The following tables summarize certain selected financial information for each of the years in the five year period ended June 30, 2004 and provide certain supplemental data. The selected consolidated income statement data for the years ended June 30, 2004, 2003, and 2002 and the selected consolidated balance sheet data as of June 30, 2004 and 2003 have been derived from the audited consolidated financial statements of Health Card included in Item 8 hereof. The selected consolidated income statement data for the years ended June 30, 2001 and 2000 and the selected consolidated balance sheet data as of June 30, 2002, 2001 and 2000 have been derived from audited consolidated financial statements of Health Card that are not included in this Form 10-K. The information contained in this table should be read in conjunction with Health Card’s consolidated financial statements and notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in
The following table sets forth the breakdown of Health Card’s revenues relating to pharmaceuticals dispensed and administrative fees ($ in thousands):
Cost of claims includes the amounts paid to network pharmacies, including mail service pharmacies, for pharmaceutical claims, and reductions resulting from the gross rebates received from drug manufacturers. Cost of claims are recognized as follows: the contractual obligation of Health Card to pay for these drugs is recorded as cost of claims at the time of dispensing of the drug by the pharmacy network. Cost of claims is reduced by the rebates that Health Card receives. Rebates are earned from drug manufacturers based on drugs utilized by plan participants at the time of dispensing. These rebates, which varies by sponsor, is recorded monthly based upon the claims adjudicated in that month.
Selling, general, and administrative expenses as a percent of revenue increased from 5.9% for the fiscal year ended June 30, 2002 to 6.3% for the fiscal year ended June 30, 2003. The main reason for the increase is the impact of recognizing more contracts on a net revenue basis, as that has the effect of dividing these same expenses over a smaller gross revenue base. In addition, the acquisition of Integrail and the start-up of NMHCmail led to an increase in this percentage.
Net cash used in investing activities was $39.4 million for the twelve months ended June 30, 2004, as compared to $6.0 million for the twelve months ended June 30, 2003. The primary differences in the two periods were the acquisition of Inteq and PPP and the repayment of affiliate loans in the twelve months ended June 30, 2004, as compared to the acquisition of Integrail in the twelve months ended June 30, 2003. In addition, there was a $4.9 million increase in capital expenditures for the twelve months ended June 30, 2004 as compared to the twelve months ended June 30, 2003. The net cash outlay for Inteq was $29.1 million, representing the initial payment of $29.6 million to the Sellers and $3.0 million to escrow plus approximately $572,000 of related expenses. Cash in the amount of approximately $4.1 million was assumed in the acquisition. The net cash outlay for PPP was $3.7 million, representing the initial payment of $3.2 million to the Sellers, $609,000 to pay off PPP’s bank debt plus $77,000 of related expenses. Cash in the amount of approximately $177,000 was assumed in the acquisition. In addition, approximately $666,000 has been accrued through June 30, 2004 as additional purchase price related to an earn-out provision, which was paid in September 2004 (See Note 3 to Consolidated Financial Statements comprising Item 8 hereof. The net cash outlay for Integrail was $1.5 million, representing the initial payment of $1.4 million plus $72,425 of related expenses. No cash was assumed in this acquisition.
The audited financial statements of Health Card as of June 30, 2004, 2003 and 2002, and the related Schedules, are set forth at the pages indicated in Item 15 hereof.