VIRGINIA BEACH, Va., Feb. 16 /PRNewswire-FirstCall/ -- AMERIGROUP Corporation today announced that net income for the fourth quarter of 2004 increased 28.2 percent to $22,397,000, or $0.43 per diluted share, compared with $17,468,000 or $0.34 per diluted share for the fourth quarter of 2003. For the year ended December 31, 2004, net income increased 27.8 percent to $86,014,000, or $1.66 per diluted share, compared with $67,324,000, or $1.48 per diluted share for the year ended December 31, 2003. After giving effect for the two-for-one stock split, the diluted shares outstanding for the full-year 2004 and 2003 were 51,837,579 and 45,603,300, respectively.
Total revenues for the fourth quarter of 2004 increased 15.6 percent to $490,323,000, compared with $424,189,000 for the fourth quarter of 2003. For the year ended December 31, 2004, revenues totaled $1,823,731,000, up 12.4 percent from $1,622,234,000 for the year ended December 31, 2003 reflecting approximately 11.2 percent same-store premium revenue growth.
Membership increased 9.2 percent, or 79,000 members, to 936,000 at December 31, 2004, as compared with 857,000 members at December 31, 2003, all of which were same-store. As expected, the new Florida Healthy Kids enrollment rules caused the disenrollment of 12,000 SCHIP members late in the fourth quarter, which offset growth in other markets, resulting in modest sequential membership growth of 2,000 members.
Additional highlights: * Successfully closed the CarePlus acquisition, with an effective date of January 1, 2005, resulting in membership exceeding 1 million; * Achieved a weighted-average premium rate increase of just under 5.0 percent, which was at the high end of the 3 to 5 percent guidance; * Health benefits ratio of 81.8 and 81.0 percent of premium revenues for the fourth quarter and the full-year 2004, respectively; * Days in claims payable within the expected range at 56 days for the quarter; * Selling, general and administrative expenses of 10.3 and 10.5 percent of total revenues for the fourth quarter and full-year 2004, respectively; * Prior to the CarePlus acquisition, unregulated cash and investments of $271,654,000; and * As of January 18, 2005, completed a two-for-one stock split.
“AMERIGROUP completed its first decade with an extremely successful year,” said Jeffrey L. McWaters, chairman and chief executive officer. “We added new members in all six of our states and entered our seventh, New York, by acquiring CarePlus Health Plan, resulting in membership in excess of 1 million. In addition, the Company attracted several exceptionally bright and experienced leaders to join an already strong executive team. The key to AMERIGROUP’s success is our unrelenting focus on providing our members with access to high-quality, preventive healthcare. This enables us to make a real difference in our members’ lives and to provide savings to our state partners.”
Health Benefits
Health benefits were 81.8 percent of premium revenues for the fourth quarter of 2004 versus 80.5 percent in the fourth quarter of 2003. The increase was primarily driven by fewer changes in claims estimates due to claims experience stabilizing in maturing products and markets. Overall, fourth quarter health benefits reflect stable performance with trends consistent with fourth quarter seasonality. For the full-year 2004, the health benefits ratio was 81.0 percent, which is in line with prior guidance.
Selling, General and Administrative Expenses
The selling, general and administrative expense ratio was 10.3 percent of total revenues for the fourth quarter of 2004 versus 11.6 percent in the fourth quarter of 2003. For the full-year 2004, the selling, general and administrative expense ratio was 10.5 percent, which was at the lower end of guidance.
Balance Sheet and Cash Flow Highlights
Cash and investments at December 31, 2004, totaled $650,424,000, of which $271,654,000 was unregulated. For the full year, operating cash flow totaled $102,060,000 compared to $128,494,000 in the prior year due primarily to early receipt of premium for two states in 2003 versus one state in 2004. The number of days in claims payable at the end of the fourth quarter was 56 compared to 58 days in the third quarter, which is consistent with the expected range of 55 to 60 days.
Outlook
Consistent with previous guidance, AMERIGROUP expects earnings per share of approximately $1.90 to $1.98 in 2005, which includes the effects of the CarePlus acquisition and the two-for-one stock split. Guidance does not include the impact from FASB 123(R), Stock-Based Compensation, or future acquisitions.
