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United American Healthcare Corporation Announces Fiscal 2007 Fourth Quarter and Year-End Results

Thursday, August 30, 2007 General News J E 4
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DETROIT, Aug. 29 United American HealthcareCorporation (Nasdaq: UAHC), a full-service managed care organization, todayannounced financial results for its fourth quarter and fiscal year ended June30, 2007.

Revenues increased 6 percent to $5.1 million for the fourth quarter endedJune 30, 2007, compared with revenues of $4.8 million for the fourth quarterof fiscal 2006. The Company reported a net loss in the fourth quarter offiscal 2007 of $1.7 million, or ($0.19) per fully diluted share, compared withnet income of $97,000, or $0.01 per fully diluted share, for the prior year'sfourth quarter.

The decline in fourth quarter profitability is primarily attributable tononrecurring charges totaling $1.5 million. The charges mainly relate to astate regulatory audit of processed claims since 2002 of the Company'ssubsidiary, UAHC Health Plan of Tennessee, Inc. ("UAHC-TN"). The third partyauditor notified UAHC-TN in late fiscal 2007 that it may have been overpaid$1.1 million for medical claims as a result of a pricing methodologydiscrepancy. UAHC-TN therefore recorded a reserve of $1.1 million in thefourth quarter of fiscal 2007. The Company also recorded a $0.4 millioncharge in the same quarter based on a state regulatory determination that theState of Tennessee, doing business as TennCare, overpaid UAHC-TN that amountunder a 2002 amendment to its TennCare contract.

Excluding the impact of the non-recurring charges, the Company reported apro-forma net loss from continuing operations of $0.1 million, or ($.01) perfully diluted share in the fiscal 2007 fourth quarter. The quarter'sprofitability was further impacted by a decline in the number of UAHC-TN'sTennCare enrollees and a budgeted increase in marketing and other expensesrelated to UAHC-TN's launch of a Medicare Advantage Special Needs Plan duringthe second half of fiscal 2007. As of August 2007, UAHC-TN's total membershipenrollment included approximately 104,850 members, down from 113,951 members ayear earlier.

"Fiscal 2007 was a period of sustained operational execution and strategicexpansion, highlighted by the successful launch of our first operations as aMedicare Advantage qualified organization in January 2007," said William C.Brooks, president, chairman and CEO of United American Healthcare. "Ourtransition to a multi-line platform positions us to fully leverage our morethan 20 years of medical management experience, established managed careinfrastructure and preventive care solutions to serve low-income seniors andadults with disabilities in Shelby County, Tenn."

Brooks continued: "Entering fiscal 2008, we remain committed to buildingon our base as a provider of quality care solutions. As before, our team isfocused on improving operational efficiency, containing medical costs,enhancing the size and scope of our provider network and, most importantly,accelerating enrollment within our Medicare Advantage Special Needs Plan.While our Medicaid business remains a core component of UAHC-TN's long-termoperating model, our recently launched Medicare Advantage Special Needs Planrepresents a key catalyst for growth in the coming years, particularly as weseek to diversify our revenue stream into higher-margin market opportunities."

For the fiscal year ended June 30, 2007, revenues were unchanged at $18.1million compared to revenues of $18.1 million in fiscal 2006. The Companyreported a net loss in fiscal 2007 of $1.1 million, or ($0.14) per fullydiluted share, compared with net income of $1.4 million, or $0.18 per fullydiluted share, in fiscal 2006. The decrease in year-over-year profitabilityis primary attributable to the nonrecurring charges of $1.5 million and thebudgeted increase in marketing and other expenses related to UAHC-TN's launchof a Medicare Advantage Special Needs Plan ("MA-SNP") during the second halfof fiscal 2007, in addition to a year-over-year declin
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