VIRGINIA BEACH, Va., July 28 /PRNewswire-FirstCall/ -- AMERIGROUP Corporation today announced that net income for the second quarter of 2004 increased 16 percent to $20,846,000 or $0.81 per diluted share, compared with $17,977,000, or $0.82 per diluted share for the second quarter of 2003. For the six months ended June 30, 2004, net income increased 24 percent to $39,284,000, or $1.53 per diluted share, compared with $31,671,000, or $1.45 per diluted share for the six months ended June 30, 2003. Earnings per diluted share in 2004 reflects our public offering of 3.2 million shares completed in October 2003.
Total revenues for the second quarter of 2004 increased 11 percent to $438,135,000, compared with $394,024,000 for the second quarter of 2003. For the six months ended June 30, 2004, revenues totaled $862,430,000, up approximately 10 percent from $785,274,000 for the six months ended June 30, 2003 reflecting 7.2 percent same-store premium revenue growth.
Membership increased 10 percent, or 83,000 members, to 902,000 at June 30, 2004, as compared with 819,000 members at June 30, 2003. Sequentially, membership increased 35,000 from the first quarter 2004.
Highlights for the second quarter include: * Weighted-average rate increases from states in the latter half of the year are expected to be at the high end of our 3 to 5 percent range; * Health benefits ratio of 81.3 percent of premium revenues; * Selling, general and administrative expenses of 10.0 percent of total revenues; * Days in claims payable within the expected range at 60 days; * Unregulated cash and investments of $242,343,000; and * Return on average equity over 19 percent.
“Our continuing focus on improving both quality and access to care has once again served us well,” said Jeffrey L. McWaters, chairman and chief executive officer. “Solid second quarter earnings coupled with better visibility into the last half of this year, due to rate increases, now enable us to anticipate improved full-year EPS. I am proud of our associates and the outstanding relationships they have built with our state partners and the communities that we serve together.”
Health Benefits
Health benefits were 81.3 percent of premium revenues for the second quarter of 2004 versus 79.2 percent in the second quarter of 2003.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were 10.0 percent of total revenues for the second quarter of 2004 versus 11.9 percent in the second quarter of 2003.
Balance Sheet and Cash Flow Highlights
Cash and investments at June 30, 2004, totaled approximately $577,396,000, the majority of which is regulated by state requirements. The unregulated portion at June 30, 2004, was $242,343,000. Operating cash flow totaled $18,785,000 for the first six months of 2004, compared to $15,152,000 for the same period in the prior year. The number of days in claims payable at the end of the second quarter was 60, consistent with AMERIGROUP’s targeted range.
Outlook Updated 2004 full-year expectations are as follows: * Earnings per diluted share increase from previous guidance of $3.09 to $3.14 to the range of $3.21 to $3.25, reflecting net income growth of over 24 percent and without giving effect to any potential acquisitions; * Same-store premium revenue growth of 10.0 to 12.0 percent; * Weighted-average rate increases expected at the high end of the 3 to 5 percent range; * Health benefits ratio less than or equal to 81.0 percent of premium revenues; * Selling, general and administrative expenses are expected to be at the low end of our range of 10.5 to 11.0 percent of total revenues; and * Fully diluted shares outstanding of approximately 26.0 million.
AMERIGROUP senior management will discuss the Company’s second quarter results on a conference call, Thursday, July 29th, at 9:30 a.m. Eastern Time. The conference can be accessed by dialing 1-800-838-4403. A recording of this conference call will be available from 12:00 p.m. Eastern Time on Thursday, July 29th, until 11:59 p.m. Eastern Time on Thursday, August 5th. To access the recording, dial 1-800-428-6051 and enter passcode 363157. 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, is a multi-state managed health-care company focused on serving people who receive healthcare benefits through publicly sponsored programs including Medicaid, State Children’s Health Insurance Program and FamilyCare. The Company operates in Texas, New Jersey, Maryland, Illinois, Florida and the District of Columbia. For more information about AMERIGROUP Corporation, please visit the Company’s Web site at 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 2004 performance such as membership, revenues, same-store premium revenues, 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 and successful integration of acquisitions 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 per share data) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 Revenues: Premium $435,918 $392,331 $858,253 $781,893 Investment income 2,217 1,693 4,177 3,381 Total revenues 438,135 394,024 862,430 785,274 Expenses: Health benefits 354,415 310,536 696,662 627,834 Selling, general and administrative 43,728 46,945 89,215 91,015 Depreciation and amortization 5,266 5,732 10,890 11,494 Interest 194 546 375 1,096 Total expenses 403,603 363,759 797,142 731,439 Income before income taxes 34,532 30,265 65,288 53,835 Income tax expense 13,686 12,288 26,004 22,164 Net income $20,846 $17,977 $39,284 $31,671 Weighted average number of common shares and dilutive potential common shares outstanding 25,791,480 21,909,649 25,710,472 21,770,714 Diluted net income per share $0.81 $0.82 $1.53 $1.45
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 Six months ended June 30, June 30, 2004 2003 2004 2003 Premium revenue 99.5 % 99.6 % 99.5 % 99.6 % Investment income 0.5 0.4 0.5 0.4 Total revenues 100.0 % 100.0 % 100.0 % 100.0 % Health benefits(1) 81.3 % 79.2 % 81.2 % 80.3 % Selling, general and administrative expenses 10.0 % 11.9 % 10.3 % 11.6 % Income before income taxes 7.9 % 7.7 % 7.6 % 6.9 % Net income 4.8 % 4.6 % 4.6 % 4.0 % (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 June 30, 2004 and 2003.
