HealthMarkets, Inc.

CIK:0000773660|SEC Filings

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
REVENUE
Health premiums	$ 457,216	$ 543,092	$ 735,538
Life premiums and other considerations	1,525	1,565	1,913
Net Earned	458,741	544,657	737,451
Investment income	23,852	28,028	42,246
Commissions and other income	85,883	83,570	76,906
Net impairment losses recognized in earnings	0	0	(765)
Realized gains (losses), net	(199)	8,942	5,815
Total revenue	568,277	665,197	861,653
BENEFITS AND EXPENSES
Benefits, claims, and settlement expenses	322,635	359,424	366,644
Underwriting, acquisition, and insurance expenses (includes amounts paid to related parties of $2,175, $512, $517 in 2012, 2011 and 2010, respectively)	70,982	96,703	160,740
Other expenses, (includes amounts paid to related parties of $16,182, $15,343 and $21,412 in 2012, 2011 and 2010, respectively)	168,673	163,540	209,070
Interest expense	12,638	22,082	30,082
Total benefits and expenses	574,928	641,749	766,536
Income (loss) from continuing operations before income taxes	(6,651)	23,448	95,117
Federal income tax expense	604	9,701	36,477
Income (loss) from continuing operations	(7,255)	13,747	58,640
Income from discontinued operations, (net of income tax expense of $172, $43, and $36 in 2012, 2011 and 2010, respectively)	321	79	66
Net income (loss)	$ (6,934)	$ 13,826	$ 58,706
Basic earnings (loss) per share:
Income (loss) from continuing operations	$ (0.24)	$ 0.45	$ 1.97
Income from discontinued operations	$ 0.01	$ 0.00	$ 0.00
Net income (loss) per share, basic	$ (0.23)	$ 0.45	$ 1.97
Diluted earnings (loss) per share:
Income (loss) from continuing operations	$ (0.24)	$ 0.44	$ 1.91
Income from discontinued operations	$ 0.01	$ 0.00	$ 0.00
Net income (loss) per share, diluted	$ (0.23)	$ 0.44	$ 1.91

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Activities
Net income (loss)	$ (6,934)	$ 13,826	$ 58,706
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Loss from discontinued operations	(321)	(79)	(66)
Realized (gains) losses, net	199	(8,942)	(5,050)
Change in deferred income taxes	1,830	(2,157)	1,668
Depreciation and amortization	13,735	17,203	23,219
Amortization of prepaid monitoring fees	12,500	12,500	15,000
Equity based compensation expense	8,675	7,787	18,180
Other items, net	4,550	7,620	14,737
Changes in assets and liabilities:
Investment income due and accrued	(1,569)	1,717	1,720
Reinsurance recoverable - ceded policy liabilities	(7,173)	104	(1,938)
Other receivables	(1,772)	10,269	(4,396)
Deferred acquisition costs	1,185	10,189	18,560
Prepaid monitoring fees	(12,500)	(12,500)	(15,000)
Change in current income tax payable	(6,936)	3,853	14,436
Policy liabilities	(37,848)	(31,181)	(147,017)
Other liabilities, accounts payable and accrued expenses	(8,434)	(7,890)	(26,130)
Cash provided by (used in) continuing operations	(40,812)	22,319	(33,371)
Cash used in discontinued operations	(231)	(9)	(112)
Net cash provided by (used in) operating activities	(41,043)	22,310	(33,483)
Securities available for sale
Purchases	(17,608)	(8,632)	(38,078)
Sales	6,878	161,997	138,777
Maturities, calls and redemptions	79,659	104,237	83,318
Student loan receivables	7,521	8,084	8,640
Short-term and other investments, net	352,963	(254,004)	(1,033)
Purchases of property and equipment	(5,165)	(7,156)	(9,542)
Net cash (out flow) proceeds from acquisition and disposition of subsidiaries	2,100	0	(45)
Acquisition of business	(6,065)	0	0
Change in restricted cash	(1,041)	(1,277)	(1,337)
Increase in agent receivables	(286)	(3,788)	(9,480)
Net cash provided by (used in) investing activities	418,956	(539)	171,220
Financing Activities
Repayment of student loan credit facility	(7,600)	(8,600)	(8,700)
Repayment of term loan	(362,500)	0	0
Change in cash overdraft	(2,607)	(159)	(6,804)
Decrease in investment products	(1,360)	(1,414)	(4,514)
Excess tax benefits from equity-based compensation	0	(793)	(1,123)
Proceeds from shares issued to agent plans and other	4,945	4,294	7,044
Purchases of treasury stock	(10,563)	(10,597)	(9,718)
Dividends paid to shareholders	0	0	(118,454)
Other financing activity	(78)	(77)	0
Net cash used in financing activities	(379,763)	(17,346)	(142,269)
Net change in cash and cash equivalents	(1,850)	4,425	(4,532)
Cash and cash equivalents at beginning of period	17,299	12,874	17,406
Cash and cash equivalents at end of period in continuing operations	15,449	17,299	12,874
Supplemental disclosures of cash flow information:
Interest paid (exclusive of the student loan credit facility)	12,943	18,511	27,594
Interest paid under the student loan credit facility	0	0	0
Federal income taxes paid, net of refunds	$ 5,881	$ 8,841	$ 21,532

