9, 2006 — Grand Prairie, Texas — 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.
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.
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
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
“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 Entrée 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 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.
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 www.precis-pcis.com, and
About Insurance Capital
Management USA Inc. and Insuraco USA, L.L.C.
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 www.icmusa.com.
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.
Tables on Following Page
Consolidated Statement of Operations and Balance Sheet Data
(Dollars in Thousands,
Except Per Share Amounts)
For the Three Months Ended
For the Nine Months Ended
Statement of Operations Data:
Product and service
Operating (loss) income
(Loss) earnings before
(Benefit) provision for
Net (loss) earnings
from continuing operations
Net (loss) earnings
applicable to shareholders
applicable to shareholders per share: