The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The auditors' report states, "the Company's recurring losses from operations, cash used in operations, shareholders' deficiency, failure to achieve the minimum statutory equity requirements of the State of New York Insurance Department and failure to maintain the minimum risk based capital requirements of the State of Connecticut Insurance Department raise substantial doubt about its ability to continue as a going concern." (See Consolidated Financial Statements).
WellCare's principal source of revenue is premiums earned from the WellCare HMOs. Other revenue consists principally of interest income. Premiums earned represented 97.0% of the Company's total revenue for the year ended December 31, 2000.
The results of operations depend significantly on the Company's ability to predict, quantify and manage medical costs. Medical expenses consist of hospital charges, physician fees and related health care costs for its members. Medical expenses also include estimates for medical services incurred but not yet reported ("IBNR") to the Company, based on a number of factors, including hospital admission data and prior claims experience; adjustments, if necessary, are made to medical expenses in the period the actual claims costs are ultimately determined. A daily inventory of hospital days and patient stays by product line is maintained by medical management.
The Company believes that the process of trending the ultimate resolution of paid, payable, and pended claims allows the Company to analyze trends and changes in payments and utilization patterns and, therefore, react to medical costs on a proactive versus a reactive basis. Although the Company continues to improve the IBNR reserve process, and believes the IBNR estimates at the December 31, 2000 are adequate, there can be no assurance that IBNR reserve currently recorded will be sufficient to cover medical expenses ultimately incurred.
The Company seeks to control medical expenses through capitation arrangements with the Alliances/IPAs and with non-Alliance/IPA primary care physicians, capitation arrangements with certain specialty providers, and, through its quality improvement programs, utilization management. The Company also conducts reviews of hospital inpatient and outpatient services, and educational programs on effective managed care for its providers.
Year Ended December 31, ------------------------------------ 2000 1999 1998 -------- -------- -------- Revenue: Premiums earned 97.0% 98.2% 98.8% Interest and other income 3.0 1.8 1.2 -------- -------- -------- Total revenue 100.0 100.0 100.0
Expenses: Hospital services 30.9 33.6 29.2 Physician services 42.9 52.5 57.9 Other medical services 14.7 4.4 2.6 -------- -------- -------- Total medical expenses 88.5 90.5 89.7
(1) Total medical expenses as a percentage of premiums earned; reflects the combined rates of Commercial, Medicaid, Full Risk Medicare and Medicare supplemental members. Medical expenses in 1998 include $730,216 of interest expense relating to "Prompt Pay" payments. (2) General and administrative expenses as a percentage of total revenue.
MEDICAL EXPENSES. Medical expenses decreased $32.2 million from $101.8 million in 1999 to $69.6 million in 2000, a decrease of 31.6%. This decrease was primarily the result of a decrease in membership. Medical expenses as a percentage of premiums earned (medical expense ratio), decreased slightly from 92.1% in 1999 to 91.2% in 2000.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased approximately $4.9 million, or 80.9%, primarily because the Company has disposed the majority of its fixed assets and sold its WCNY's Commercial books of business to GHI. Interest expense increased 106.1% to $3.6 million due to the subordinated convertible debt inducement (see Business-Business Developments).
EXTRAORDINARY GAIN. Extraordinary gain of approximately $18.3 million consists of claims settlement income. The claims settlement income resulted from settlement of commercial claims at forty-five percent of the accrued settlement amounts incurred prior to May 1, 1999.
As part of the Company's plan to bring its net worth into compliance with the State of New York's and the State of Connecticut's requirements, $0.8 million and $4.4 million was infused into the Company during 2000 as notes payable from WellCare Management Group, Inc. and Comprehensive Health Management, Inc., ("CHMI") an affiliate of the majority shareholder, respectively. An additional $750,000 note payable from Comprehensive Health Management of Florida, L.C., an affiliate of the majority shareholder, was infused in March 2001. The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The auditors' report on the Company's 2000 consolidated financial statements states that "the Company's recurring losses from operations, working capital deficit, shareholders' deficiency, failure to achieve the minimum statutory equity requirements of the State of New York Insurance Department and failure to maintain the minimum risk based capital requirements of the State of Connecticut Insurance Department raise substantial doubt about its ability to continue as a going concern." The Company continues to explore the possibility of raising funds through available sources including but not limited to the equity and debt markets. It is uncertain that the Company will be successful at raising funds through these sources.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements", which provided guidance related to revenue recognition based on interpretations and practices followed by the SEC. SAB No. 101 was effective for the Company'' fourth quarter 2000, and required the Company to report any changes in revenue recognition as a cumulative change in accounting principle at the time of implementation. The Company is in compliance with the provisions of SAB No. 101, and adoption of the provisions did not have an impact on the Company's consolidated financial statements.