June 30, Market 2004 2003 Texas 356,000 321,000 Florida 240,000 199,000 Maryland 127,000 127,000 New Jersey 106,000 104,000 District of Columbia 38,000 37,000 Illinois 35,000 31,000 Total 902,000 819,000
The following table sets forth the approximate number of members in each of the products we offer as of June 30, 2004 and 2003.
June 30, Product 2004 2003 AMERICAID (Medicaid--TANF) 616,000 535,000 AMERIKIDS (SCHIP) 195,000 195,000 AMERIPLUS (Medicaid--SSI) 76,000 68,000 AMERIFAM (FamilyCare) 15,000 21,000 Total 902,000 819,000 AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2004 2003 (in thousands) Assets Current assets: Cash and cash equivalents $296,332 $407,220 Short-term investments 53,265 8,750 Premium receivables 37,819 38,259 Deferred income taxes 8,232 10,164 Prepaid expenses and other current assets 15,538 15,995 Total current assets 411,186 480,388 Property, equipment and software, net 43,211 42,158 Goodwill and other intangible assets, net 142,251 144,398 Long-term investments, including investments on deposit for licensure 227,799 154,479 Other long-term assets 5,256 4,598 $829,703 $826,021 Liabilities and Stockholders’ Equity Current liabilities: Claims payable $232,918 $239,532 Unearned revenue 28,818 54,324 Accounts payable 4,207 5,523 Accrued expenses, capital leases and other current liabilities 43,117 53,431 Total current liabilities 309,060 352,810 Deferred income taxes, capital leases and other long-term liabilities 9,665 11,497 Total liabilities 318,725 364,307 Stockholders’ equity: Common stock, $.01 par value 249 244 Additional paid-in capital 341,669 331,751 Retained earnings 169,060 129,719 Total stockholders’ equity 510,978 461,714 $829,703 $826,021 AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, 2004 2003 Cash flows from operating activities: Net income $39,284 $31,671 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,890 11,494 Loss on disposal or abandonment of property, equipment and software 945 - Deferred tax expense 1,103 1,231 Amortization of deferred compensation 57 180 Tax benefit related to option exercises 3,385 925 Changes in assets and liabilities increasing (decreasing) cash flows from operations: Premium receivables 440 1,889 Prepaid expenses and other current assets 457 (939) Other assets (974) (918) Claims payable (6,614) 3,707 Unearned revenue (25,506) (23,449) Accounts payable, accrued expenses and other current liabilities (5,469) (11,769) Other long-term liabilities 787 1,130 Net cash provided by operating activities 18,785 15,152 Cash flows from investing activities: (Purchase of) proceeds from sale of investments, net (115,715) 9,076 Purchase of investments on deposit for licensure, net (2,120) (3,954) Purchase of property, equipment and software (10,473) (6,406) Purchase of contract rights and related assets, net of adjustments 48 (8,209) Cash acquired through Florida acquisition - 27,483 Net cash (used in) provided by investing activities (128,260) 17,990 Cash flows from financing activities: Payment of capital lease obligations (2,636) (1,942) Repayment of borrowings under credit facility - (11,000) Proceeds from exercise of stock options, change in bank overdrafts and other, net 1,223 4,159 Net cash used in financing activities (1,413) (8,783) Net (decrease) increase in cash and cash equivalents (110,888) 24,359 Cash and cash equivalents at beginning of period 407,220 207,996 Cash and cash equivalents at end of period $296,332 $232,355
CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, of AMERIGROUP Corporation, +1-757-321-3535.
AMERIGROUP Corporation
CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, ofAMERIGROUP Corporation, +1-757-321-3535
Web site: http://www.amerigroupcorp.com/
