Monday August 16, 6:53 pm Eastern Time
Company Press Release
Provident American Corporation Reports Financial Results
HealthAxis.Com Shows Strong Second Quarter Growth in Policies In-Force
EAST NORRITON, Pa.--(BUSINESS WIRE)--August 16, 1999-- Company Announces Agreement To Sell Insurance Subsidiary;
HealthAxis.com To Become Its Sole Operating Unit
Top Management Team To Realign Responsibilities
Provident American Corporation (Nasdaq: PAMC - news) today reported a net loss applicable to common stock for the second quarter ended June 30, 1999 of $10,539,000, or ($.88) per share on a fully diluted basis, on $3,186,000 of revenue. For the corresponding 1998 quarter, the Company reported a net loss of $2,381,000, or ($.20) per share on a fully diluted basis, on $17,168,000 of revenue. Provident American said its net loss was related to increased expenses at HealthAxis.com, as well as losses from its insurance operations.
For the six-month period ended June 30, 1999, the Company reported a net loss applicable to common stock of $13,440,000 or ($1.14) per share on a fully diluted basis, on $7,619,000 of revenue. This compares to net income of $254,000 or $0.02 per share, during the same period in 1998.
Provident American's six-month 1999 results included a $1.5 million gain on the sale of its remaining 20% of Montgomery Management Corporation's common stock, whereas 1998 results included a $4 million gain on the sale of the Company's 80% ownership of Montgomery Management's common stock.
HealthAxis.Com Shows Strong Second Quarter Growth in Policies In-Force
HealthAxis.com today announced that its policies in-force - a measure of the policies earning commission revenue for HealthAxis.com as of the end of the second quarter (calculated as prior sales less attrition plus new sales) - rose by 326 over the first quarter to a total of 416 policies in-force.
HealthAxis.com anticipates launching a robust marketing effort in conjunction with the integration of additional carrier partners, including WellPoint Health Networks, Aegon, Fortis, and UICI, among others. HealthAxis.com also announced that it has signed 2 additional carrier partners during the month of July, bringing the total to 10. Additionally, Fortis products are scheduled to go live on HealthAxis.com during the month of August.
Michael Ashker, HealthAxis.com's President and Chief Executive Officer said: ''We are extremely pleased with HealthAxis.com's growth during the second quarter. Customer response has been strong, demonstrating the pent-up demand for an online insurance service that enables Internet consumers to not only shop, but also actually complete their insurance transaction online. HealthAxis.com's efforts are focused on both rapidly integrating new carriers and enhancing the functionality of our Web site. We are confident that these efforts will produce an end-to-end, digital insurance platform that will provide our customers with unmatched ease-of-use, convenience, and affordability.''
Provident Indemnity Life Insurance Company To Be Sold
The Company also announced that it has entered into a definitive agreement to sell its insurance subsidiary, Provident Indemnity Life Insurance Company (''PILIC''), to Provident's Chairman Alvin H. Clemens. This sale will make HealthAxis.com the Company's sole operating unit.
Under the terms of the agreement, Provident will sell all of the issued and outstanding shares of the common stock of PILIC to AHC Acquisition, Inc. (''AHC''), a newly formed Pennsylvania business corporation, all of the stock of which is owned by Mr. Clemens. The transaction is subject to the approval of the boards of directors of all parties to the transaction, the shareholders of Provident, the Pennsylvania Department of Insurance and certain of the lenders of the parties, as well as the receipt by the Board of Provident of a fairness opinion and financing.
The consideration for the purchase and sale is the purchase by Provident of its home office building and 545,915 shares of Series A Convertible Preferred Stock of HealthAxis.com, Inc., both owned by PILIC, and a contribution to the capital of PILIC by Provident at or prior to closing. The aggregate consideration paid by Provident will total $14,700,000. In addition, Provident will transfer to AHC 100,000 of Series A Convertible Preferred Stock of HealthAxis.com, Inc. in connection with the obligations AHC will assume at the closing.
It is anticipated that upon the completion of the sale, Provident will have no continuing liabilities with respect to the insurance, capital and surplus, and business operations of PILIC, except those which were created in December, 1998 in connection with the sale by Provident of the capital stock of Provident American Life & Health Insurance Company to Ceres Group, Inc.
The Company anticipates that the transaction will close as soon as practical after receiving appropriate approvals and financing. The Company further anticipates that the sale of PILIC will result in a loss, the amount of which is under evaluation at this time, and will be reported when that information becomes available.
Mr. Clemens said: ''When completed, the sale of PILIC will clear the Company's decks of the insurance operations. Our management team will be able to focus totally on growing our new business, HealthAxis.com.''
Top Management Team To Realign Responsibilities
Provident American also announced that it will realign the responsibilities of its top management team.
Mr. Ashker will become President and Chief Executive Officer of Provident American Corporation, with responsibility for the day-to-day operations. He will remain HealthAxis.com's President and Chief Executive Officer.
Mr. Clemens will continue to serve as the Company's Chairman, with responsibility for strategic planning as well as mergers and acquisitions, and will assume the role of Chairman of the Executive Committee.
Mr. Clemens said, ''By assuming the responsibilities as Provident American's President and Chief Executive Officer, Mike will be better positioned to expedite the final stages of Provident American's transformation into a successful, pure e-commerce enterprise, while I focus on the Company's strategic future.''
As previously announced, the merger between Provident American and HealthAxis.com is expected to close in the third or fourth quarter of 1999.
About Provident American Corporation/HealthAxis.com, Inc.
The Provident American Corporation (Nasdaq: PAMC - news) operates HealthAxis.com, Inc., a pioneer in the Internet distribution of health and life insurance to the individual and small group markets. HealthAxis.com is a fully-transactional, ''digital insurance agent.'' HealthAxis.com does not engage in any insurance underwriting and assumes no underwriting risk. Through its interactive, user-friendly, one-stop healthcare insurance Web site, healthaxis.com, HealthAxis.com provides customers with access to and the ability to purchase a full range of high quality insurance products at competitive prices. HealthAxis.com also provides product information and advice, instant price quotes, electronic application processing, online billing, claims status, policy or personal information changes, and a customer hotline. Policyholders can easily and conveniently view billing information, claims history and policy details - day and night, 7 days a week. HealthAxis.com has Internet distribution agreements with AOL (Keyword: HealthAxis), Lycos, CNet and Snap! HealthAxis.com is currently in the process of merging with its parent company, Provident American Corporation.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements made by the Company which are not historical facts may be considered forward-looking statements, including, without limitation, statements as to trends, management's beliefs, expectations and opinions, which are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors, which may cause actual results to differ materially from those in the forward-looking statements. For further information, which could cause actual results to differ from the Company's expectations as well as other factors, which could affect the Company's financial statements, please refer to the Company's reports filed with the Securities and Exchange Commission.
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