Schedule I - Condensed Financial Information of the Registrant 55 Schedule II - Valuation and Qualifying Accounts 58
To the Board of Directors and Shareholders of WellCare Management Group, Inc.
We have audited the accompanying consolidated balance sheet of WellCare Management Group, Inc. and subsidiaries (the "Company") as of December 31, 2000, and the related consolidated statements of operations, shareholders' deficiency, and cash flows for the year ended December 31, 2000. Our audit also included the financial statement schedules for the year ended December 31, 2000 listed in the Index at Item 14 (a) 2. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audit. The financial statements of the Company for the year ended December 31, 1999 were audited by other auditors whose report, dated April 12, 2000, on those statements included an explanatory paragraph that expressed a going concern opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2000, and the results of their operations and their cash flows for the year ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 16 to the consolidated financial statements, the Company's recurring losses from operations, working capital deficit, shareholders' deficiency, failure to achieve the minimum statutory equity requirements of the State of New York Insurance Department, and failure to maintain the minimum risk based capital requirements of the State of Connecticut Insurance Department raise substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 16. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 16 to the consolidated financial statements, the Company's recurring losses from operations, working capital deficit, shareholders' deficiency and failure to maintain 100% of the contingent reserve requirement of the New York State and Connecticut State Departments of Insurance raise substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 16. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In $ Thousands)
The Wellcare Management Group, Inc. ("WellCare" or the "Company"), a New York corporation, owns, operates and provides management services to health maintenance organizations ("HMO"). An HMO is an organization that accepts contractual responsibility for the delivery of a stated range of health care services to its members for a predetermined, prepaid fee.
Well Care Administration, Inc. ("WCA") (formerly Agente Benefit Consultants, Inc. ("ABC")) is a wholly-owned subsidiary that administered the Company's pharmacy, vision care, dental care and other specialty care benefit programs as stand-alone products to self-insured employer and other groups until June 1999. WCA was rendered inactive after June 1999 as the Company's pharmacy, vision care, dental care and other specialty care benefit programs were contracted with third party venders and was subsequently dissolved in October 2000.
Well Care Development, Inc. ("WCD") is a wholly-owned subsidiary formed to acquire, own and develop real estate. WCD was rendered inactive as of June 1999 and was subsequently dissolved in October 2000.
In June 1999, Kiran C. Patel, M.D. ("Dr. Patel"), the principal owner of Well Care HMO, Inc., a Florida corporation, an entity unrelated to WellCare, purchased a fifty-five (55%) percent ownership interest in the Company for $5.0 million (the "Patel Transaction"). As part of the purchase transaction, Dr. Patel received 100,000 shares (the "Shares") of a newly authorized series of senior convertible preferred stock ("Series A Convertible Preferred Stock"), which provided Dr. Patel with 55% of WellCare's voting power. The preferred stock was subject to mandatory conversion into common stock upon the amendment of WellCare's certificate of incorporation to increase the number of authorized shares of common stock from 20 million shares to 75 million shares. Due to the excess of the fair value of the underlying common stock, which totaled approximately $8 million over the purchase price, the Company recorded a deemed dividend on the preferred stock totaling approximately $3 million. For financial statement purposes, the issuance of the common stock in exchange for the preferred stock has been reflected as of December 31, 1999, however, the physical transfer took place in April 2000. The shares are subject to anti- dilution rights, whereby upon conversion Dr. Patel will generally preserve his 55% interest in WellCare until there are 75 million shares of common stock issued and outstanding. In order to preserve his 55% interest, Dr. Patel will be required to pay the par value ($0.01 per share) for each common share subsequently purchased.
