EX-99 2 exhibit9901.htm


 

 

Contact:

Chris Paterson

 

 

Chief Executive Officer

 

(954) 796-3651

 

 

cpaterson@careguide.com

 

 

 

CAREGUIDE ANNOUNCES RESULTS

FOR QUARTER ENDED SEPTEMBER 30, 2006

 

Highlights:

•

Third consecutive quarter of profitability;

•

Net income and EBITDA increased substantially over prior year;

•

Increased focus on ASO contracts;

•

Acquisition of Haelan Corporation; and

•

Expanded Board.

 

Coral Springs, Florida (November 14, 2006) – CareGuide, Inc. (OTCBB: CGDE), a national disease and healthcare management company, today announced results for its quarter ended September 30, 2006.

 

For the quarter ended September 30, 2006, the Company reported revenues of $13.8 million, a 13.6% increase compared with $12.1 million for the quarter ended September 30, 2005. Net income for the quarter ended September 30, 2006, was $524 thousand as compared with a net loss of $1.4 million for the same period in the prior year. Loss from continuing operations for the quarter ended September 30, 2006, was $187 thousand as compared with a loss from continuing operations of $1.5 million for the same quarter in 2005. The Company’s earnings before interest and investment gains or losses, taxes, depreciation and amortization (EBITDA) from continuing operations, which the Company believes provides useful information to management and investors regarding the financial and business trends relating to its results of operations, was $761 thousand compared with a loss of $893 thousand for the same quarter in 2005. The Company recorded a gain from discontinued operations in the quarter ended September 30, 2006, of $711 thousand due to a favorable ruling in an arbitration proceeding.

 

During the quarter ended September 30, 2006, the Company began trading on the Over-the-Counter Bulletin Board under ticker symbol “CGDE,” which followed the change of the Company’s legal name to CareGuide, Inc. Previously, the Company had operated under the name Patient Infosystems, Inc., d/b/a CareGuide, and traded under the symbol “PATY.” The Company also announced during the quarter the addition of William C. Stapleton to the Company’s Board of Directors, expanding the number of Board members to six. Mr. Stapleton is also serving as Chairman of the Audit Committee.

On November 6, 2006, the Company issued a press release regarding the acquisition of Haelan Corporation, a privately held health improvement solutions company based in Indianapolis, Indiana. The Company also announced in that release that the Company and Aetna had come to an agreement to terminate their risk-based contracts effective as of January 31, 2007, after which time Aetna will fold the services CareGuide provided into its internal operations. However, CareGuide will continue to serve Aetna chronic care management administrative services only (ASO) business. Both the Haelan and Aetna events are consistent with CareGuide’s strategy to focus on growing the proportion of its revenue that is ASO, as opposed to business where the Company is at-risk for claims.

 

 

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CGDE Announces Results For Quarter Ended September 30, 2006

Page 2

November 14, 2006

 

 

In commenting on the quarterly results, Chris E. Paterson, president and chief executive officer of CareGuide, said, “We are pleased with our progress and performance in the quarter ended September 30, 2006. The combination of continued profitability and the Haelan acquisition gives us a substantial amount of momentum for achieving our strategic goals. Our earlier decision to focus on ASO contracts, and our acquisition of Haelan, further solidifies CareGuide as a care and disease management organization with a complete and fully integrated set of products. The Haelan transaction, which we believe will close in late November, provides us with a unique predictive modeling tool and coaching intervention that gives us a competitive advantage. We believe this new product will give us an early mover advantage in our industry.”

 

Mr. Paterson added, “We believe that customers served by the merger of our two companies will benefit from the combination of Haelan’s One Care Street™, which employs a proprietary survey to identify at-risk individuals before they begin requiring high levels of medical resources, and CareGuide’s current care management and disease education offerings. We believe this transaction significantly advances CareGuide’s growth strategy and further differentiates us from our competitors. There is an opportunity to set the standard for delivery of care and disease management services in our industry, and we fully accept the challenge.”

 

The Company issued full calendar year guidance in a press release on March 8, 2006, where it estimated revenues for the full calendar year of 2006 would be between $60 million to $70 million and EBITDA would be between $3.5 million and $5 million. For the nine months ended September 30, 2006, the Company has reported revenues of $43.2 million and EBITDA of $3.9 million. The Company now believes that revenues will be slightly below the $60 million target due to timing issues, including delays in the ramping up of signed contracts. The Company expects EBITDA to be in the high end of the previously announced range.

 

The Company intends to change its fiscal year-end from March 31 to December 31 before the end of the 2006 calendar year.

