Precis, Inc. Announces Third Quarter Results and Executes Agreement to Merge With Insurance Capital Management
November 09 2006 - 4:00PM
PR Newswire (US)
GRAND PRAIRIE, Texas, Nov. 9 /PRNewswire-FirstCall/ -- Precis, Inc.
(NASDAQ:PCIS), a provider of access to affordable healthcare
services to the ever growing number of uninsured and/or
underinsured in the United States, reported its financial results
for the third quarter ended September 30, 2006. Precis also
announced that it has entered into an Agreement and Plan of Merger
with Insurance Capital Management USA Inc. ("ICM"). Financial
Results For the quarter, the company reported revenue from
continuing operations of $5.3 million, compared to $7.2 million
during the comparable quarter in 2005; a decrease of 26% from the
comparable quarter last year; and a sequential decrease of $0.3
million or 6% from the previous quarter. The company reported a net
loss from continuing operations for the quarter of $185,000, or
$0.01 per diluted share, compared to net earnings from continuing
operations of $239,000 or $0.02 per diluted share, for the
comparable quarter in 2005. The company's operations used net cash
of $293,000 during the quarter. The majority of that usage was
attributable to the operating loss. However, the company ended the
quarter with $6.6 million of cash and no debt. The company is still
expecting to receive a refund of previously paid franchise taxes of
$350,000 related to a successful redetermination of the manner in
which it should be assessed Texas franchise taxes that was reported
in last quarter's results. The company continued to experience
declining revenue in its consumer healthcare services segment due
to declining memberships in its programs. The company expects to
introduce new consumer healthcare savings programs, as well as new
marketing initiatives, in early 2007 in conjunction with its
merger-acquisition of ICM. Merger Agreement Precis has executed an
Agreement and Plan of Merger with ICM. Through its subsidiary
Insuraco USA, L.L.C., ICM provides web-based technology and
specialty products that enable insurance companies to improve their
product distribution and marketing. Its operations principally
comprise the sale and marketing of individual health insurance
products and related benefit plans, primarily through a broad
network of independent agency channels in three markets: * Major
medical / individual health insurance * Senior health insurance /
managed care * Specialty medical and benefit plans for affinity
groups, associations, employer groups and other groups ICM was
founded by Peter W. Nauert, the former CEO of Ceres Group, Inc. and
Pioneer Financial Services, both publicly-held companies in the
insurance industry. Upon completion of the merger of ICM into
Precis, Mr. Nauert will be named CEO of the combined company. Under
the terms of the transaction, the shareholders of ICM will receive
shares of Precis common stock in exchange for their shares of ICM
and ICM will merger into Precis. The number of shares to be issued
will depend on ICM's adjusted earnings before interest, tax,
depreciation, and amortization. If ICM records at least $1,250,000
of such cumulative earnings over four consecutive calendar quarters
ending on or before December 31, 2007, the shareholders of ICM will
receive 6,756,382 shares of Precis' common stock, the maximum that
can be issued under the Merger Agreement. Assuming ICM achieves
such earnings, on a post-merger basis Precis' current shareholders
will own approximately 67% of Precis and ICM's shareholders will
own approximately 33%. The combination of Precis and ICM will
provide consumers with a full range of insurance and non-insurance
products that represent affordable solutions to access the
healthcare they need. The combined companies will have a
significantly greater portfolio of products and the opportunity to
grow into new markets. "Since our mid-June announcement of our
letter of intent to acquire ICM and Insuraco, we have worked
diligently to bring this transaction to fruition. We believe we can
leverage across both companies to grow our distribution channels,
offer a wider range of consumer-directed health care products, and
improve our company's access to capital markets," said Nicholas J.
Zaffiris, the Chairman of the Board for Precis. "We are confident
that under the leadership of Peter W. Nauert as Precis' new CEO,
our potential to return to profitability will be greatly enhanced
and that the results of the merger will be accretive to earnings in
fiscal 2007." Mr. Zaffiris continued, "Once our preliminary proxy
statement is reviewed and completed, a definitive proxy statement
will be mailed to our stockholders to vote on the approval of the
merger. At that meeting, we will also ask shareholders to approve
an amendment to our Certificate of Incorporation to change our name
to Access Plans USA, Inc. to more accurately reflect the mission of
our combined companies. We look forward to our annual shareholder
meeting and encourage shareholders to read the proxy statement
carefully when it becomes available because it will contain
important information about the merger, and other matters." "I
believe that the combination of ICM's strong distribution channels,
product development capabilities and electronic sales platform with
Precis' Care Entree and Access HealthSource divisions represents a
significant opportunity for the combined companies to be a powerful
force in a rapidly changing healthcare marketplace. Both Precis and
ICM are passionate about building on their respective capabilities
and are committed to improving shareholder value, delivering
innovative products using cutting-edge platforms, and providing
excellent customer service," said Peter W. Nauert, founder and CEO
of ICM and Insuraco. Other matters to be voted upon by Precis'
shareholders include the election of five directors, amendments to
its 2002 Non-Employee Stock Option Plan, and ratification of the
appointment of its public accounting firm. Stockholders will be
able to obtain free copies of the proxy statement and other
documents filed with the SEC by Precis through the SEC's web site
at http://www.sec.gov/. In addition, stockholders will be able to
obtain free copies of the proxy statement from the Precis web site
at http://www.precis-pcis.com/. Precis expects that the meeting of
its shareholders will take place at 10:00 a.m. on December 29,
2006, but that date is subject to change in the event that its
final proxy statement is not completed in time for adequate notice
to be given to its shareholders. Precis will discuss these results
in a conference call scheduled for today at 4:00 p.m. Eastern.