In June 1999, Group Health Incorporated ("GHI") purchased WCNY's commercial business, consisting mainly of other assets and goodwill associated with member lives, for approximately $5.0 million (the "GHI Transaction"). During 1999, the Company recorded a gain of $352,000 in connection with the sale. As stipulated and agreed upon in the GHI transaction, WellCare and WCNY will not engage in commercial HMO business in New York for a period of one year from the June 1, 1999 closing date.
RESTRICTED CASH - Restricted cash includes amounts in escrow with a provider and statutory cash reserve requirement of the State of New York Insurance Department.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates the recoverability of the net carrying value of its property and equipment, and other long-lived assets by comparing the carrying values to the estimated future undiscounted cash flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The impairment write-down would be the difference between the carrying amounts and the fair value of these assets. Impairment would be recognized by a charge to operations.
CONCENTRATIONS OF CREDIT RISK - Financial instruments, which potentially subject the Company to concentration of credit risk consist principally of cash equivalents and receivables. The Company limits the amount of credit exposure to each individual financial institution and places its temporary cash into investments of high credit quality. Concentrations of credit risk with respect to premium receivables are limited, as the majority of the Company's business is generated from government sponsored programs. As of December 31, 2000 and 1999, management believes that the Company had no significant concentrations of credit risk.
USE OF ESTIMATES - The preparation of the consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
REINSURANCE - The WellCare HMOs insure excess loss for health care claims under policies with a reinsurance company. Under the excess loss reinsurance policies, recoveries are made for annual claims of each member in excess of the deductible established in the policies subject to certain limitations. The Company's deductibles were $85,000 for the FirstChoice lines of business and $115,000 and $100,000 for WCNY's Medicaid and Medicare lines of business, respectively, during fiscal years 2000, 1999, and 1998.
ADVERTISING COSTS - Advertising costs, which include costs for certain marketing materials and development/implementation of public relations and marketing campaigns, are expensed as incurred.
RECLASSIFICATION - Certain amounts in the 1999 and 1998 consolidated financial statements have been reclassified to conform to the 2000 presentation.
NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends upon the intended use of the derivative and resulting designation. In July 1999, FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133, which postponed the effective date of the SFAS No. 133 for one year. In June 2000, FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, and amendment to SFAS No. 133. The Company adopted SFAS 133 on January 1, 2001. The adoption of SFAS No. 133 did not have a material impact on the Company's financial position or results of operations.
December 31, -------------------------- 2000 1999 ------------ ------------ Receivable from third-party insurers $ 40 $ 120 Reinsurance receivable 102 245
New York State Pools receivable - 543 Pharmacy rebate receivable 125 - Insurance claims receivable - 218 Other 524 489 ------------ ------------ Total other receivable $ 791 $ 1,615 ============ ============
Depreciation expense for the years ended December 31, 2000, 1999, and 1998 were $420,000, $1,147,000, and $3,624,000, respectively.
December 31, -------------------------- 2000 1999 ------------ ------------ Balance, beginning of year $ 14,386 $ 26,404 Total incurred related to: Current year 69,840 97,429 Prior year (286) 4,369 ------------ ------------ Total incurred 69,554 101,798 Paid and settled related to:
The liability for accrued medical costs payable includes management's estimate of amounts required to settle known claims, claims in the process of adjudication, and estimated claims incurred but not reported.
The significant components of deferred taxes were as follow (in $ thousands):
The Company has net operating loss ("NOL") carryforwards in the amount of approximately $70,000,000 expiring through 2020. Of this amount, approximately $37,900,000 of NOL carryforward has been limited by imposition of Section 382 of the Internal Revenue Code due to a change in the Company's ownership in 1999. The ability to realize the tax benefits associated with deferred tax assets and NOLs is reliant upon the Company's ability to generate future taxable income from operations and/or to effectuate successful tax planning strategies. Although management believes that profitable operations may be achieved in the future, in view of their size and length of the expected recoup period, the Company provided a 100% valuation allowance in both 2000 and 1999 with respect to the deferred tax assets for 2000 and 1999 respectively.
