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[MikeDDKing]

MDF reported Q2 with a profit of $0.02

Mike

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Metropolitan Health Networks Reports 2006 Second Quarter Results
Monday August 7, 5:00 pm ET


WEST PALM BEACH, Fla.--(BUSINESS WIRE)--Aug. 7, 2006--Metropolitan Health Networks, Inc. (AMEX:MDF - News; NYSE Arca:MDF), a leading provider of healthcare services to Medicare beneficiaries in Florida, today announced financial results for the quarter ended June 30, 2006.
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The Company recognized revenues of $57.5 million for the quarter ended June 30, 2006 compared to $46.2 million in the prior year quarter, a 24.6% increase. Net income was $819,000 compared to $1.2 million for the quarter ended June 30, 2005. Fully diluted earnings per share basis was $0.02 for both the quarters ended June 30, 2006 and 2005, respectively.

The 2006-second quarter results included a pre-tax segment loss of $2.2 million for the Company's Medicare Advantage HMO, compared to $1.0 million in the prior year's quarter. This business began operations, enrolled its first members and earned its first revenues in 2005's third quarter.

For the six months ended June 30, 2006, the Company's revenues totaled $113.0 million compared to $91.7 million in the prior year period, an increase of 23.2%. Net income was $1.5 million compared to $2.4 million for the six months ended June 30, 2005. Fully diluted earnings per share were $0.03 and $0.05 for the six months ended June 30, 2006 and 2005, respectively.

The Company recognized stock-based employee compensation expense of $162,000 and $364,000 for the quarter and six months ended June 30, 2006, respectively, resulting from the adoption of SFAS 123® effective January 1, 2006. There was no comparable compensation expense recognized in 2005.

Total cash and equivalents and short-term investments at June 30, 2006 amounted to $21.3 million, up from $15.6 million at December 31, 2005. The Company had working capital of $23.0 million at period end, compared to $21.1 million as of December 31, 2005. The Company has no outstanding debt and stockholder equity grew to $31.7 million at June 30, 2006.

Total Medicare Advantage lives served increased by approximately 2,300 members from June 2005 to a membership of over 29,000 in June 2006. June 1, 2006 membership for the Company's Humana-related business (the "PSN") and the new HMO were 25,875 and 3,145, respectively. Member months, the combined total membership for each month of the measurement period, were 86,012 and 79,816 for the 2006 and 2005 quarters, respectively. For the six-month periods, member months were 169,462 and 159,366 for 2006 and 2005, respectively. Included in these numbers were approximately 8,441 and 14,373 member months related to the HMO for the quarter and six months ended June 30, 2006, respectively.

Michael Earley, Chairman and Chief Executive Officer, commented, "We're pleased to report the progress made in the first half of 2006. As noted a quarter ago, our growth strategy is unfolding this year as METCARE Health Plans, Inc., our Medicare Advantage HMO, with its AdvantageCare(SM) product is now entering its second year of operations. While this new business accounted for no revenues in our 2005-second quarter, this year it generated 11.5% of our second quarterly revenues. We're pleased that this second business is now well underway, in its first markets, with its first products and growing membership. We expect to expand our market footprint and product offerings as we enter 2007, while recognizing the challenge of balancing growth initiatives with reaching profitability."

Continuing, Earley stated, "Our core Humana business continues to perform with revenues up over 11% in the first half of this year compared to a year ago, and with a segment gain before overhead and taxes of $9.8 million, up 22% over 2005's first half. On the cost front, we are pleased that our medical expense ratio continues to decline, from 90.2% in 2005's fourth quarter to 89.4% in the first quarter to this quarter's 88.4%. Recognizing that medical utilization and costs can and do fluctuate for a variety of reasons, some controllable and others not, we are pleased with the trend and believe the current results are due in part to initiatives undertaken by our medical management professionals over the past year. We continue to be pleased with our progress and, as always, look forward to reporting our results as we continue the year."

Conference Call Information:

The company's senior management will discuss Metropolitan's results for the second quarter ended June 30, 2006, during a conference call scheduled for Tuesday, August 8, 2006, at 11:00 a.m. Eastern time.

What: Metropolitan Health Networks Second Quarter 2006
Conference Call

When: Tuesday, August 8, 2006, 11:00 a.m. Eastern

Web cast
address: http://www.streetevents.com, http://www.fulldisclosure.com

Dial-in
Numbers: 866-362-4832 (domestic) or 617-597-5364 (international),
pass code # 72714199

Contact: Al Palombo, Cameron Associates, 212-245-8800 Ext. 209,
[e-mail]

If you are unable to participate, an audio replay of the call will be available beginning two hours after the call and will be available until 11:59 p.m. on August 15, 2006, by dialing 888-286-8010 (domestic) or 617-801-6888 (international) using confirmation pass code 76484252.

About Metropolitan Health Networks, Inc.:

Metropolitan is a growing healthcare organization in Florida that provides comprehensive healthcare services for Medicare Advantage members and other patients in South and Central Florida. To learn more about Metropolitan Health Networks, Inc. please visit its website at http://www.metcare.com.

