Metropolitan Health Networks, Inc. (MDF)
Q4 2007 Earnings Call
March 4, 2008 11:00 am ET
Michael Earley - Chairman and CEO
Robert Sabo – Chief Financial Officer
Roberto Palenzuela – General Counsel
Dan McCarthy – President of METCARE Health Plans, Inc.
Bob Leatherman – Hissup and Mammoth
Cole Zinger – Fundamental Management
Roth Stohoe – RBAC
Jeremy Hellman – Singular Research
Neil Myers – Bullpest Capital
Richard Weinstein – vFinance
Mark Dodd – Omni Capital
Ben Atkinson – Gagnon Securities
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Thank you, JD. Good morning. We are pleased to be discussing our fourth quarter and full year 2007 result. Thank you for joining us.
We issued the press release this morning outlining our earning. We anticipate that our annual report on Form 10-K to be filled by weeks end with the SEC. This call is being broadcast over this conference line and it is also available via the web as noted in our press release. It will be available after the call in recorded format to the conference service on our website. With me today are Robert Sabo, our Chief Financial Officer and Roberto Palenzuela, our General Counsel, Dan McCarthy who manages our HMO is also with us.
Before we get started, I would like Roberto to read our safe harbor statement.
Thanks Mike. In order to comply with the forward-looking statements of safe harbor, I want to advice that in addition to historical information, certain comments made during this conference call, particularly those that pertains future financial performance, business prospects and gross operating strategies constitute forward-looking statements within the meaning of Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Such statements maybe identified by words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “predict”, “hope”, or similar expressions, such statements which include estimated financial information or results are based on managements current expectation and are subject to a number of factor and uncertainties which could cause the actual results to differ materially from those described in the forward-looking statements, including without limitation, are failure to accurately estimate in current without reported medical benefit expenses.
Rising pressures inserted on us by managed care organizations and the level of payments we received under governmental programs or from other payers, future legislation and changes in governmental regulations, the impact of Medicare risks adjustments on payments we receive for our managed care operation, a loss of any of our significant contracts or our ability to increase the number of Medicare eligible patient lives we manage under this contract.
Our ability to successfully operate a health maintenance organization otherwise known as HMO and our ability to continuously increase enrollment and effectively manage expenses in our HMO as well as the risks and uncertainties described at the report filed by the company with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as amended, including without limitation, cautionary statements made in the company’s annual report on Form 10-K for the year ended December 31, 2006, its quarterly report on Form 10-Q for the quarter ended March 31, 2007, its quarterly report on Form 10-Q for the quarter ended June 30, 2007 and its quarterly report on Form 10-Q for the quarter ended September 30, 2007 and its annual report on Form 10-K for the year ended December 31, 2007 which is anticipated and be filed shortly.
Thanks Roberto. I cannot help but repeat my opening remarks when we last spoke in November. Our 2007 has been challenging for Metropolitan, its managers and employees and the shareholders. I believe today, the company is in the best position than it has ever been in. That was two to three months ago and it is our belief today.
It is not to say that we do not have our challenges, we do but we have worked very hard and made real progress in both growing and improving the operations of our Medicare HMO. There are still works to be done so we believe our increasing scale and experience are allowing us to meet those challenges.
In terms of financial risk, the HMO now presents a more stable and tolerable profile as we move into 2008. We will discuss these matters in more detail later in the call. Today, we are caring for approximately 33,000 people with Medicare, stock business generating annualized revenue of more than $300 million.
Our balance sheet is as strongest that it has ever been with working capital of $29 million and that will be evolved for $38 million. We have no long-term debt. We operate two businesses. Our core Provider Service Network or PSN business generating 80% of our revenues and the profits and cash flow that enable us to fund the development of our second business, our own Medicare advantage HMO which today has the membership approaching 7500.
Our PSN business had its best year ever in terms of profitability and cash flow in 2007. We believe that our relationship with Humana, its 26,000 members we provide care for is strongest that it has been in its 10 year history. We have expanded our relationship with Humana to include serving their cared flow subsidiary and nine Florida counties. That brings the total number of counties we conserve in our Humana business to 11.