Options exercisable at year end 573,429 580,964 463,005 Weighted average fair value of Options granted during the year $ - $ 0.25 $ -
At December 31, 2000, there were 4,002,000 options outstanding, of which 573,429 options were exercisable, with a weighted average exercise price of $0.375 per share and a weighted average remaining contractual life of nine years.
Options exercisable at year end - 200,000 Option price per share - $4.00-$6.25
December 31, ---------------------------- 2000 1999 1998 -------- -------- -------- Net loss available to common shareholders: As reported $ (4,879) $ (1,435) $(30,858) Pro forma (4,928) (1,695) (33,272)
Net loss available to common shareholders per share - basic and diluted: As reported $ (0.13) $ (0.09) $ (4.36) Pro forma (0.13) (0.11) (4.70)
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted- average assumptions used for grants in 2000, 1999, 1998, respectively: expected volatility of 131.0%, 45.8%, and 144.1%; expected lives of 7.0, 3.0, and 3.7 years; and risk-free interest rate of 4.0%, 6.0%, and 7.0%. Additionally, in each year, the dividend yield was 0%.
Options to purchase 4,002,000, 4,009,535, and 598,741 shares of common stock were outstanding, but were not included in the computation of diluted Earnings Per Share ("EPS") at December 31, 2000, 1999, and 1998 respectively, due to their anti-dilutive effect.
The Company's common stock shares are subject to anti-dilution rights whereby upon conversion the majority shareholder will generally preserve his 55% interest in Wellcare until there are 75 million shares of common stock issued and outstanding. Accordingly, during a year when the Company is in a net income position, earnings per share could potentially be diluted by common stock shares totaling as much as 55% of 75 million shares less the number of shares outstanding at any given point in time.
The Company sponsored a retirement plan (the "Plan") designed to qualify under Section 401(k) of the Internal Revenue Code of 1986, as amended. All employees over age twenty-one (21) who have been employed by the Company for at least one year with one thousand (1,000) hours of service are eligible to participate in the plan. Employees may contribute to the plan on a tax - deferred basis generally up to 18% of their total annual salary. Under the plan, the Company makes matching contributions at the rate of 50% of the amount contributed by the employees up to a maximum of 2% of the employee's total annual compensation. The employer contributions are vested after five (5) years of service. The Company contributed approximately $0, $0, and $58,000 for 2000, 1999, and 1998, respectively. The Plan was terminated in May 2000 as all employees are paid by Comprehensive Health Management, Inc. ("CHM"), an affiliate of the majority shareholder, in accordance with contract specifications. Payroll expenses related to the Company's marketing employees are reimbursed to CHM and administrative employee payroll expenses are the responsibility of CHM.
WCNY and FirstChoice have entered into management agreements with Comprehensive Health Management, Inc. ("CHM"), a Company that was established by the majority shareholder to provide management, administrative services, and claims processing services to health maintenance organizations. During September 1999, WCNY and FirstChoice each executed a five-year management agreement with CHM to perform claims processing services, utilization review, payroll services, and most all of the administrative functions of the Company, excluding certain marketing functions. CHM is responsible for all the administrative employees' payroll and business expenses. Additionally, CHM is responsible for maintaining the claims related data processing equipment and software.
Management fees, net of asset purchases and excluded membership groups, for the years ended December 31, 2000 and 1999 were approximately $7,799,000 and $3,046,000, respectively, which were included in general and administrative expenses. At December 31, 2000, the Company owed CHM approximately $223,000. At December 31, 1999, CHM owed the Company approximately $799,000. As a result of the CHM management agreement, the Company's general and administrative expenses as a percentage of total revenue decreased from 20.1% in 1999, and to 17.0% in 2000.
Under the management services agreement, the Company is responsible for the direct salary cost of their marketing personnel. During 2000, CHM processed and paid the payroll for the Company's marketing personnel. The Company reimbursed CHM approximately $1,620,000 and $660,000 during 2000 and 1999, respectively related to these direct salary costs during the current year.
The Company's majority shareholder has provided financing to the Company through various cash infusions from related enterprises. During 2000, approximately $4.4 million in surplus notes were provided to the Company from enterprises controlled by the majority shareholder, which are due upon demand with interest accruing at 8.5% per annum. The cash infusions were primarily used by the Company to increase the statutory net equity of WCNY and FirstChoice during the year. See Note 7 for details.
