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United American Healthcare Corporation Announces Fiscal 2009 Second Quarter Results

DETROIT, Feb. 5 /PRNewswire-FirstCall/ -- United American Healthcare Corporation (Nasdaq: UAHC), which owns and provides comprehensive management services to a managed care organization in Tennessee, today announced financial results for its fiscal second quarter ended Dec. 31, 2008.

Revenues decreased $2.2 million, or 32 percent, to $4.8 million for the second quarter ended Dec. 31, 2008, compared with revenues of $7.0 million for the second quarter of the prior fiscal year. The decline was primarily the result of the transfer of members from the Company's subsidiary, UAHC Health Plan of Tennessee (UAHC-TN), to other service providers on Nov. 1, 2008 in advance of the impending expiration of UAHC-TN's TennCare contract to serve Medicaid beneficiaries in the West Grand Region of Tennessee. Total expenses decreased $0.5 million, or 8 percent, to $6.2 million in the fiscal 2009 second quarter, compared with $6.7 million in the prior fiscal year's second quarter. For the second quarter of fiscal 2009, the Company reported a net loss of $1.4 million, or ($0.16) per basic share, compared with net income of $0.3 million, or $0.03 per basic share, in the comparable quarter a year ago. The loss was primarily due to the decrease in revenue, partially offset by a decrease in marketing, general and administrative expenses due to the impending expiration of UAHC-TN's TennCare contract.

For the first six months of fiscal 2009, revenues fell $1.9 million, or 15 percent, to $11.3 million, compared with $13.2 million for the first six months of fiscal 2008. The change in revenues was primarily caused by the transfer of UAHC-TN's TennCare enrollees to other providers on Nov. 1, 2008. Total expenses for the first six months of fiscal 2009 decreased $0.4 million, or 3 percent, to $12.4 million, compared with $12.8 million for the comparable period in the prior year. The expense reduction was the result of a $1.0 million decrease in marketing, general and administrative expenses, partially offset by an increase in medical expenses in the six months ended Dec. 31, 2008. As a result, the Company reported a net loss for the first half of fiscal 2009 of $1.2 million, or $0.13 per share, compared with net income of $0.3 million, or $0.04 per share, in the first half of fiscal 2008.

"We have largely completed the transition of our TennCare business to new managed care organizations, resulting in a sizable reduction in our revenue base," said William C. Brooks, president and CEO of United American Healthcare. "With lower revenues, our disciplined efforts to control expenses and conserve resources will be even more critical as we move closer to the expiration of UAHC-TN's TennCare contract on June 30, 2009."

UAHC-TN's Medicare Advantage "Special Needs Plan" (MA-SNP) business comprised 50 percent of the Company's total revenue in the fiscal 2009 second quarter. MA-SNP medical premiums revenues were $2.4 million, while medical expenses for MA-SNP decreased to $2.3 million. The percentage of such medical expenses to medical premiums revenues - the "medical loss ratio" - was 81.2% for the quarter. As of January 30, 2009, there were approximately 719 enrollees in UAHC-TN's Medicare Advantage Special Needs Plan.

The Company previously reported that on April 22, 2008, UAHC-TN learned that it will no longer have a TennCare contract to serve Medicaid beneficiaries in the West Grand Region of Tennessee when its current TennCare contract expires. UAHC-TN's TennCare contract represented 44.2 percent of the Company's total revenues for the fiscal 2009 second quarter. UAHC-TN's TennCare members transferred to other managed care organizations on Nov. 1, 2008. UAHC-TN will perform its remaining contractual obligations through its TennCare contract expiration date of June 30, 2009.

Management expects to incur substantial expenses related to the impending TennCare contract discontinuance. The net loss is estimated in the range of $4.6 million to $6.6 million, including claims processing costs, employee severance, lease termination costs and other general administrative expenses from November 2008 through June 2009. As a result of the contract discontinuance, the total number of employees of the Company was 29 at December 31, 2008, compared to 111 at December 31, 2007.

As of Dec. 31, 2008, United American Healthcare reported cash, cash equivalents and short-term marketable securities of $16.6 million, compared to $19.5 million as of June 30, 2008. The Company remains debt-free.

"We will continue managing prudently in this transition to the discontinuance of UAHC-TN's TennCare contract," concluded Brooks. "In the face of these immediate challenges, as well as the broader challenges in the overall economy, the Company's management team and board continue to take actions to reduce expenses and conserve cash until a final decision is made concerning the strategic options available to the Company."