Interested parties can access the call by dialing (877) 858-9308
(domestic) or (706) 643-0580 (international) or by accessing the
web cast at http://www.precis-pcis.com/ir/IRindex.html. A replay of
the call will be available at (800) 642-1687 (domestic) or (706)
645-9291 (international), access number 1470878, for 3 days
following the call and the web cast can be accessed at
http://www.precis-pcis.com/ir/IRindex.html for 30 days. About
Precis, Inc. Precis, Inc. and its subsidiaries provide affordable
consumer driven health care solutions as alternatives to
traditional health insurance. The companies market non-insurance
health care savings programs, and offer third party claims
administration, provider network management, and utilization
management services for employer groups that utilize partially self
funded strategies to finance their employee benefit programs. For
more information on Precis and its subsidiary Access
Administrators, visit http://www.precis-pcis.com/, and
http://www.accesshealthsource.com/, respectively. About Insurance
Capital Management USA Inc. and Insuraco USA, L.L.C. Insurance
Capital Management USA, Inc. (ICM) and its wholly owned subsidiary
Insuraco USA, L.L.C. provide web-based technology, specialty
products and marketing for insurance and financial services. ICM's
team of sales, marketing and technology professionals enable
insurance, healthcare and financial service companies to improve
their product distribution and marketing. ICM utilizes web-based
technology, its nationwide agent distribution and direct call
center programs to provide superior customer and marketing support.
For more information, go to http://www.icmusa.com/. Disclaimer
Certain statements included in this news release constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Certain, but not
necessarily all, of such forward-looking statements can be
identified by the use of forward-looking terminology such as
"anticipate", "believes", "expects", "may", "will", or "should", or
other variations thereon, by discussions of strategies that involve
risks and uncertainties. Precis Inc.'s actual results or industry
results may be materially different from any future results
expressed or implied by such forward-looking statements. Factors
that could cause actual results to differ materially include
general economic and business conditions; Precis Inc.'s ability to
implement its business strategies; competition; availability of key
personnel; increasing operating costs; unsuccessful promotional
efforts; changes in brand awareness; acceptance of new product
offerings; retention of members and independent marketing
representatives; and changes in, or the failure to comply with,
government regulations. The Company undertakes no obligation to
update any forward-looking statements or to make any other
forward-looking statement, whether as a result of new information,
future events, or otherwise. Contact: Bob Bintliff Joe Diaz Chief
Financial Officer Lytham Partners, LLC Precis, Inc. 602-889-9660
972-343-6501 Nancy Zalud Annemarie Marek Senior Vice President
Marek & Company Insurance Capital Management USA Inc.
469-235-2166 817-820-2125 Precis, Inc. Condensed Consolidated
Statement of Operations and Balance Sheet Data (Dollars in
Thousands, Except Per Share Amounts) For the Three Months For the
Nine Months Ended Ended September 30, September 30, 2006 2005 2006
2005 Statement of Operations Data: Product and service revenues
$5,315 $7,200 $17,085 $23,466 Total operating expenses 5,615 6,940
17,443 34,212 Operating (loss) income (300) 260 (358) (10,746)
(Loss) earnings before income taxes (205) 320 (99) (10,647)
(Benefit) provision for income taxes (20) 81 (485) 19 Net (loss)
earnings from continuing operations (185) 239 386 (10,666) (Loss)
from discontinued operations -- (109) (789) (81) Net (loss)
earnings applicable to shareholders $(185) $130 $(403) $(10,747)
(Loss) earnings applicable to shareholders per share: Basic:
Continuing operations $(0.01) $0.02 $0.03 $(0.87) Discontinued
operations $-- $(0.01) $(0.06) $(0.01) Diluted: Continuing
operations $(0.01) $0.02 $0.03 $(0.87) Discontinued operations $--
$(0.01) $(0.06) $(0.01) September 30, December 31, 2006 2005
Balance Sheet Data: Cash and cash equivalents $6,612 $6,261 Working
capital $4,738 $4,692 Total assets $27,276 $30,864 Total
liabilities $6,694 $10,500 Stockholders' equity $20,582 $20,364
DATASOURCE: Precis, Inc. CONTACT: Bob Bintliff, Chief Financial
Officer of Precis, Inc., +1-972-343-6501; or Joe Diaz of Lytham
Partners, LLC, +1-602-889-9660, for Precis, Inc.; or Nancy Zalud,
Senior Vice President of Insurance Capital Management USA Inc.,
+1-817-820-2125; or Annemarie Marek of Marek & Company,
+1-469-235-2166, for Precis, Inc. Web site:
http://www.precis-pcis.com/
http://www.precis-pcis.com/ir/IRindex.html
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