Fourth-quarter and full year fiscal 2009 results announced

Sep 28 2009

United American Healthcare Corporation (Nasdaq: UAHC) today announced financial results for the Company's fiscal fourth quarter and full year ended June 30, 2009.

Revenues for the fourth quarter were $3.3 million, down $3.2 million, or 49 percent, compared with revenues of $6.4 million for the fourth quarter of the prior fiscal year. The decline was primarily the result of the complete transfer of TennCare enrollees served by the Company's subsidiary, UAHC Health Plan of Tennessee (UAHC-TN), to other managed care organizations on November 1, 2008, and the discontinuance of UAHC-TN's managed care services as a TennCare contractor.

Total expenses increased $1.1 million, or 16 percent, to $7.9 million in the fiscal 2009 fourth quarter, compared with $6.8 million in the prior fiscal year's fourth quarter. The expenses for the quarter included increased legal and related settlement expenses, which more than offset reductions in marketing, general and administrative expenses. For the fourth quarter of fiscal 2009, the Company reported a net loss of $4.5 million, or ($0.53) per basic share, compared with a net loss of $0.6 million, or ($0.08) per basic share, in the comparable quarter a year ago. The loss in the most recent quarter was primarily a result of the loss of TennCare revenue, and the increase in legal expenses and settlement costs associated with recent litigation.

"As we move beyond the expiration of the TennCare contract and wind down the CMS Medicare business, our focus will remain on reducing costs and conserving our resources as we evaluate strategic alternatives for the Company," said William C. Brooks, President and CEO of United American Healthcare. "Although our review has taken more time than anticipated, we will continue these efforts as we work to identify the most appropriate strategy for the benefit of our shareholders."

For the full year ended June 30, 2009, revenues fell $10.2 million, or 38 percent, to $16.7 million, compared with $26.8 million for fiscal 2008. The transfer of UAHC-TN's TennCare enrollees to other providers on November 1, 2008 was the primary cause of the decrease in revenues. Total expenses for fiscal 2009 decreased $4.1 million, or 13 percent, to $26.1 million, compared with $30.1 million for the prior year. The expense reduction was primarily the result of a decrease in marketing, general and administrative expenses, offset by the legal and related settlement expenses incurred in the fourth quarter as well as an increase in medical expenses. Operating expenses for fiscal 2009 also included approximately $4.0 million in expenses related to the TennCare contract discontinuance, including claims processing costs, employee severance and retention, lease termination costs and other corporate general administrative costs. The results for fiscal 2008 were impacted by a goodwill impairment charge of $3.5 million that was not present in the Company's fiscal 2009 results. In addition, results for the prior year included an increase in the Company's deferred tax valuation allowance, resulting in an income tax expense of $2.1 million, compared with no income tax expense in fiscal 2009. As a result, the Company reported a net loss for fiscal 2009 of $8.7 million, or ($1.02) per share, compared with a net loss of $4.0 million, or ($0.47) per share, in fiscal 2008.

As of June 30, 2009, United American Healthcare reported cash, cash equivalents, short-term marketable securities and restricted marketable securities of $19.9 million, compared to $27.0 million as of June 30, 2008. The decrease in cash was primarily the result of negative operating cash flow of approximately $6.2 million in fiscal 2009. The Company remains free of debt.

United American Healthcare continued to take actions to reduce expenses and conserve cash during fiscal 2009. The Company significantly reduced the number of employees to fit its lower level of operating activity. At June 30, 2009, the total number of employees was reduced to 16 from 122 employees a year earlier, representing a year-over-year cost reduction of approximately $2.6 million. By September 21, 2009, the Company had further reduced the number of full time equivalent employees to 12. In addition, as part of its continuing effort to conserve capital resources, the Company has entered into an agreement to sublease its former facility in Tennessee, resulting in a $0.5 million expense reduction over the remaining lease term.