Fiscal 2009 Second Quarter Conference Call

United American Healthcare Corporation will host a conference call at 4:30 p.m. Eastern Time today to discuss these results and current business trends. To access the live conference call, please dial 1-877-857-6167 and provide the conference passcode 8412524. A replay of the call will be available through Tuesday, April 28, 2009. To access the replay, please call 1-888-203-1112 and provide conference passcode 8412524.

Participation in the call's question-and-answer session will be limited to institutional investors and analysts. Individual investors and retail brokers are invited to listen via a live webcast. To listen, please go to the investor section of the Company's website at The webcast will be archived on the United American Healthcare website for 90 days from the date of the call.

About United American Healthcare Corporation

United American Healthcare Corporation (UAHC) is a full-service healthcare management company that pioneered the delivery of healthcare services to Medicaid recipients since 1985. UAHC owns and manages UAHC Health Plan, which is based in western Tennessee and includes the Memphis market. For more information, please visit the Company's web site at

United American Healthcare Corporation Safe Harbor Statement

Forward-looking statements by United American Healthcare Corporation, including those in this announcement, involve known and unknown risks, which may cause actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from expectations include, without limitation, the effects of state and federal regulations, the effects of acquisitions and divestitures, and other risks described from time to time in each of United American Healthcare's SEC reports, including quarterly reports on Form 10-Q, annual reports on Form 10-K, and reports on Form 8-K.

           United American Healthcare Corporation and Subsidiaries
                    (in thousands, except per share data)

                                        Three Months Ended  Six Months Ended
                                            December 31,       December 31,
                                           2008     2007      2008      2007

      Fixed administrative fees          $  1,173  $ 3,677  $  4,596  $  7,383
      Variable administrative fees            944      280       944       280
      Medical premiums                      2,395    2,707     5,257     4,789
      Interest and other income               274      384       482       784
        Total revenues                      4,786    7,048    11,279    13,236

      Medical expenses                      2,267    2,551     4,790     4,415
      Marketing, general and
       administrative                       3,692    4,089     7,331     8,280
      Depreciation and amortization            56       51       117        91
      Loss on disposal of fixed assets        135        -       135         -
        Total expenses                      6,150    6,691    12,373    12,786
    Earnings (loss) from operations
     before income taxes                   (1,364)     357    (1,094)      450
      Income tax expense                        -      101        80       121
        Net earnings (loss)              $ (1,364) $   256  $ (1,174) $    329

    Net earnings (loss) per common
     share - basic
      Net earnings (loss) per common
       share                             $  (0.16) $  0.03  $  (0.13) $   0.04
      Weighted average shares outstanding
                                            8,728    8,612     8,731     8,636
    Net earnings (loss) per common
     share - diluted
      Net earnings (loss) per common
       share                             $  (0.16) $  0.03  $  (0.13) $   0.04
      Weighted average shares
       outstanding                          8,728    8,778     8,731     8,797

           United American Healthcare Corporation and Subsidiaries
                   CONSOLIDATED BALANCE SHEETS (Unaudited)
                      (in thousands, except share data)

                                                       December 31,  June 30,
                                                           2008        2008
    Current assets
      Cash and cash equivalents                          $   6,025  $  10,713
      Marketable securities                                 10,624      8,774
      Accounts receivable - State of Tennessee, net          1,900      1,093
      Interest receivable                                      282        551
      Other receivables                                        318        374
      Prepaid expenses and other                               310        299
        Total current assets                                19,459     21,804

    Property and equipment, net                                211        472
      Marketable securities                                  7,618      7,514
      Restricted assets                                        421        421
      Other assets                                             586        586
      Total assets                                       $  28,295  $  30,797
    Liabilities and Shareholders' Equity
    Current liabilities
      Medical claims payable                             $   2,060  $   2,563
      Accounts payable and accrued expenses                  1,353      1,726
      Accrued compensation and related benefits                525        896
      Accrued rent                                             117         90
      Other current liabilities                                858      1,183
        Total current liabilities                            4,913      6,458

    Total liabilities                                        4,913      6,458

    Commitments and contingencies
    Shareholders' equity
      Preferred stock, 5,000,000 shares authorized;
       none issued
      Common stock, no par, 15,000,000 shares
       authorized; 8,689,520 and 8,734,214 issued
       and outstanding at December 31, 2008 and
       June 30, 2008, respectively                          18,499     18,558
    Paid in capital - stock options                          1,334      1,153
    Warrants                                                   444        444
    Retained earnings                                        3,087      4,261
    Accumulated other comprehensive income (loss), net
     of deferred federal income taxes                           18        (77)
      Total shareholders' equity                            23,382     24,339
        Total liabilities and shareholders' equity       $  28,295  $  30,797

SOURCE United American Healthcare Corporation
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