (134) (57) 923 - 732 NET INCOME $6,463 $6,769 $8,811 $7,267 $29,310 PER SHARE DATA Adjusted net income - diluted (1) $0.47 $0.48 $0.49 $0.50 $1.94 Income from continuing operations - diluted $0.49 $0.49 $0.55 $0.50 $2.03 Income (loss) from discontinued operations - diluted $(0.01) $- $0.06 $- $0.05 Net income - basic $0.50 $0.51 $0.66 $0.54 $2.21 Net income - diluted $0.48 $0.48 $0.61 $0.50 $2.08 Weighted average common shares - basic 12,981 13,160 13,392 13,542 13,270 Weighted average common shares - diluted 13,575 14,015 14,340 14,464 14,100 MARGIN ANALYSIS Income before income taxes 5.7% 5.9% 6.8% 6.2% 6.2% Net income 3.5% 3.6% 4.8% 3.9% 3.9% 2004 YTD 1st Qtr 2nd Qtr 3rd Qtr 09/30/03 09/30/04 REVENUES Premiums $177,722 $176,528 $175,789 $534,566 $530,039 Investment income 3,538 3,454 3,506 9,958 10,498 Realized investment gain (loss) 65 (117) 28 1,882 (24) Fees & other 4,249 4,155 4,076 11,784 12,480 Total revenues 185,574 184,020 183,399 558,190 552,993 EXPENSES Benefits 118,505 117,392 117,598 359,131 353,495 General and administrative 28,187 28,349 27,233 85,436 83,769 Commissions and selling 24,749 24,173 24,264 72,628 73,186 Interest expense 221 221 255 972 697 Depreciation 1,591 1,470 1,395 5,114 4,456 Amortization 163 163 163 715 489 Total expenses 173,416 171,768 170,908 523,996 516,092 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 12,158 12,252 12,491 34,194 36,901 Income taxes 4,515 4,506 4,593 12,883 13,614 INCOME FROM CONTINUING OPERATIONS 7,643 7,746 7,898 21,311 23,287 PBM settlement, net of tax 3,356 - - - 3,356 Acquisition transaction costs - - (2,647) - (2,647) Income (loss) from discontinued operations - - - 732 - NET INCOME $10,999 $7,746 $5,251 $22,043 $23,996 PER SHARE DATA Adjusted net income - diluted (1) $0.52 $0.53 $0.54 $1.44 $1.59 Income from continuing operations - diluted $0.52 $0.53 $0.54 $1.52 $1.59 Income (loss) from discontinued operations - diluted $- $- $- $0.05 $- Net income - basic $0.81 $0.57 $0.38 $1.67 $1.75 Net income - diluted $0.75 $0.53 $0.36 $1.58 $1.64 Weighted average common shares - basic 13,627 13,690 13,763 13,179 13,694 Weighted average common shares - diluted 14,585 14,666 14,692 13,978 14,648 MARGIN ANALYSIS Income before income taxes 6.6% 6.7% 6.8% 6.1% 6.7% Net income 5.9% 4.2% 2.9% 3.9% 4.3% (1) - See page 8 for reconciliation of GAAP net income to adjusted net income. AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES FINANCIAL DATA (in thousands, except membership) 2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD REVENUE MIX Health premiums $175,924 $175,703 $173,744 $174,871 $700,242 Life premiums 3,131 3,073 2,991 2,981 12,176 Investment income 3,777 3,436 4,627 3,601 15,441 Service fees 4,040 3,845 3,899 4,073 15,857 Total revenues $186,872 $186,057 $185,261 $185,526 $743,716 MEMBERSHIP ANALYSIS Fully insured medical 278,091 275,323 270,401 273,252 273,252 Self funded medical 42,704 42,568 43,858 46,012 46,012 Dental 231,508 228,610 226,734 227,502 227,502 Total Health 552,303 546,501 540,993 546,766 546,766 Life 144,207 141,930 137,395 136,423 136,423 FINANCIAL STATISTICS Book value per share $14.68 $15.27 $15.71 $16.12 $16.12 Cash flow from operations $(3,575) $1,978 $9,092 $12,630 $20,125 Return on equity, annualized 14.2% 13.9% 15.3% 13.6% 14.3% Debt to total capital 15.0% 14.1% 13.5% 12.2% 12.2% Common shares outstanding, net of treasury 12,936 13,254 13,434 13,511 13,511 2004 YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/03 9/30/04 REVENUE MIX Health premiums $174,810 $173,673 $173,003 $525,371 $521,486 Life premiums 2,912 2,855 2,786 9,195 8,553 Investment income 3,603 3,337 3,534 11,840 10,474 Service fees 4,249 4,155 4,076 11,784 12,480 Total revenues $185,574 $184,020 $183,399 $558,190 $552,993 MEMBERSHIP ANALYSIS Fully insured medical 269,697 270,538 272,140 270,401 272,140 Self funded medical 44,400 44,538 43,218 43,858 43,218 Dental 222,118 218,758 214,664 226,734 214,664 Total Health 536,215 533,834 530,022 540,993 530,022 Life 132,437 130,418 127,075 137,395 127,075 FINANCIAL STATISTICS Book value per share $17.11 $17.16 $17.78 $15.71 $17.78 Cash flow from operations $10,422 $(3,646) $4,742 $7,495 $11,518 Return on equity, annualized 13.6% 13.3% 13.2% 14.4% 13.5% Debt to total capital 11.5% 11.4% 11.0% 13.5% 11.0% Common shares outstanding, net of treasury 13,549 13,678 13,683 13,434 13,683 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES BALANCE SHEETS (in thousands) 2003 3/31 6/30 9/30 12/31 ASSETS Investments: Fixed maturity securities available for sale, at fair value $283,595 $286,044 $286,324 $302,277 Fixed maturity securities held to maturity, at amortized cost 3,175 3,168 3,483 3,377 Trading securities, at fair value 1,142 1,217 1,254 1,424 Total investments 287,912 290,429 291,061 307,078 Cash and cash equivalents 20,396 22,036 30,183 17,289 Other assets: Property and equipment, net 34,112 35,118 34,445 37,446 Goodwill and other intangibles, net 35,468 35,229 34,283 34,095 Other assets 50,737 49,239 49,378 48,179 Total other assets 120,317 119,586 118,106 119,720 TOTAL ASSETS $428,625 $432,051 $439,350 $444,087 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Medical and other benefits payable $131,650 $131,023 $127,023 $129,809 Advance premiums 17,300 16,453 16,150 15,865 Payables and accrued expenses 23,466 21,039 24,020 24,099 Notes payable 33,558 33,258 32,958 30,158 Other liabilities 32,736 27,860 28,162 26,332 Total liabilities 238,710 229,633 228,313 226,263 Shareholders’ equity: Common stock 16,654 16,654 16,654 16,654 Paid-in capital 190,367 192,362 193,509 194,431 Retained earnings 9,321 16,090 24,901 32,168 Unrealized gain on investments 8,090 9,964 7,521 6,133 Treasury stock (34,517) (32,652) (31,548) (31,562) Total shareholders’ equity 189,915 202,418 211,037 217,824 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $428,625 $432,051 $439,350 $444,087 2004 3/31 6/30 9/30 ASSETS Investments: Fixed maturity securities available for sale, at fair value $313,813 $296,890 $302,119 Fixed maturity securities held to maturity, at amortized cost 3,170 3,163 3,164 Trading securities, at fair value 1,582 1,700 1,797 Total investments 318,565 301,753 307,080 Cash and cash equivalents 18,716 19,610 20,756 Other assets: Property and equipment, net 37,441 38,485 39,922 Goodwill and other intangibles, net 33,932 33,769 33,606 Other assets 44,594 46,310 39,323 Total other assets 115,967 118,564 112,851 TOTAL ASSETS $453,248 $439,927 $440,687 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Medical and other benefits payable $123,426 $118,723 $106,274 Advance premiums 16,902 14,982 15,350 Payables and accrued expenses 22,539 20,281 23,846 Notes payable 30,158 30,158 30,158 Other liabilities 28,436 21,005 21,838 Total liabilities 221,461 205,149 197,466 Shareholders’ equity: Common stock 16,654 16,654 16,654 Paid-in capital 194,426 195,548 195,610 Retained earnings 43,167 50,913 56,164 Unrealized gain on investments 8,869 2,094 5,190 Treasury stock (31,329) (30,431) (30,397) Total shareholders’ equity 231,787 234,778 243,221 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $453,248 $439,927 $440,687 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES SEGMENT DATA - HEALTH (in thousands, except financial statistics) 2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD OPERATING RESULTS Revenues: Premiums $175,924 $175,703 $173,744 $174,871 $700,242 Investment income 1,715 1,683 1,596 1,675 