Other 2005 full-year expectations are as follows: * Net income growth of approximately 18.0 to 23.0 percent, which includes the effect of CarePlus; * Same-store premium revenue growth in the range of 10.0 to 13.0 percent, which includes a weighted-average rate increase of approximately 3 to 5 percent; * Health benefits ratio less than 81.0 percent of premium revenues; * Selling, general and administrative expenses of 11.0 to 11.5 percent of total revenues; * CarePlus acquisition will add over $200,000,000 of revenues and will result in an additional estimated $10,000,000 of depreciation and amortization on an annualized basis; and * Fully diluted shares outstanding of approximately 53,600,000. Introducing first quarter 2005 guidance relating to CarePlus: * Health benefits ratio is expected to be approximately 81.5 percent. This reflects the increase in health benefits to bring CarePlus liabilities to required levels, which is consistent with established policy. * Included in first quarter selling, general and administrative expenses are approximately $1,400,000 of integration costs relating to CarePlus.
AMERIGROUP senior management will discuss the Company’s fourth quarter and year ended December 31, 2004 results on a conference call, Thursday, February 17th, at 9:00 a.m. Eastern Time. The conference can be accessed by dialing 1- 800-565-5442 and entering passcode 5681824. A recording of this conference call will be available from 12:00 p.m. Eastern Time on Thursday, February 17th, until 11:59 p.m. Eastern Time on Wednesday, February 23rd. To access the recording, dial 1-888-203-1112 and enter passcode 5681824. A live webcast of the call also will be available through the investors page on the AMERIGROUP Web site at http://www.amerigroupcorp.com/, or through CCBN at http://www.companyboardroom.com/. A 30-day replay of this webcast will be available on these Web sites approximately two hours following the conclusion of the live broadcast.
AMERIGROUP Corporation, headquartered in Virginia Beach, Virginia, improves healthcare access and quality for low-income Americans by developing innovative managed health services for the public sector. AMERIGROUP serves more than 1 million people in New York, New Jersey, Maryland, the District of Columbia, Florida, Texas and Illinois. For more information, visit http://www.amerigroupcorp.com/.
This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the Securities and Exchange Commission’s Fair Disclosure Regulation. This release contains certain ''forward-looking’’ statements, including statements related to expected 2005 performance such as membership, revenues, same-store premium revenues, rate increases, operating cash flows, health benefits expenses, seasonality of health benefits expenses, selling, general and administrative expenses, days in claims payable, income tax rates, earnings per share, and net income growth, as well as expectations on the effective date of any pending acquisition and the successful integration and debt levels, made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company’s actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, national, state and local economic conditions, including their effect on the rate-setting process, timing of payments, as well as the availability and cost of labor, utilities and materials; the effect of government regulations and changes in regulations governing the healthcare industry, including our compliance with such regulations and their effect on our ability to manage our medical costs; changes in Medicaid payment levels, membership eligibility and methodologies and the application of such methodologies by the government; liabilities and other claims asserted against the Company; our ability to attract and retain qualified personnel; our ability to maintain compliance with all minimum capital requirements; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which we operate; our ability to maintain and increase membership levels; and demographic changes.
Investors should also refer to our Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission on March 9, 2004, for a discussion of risk factors. Given these risks and uncertainties, we can give no assurances that any forward-looking statements will, in fact, transpire and, therefore, caution investors not to place undue reliance on them. We specifically disclaim any obligation to update or revise any forward- looking statements, whether as a result of new information, future developments or otherwise.
AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (dollars in thousands, except for per share data) Three months ended Year ended December 31, December 31, 2004 2003 2004 2003 (unaudited) Revenues: Premium $486,982 $422,338 $1,813,391 $1,615,508 Investment income 3,341 1,851 10,340 6,726 Total revenues 490,323 424,189 1,823,731 1,622,234 Expenses: Health benefits 398,350 339,831 1,469,097 1,295,900 Selling, general and administrative 50,576 49,060 191,915 186,856 Depreciation and amortization 4,925 5,777 20,750 23,650 Interest 191 352 731 1,913 Total expenses 454,042 395,020 1,682,493 1,508,319 Income before income taxes 36,281 29,169 141,238 113,915 Income tax expense 13,884 11,701 55,224 46,591 Net income $22,397 $17,468 $86,014 $67,324 Weighted average number of common shares and dilutive potential common shares outstanding 52,552,486 50,672,583 51,837,579 45,603,300 Diluted net income per share $0.43 $0.34 $1.66 $1.48
The following table sets forth selected operating ratios. All ratios, with the exception of the health benefits ratio, are shown as a percentage of total revenues.
