Metropolitan Health Networks Reports 2008 Third Quarter Results

-- Completion of the sale of METCARE Health Plans, Inc., the company's wholly owned, 13 county Medicare Advantage HMO ("AdvantageCare"), to Humana Medical Plan, Inc. ("Humana") for approximately $14.6 million;

-- Addition of a new provider-risk agreement with Humana in the 13 counties to provide care for AdvantageCare customers as well as future Humana customers;

-- Expansion of the company's provider relationship with CarePlus -- Humana's wholly owned Medicare Advantage health plan -- to include the same 13 counties;

-- Amendment of Metropolitan's existing provider-risk agreement to expand the company's PSN business into nine additional Florida counties bringing the total Humana service area to include 27 Florida counties;

-- Revenue of $78.9 million, a 13.4% increase compared to the third quarter in 2007; and

-- Net income of $4.3 million, or $0.08 per diluted share.

Third Quarter Financial Highlights:

The company recognized revenue of $78.9 million for the third quarter as compared to $69.6 million in the 2007 third-quarter, a 13.4% increase. Net income for the 2008-third quarter was $4.3 million or $0.08 per share, diluted as compared to $1.6 million or $0.03 per share, diluted for the same quarter last year. Included in the quarterly results were a gain on the sale of the HMO of $5.8 million and one-time stay bonuses and termination costs related to the sale of $1.6 million.

The company's consolidated MER was 90.2% in the third quarter of 2008 compared to 86.9% in the same quarter of 2007. Operating income for the third quarter before gain on sale of HMO, less the impact of the one-time stay bonuses and termination costs, totaled $2.3 million compared to operating income, adjusted for a one-time $583,000 restructuring charge, of $2.6 million in the same quarter 2007. Investment income declined from $377,000 in the 2007 third quarter to $29,000 in 2008.

Nine Months Year to Date Financial Highlights:

For the nine months ended September 30, 2008, the company's revenue totaled $237.2 million compared to $207.7 million in the prior year period, an increase of 14.2%. Net income was $7.6 million compared to $3.4 million for the same period of 2007. Fully diluted earnings per share were $0.14 and $0.06 for the nine months ended September 30, 2008 and 2007, respectively.

The company's consolidated MER was 88.4% in the first nine months of 2008 compared to 87.5% in the first nine months of 2007. Year to date operating income before gain on sale of HMO, less the impact of the one-time stay bonuses and termination costs, amounted to $7.4 million compared to operating income, adjusted for a one-time $583,000 restructuring charge, of $4.9 million in the same period of 2007. Investment income amounted to $255,000 and $1.1 million in the first nine months of 2008 and 2007, respectively.

Customer Information:

The total number of Medicare Advantage customers served by the company increased by 2,500 between September 2007 and September 2008 to 33,100 as of September 30, 2008. With the sale of the HMO and the new provider risk agreement reached late in the quarter with Humana in the 13 HMO counties, all of our customers are in the core PSN business. Total customer months, the combined total customers for each month of the measurement period, increased by 9% to 297,300 in the first nine months of 2008, up from 272,900 in the 2007 period.

Balance Sheet Highlights:

Cash and equivalents at September 30, 2008, now all unrestricted as a result of the sale of the HMO, totaled $44.3 million. This compares to $38.7 million at December 31, 2007. The company had a working capital surplus that increased to approximately $39.4 million at quarter end, compared to a surplus of approximately $29.2 million as of December 31, 2007. The company has no outstanding debt and stockholders' equity totaled $47.5 million at September 30, 2008.

Completion of Sale of the HMO:

On September 2, 2008 Metropolitan announced that it had completed the sale of METCARE Health Plans, Inc., its wholly owned subsidiary, to Humana Medical Plan, Inc. for approximately $14.6 million. A gain of $5.8 million was recognized on the transaction. AdvantageCare, the Medicare Advantage health plan offered by the HMO, provides Medicare beneficiaries with access to comprehensive health care coverage in Florida. At the time of the sale, AdvantageCare had approximately 7,300 members in the following 13 Florida counties: Charlotte, Collier, Glades, Lake, Lee, Manatee, Marion, Martin, Okeechobee, Polk, Sarasota, St. Lucie and Sumter.