 

The reconciliations from (loss) income from continuing operations to EBITDA for the three and six months ended September 30, 2006 and 2005, and the nine months ended September 30, 2006, are as follows (dollars in thousands):

 

 

 

For the

Three Months Ended

 

For the

Six Months Ended

For the Nine Months Ended

 

Sept. 30,

 

Sept. 30,

 

Sept. 30,

 

2006

 

2005

 

2006

 

2005

 

2006

(Loss) income from continuing   operations, GAAP basis

$      (187)

 

$  (1,466)

 

$       228

 

$  (2,418)

 

$    1,099

Depreciation and amortization

437

 

290

 

958

 

598

 

1,424

Interest income

(94)

 

(96)

 

(219)

 

(170)

 

(329)

Trading portfolio loss

174

 

-

 

387

 

-

 

403

Interest expense

412

 

378

 

818

 

731

 

1,221

Income tax expense

19

 

1

 

138

 

18

 

117

EBITDA (loss) from continuing   operations, non-GAAP basis

$       761

 

$     (893)

 

$    2,310

 

$  (1,241)

 

$    3,935

 

 

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CGDE Announces Results For Quarter Ended September 30, 2006

Page 3

November 14, 2006

 

 

The Company’s management will host a conference call and webcast to discuss the earnings release at 11:30 a.m. Eastern time on Tuesday, November 14, 2006. To participate in the call, participants should dial 1-212-896-6061 approximately ten minutes prior to the start time of the call. A telephonic replay of the call may be accessed by dialing 1-800-633-8284 and entering access code 21309329. The replay will be available from 1:30 p.m. Eastern time on Tuesday, November 14, 2006, until 6:00 p.m. on Wednesday, November 15, 2006. The conference call will also be available for 30 days through the Company’s website at www.careguide.com and at www.earnings.com.

 

Headquartered in Coral Springs, Florida, CareGuide is a national disease and care management company serving the health and benefit plans of managed care organizations, employers, unions, third party administrators and government customers. Understanding that health status is dynamic and encompasses physical, mental and social qualities, CareGuide focuses on total population health management. The Company employs a unique approach to identify members of its clients’ populations who are at risk for medical destabilization, loss of productivity and high claims expense. Through flexible, evidence-based and member-centric interventions that are matched to the individual’s holistic health needs, hospital admissions are prevented and quality of life is enhanced. CareGuide distinguishes itself by combining high human touch with technology to assist chronically ill members in self-managing their health. Visit www.careguide.com for more information.

 

This release contains information about management’s view of the company’s future expectations, financial results, plans and prospects, including prospects for success of the acquisition of Haelan and the combination of the two companies, replacing revenues associated with its contracts with Aetna, prospects for growth of its ASO business, and improving its operating results in future periods, that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the company’s financial condition, its ability to integrate Haelan into its operations and sell the combined company’s products, its ability to successfully transition from risk-based services to administrative service only contracts, its ability to compete with competitors and its ability to increase its business and revenue base, difficulties encountered in closing the Haelan transaction and integrating the business of Haelan, the competitive environment in the healthcare industry and competitive responses to the proposed merger, and the growth of the healthcare market, as well as other factors that are discussed in the Company’s filed Annual Report on Form 10-KSB for the fiscal year ended March 31, 2006, filed with the SEC on June 29, 2006, and the Company’s Quarterly Reports on Form-10-QSB for the quarter ended June 30, 2006, filed with the SEC on August 14, 2006, and for the quarter ended September 30, 2006, filed with the SEC on November 14, 2006, as well as other documents the Company files with the SEC.

 

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CGDE Announces Results For Quarter Ended September 30, 2006

Page 4

November 14, 2006

 

 

CAREGUIDE

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par values)

 

 

Sept. 30,

 

March 31,

 

2006

 

2006

Assets

(Unaudited)

 

 

Current assets:

 

Cash and cash equivalents

$      6,873

 

$      8,399

Restricted cash available for current liabilities

4,516

 

4,894

Securities available for sale

38

 

99

Securities held for trading

441

 

827

Notes receivable

350

 

340

Accounts receivable, net of allowance for doubtful accounts

 f $544 and 430, respectively

 

3,500

 

 

3,859

Prepaid expenses and other current assets

458

 

440

Current assets of discontinued operations

1,000

 

351

Total current assets

17,176

 

19,209

Property and equipment, net

1,295

 

1,511

Intangibles and other assets, net

3,674

 

4,219

Goodwill

28,695

 

28,666

Restricted cash

884

 

618

Total assets

$    51,724

 

$    54,223

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Claims payable

$      6,843

 

$      8,260

Accounts payable and accrued expenses

4,103

 

6,095

Deferred revenue

1,312

 

1,355

Note payable

300

 

300

Current income tax liability

126

 

93

Current portion of capital lease obligations

1

 

67

Current liabilities of discontinued operations

1,129

 

1,018

Total current liabilities

13,814

 

17,188

Long-term liabilities:

 

 

 

Line of credit

8,000

 

8,000

Deferred tax liability

-

 

28

Legal settlement payable, net of current portion

300

 

300

Total liabilities

22,114

 

25,516

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock, $.01 par value, 80,000,000 shares authorized;

  7,538,976 shares issued and outstanding

675

 

675

Additional paid-in capital

62,014

 

61,742

Other comprehensive loss

(23)

 

(1)

Accumulated deficit

(33,056)

 

(33,709)

Total stockholders’ equity

29,610

 

28,707

Total liabilities and stockholders’ equity

$    51,724

 

$    54,223

 

 

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CGDE Announces Results For Quarter Ended September 30, 2006

Page 5

November 14, 2006

 

 