Forward Looking Statements:

Except for historical matters contained herein, statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as "may", "will", "to", "plan", "expect", "believe", "anticipate", "intend", "could", "would", "estimate", or "continue" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements.

Investors and others are cautioned that a variety of factors, including certain risks, may affect our business and cause actual results to differ materially from those set forth in the forward-looking statements. These risk factors include, without limitation, (i) pricing pressures exerted on us by managed care organizations and the level of payments we receive under governmental programs or from other payors; (ii) future legislation and changes in governmental regulations; (iii) the impact of Medicare Risk Adjustments on payments we receive for our managed care operations; (iv) our ability to successfully recruit and retain medical professionals; (v) a loss of any of our significant contracts or our ability to increase the number of Medicare eligible patient lives we manage under these contracts; and (vi) our ability to successfully operate a healthcare management organization otherwise known as an HMO. The Company is also subject to the risks and uncertainties described in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2005.

Financial Tables to Follow

METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
======================================================================

June 30, December 31,
2006 2005
ASSETS (Unaudited) (Audited)
------ ------------ -------------

CURRENT ASSETS
Cash and equivalents $15,633,283 $ 15,572,862
Short-term investments 5,677,050 -
Accounts receivable, net of allowance 5,155,658 4,183,974
Inventory 241,263 201,430
Prepaid expenses 1,070,721 473,286
Deferred income taxes 3,400,000 3,500,000
Other current assets 251,082 547,976
----------- ------------
TOTAL CURRENT ASSETS 31,429,057 24,479,528
PROPERTY AND EQUIPMENT, net 1,139,907 899,998
INVESTMENTS 940,757 627,819
GOODWILL, net 1,992,133 1,992,133
DEFERRED INCOME TAXES 3,680,000 4,493,000
OTHER ASSETS 1,012,774 622,628
----------- ------------
TOTAL ASSETS $40,194,628 $ 33,115,106
=========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES
Accounts payable $ 645,831 $ 969,184
Advance and unearned premiums 3,337,226 -
Estimated medical expenses payable 2,601,708 694,410
Accrued payroll and payroll taxes 1,147,750 1,459,098
Accrued expenses 742,980 293,552
----------- ------------
TOTAL CURRENT LIABILITIES 8,475,495 3,416,244
----------- ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock, par value $.001 per
share; stated value $100 per share;
10,000,000 shares authorized; 5,000
issued and outstanding 500,000 500,000
Common stock, par value $.001 per share;
80,000,000 shares authorized;
50,106,526 and 49,851,526 issued and
outstanding, respectively 50,106 49,851
Additional paid-in capital 40,712,061 40,182,889
Accumulated deficit (9,543,034) (11,033,878)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 31,719,133 29,698,862
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $40,194,628 $ 33,115,106
=========== ============

METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
======================================================================

For the six months For the three months
ended June 30, ended June 30,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------- ------------ ------------ ------------

REVENUES, net $112,981,144 $91,688,772 $57,547,610 $46,169,207
------------ ----------- ----------- -----------

OPERATING EXPENSES
Direct medical
costs 95,297,419 77,332,404 48,334,576 38,799,286
Other medical
costs 5,144,944 5,210,820 2,559,277 2,573,845
------------ ----------- ----------- -----------
Total medical
expenses 100,442,363 82,543,224 50,893,853 41,373,131
Administrative
payroll, payroll
taxes and
benefits 5,003,185 2,682,290 2,555,386 1,416,029
Marketing and
advertising 1,995,854 156,189 1,021,924 155,819
General and
administrative 3,549,237 2,739,344 1,977,221 1,371,308
------------ ----------- ----------- -----------
TOTAL
EXPENSES 110,990,639 88,121,047 56,448,384 44,316,287
------------ ----------- ----------- -----------

OPERATING INCOME 1,990,505 3,567,725 1,099,226 1,852,920
------------ ----------- ----------- -----------

OTHER INCOME
Interest income,
net 412,138 137,049 222,700 71,975
Other 1,201 129,614 21 67,891
------------ ----------- ----------- -----------
TOTAL OTHER
INCOME 413,339 266,663 222,721 139,866
------------ ----------- ----------- -----------

INCOME BEFORE
INCOME TAXES 2,403,844 3,834,388 1,321,947 1,992,786
INCOME TAXES (913,000) (1,447,000) (502,800) (750,000)
------------ ----------- ----------- -----------
NET INCOME $ 1,490,844 $ 2,387,388 $ 819,147 $ 1,242,786
============ =========== =========== ===========

NET EARNINGS PER
SHARE:
Basic $ 0.03 $ 0.05 $ 0.02 $ 0.03
============ =========== =========== ===========
Diluted $ 0.03 $ 0.05 $ 0.02 $ 0.02
============ =========== =========== ===========



Contact:
Metropolitan Health Networks, West Palm Beach
Michael Earley, 561-805-8500
[e-mail]
or
Cameron Associates
Investor Relations
Al Palombo, 212-245-8800 Ext. 209
[e-mail]

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Source: Metropolitan Health Networks