APS Healthcare

Feb 28, 2017

(188.4 ) (1) 2016 amounts include earn-out revenues and litigation settlement, while 2015 amounts include initial loss on sale of APS Healthcare. Investment Portfolio As of December 31, 2016, Universal American had $356.0 million of cash and invested assets as follows: 50% is invested in U.S. Government and agency securities; The average credit quality of the investment portfolio is AA-; and Less than 1% of the investment portfolio is non-investment grade. A complete listing of our fixed income investment portfolio as of December 31, 2016 is available for review in the financial supplement located in the Investors – Financial Reports section of our website, www.UniversalAmerican.com . Balance Sheet and Liquidity As of December 31, 2016, Universal American’s Balance Sheet had the following characteristics: Unregulated cash and investments of $102.9 million; Total cash and investments were $356.0 million and total assets were $785.6 million, including $229.8 million in assets of discontinued operations; Total policyholder liabilities were $82.9 million and total liabilities were $516.2 million, including $237.8 million in liabilities of discontinued operations; Stockholders’ equity was $269.4 million and book value was $4.57 per diluted common share; Tangible book value per diluted common share (excluding accumulated other comprehensive income, goodwill and amortizing intangibles) was $3.39; $115 million of convertible senior notes with a carrying value of $96.5 million which bear cash interest of 4.0% per annum and an annual effective interest rate of 8.5%; and $40.0 million of mandatorily redeemable preferred stock, reported as a liability, with an annual dividend rate of 8.5%, which will mature in May 2017. As of December 31, 2016, the ratio of debt to total capital, excluding the effect of AOCI and including Universal American’s convertible senior notes and mandatorily redeemable preferred stock as debt, was 38.1%. Conference Call Given the pending transaction with WellCare, Universal American is not hosting a conference call in conjunction with this earnings release and does not expect to do so for future quarters. About Universal American Corp. Universal American (NYSE: UAM), through our family of healthcare companies, provides health benefits to people covered by Medicare. We are dedicated to working collaboratively with healthcare professionals, especially primary care physicians, in order to improve the health and well-being of those we serve and reduce healthcare costs. For more information on Universal American, please visit our website at www.UniversalAmerican.com . Forward Looking Statements This news release and oral statements made from time to time by our executive officers may contain "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. Such statements that are not historical facts are hereby identified as forward-looking statements and intended to be covered by the safe harbor provisions of the PSLRA and can be identified by the use of the words "believe," "expect," "predict," "project," "potential," "estimate," "anticipate," "should," "intend," "may," "will," and similar expressions or variations of such words, or by discussion of future financial results and events, strategy or risks and uncertainties, trends and conditions in our business and competitive strengths, all of which involve risks and uncertainties. Where, in any forward-looking statement, we or our management expresses an expectation or belief as to future results or actions, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Our actual results may differ materially from our expectations, plans or projections. We warn you that forward-looking statements are only predictions and estimates, which are inherently subject to risks, trends and uncertainties, many of which are beyond our ability to control or predict with accuracy and some of which we might not even anticipate. We give no assurance that we will achieve our expectations and we do not assume responsibility for the accuracy and completeness of the forward-looking statements. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements as a result of many factors, including the risk factors described in the risk factor section of our SEC reports. A summary of the information set forth in the "Risk Factors" section of our SEC reports and other risks includes, but is not limited to the following: the risk that the WellCare Transaction may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the failure to satisfy the conditions to the consummation of the WellCare Transaction, including the receipt of certain governmental and regulatory approvals; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement with WellCare; the effect of the announcement or pendency of the WellCare Transaction on our business relationships, operating results, and business generally, including risks related to the WellCare Transaction disrupting current plans and operations and potential difficulties in employee retention as a result of the transaction; risks related to diverting management’s attention from our ongoing business operations; we are subject to extensive government regulation and frequent audit and the potential that CMS and/or other regulators could impose significant fines, penalties or operating restrictions on Universal American, including with respect to CMS audits, False Claims Act matters or Risk Adjustment Data Validation (“RADV”) audits; the Affordable Care Act, including efforts to repeal and replace the Affordable Care Act, could have a material adverse effect on our opportunities for growth and our financial results; we are investing significant capital and management attention in new and unproven business opportunities, including our Accountable Care Organizations (“ACOs”), where we take two-sided risk , that may not be profitable; the impact of the Centers for Medicare and Medicaid Services’ (“CMS”) Advance Notice regarding Medicare Advantage reimbursement rates for calendar year 2018 could have a material adverse effect on Universal American’s MA business; we may experience higher than expected medical loss ratios or lower revenues, especially with our new members in our Northeast markets, which could materially adversely affect our results of operations; If we are unable to develop and maintain satisfactory relationships with the providers of care to our members and ACO beneficiaries, our business and overall profitability could be materially adversely affected; if we fail to design and price our products properly and competitively or if the premiums and fees we charge are insufficient to cover the cost of health care services delivered to our members, our profitability may be materially adversely affected; our significant shareholders may have interests that are different than other shareholders and may sell or distribute their stock which could cause the price of our stock to decline; changes in governmental regulation or legislative reform could increase our costs of doing business and adversely affect our profitability; reductions in funding for Medicare programs could materially reduce our profitability; failure to reduce our operating and corporate costs could have a material adverse effect on our financial position, results of operations and cash flows; we may not be able to maintain or improve our CMS Star ratings which may cause certain of our plans to receive less bonuses or rebates than our competitors; changes in governmental regulation or legislative reform, including the impact of Sequestration, could reduce our revenues, increase our costs of doing business and adversely affect our profitability; a substantial portion of our revenues are tied to our Medicare businesses and regulated by CMS and if our government contracts are not renewed or are terminated, our business could be substantially impaired; any failure by us to manage our operations or to successfully complete or integrate acquisitions, dispositions and other significant transactions could harm our financial results, business and prospects; we could be subject to a cyber-attack or similar network breach that could damage our reputation and have a material adverse effect. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of Universal American. All forward-looking statements included in this release are based upon information available to Universal American as of the date of the release, and we assume no obligation to update or revise any such forward-looking statements. (Tables to follow)