CAREGUIDE

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

 

 

Three Months Ended September 30,

 

Six Months Ended September 30,

Revenues:

2006

 

2005

 

2006

 

2005

Capitation revenue

$      9,093

 

$      9,403

 

$    17,994

 

$    21,540

Administrative and fee revenue

4,658

 

2,704

 

9,554

 

5,127

Total revenues

13,751

 

12,107

 

27,548

 

26,667

Cost of services – direct service costs    (excluding depreciation and    amortization)

10,800

 

11,537

 

20,689

 

25,073

Gross profit

2,951

 

570

 

6,859

 

1,594

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

Selling, general and

 dministrative expense

2,190

 

1,463

 

4,549

 

2,835

Depreciation and amortization

437

 

290

 

958

 

598

Total operating costs and expenses

2,627

 

1,753

 

5,507

 

3,433

 

 

 

 

 

 

 

 

Operating income (loss) from

continuing operations

324

 

(1,183)

 

1,352

 

(1,839)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest and other income

94

 

96

 

219

 

170

Trading portfolio loss

(174)

 

-

 

(387)

 

-

Interest expense

(412)

 

(378)

 

(818)

 

(731)

(Loss) income from continuing    operations before income taxes

and discontinued operations

(168)

 

(1,465)

 

366

 

(2,400)

 

 

 

 

 

 

 

 

Income tax expense

(19)

 

(1)

 

(138)

 

(18)

(Loss) income from continuing operations

(187)

 

(1,466)

 

228

 

(2,418)

Income from discontinued operations

711

 

73

 

425

 

294

Net income (loss)

524

 

(1,393)

 

653

 

(2,124)

Accretion of preferred stock

-

 

(38)

 

-

 

(76)

Net income (loss) attributable

to common stockholders

$         524

 

$    (1,431)

 

$         653

 

$    (2,200)

 

 

 

 

 

 

 

 

Net income (loss) per common share -    basic and diluted:

 

 

 

 

 

 

 

Continuing operations

$         -

 

$      (0.18)

 

$       -

 

$      (0.30)

Discontinued operations

0.01

 

0.01

 

0.01

 

0.04

Net income (loss) per common share

$        0.01

 

$      (0.17)

 

$        0.01

 

$      (0.26)

 

 

 

 

 

 

 

 

Weighted average common

shares outstanding:

 

 

 

 

 

 

 

Basic

67,539

 

8,256

 

67,539

 

8,256

Diluted

67,539

 

8,256

 

70,411

 

8,256

 

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CGDE Announces Results For Quarter Ended September 30, 2006

Page 6

November 14, 2006

 

 

CAREGUIDE

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

 

Six Months Ended

September 30,

 

2006

 

2005

Cash provided by (used in) operating activities:

 

 

 

Cash received from customers

$  20,559

 

$  17,895

Direct provider costs and claims settlements paid

(7,242)

 

(13,482)

Salary and benefits paid

(8,315)

 

(5,237)

Rent expense paid

(1,043)

 

(686)

Professional fees paid

(1,517)

 

(467)

Other operating expenses paid

(3,010)

 

(2,091)

Other income received

219

 

170

Interest expense paid

(376)

 

(251)

Income taxes paid

(166)

 

(24)

Net cash used in operating activities

(891)

 

(4,173)

 

 

 

 

Cash provided by (used in) investing activities:

 

 

 

Purchases of property and equipment

(112)

 

(229)

Restricted deposits, net

112

 

3,619

Merger costs paid

-

 

(194)

Net cash provided by investing activities

-

 

3,196

 

 

 

 

Cash provided by (used in) financing activities:

 

 

 

Principal payments of capital lease obligations

(67)

 

(137)

Proceeds from borrowing under line of credit facility

-

 

1,200

Return of capital

(568)

 

-

Net cash (used in) provided by financing activities

(635)

 

1,063

 

 

 

 

Net (decrease) increase in cash and cash equivalents

(1,526)

 

86

Cash and cash equivalents, beginning of period

8,399

 

1,432

Cash and cash equivalents, end of period

$    6,873

 

$    1,518

 

Reconciliation of net income (loss) to net cash used in operating activities:

 

 

 

Net income (loss)

$       653

 

$  (2,124)

Adjustments to reconcile net income (loss)

 

 

 

to net cash used in operating activities:

 

 

 

Depreciation and amortization

958

 

598

Stock option compensation

42

 

36

Amortization of warrants

438

 

438

Decrease (increase) in accounts receivable

359

 

(514)

Increase in prepaid expenses and other current assets

(69)

 

(138)

Decrease in claims payable

(1,417)

 

(2,738)

Decrease in accounts payable and accrued expenses

(1,635)

 

(139)

(Decrease) increase in deferred revenue

(43)

 

405

Reverse trading portfolio loss

387

 

-

Increase in current income tax liability

32

 

-

Deferred tax benefit

(58)

 

-

(Increase) decrease in current assets of discontinued operations

(649)

 

570

Increase (decrease) in current liabilities of discontinued operations

111

 

(567)

Net cash used in operating activities

$     (891)

 

$  (4,173)

 

 

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