Concurrent with the sale, Metropolitan, through its core Provider Service Network (PSN) business, Metcare of Florida, Inc., entered into a provider-risk agreement with Humana in the 13 counties listed above to provide care for AdvantageCare customers as well as future Humana customers in these counties. In addition, Metropolitan has expanded its provider relationship with CarePlus -- Humana's wholly owned Medicare Advantage health plan -- to include these 13 counties.

Market Expansion:

Effective October 1, 2008, Metropolitan's wholly owned subsidiary, Metcare of Florida, Inc., amended its existing agreement with Humana to expand its PSN business into nine additional Florida counties. These additions bring the total Humana service area to include 27 Florida counties. The added counties include Orange, Seminole and Osceola in the Orlando market, and Putnam, Clay, St. Johns, Duval, Nassau and Baker in northeast Florida. These counties currently are home to approximately 400,000 Medicare beneficiaries, of which about 20% are currently enrolled in Medicare Advantage plans.

Share Repurchase Program:

On October 3, 2008, Metropolitan Health Networks announced that its Board of Directors had authorized the repurchase of up to 10 million shares of the Company's outstanding common stock. Through October 31, the company has repurchased 1,092,800 shares of its common stock at an average cost of approximately $1.91 per share. The number of shares to be repurchased and the timing of the purchases will be at the discretion of the Company's management and will be influenced by a number of factors, including the then prevailing market price of the common stock of the Company, other perceived opportunities that may become available to the Company and regulatory requirements.

Michael Earley, Chairman and Chief Executive Officer of Metropolitan Health Networks, Inc., commented, "Our 2008 third quarter was one in which our business was transformed. AdvantageCare, our Medicare Advantage plan launched 40 months ago, was a vehicle for customer growth and market expansion. With the sale of this business to Humana, we delivered its 13-county market area and its customers into the hands of the premier Medicare Advantage provider in Florida. We expect to see that business and those markets continue to grow under Humana's ownership. With Metropolitan as Humana's risk provider in these counties, we expect our business to continue growing. With the sale, we have been able to streamline and focus our operations in our core PSN business. We expect to eliminate approximately $12 million of annual selling, general and administrative spending attributable to that business."

Continuing, Earley noted, "We have dramatically expanded our business and market opportunity with Humana, which today comprises a service area of 27 counties. While we are not currently operating in all of these counties, the process of investing and developing these markets has begun and we believe that our efforts in 2009 will result in meaningful customer and revenue growth beginning in 2010. Our balance sheet and our company, for that matter, are the strongest in our history."

Conference Call Information:

Metropolitan Health Networks will hold a conference call to review its third quarter 2008 results on Tuesday, November 4, 2008 at 11:00 a.m. Eastern. The call will be hosted by Michael Earley, Chairman and Chief Executive Officer. Interested parties may access the conference call by dialing the following numbers: 888-713-4217 (domestic) or 617-213-4869 (international), pass code #48862295. The call will also be available via web cast at www.metcare.com, http://www.streetevents.com, http://www.fulldisclosure.com.

Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PAFF3YAE W. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.

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 November 11, 2008, by dialing 888-286-8010 (domestic) or 617-801-6888 (international) using confirmation pass code 51178581.

About Metropolitan Health Networks, Inc.:

