Health Risk Management, Inc. Announces Delay in 10-K Filing and Continuation Of Rationalization Plans

Apr 19, 2001, 01:00 ET from Health Risk Management, Inc.

    MINNEAPOLIS, April 19 /PRNewswire/ --
     Health Risk Management, Inc. (HRM) (Nasdaq: HRMI) announced today that it
 was not filing its annual report and 10-K by the delayed April 16th date given
 by the Securities and Exchange Commission.  HRM blamed the delayed filing on a
 need to include the effects of its previously announced corporate
 rationalization plan, to conclude arrangements for anticipated new financings,
 to develop a plan to increase the capital reserves of its HMO subsidiary and
 to factor these matters into its annual report and Form 10-K.
     The rationalization plan, which was announced originally on April 10th,
 has included to date reductions in payroll and other operating expenses
 expected to result in savings of approximately $7.5 million, changes to the
 management structure and Board of Directors, including the addition of Corbett
 A. Price as the Chairman of the Board, the addition of Steven L. Volla to the
 Board of Directors, the resignations of HRM's Chairman and Chief Executive
 Officer and its President, and the appointment of an Executive Committee and
 creation of an Office of the Chairman to assist the Board in operating the
 Company pending a permanent replacement CEO.  The Executive Committee is
 reviewing all aspects of the Company's business arrangements with a view to
 removing barriers to increased shareholder value.
     HRM, in response to a request from the Commonwealth of Pennsylvania
 Insurance Department, formulated a plan for its HMO subsidiary as a result of
 changes in the applicable statutory requirements.  HRM is in the process of
 meeting with the Department to review the plan, which will require the HMO to
 increase capital reserves to cover unanticipated claims.  As part of the plan,
 Loop Corp and other related organizations have agreed to provide up to
 $15-$16 million in equity and other financing to HRM.  A portion of the
 financing includes a contribution of real estate, which HRM expects to sell
 for net proceeds of between $7 million and $8 million.  A portion of the
 proceeds from the sale of real estate will be used to retire debt of the HMO
 subsidiary to HRM to increase the capital surplus of the subsidiary.  HRM
 expects these arrangements to be finalized before May 15, 2001.  Leon
 Greenblatt, HRM's largest shareholder, is affiliated with Loop Corp.
     HRM is continuing to work with its auditors to review its results of
 operations and complete its fiscal 2000 annual report and Form 10-K, which it
 expects to file on or before May 15, 2001.
     HRM, headquartered in Minneapolis, owns and operates two Medicaid HMOs in
 the Commonwealth of Pennsylvania.  In addition, HRM provides managed care,
 administrative and indemnity services to self-funded employers, health plans,
 and other entities.
 
     Forward looking statements in this news release reflected as expectations,
 plans, anticipations, prospects or future estimates are subject to the risks
 and the uncertainties present in HRM's business and the competitive health
 care marketplace including, but not limited to, clients and vendors commonly
 experiencing mergers or acquisitions, use of estimates for incurred but not
 yet reported claims including medical services payable, use of estimates of
 bonus accruals including accounts receivable, reconciliations, volume
 fluctuations, provider relations and contracting, participant enrollment
 fluctuations, changes in member mix or utilization levels, fixed price
 contracts, contract disputes, contract modifications, contract renewals and
 non-renewals, regulatory issues and requirements, various business reasons for
 delaying contract closings, and the operational challenges of matching case
 volume with optimum staffing, having fully trained staff, having computer and
 telephonic supported operations, and managing turnover of key employees and
 outsourced services to performance standards.  While occurrences of these
 risks, and others periodically detailed in the Company's SEC reports, cannot
 be predicted exactly, such occurrences can be expected to have an impact on
 HRM's anticipated level of revenue growth or profitability.
 
 

SOURCE Health Risk Management, Inc.
    MINNEAPOLIS, April 19 /PRNewswire/ --
     Health Risk Management, Inc. (HRM) (Nasdaq: HRMI) announced today that it
 was not filing its annual report and 10-K by the delayed April 16th date given
 by the Securities and Exchange Commission.  HRM blamed the delayed filing on a
 need to include the effects of its previously announced corporate
 rationalization plan, to conclude arrangements for anticipated new financings,
 to develop a plan to increase the capital reserves of its HMO subsidiary and
 to factor these matters into its annual report and Form 10-K.
     The rationalization plan, which was announced originally on April 10th,
 has included to date reductions in payroll and other operating expenses
 expected to result in savings of approximately $7.5 million, changes to the
 management structure and Board of Directors, including the addition of Corbett
 A. Price as the Chairman of the Board, the addition of Steven L. Volla to the
 Board of Directors, the resignations of HRM's Chairman and Chief Executive
 Officer and its President, and the appointment of an Executive Committee and
 creation of an Office of the Chairman to assist the Board in operating the
 Company pending a permanent replacement CEO.  The Executive Committee is
 reviewing all aspects of the Company's business arrangements with a view to
 removing barriers to increased shareholder value.
     HRM, in response to a request from the Commonwealth of Pennsylvania
 Insurance Department, formulated a plan for its HMO subsidiary as a result of
 changes in the applicable statutory requirements.  HRM is in the process of
 meeting with the Department to review the plan, which will require the HMO to
 increase capital reserves to cover unanticipated claims.  As part of the plan,
 Loop Corp and other related organizations have agreed to provide up to
 $15-$16 million in equity and other financing to HRM.  A portion of the
 financing includes a contribution of real estate, which HRM expects to sell
 for net proceeds of between $7 million and $8 million.  A portion of the
 proceeds from the sale of real estate will be used to retire debt of the HMO
 subsidiary to HRM to increase the capital surplus of the subsidiary.  HRM
 expects these arrangements to be finalized before May 15, 2001.  Leon
 Greenblatt, HRM's largest shareholder, is affiliated with Loop Corp.
     HRM is continuing to work with its auditors to review its results of
 operations and complete its fiscal 2000 annual report and Form 10-K, which it
 expects to file on or before May 15, 2001.
     HRM, headquartered in Minneapolis, owns and operates two Medicaid HMOs in
 the Commonwealth of Pennsylvania.  In addition, HRM provides managed care,
 administrative and indemnity services to self-funded employers, health plans,
 and other entities.
 
     Forward looking statements in this news release reflected as expectations,
 plans, anticipations, prospects or future estimates are subject to the risks
 and the uncertainties present in HRM's business and the competitive health
 care marketplace including, but not limited to, clients and vendors commonly
 experiencing mergers or acquisitions, use of estimates for incurred but not
 yet reported claims including medical services payable, use of estimates of
 bonus accruals including accounts receivable, reconciliations, volume
 fluctuations, provider relations and contracting, participant enrollment
 fluctuations, changes in member mix or utilization levels, fixed price
 contracts, contract disputes, contract modifications, contract renewals and
 non-renewals, regulatory issues and requirements, various business reasons for
 delaying contract closings, and the operational challenges of matching case
 volume with optimum staffing, having fully trained staff, having computer and
 telephonic supported operations, and managing turnover of key employees and
 outsourced services to performance standards.  While occurrences of these
 risks, and others periodically detailed in the Company's SEC reports, cannot
 be predicted exactly, such occurrences can be expected to have an impact on
 HRM's anticipated level of revenue growth or profitability.
 
 SOURCE  Health Risk Management, Inc.

RELATED LINKS

http://www.hqi.com