Includes a $838 increase in fully-insured dental HMO revenue and a $6,283 increase in self-insured dental HMO revenue.
Headquartered in Cincinnati, Ohio, Dental Care Plus Group offers to employer groups of all sizes dental HMO, dental PPO, dental indemnity and vision PPO benefit plans and related services. As of December 31, 2007, we had approximately 245,000 members in our dental and vision benefit programs with 1,972 dentists participating in our networks of providers.
Our dental and vision products grew by approximately 28,300 members, or 13.1%, from 216,700 members at December 31, 2006 to 245,000 members at December 31, 2007. This membership increase included approximately 6,300 members from sales primarily related to our new DentaSelect PPO offering.
Total self-insured revenue increased approximately $6,283,000, or 46.6%, from approximately $13,485,000 in 2006 to approximately $19,768,000 in 2007. This increase is attributable to the 34.9% increase in self-insured HMO membership, an increase in self-insured ASO fee rates and a provider fee schedule increase implemented at the beginning of 2007 that contributed to the 6.0% increase in self-insured claim revenue on a per member per month basis. The self-insured segment revenue has two components:
Our effective tax rate for 2006 of 45.5% increased 4.8% compared to the 40.7% effective tax rate in 2005. Our 2006 effective tax rate is higher than the federal statutory rate due to applicable state and local taxes and certain non-deductible reorganization costs associated with acquiring the Dental Care Plus Life Insurance license. See Note 6 to the consolidated financial statements included in Item 8 - Financial Statements and Supplementary Data for a complete reconciliation of the federal statutory rate to the effective tax rate.
space and acquisition of office equipment for new employees) and our estimated federal income tax liability. After considering these and any other factors deemed relevant, the Board determines the amount of the provider withhold that may be paid to participating dental providers, if any. Each participating dental provider’s share of the provider withhold payment is based on the proportionate amount of claims submitted by such participating dental provider in relation to the total claims submitted by all participating dental providers in a given year, expressed as a percentage, and is not related to or dependent upon any such provider’s holdings of shares in the Company. Payments authorized by the Board are accrued in the fourth quarter of the fiscal year. The Board authorized amounts of return of withhold amounting to $650,000 and $900,000 for the years ended December 31, 2007 and 2006, respectively. In 2005, the Board authorized amounts of return of withhold totaling approximately $610,000 that consisted of $300,000 with respect to amounts withheld in 2005 and 2004, and approximately $310,000 with respect to amounts withheld in 2003.
Net unrealized investment gains in marketable securities (net of income tax effects) were $5,030 in the year ended December 31, 2007. Net unrealized investment losses in marketable securities (net of income tax effects) were $554 in the year ended December 31, 2006.
The fair market value of the variable to fixed interest rate swap contract (net of income tax effects) decreased by $30,096 in year ended December 31, 2007 due to a decrease in prevailing interest rates during 2007. The fair market value of the variable to fixed interest rate swap contract (net of income tax effects) decreased by $3,953 in year ended December 31, 2006 due to a decrease in expected future interest rates during 2006. The fair market value of the variable to fixed interest rate swap contract was $27,009, $72,609 and $78,599 at December 31, 2007, 2006 and 2005, respectively and is included in other assets.
with the requirements of EITF D-98, the Company changed its reporting related to its redeemable common shares as a result of becoming a Securities and Exchange Commission registrant. The Company’s Class A and Class B common shares are now considered to be redeemable common shares due to the fact that the shareholders have the option to require the Company to repurchase these shares upon their death, permanent disability or retirement. The Company now records Class A and Class B common shares as Redeemable Common Shares in the consolidated balance sheet outside of permanent shareholders’ equity at the redemption value of the common shares. Accordingly, the Company records any net income (loss) or other comprehensive income (loss) that formerly was recorded as a change to retained earnings as a change to the redemption value of the Redeemable Common Shares to accrete the carrying value of the Redeemable Common Shares to the redemption value at the end of each reporting period. Under this method, the end of the reporting period is treated as if it were also the redemption date for the security.
DCP Holding Company (the “Company”) is the parent holding company of three wholly-owned subsidiaries which include Dental Care Plus, Inc., or Dental Care Plus, an Ohio corporation, Insurance Associates Plus, Inc., or Insurance Associates, an Ohio corporation, and Adenta, Inc., or Adenta, a Kentucky corporation. The Company is owned and controlled primarily by 653 dentists who participate in our Dental Care Plus plans. The Company offers to employer groups of all sizes health maintenance organization (“HMO”), participating provider organization (“PPO”) and indemnity plans for dental care services. As of December 31, 2007, the Company had approximately 238,100 members in its dental benefits programs with 1,972 dentists participating in its two provider networks in Southwestern Ohio, Northern Kentucky, Central Kentucky and Southeastern Indiana. In addition, the Company had approximately 6,900 members in its vision benefit programs. The Company markets its products through a network of independent brokers.
deferred tax benefits include the historical operating results and the expectations of future earnings. The Company’s effective tax rate was different from the U.S statutory rate due to the following:
For the year ended December 31, 2007, the Company reduced its remaining FIN 48 liability of $5,760, as they settled all outstanding state income tax issues associated with the original recorded amount.
Effective January 1, 2006, the Company adopted the provisions of SFAS 123R, which replaced SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). SFAS 123R requires the Company to record compensation costs relating to share-based payment transactions in its financial statements. Under the fair value recognition provisions of SFAS 123R, share-based compensation cost is measured at the grant date based on the fair value of the liability awards and is recognized as expense ratably over the vesting periods. The fair value of the liability awards are
Providers in the original eight county area have the option to purchase one share of voting Class A Redeemable Common Shares of the Company. The area we refer to as our original eight county service area includes: Butler, Clermont, Hamilton and Warren counties in Ohio, and Boone, Campbell, Kenton and Pendleton counties in Kentucky. All participating providers along with Company directors and employees have the option to purchase one or more non-voting Class B Redeemable Common Shares of Company. Accordingly, prospective shareholders may make a subscription payment per share equal to the book value of a common share, which was $601 and $532 at
The Company’s providers who are also shareholders submitted claims of approximately $38,941,000, $36,972,000, and $33,476,000 in 2007, 2006 and 2005, respectively. The Company had claims payable liability to related party providers of approximately $2,047,000 and $3,508,000 at December 31, 2007 and 2006, respectively.