Metropolitan is a growing healthcare organization that provides comprehensive healthcare services for Medicare Advantage members and other patients in Florida. To learn more about Metropolitan Health Networks, Inc. please visit its website at 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) our ability to meet our cost projections under various provider agreements with Humana; (ii) our failure to accurately estimate incurred but not reported medical benefits expense; (iii) pricing pressures exerted on us by managed care organizations and the level of payments we indirectly receive under governmental programs or from other payors; (iv) future legislation and changes in governmental regulations; (v) the impact of Medicare Risk Adjustments on payments we receive for our managed care operations; (vi) 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. 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, 2007, its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 2008 2007 (unaudited) CURRENT ASSETS Cash and equivalents, including $13.0 million in 2007 statutorily $ 44,285,193 $ 38,682,186 limited to use by the HMO Accounts receivable, net 218,863 1,563,370 Inventory 214,602 196,154 Prepaid expenses 762,203 739,307 Deferred income taxes 1,171,716 2,905,755 Other current assets 133,170 676,980 TOTAL CURRENT ASSETS 46,785,747 44,763,752 PROPERTY AND EQUIPMENT, net 1,437,372 2,181,119 INVESTMENT 688,997 688,997 RESTRICTED CASH 1,400,000 - GOODWILL, net 2,587,332 2,585,857 DEFERRED INCOME TAXES 600,000 1,403,082 OTHER INTANGIBLE ASSETS, net 1,277,850 1,588,498 OTHER ASSETS 90,150 599,742 TOTAL ASSETS $ 54,867,448 $ 53,811,047 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 1,162,846 $ 1,461,668 Due to Humana 881,939 753,466 Accrued payroll and payroll taxes 2,086,074 2,546,295 Income taxes payable 1,179,448 249,077 Accrued expenses 2,047,642 822,843 Estimated medical expenses payable - 7,016,632 Due to Centers for Medicare and Medicaid Services - 2,695,087 TOTAL CURRENT LIABILITIES 7,357,949 15,545,068 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, par value $.001 per share; stated value $100 per 500,000 500,000 share; 10,000,000 shares authorized; 5,000 issued and outstanding, with a liquidation preference of $554,167 and $516,667 in 2008 and 2007, respectively Common stock, par value $.001 per share; 80,000,000 shares 52,309 51,557 authorized; 52,308,526 and 51,556,732 issued and outstanding at September 30, 2008 and December 31, 2007, respectively Additional paid-in capital 44,919,562 43,311,741 Retained earnings (deficit) 2,037,628 (5,597,319 ) TOTAL STOCKHOLDERS' EQUITY 47,509,499 38,265,979 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 54,867,448 $ 53,811,047

METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended Three Months Ended September 30, September 30, 2008 2007 2008 2007 (unaudited) (unaudited) (unaudited) (unaudited) REVENUE $ 237,175,320 $ 207,660,167 $ 78,949,785 $ 69,622,067 MEDICAL EXPENSE Medical claims expense 200,522,906 173,525,324 68,072,724 57,715,133 Medical center costs 9,247,512 8,269,186 3,175,606 2,789,485 Total Medical Expense 209,770,418 181,794,510 71,248,330 60,504,618 GROSS PROFIT 27,404,902 25,865,657 7,701,455 9,117,449 OPERATING EXPENSES Payroll, payroll taxes and benefits 9,911,209 10,100,668 2,897,108 3,357,216 Stay bonuses and termination costs 1,597,674 - 1,597,674 - Marketing and advertising 1,739,459 2,609,517 138,932 577,815 General and administrative 8,306,534 8,242,227 2,405,884 2,588,784 Restructuring expenses - 583,000 - 583,000 Total Operating Expenses 21,554,876 21,535,412 7,039,598 7,106,815 OPERATING INCOME BEFORE GAIN ON SALE OF HMO 5,850,026 4,330,245 661,857 2,010,634 Gain on sale of HMO subsidiary 5,797,769 - 5,797,769 - OPERATING INCOME 11,647,795 4,330,245 6,459,626 2,010,634 OTHER INCOME (EXPENSE): Investment income 254,547 1,083,978 28,630 376,732 Other income (expense) (16,805 ) (20,754 ) (10,388 ) (3,533 ) Total other income (expense) 237,742 1,063,224 18,242 373,199 INCOME BEFORE INCOME TAX EXPENSE 11,885,537 5,393,469 6,477,868 2,383,833 INCOME TAX EXPENSE 4,250,590 2,037,000 2,209,542 786,600 NET INCOME $ 7,634,947 $ 3,356,469 $ 4,268,326 $ 1,597,233 NET EARNINGS PER COMMON SHARE: Basic $ 0.15 $ 0.07 $ 0.08 $ 0.03 Diluted $ 0.14 $ 0.06 $ 0.08 $ 0.03

SOURCE: Metropolitan Health Networks

Metropolitan Health Networks, West Palm Beach Michael Earley, Chief Executive Officer, 561-805-8500 mearley@metcare.com or Cameron Associates Al Palombo, Investor Relations, 212-245-8800 Ext. 209 al@cameronassoc.com