2001 $ 184,117 2002 148,583 2003 137,003 2004 142,483 2005 97,488 Thereafter - --------- $ 709,674 =========
The Company is currently in negotiations with a former provider group regarding a number of outstanding and disputed claims. The total amount in dispute is estimated by Management to be less than $25,000. A formal response along with the detail of all disputed claims and their resolution have been submitted to the provider group. During 2000, the Company established an escrow account of $450,000 relating to this matter, which is included in restricted cash in the financial statements.
The Company is a party to service agreements with five IPA's owned by Primergy (the "Primergy IPA's"). Accordingly, the Settlement Agreement further required Primergy to pay $2 per member per month for the period commencing from August 31, 2000 to July 31, 2002 for members assigned to the Primergy IPA's. Such payment is guaranteed by Promedco Management Company. The Primergy IPA's contract period was reduced and currently will terminate on July 31, 2002. In 2000, the Company recognized approximately $118,000 in income pertaining to this settlement. Such amount is included in "Other Income - Net" in the 2000 financial statements.
The State of Connecticut Insurance Department requires that stipulated amounts of surplus be maintained at all times. FirstChoice must maintain a minimum net worth equal to the greater of: (A) $1,000,000; or (B) 2% of its annual premium revenues as reported on the most recent annual financial statement filed with the State of Connecticut Insurance Department on the first $150,000,000 of premium revenues plus 1% of annual premium revenues in excess of $150,000,000. At December 31, 2000 FirstChoice's statutory net worth was approximately $1.7 million, which was in compliance with the net worth requirement.
The Risk-Based Capital ("RBC") requirements for health care centers were adopted through a regulation promulgated by the Department effective January 31, 2000. The main purpose of the Regulation is to provide a tool for insurance regulators to evaluate the capital of insurers. FirstChoice filed a RBC report as of December 31, 2000 on March 1, 2001. This report disclosed that FirstChoice did not meet the minimum RBC requirements and triggered an Authorized Control Level ("ACL") event as defined in the regulation. An ACL event occurred since the Company's total adjusted capital was above the Mandatory Control Level ("MCL") but less than ACL RBC. The State of Connecticut Insurance Department may take regulatory action against the Company as a result of filing this RBC report, including but not limited to, placing the Company under regulatory control. As of May 25, 2001, the State of Connecticut Insurance Department has not taken any action.
FirstChoice underwent an examination for the period from March 1, 1995 to December 31, 1999 conducted by the State of Connecticut Insurance Department. The State of Connecticut Insurance Department issued a final report of examination on January 16, 2001, which resulted in an adjustment to statutory surplus of $1,659,447. These adjustments were comprised of approximately $1,000,000 relating to non-admitting various premium receivables and approximately $600,000 relating to the need for additional IBNR reserves. FirstChoice has reflected approximately $554,000 of additional medical expenses at December 31, 2000 for claims incurred prior to December 31, 1999. As a result of this, management believes that appropriate corrective action has been taken to address the findings of the examination report.
WCNY underwent an examination for the period from June 1, 1999 through September 30, 2000 conducted by the SNYID. The SNYID issued its report of examination findings on April 13, 2001, which stated that WCNY was insolvent in the amount of $1,465,680 its statutory minimum net worth requirement was impaired in the amount of $5,577,278 as of September 30, 2000. The Subsequent Events section of the report disclosed that $4,897,124 in cash was infused into the WCNY from October 1, 2000 through May 2, 2001 in the form of Section 1307 loans from Comprehensive Health Management, Inc. and Comprehensive Health Management of Florida, LLC, affiliated companies of the majority shareholder of WCMG. Management believes the cash infusion remedied the insolvency and capital impairment determined by the examination and reduced that statutory net worth impairment to $680,154 as of September 30, 2000. Additionally, during the exam certain recommendations were made by the SNYID to improve the Company's business processes. Management is currently reviewing and planning the implementation of these recommendations.
