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Universal American Corp. (UAM)
Q1 2010 Earnings Call Transcript
April 30, 2010 10:00 am ET
Richard Barasch – Chairman and CEO
Martina Alisuag – Director, IR
Bob Waegelein – EVP and CFO
Tom Carroll – Stifel
Joshua Raskin – Barclays Capital
Carl McDonald – Oppenheimer
Daryn Miller – Goldman Sachs
Sushil Garg – Dowling & Partners
Justin Bowers – Deutsche Bank
Sarah James – Wedbush
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Thank you. Thank you. Good morning everyone. Thanks for joining us on our first quarter 2010 earnings conference call. I'm here with Bob Waegelein, our CFO and Martina Alisuag, our Director of Investor Relations. I'd like to ask Martina to read our Safe Harbor language.
Before we begin, I'd like to remind you that we have posted our presentation for this call on the investor section of our website, www.universalamerican.com. I would like to remind you that some of the information discussed during this conference call will constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements may include statements regarding the likelihood or effect of any legislative or regulatory changes; our expectations of the performance of our Medicare Advantage, Part D, Med Supp, and other lines of business; the estimation of loss ratios and lapsation; the adequacy of reserves; our ability to institute future rate increases; expectations regarding our Part D and Medicare Advantage programs, including our estimates of membership costs, revenues, future operating results, prior period adjustments. This is excess of our filing for new products, estimates of future membership and the risks inherent in these businesses; the identification of acquisition candidates; the completion, integration, or accretion of any acquisition transactions and the viability of any acquisition proposal.
Although we believe that the expectations reflected in these statements are based upon reasonable assumptions and estimates, we cannot give assurance that we will achieve the expected results. We also suggest that you review the most recent risk factors that we periodically file with the SEC. Richard?
Thanks Martina. This morning, Bob and I are going to spend some time describing the highlights of the first quarter and then move on to discussion about how universal American is positioned for the new environment. Finally, I'll talk about our prospects from the balance of 2010. As you saw it in the press release, we're affirming to $1.70 to $1.80 per share.
The company in the healthcare business and as American before we supported the aspiration for health care reform in our country and the extent to which the recently enacted legislation will provide need to changes to be subject of debate for a long time. In the meantime, we now have the basic rules of the road for our business and can get on with the task of managing our business through the coming changes.
Starting with slide three of the deck posted on our website, I’d like to reiterate that nothing in the enacted legislation diminishes the size of the task this country faces to pay for the increasing cost of health care, the rapidly growing and avidly consuming senior population.
Despite all the negative rhetoric we heard during the health care debate, we still see a huge roll for private insurers to be a part of this solution. To be successful in the long run, our products has offered a compelling value proposition for our members and to our partners in the government.
Embedded in many, many Medicare advantage plans, ours included, many of the same concepts enacted in the legislation. We are ready by definition bundling, we work with providers to create medical homes, many of our provider groups are already in fact accountable health organization and we have and are expanding paid for performance model that we think creates an appropriate alignment.
At the end of the day, we must be delivered – we must be able to deliver to our Medicare advantage care members, better healthcare solution and standalone Medicare and a less costly alternative to Medicare plus med stock [ph]. This can be achieved by bringing out the waste in the secret service system, the combination of technology and common sense cost controls and appropriately compensating our providers and keeping our members healthy and delivering better and more cost effective out comes.
We're doing this successfully in our HMOs for our healthy collaboration model in which we work closely with physicians and members to promote better health outcomes and control medical cost. We’re confident that we can deliver similar value to our new network and rural members as well, even in the lower reimbursement environment. As you can see from the chart on slide four, we have the size and scale of Medicare to manage through the coming changes.
Now, let's turn to our financial results on slide five. Even though, we're focused on the affect of reform, we believe there are consistent financial results to provide a solid foundation upon which we can approach the new environment. Bob, do you want to go through some of the details, please.
Sure, Richard. We reported a net income of $1.5 million for the quarter, a Medicare advantage segment provided solid results of the quarter earning $47.5 million which included around $16 million in prior period items. Our membership is up 23% from March of 2009, generating 785 million in revenue for the quarter with an adjusted MBR of 84.4%, right in the middle of our expectations.