6,669 Other revenue 3,965 3,772 3,828 4,008 15,573 Total revenues 181,604 181,158 179,168 180,554 722,484 Expenses: Benefits 119,783 118,637 118,518 118,708 475,646 PBM settlement (pre-tax) - - - - - General and administrative 29,352 29,189 27,090 28,004 113,635 Commissions and selling 23,472 23,724 23,727 23,901 94,824 Total expenses 172,607 171,550 169,335 170,613 684,105 Income before income taxes $8,997 $9,608 $9,833 $9,941 $38,379 FINANCIAL STATISTICS Loss ratio 68.1% 67.5% 68.2% 67.9% 67.9% Expense ratio: General and administrative 14.4% 14.5% 13.4% 13.7% 14.0% Commissions and selling 13.3% 13.5% 13.7% 13.7% 13.5% Total expense ratio 27.8% 28.0% 27.0% 27.4% 27.5% Combined ratio 95.9% 95.5% 95.3% 95.3% 95.5% Premiums per member per month: Fully insured medical $181 $184 $184 $185 $183 Self funded 53 53 55 53 54 Dental 23 23 24 24 23 Short-term disability 22 22 23 23 22 Benefits cost per member per month: Fully insured medical $125 $124 $127 $128 $126 Self funded 27 36 40 29 33 Dental 15 16 15 15 15 Short-term disability 12 8 3 4 7 2004 YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/03 9/30/04 OPERATING RESULTS Revenues: Premiums $174,810 $173,673 $173,003 $525,371 $521,486 Investment income 1,568 1,496 1,417 4,994 4,481 Other revenue 4,193 4,104 4,030 11,565 12,327 Total revenues 180,571 179,273 178,450 541,930 538,294 Expenses: Benefits 117,904 116,833 117,178 356,938 351,915 PBM settlement (pre-tax) (5,339) - - - (5,339) General and administrative 28,345 28,377 27,272 85,631 83,994 Commissions and selling 24,200 23,643 23,758 70,923 71,601 Total expenses 165,110 168,853 168,208 513,492 502,171 Income before income taxes $15,461 $10,420 $10,242 $28,438 $36,123 FINANCIAL STATISTICS Loss ratio 64.4% 67.3% 67.7% 67.9% 66.5% Expense ratio: General and administrative 13.8% 14.0% 13.4% 14.1% 13.7% Commissions and selling 13.8% 13.6% 13.7% 13.5% 13.7% Total expense ratio 27.7% 27.6% 27.2% 27.6% 27.5% Combined ratio 92.1% 94.9% 94.9% 95.5% 93.9% Premiums per member per month: Fully insured medical $186 $185 $183 $183 $185 Self funded 55 55 57 54 56 Dental 24 24 25 23 24 Short-term disability 23 24 24 22 24 Benefits cost per member per month: Fully insured medical $119 $125 $126 $125 $123 Self funded 39 39 38 34 39 Dental 15 16 15 15 16 Short-term disability 6 4 5 8 5 AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES SEGMENT DATA - LIFE (in thousands, except financial statistics) 2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD OPERATING RESULTS Revenues: Premiums $3,131 $3,073 $2,991 $2,981 $12,176 Investment income 133 129 121 129 512 Other revenue 75 73 71 65 284 Total revenues 3,339 3,275 3,183 3,175 12,972 Expenses: Benefits 837 679 700 658 2,874 General and administrative 510 487 383 415 1,795 Commissions and selling 589 585 582 575 2,331 Total expenses 1,936 1,751 1,665 1,648 7,000 Income before income taxes $1,403 $1,524 $1,518 $1,527 $5,972 FINANCIAL STATISTICS Loss ratio 26.7% 22.1% 23.4% 22.1% 23.6% Expense ratio: General and administrative 13.9% 13.5% 10.4% 11.7% 12.4% Commissions and selling 18.8% 19.0% 19.5% 19.3% 19.1% Total expense ratio 32.7% 32.5% 29.9% 31.0% 31.6% Combined ratio 59.4% 54.6% 53.3% 53.1% 55.2% 2004 YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/03 9/30/04 OPERATING RESULTS Revenues: Premiums $2,912 $2,855 $2,786 $9,195 $8,553 Investment income 121 114 116 383 351 Other revenue 56 51 46 219 153 Total revenues 3,089 3,020 2,948 9,797 9,057 Expenses: Benefits 601 559 420 2,216 1,580 General and administrative 402 383 386 1,380 1,171 Commissions and selling 564 530 506 1,756 1,600 Total expenses 1,567 1,472 1,312 5,352 4,351 Income before income taxes $1,522 $1,548 $1,636 $4,445 $4,706 FINANCIAL STATISTICS Loss