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Securities available for sale -
Fixed maturities, at fair value (cost: 2012 - $325,436; 2011 - $394,948)	$ 365,094	$ 428,199
Short-term and other investments	271,597	626,415
Total investments	636,691	1,054,614
Cash and cash equivalents	15,449	17,299
Student loan receivables	41,891	50,733
Restricted cash	15,488	14,447
Investment income due and accrued	4,586	4,007
Reinsurance recoverable - ceded policy liabilities	370,312	363,139
Agent and other receivables	21,801	21,416
Deferred acquisition costs	13,454	14,639
Property and equipment, net	33,546	37,466
Goodwill and other intangible assets	83,514	80,255
Recoverable federal income taxes	6,526	0
Other assets	14,859	13,478
Assets held for sale	0	2,100
Total assets	1,258,117	1,673,593
Policy liabilities:
Future policy and contract benefits	462,099	473,163
Claims	89,841	94,743
Unearned premiums	22,990	27,523
Other policy liabilities	15,458	34,167
Accounts payable and accrued expenses	23,234	30,852
Other liabilities	57,111	57,107
Current income taxes payable	0	410
Deferred income taxes payable	73,153	68,881
Debt	190,920	553,420
Student loan credit facility	52,450	60,050
Net liabilities of discontinued operations	934	1,486
Total liabilities	988,190	1,401,802
Commitments and Contingencies (Note 16)
Stockholders' Equity:
Preferred stock, par value $0.01 per share - authorized 10,000,000 shares, none issued	0	0
Common Stock, Class A-1, par value $0.01 per share - authorized 90,000,000 shares, 28,096,278 issued and 27,836,809 outstanding at December 31, 2012 and 90,000,000 shares, 28,156,278 issued and 27,851,301 outstanding at December 31, 2011. Class A-2, par value $0.01 per share - authorized 20,000,000 shares, 4,026,104 issued and 2,753,465 outstanding at December 31, 2012 and 20,000,000 shares, 4,026,104 issued and 2,776,985 outstanding at December 31, 2011;	321	322
Additional paid-in capital	50,616	50,535
Accumulated other comprehensive income	26,373	21,838
Retained earnings	207,919	214,853
Treasury stock, at cost (259,469 Class A-1 common shares and 1,272,639 Class A-2 common shares at December 31, 2012; 304,977 Class A-1 common shares and 1,249,119 Class A-2 common shares at December 31, 2011)	(15,302)	(15,757)
Total stockholders' equity	269,927	271,791
Total liabilities and stockholders' equity	$ 1,258,117	$ 1,673,593