Provident American Corporation Reports Financial Results
NORRISTOWN, Pa.--(BUSINESS WIRE)--July 17, 1998--Provident American Corporation, reported a net loss for the fourth quarter ended December 31, 1997, of $12,578,000 or $1.24 per diluted share, on $29,484,000 of gross revenues. For the corresponding 1996 quarter, the Company reported fourth quarter net income of $903,000, or $0.07 per diluted share, on $22,334,000 of gross revenues.
For the year ended December 31, 1997, the Company reported a net loss of $18,573,000, or $1.84 per diluted share, compared with net income of $15,926,000, or $1.36 per diluted share, for the prior year. Net income for 1996 was positively impacted by a one-time after-tax gain of $14.6 million related to a legal settlement ($22.4 million, pre-tax).
These results are consistent with the Company's previously projected results for both its fourth quarter and year ended December 31, 1997 announced on March 26, 1998.
The Company also reported results for the first quarter ended March 31, 1998. Net income for the first quarter was $2,636,000, or $0.22 per diluted share, on $36,269,000 of gross revenues. For the corresponding 1997 quarter, the Company's net income totaled $778,000 or $0.06 per diluted share, on gross revenues of $23,085,000. The results for the first quarter of 1998 included a realized after tax gain of $4,000,000 from the sale of an 80% majority interest in Montgomery Management Corporation, a wholly-owned subsidiary of Provident Idemnity Life Insurance Company and $1,200,000 of costs incurred relating to outsourcing.
Alvin H. Clemens, Chairman and Chief Executive Officer, commented, "The results for the first quarter of 1998 indicate that the strategies implemented thus far are having a positive impact by reducing the policy loss ratio and lowering expenses. As reported earlier, the Company has implemented managed care initiatives that include more stringent front-end underwriting, price increases on both renewal and new policies, and, as of June 1998, a redesigned policy now in use to promote greater in-network utilization by both new and existing policyholders. Most importantly, these new policies include strict out-of-network penalties and price increases and are the only policies now being sold by the agency force."
Mr. Clemens further stated, "We are moving forward on the fall launch of our easy-to-use, one stop interactive health care insurance Web site as part of our exclusive agreement with America Online, Inc. Provident American, through its new health care E-Tailing subsidiary Insurion, Inc., will offer a range of products including individual and small-group health insurance to AOL's 12 million members on the AOL service and Internet users on AOL.COM. Among the products that Insurion, Inc., will market are health, dental, vision care, prescription, critical care and long-term care insurance on an exclusive basis and life and long-term disability on a nonexclusive basis."
Last month, Provident American announced that an investor had purchased a $5 million debt instrument convertible into 12 1/2% of the common stock of Insurion and has committed to invest another $5 million before September 30, 1998.
Provident American is an insurance company specializing in the marketing of managed-care health insurance through the underwriting of unique, affordable health care and life policies to individuals and small businesses, a $300 billion annual market.
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. -0- *T
Provident American Corp. and Subsidiaries
Consolidated Condensed Statements of Operations
(000's omitted)
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31, 1997 1996 1997 1996
Premiums earned $27,436 $19,265 $94,274 $68,503
Net investment income 732 2,294 4,237 5,380
Other income 1,316 775 3,540 1,661
Litigation settlement 22,400 Gross revenue 29,484 22,334 102,051 97,944
Reinsurance ceded 11,991 7,816 40,021 23,797
Net revenue 17,493 14,518 62,030 74,147
Benefits and expenses 30,515 12,935 85,044 51,630
Net income before income taxes (13,022) 1,583 (23,014) 22,517
Provision for income taxes (481) 643 (4,589) 6,397
Net income (12,541) 940 (18,425) 16,120
Dividends on preferred stock 37 37 148 194
Net income applicable to common stock ($12,578) $903 ($18,573) $15,926
Income (loss) per share of common stock
Basic $ (1.24) $ 0.09 $ (1.84) $ 1.66
Diluted $ (1.24) $ 0.07 $ (1.84) $ 1.36
Common shares and equivalents used in computing income (loss) per share
Basic 10,146 10,024 10,090 9,610
Diluted 10,146 12,378 10,090 11,674
Provident American Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(000's omitted)
December 31, December 31, 1997 1996
Assets
Investments $ 47,101 $ 61,942
Cash and Cash equivalents 16,767 6,218
Other 34,497 24,894
Total assets $ 98,365 $ 93,054
Liabilities and Stockholders' Equity
Future policy benefits $ 46,093 $ 44,813
Policy claims 31,109 15,438
Other 17,154 10,750
Stockholders' equity 4,009 22,053
Total Liabilities and
Stockholders' Equity $ 98,365 $ 93,054
Provident American Corporation and Subsidiaries
Consolidated Condensed Statements of Operations
(000's omitted)
Three Months
Ended March 31, 1998 1997
Premiums earned $31,145 $21,043
Net investment income 919 1,921
Other income 4,205 121
Gross revenue 36,269 23,085
Reinsurance ended 11,749 8,506
Net revenue 24,520 14,579
Benefits and expenses 21,807 13,620
Net income before income taxes 2,714 959
Provision for income taxes 41 144
Net income 2,673 815
Dividends on preferred stock 37 37
Net income applicable to common stock $2,636 $778
Income (loss) per share of common stock
Basic $0.26 $0.08
Diluted $0.22 $0.06
Common shares and equivalents used in computing income (loss) per share
Basic 10,173 10,064
Diluted 11,787 12,160
Provident American Corp. and Subsidiaries
Consolidated Condensed Balance Sheets
(000's omitted)
March 31, December 31, 1998 1997
Assets
Investments $46,707 $47,101
Cash and cash equivalents 16,064 16,767
Other 48,075 34,497
Total assets $110,846 $98,365
Liabilities and Stockholders' Equity
Future policy benefits $45,847 $46,093
Policy claims 43,653 31,109
Other 13,682 17,154
Stockholders' equity 7,664 4,009
Total Liabilities and Stockholders' Equity $110,846 $98,365
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CONTACT:
John Gillin
Provident American Corporation
(610) 279-2500
or
Kevin McGrath
Cameron Associates
(212) 245-8800
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