ratio 20.6% 19.6% 15.1% 24.1% 18.5% Expense ratio: General and administrative 11.9% 11.6% 12.2% 12.6% 11.9% Commissions and selling 19.4% 18.6% 18.2% 19.1% 18.7% Total expense ratio 31.3% 30.2% 30.4% 31.7% 30.6% Combined ratio 51.9% 49.8% 45.4% 55.8% 49.1% AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES CORPORATE AND OTHER (in thousands) 2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD OPERATING RESULTS Revenues: Investment income $1,554 $1,533 $1,494 $1,769 $6,350 Realized investment gain (loss) 375 91 1,416 28 1,910 Total revenues 1,929 1,624 2,910 1,797 8,260 Expenses: Benefits (22) (1) - - (23) General and administrative 1,199 1,232 1,108 1,230 4,769 Commissions and selling (19) (15) (17) (21) (72) Acquisition transaction costs - - - - - Interest expense 339 324 309 283 1,255 Amortization of intangibles 238 239 238 188 903 Total expenses 1,735 1,779 1,638 1,680 6,832 Income (loss) before income taxes $194 $(155) $1,272 $117 $1,428 2004 YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/03 9/30/04 OPERATING RESULTS Revenues: Investment income $1,849 $1,844 $1,973 $4,581 $5,666 Realized investment gain (loss) 65 (117) 28 1,882 (24) Total revenues 1,914 1,727 2,001 6,463 5,642 Expenses: Benefits - - - (23) - General and administrative 1,031 1,059 970 3,539 3,060 Commissions and selling (15) - - (51) (15) Acquisition transaction costs - - 2,647 - 2,647 Interest expense 221 221 255 972 697 Amortization of intangibles 163 163 163 715 489 Total expenses 1,400 1,443 4,035 5,152 6,878 Income (loss) before income taxes $514 $284 $(2,034) $1,311 $(1,236) AMERICAN MEDICAL SECURITY GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME (in thousands, except earnings per share) 2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD INCOME GAAP Net income $6,463 $6,769 $8,811 $7,267 $29,310 Less: Income (loss) from discontinued operations (134) (57) 923 - 732 Income from continuing operations 6,597 6,826 7,888 7,267 28,578 Less: PBM settlement, net of tax - - - - - Acquisition transaction costs - - - - - Realized investment gains (loss), net of tax 234 57 885 18 1,192 Adjusted net income $6,363 $6,769 $7,003 $7,249 $27,386 INCOME PER SHARE - DILUTED GAAP Net income per share $0.48 $0.48 $0.61 $0.50 $2.08 Less: Income (loss) from discontinued operations (0.01) - 0.06 - 0.05 Income from continuing operations 0.49 0.49 0.55 0.50 2.03 Less: PBM settlement, net of tax - - - - - Acquisition transaction costs - - - - - Realized investment gain (loss), net of tax 0.02 - 0.06 - 0.08 Adjusted net income per share $0.47 $0.48 $0.49 $0.50 $1.94 2004 YTD 1st Qtr 2nd Qtr 3rd Qtr 9/30/03 9/30/04 INCOME GAAP Net income $10,999 $7,746 $5,251 $22,043 $23,996 Less: Income (loss) from discontinued operations - - - 732 - Income from continuing operations 10,999 7,746 5,251 21,311 23,996 Less: PBM settlement, net of tax 3,356 - - - 3,356 Acquisition transaction costs - - (2,647) (2,647) Realized investment gains (loss), net of tax 41 (74) 18 1,176 (15) Adjusted net income $7,602 $7,820 $7,880 $20,135 $23,302 INCOME PER SHARE - DILUTED GAAP Net income per share $0.75 $0.53 $0.36 $1.58 $1.64 Less: Income (loss) from discontinued operations - - - 0.05 - Income from continuing operations 0.75 0.53 0.36 1.52 1.64 Less: PBM settlement, net of tax 0.23 - - - 0.23 Acquisition transaction costs - - (0.18) - (0.18) Realized investment gain (loss), net of tax - (0.01) - 0.08 - Adjusted net income per share $0.52 $0.53 $0.54 $1.44 $1.59
American Medical Security Group, Inc.
CONTACT: Cliff Bowers, Vice President Corporate Communications ofAmerican Medical Security Group, Inc., +1-920-661-2766
Web site: http://www.eams.com/
Company News On-Call: http://www.prnewswire.com/comp/107560.html