Three months ended Year ended December 31, December 31, 2004 2003 2004 2003 Premium revenue 99.3 % 99.6 % 99.4 % 99.6 % Investment income 0.7 0.4 0.6 0.4 Total revenues 100.0 % 100.0 % 100.0 % 100.0 % Health benefits (1) 81.8 % 80.5 % 81.0 % 80.2 % Selling, general and administrative expenses 10.3 % 11.6 % 10.5 % 11.5 % Income before income taxes 7.4 % 6.9 % 7.7 % 7.0 % Net income 4.6 % 4.1 % 4.7 % 4.2 % (1) The health benefits ratio is shown as a percentage of premium revenue because there is a direct relationship between the premium received and the health benefits provided.
The following table sets forth the approximate number of members served in each of our service areas as of December 31, 2004 and 2003.
December 31, Market 2004 2003 Texas 394,000 343,000 Florida 229,000 221,000 Maryland 130,000 124,000 New Jersey 105,000 99,000 District of Columbia 41,000 38,000 Illinois 37,000 32,000 Total 936,000 857,000
The following table sets forth the approximate number of members in each of the products we offer as of December 31, 2004 and 2003.
December 31, Product 2004 2003 AMERICAID (Medicaid-TANF) 662,000 587,000 AMERIKIDS (SCHIP) 182,000 180,000 AMERIPLUS (Medicaid-SSI) 79,000 74,000 AMERIFAM (FamilyCare) 13,000 16,000 Total 936,000 857,000 AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS December 31, December 31, 2004 2003 (in thousands) Assets Current assets: Cash and cash equivalents $350,581 $407,220 Short-term investments 52,913 8,750 Premium receivables 44,081 38,259 Deferred income taxes 11,019 10,164 Prepaid expenses and other current assets 18,737 15,995 Total current assets 477,331 480,388 Property, equipment and software, net 50,298 42,158 Goodwill and other intangible assets, net 140,382 144,398 Long-term investments, including investments on deposit for licensure 246,930 154,479 Other long-term assets 4,909 4,598 $919,850 $826,021 Liabilities and Stockholders’ Equity Current liabilities: Claims payable $241,253 $239,532 Unearned revenue 34,228 54,324 Accounts payable 4,826 5,523 Accrued expenses, capital leases and other current liabilities 56,842 53,431 Total current liabilities 337,149 352,810 Deferred income taxes, capital leases and other long-term liabilities 13,989 11,497 Total liabilities 351,138 364,307 Stockholders’ equity: Common stock, $.01 par value 505 489 Additional paid-in capital 352,417 331,506 Retained earnings 215,790 129,719 Total stockholders’ equity 568,712 461,714 $919,850 $826,021 AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, 2004 2003 (in thousands) Cash flows from operating activities: Net income $86,014 $67,324 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,750 23,650 Loss on disposal or abandonment of property, equipment and software 971 74 Deferred tax expense (benefit) 2,878 (3,272) Amortization of deferred compensation 57 360 Tax benefit related to option exercises 8,009 4,547 Changes in assets and liabilities increasing (decreasing) cash flows from operations: Premium receivables (5,822) (3,026) Prepaid expenses and other current assets (2,742) (7,954) Other assets (941) (750) Claims payable 1,721 16,681 Unearned revenue (20,096) 28,806 Accounts payable, accrued expenses and other current liabilities 9,234 (494) Other long-term liabilities 2,027 2,548 Net cash provided by operating activities 102,060 128,494 Cash flows from investing activities: Purchase of investments, net (133,595) (28,944) Purchase of investments on deposit for licensure, net (3,019) (5,487) Purchase of property, equipment and software (25,727) (13,294) Purchase of contract rights and related assets, net of adjustments 512 (7,618) Cash acquired through Florida acquisition - 27,473 Net cash used in investing activities (161,829) (27,870) Cash flows from financing activities: Net proceeds from public offering of common stock - 138,829 Payment of capital lease obligations (4,473) (4,902) Repayment of borrowings under credit facility - (50,000) Payment of debt issuance costs - (1,428) Proceeds from exercise of stock options, change in bank overdrafts and other, net 7,603 16,101 Net cash provided by financing activities 3,130 98,600 Net (decrease) increase in cash and cash equivalents (56,639) 199,224 Cash and cash equivalents at beginning of period 407,220 207,996 Cash and cash equivalents at end of period $350,581 $407,220
CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, of AMERIGROUP Corporation, +1-757-321-3597.
AMERIGROUP Corporation
CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, ofAMERIGROUP Corporation, +1-757-321-3597
Web site: http://www.amerigroupcorp.com/