In March 1998, the National Association of Insurance Commissioners adopted the Codification of Statutory Accounting Principles (the Codification). The SNYID has adopted the Codification, with some modifications, through the adoption of Regulation 172. The purpose of the Codification is to enhance the consistency of the accounting treatment of assets, liabilities, reserves, income, and expenses of insurers, by setting forth the accounting practices and procedures to be followed in completing annual and quarterly financial statements required by law. The applicable modifications that will effect the preparation of the statutory financial statements for WCNY are as follows: 1) no limitation with respect to the amount of EDP Equipment to be admitted, with useful lives being recorded up to 10 years, 2) estimated Pharmaceutical Rebates may be included as admitted assets, and 3) unsecured Receivables from Health Care Providers are non-admitted, and include non-admitting deferred income taxes. The State of New York will require adoption of the Codification for the preparation of statutory financial statements effective January 1, 2001. The Company estimates that the adoption of the Codification will reduce statutory capital and surplus as of January 1, 2001 by approximately $1,200,000 for WCNY, which results in the failure of the Company to comply with statutory reserve requirements on January 1, 2001.
Over the next fiscal year, Management is focusing on its marketing efforts to increase membership of its Medicaid and Child Health Plus products. The Medicaid and Child Health Plus products have proven to be profitable in past years. Additionally, over the next fiscal year, Management is focusing on its newly acquired Medicaid book of business from HealthChoice. The Company currently is not marketing its Medicare products and does not intend to market these products in the near future. The Company also does not have plans to market its Commercial products. Additionally, the Company believes that it will be able to capitalize on the efficiencies in claims processing and administrative services through its management agreement with CHM. However, there is no assurance that the Company will be able to achieve its recovery plan.
In the event of a cash shortage, the Company will have to implement various cost cutting measures, including but not limited to reducing its work force and reducing commissions to brokers and agents. The Company may have to raise financing through external sources. However, resources for raising external capital are limited due to the Company's past history and the overall market sensitivity of the HMO business. The consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability of assets and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Effective October 1, 2000, FirstChoice closed on its transaction with HealthChoice of Connecticut, Inc., ("HealthChoice") to acquire the assets of HealthChoice's Medicaid line of business, known as PreferredOne for a purchase price of $1.00 (one dollar). With this acquisition, the Company increased its membership by approximately 24,000 members. The following table illustrates the proforma result if the Company had acquired this line of business as of January 1, 1999 (in thousands, except per share data):
(1) The acquired line of business's general and administrative expenses were adjusted using 11.5% of revenue under the management agreement with CHM, which resulted in savings of approximately $40,000.
(2) The acquired line of business's general and administrative expenses were adjusted using 11.5% of revenue under the management agreement with CHM, which resulted in savings of approximately $145,000.
The following schedule presents information about the Company's segments for the years ended December 31 (in thousands):
2000 1999 1998 ---------- ---------- ---------- Total Revenues: New York $ 57,415 $ 80,377 $ 133,717 Connecticut 20,304 29,003 9,668 Other 885 3,129 1,064 ---------- ---------- ---------- Total 78,604 112,509 144,449 ========== ========== ==========
Total Expenses: New York $ 59,567 $ 91,932 $ 148,460 Connecticut 23,622 30,579 10,151 Other 294 6,658 11,255 ---------- ---------- ---------- Total 83,483 129,169 169,866 ========== ========== ==========
Depreciation and Amortization: New York $ 398 $ 968 $ 3,646 Connecticut 17 27 7 Other 5 152 2,348 ---------- ---------- ---------- Total 420 1,147 6,001 ========== ========== ==========
Interest Expense: New York $ 174 $ - $ - Connecticut - - - Other - 3,565 1,730 ---------- ---------- ---------- Total 174 3,565 1,730 ========== ========== ==========
Capital Expenditures: New York $ 264 $ 56 $ 631 Connecticut 40 - - Other - - 26 ---------- ---------- ---------- Total 304 56 657 ========== ========== ==========
THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES Schedule I Condensed Financial Information of Registrant Condensed Balance Sheets (In Thousands)
THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES Schedule II Valuation and Qualifying Accounts For the years ended December 31, 2000, 1999, and 1998 (In Thousands)