elsewhere in this report. We derived the selected balance sheet data as of February 28, 2005 from the unaudited consolidated financial statements of NewQuest, LLC.
Our diluted EPS was $1.51 for 2007 compared with $1.44 for 2006.
Commercial. Our commercial HMO membership declined from 31,970 members at December 31, 2006 to 11,801 members at December 31, 2007, or by 63.1%, primarily as a result of the non-renewal by employers in Alabama and Tennessee. Total commercial membership as of January 1, 2008 was 3,418.
PDP: PDP premiums (after risk corridor adjustments) were $116.0 million in the year ended December 31, 2007 compared to $101.4 million in the same period of 2006, an increase of $14.6 million, or 14.4%. Our average PMPM premiums (after risk corridor adjustments) decreased 20.1% to $79.94 in the current period versus $100.10 during the 2006 period. The impact of the rate decrease in the current period was more than offset by a 43.2% increase in member months in the year ended December 31, 2007 as compared to the same period in 2006. We expect PMPM premiums for 2008 to be relatively unchanged compared to 2007 levels.
During the second quarter of 2007, the company recorded a $4.5 million charge for the impairment of intangible assets associated with commercial customer relationships in the company’s Tennessee health plan. This second quarter charge was the result of the company’s expectation that significant declines in commercial membership would occur as a result of its decision in the second quarter of 2007 to implement premium increases upon renewal for large group plans.
Risk corridor payable to CMS associated with the Part D drug program increased $27.6 million in 2006.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the years then ended and for the ten-month period from March 1, 2005 through December 31, 2005; and the results of operations and cash flows of the Predecessor for the two months ended February 28, 2005, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
Goodwill represents the excess of cost over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually. The Company has selected December 31 as its annual testing date.
Pro forma net income and basic and diluted earnings per share for 2005 has not been disclosed as the impact of applying the fair value based method to all outstanding and unvested awards would not be material to the Company’s consolidated results of operations.
In December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141R”), “Business Combinations” and SFAS No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51”. SFAS 141R will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 141R and SFAS 160 are effective for us beginning in the first quarter of fiscal 2010. Early adoption is not permitted. The Company is currently evaluating the impact that SFAS 141R and SFAS 160 will have on its consolidated financial statements.
Investment securities held to maturity classified as non-current assets were as follows:
Maturities of debt securities classified as available for sale, regardless of their classification on the consolidated balance sheet, were as follows at December 31, 2007:
Income tax expense (benefit) consisted of the following for the periods presented: