* Full Year Earnings Per Share of $4.37, Excluding $0.22 Per Share in
Charges Related to Class Action Securities Litigation Settlement
* Fourth Quarter Earnings Per Share of $1.14
* Operating Cash Flow of $223.6 Million for the Quarter and $343.2
Million for the Year
TRUMBULL, Conn., Feb. 4 /PRNewswire-FirstCall/ -- Oxford Health Plans,
Inc. (NYSE: OHP) announced today net earnings of $95.5 million, or $1.14 per
diluted share, for the quarter ended December 31, 2003, compared to $73.8
million, or $0.84 per diluted share, for the prior year quarter. Full year
net earnings were $351.9 million, or $4.15 per share, for 2003 compared to
$222 million, or $2.45 per share, in 2002. See Exhibit 1 of this release for
a reconciliation of net earnings reported under generally accepted accounting
principles to run rate earnings for the fourth quarter and twelve months of
2003 compared to 2002.
"Oxford's strong financial results in 2003 reflect our disciplined
approach to executing on the fundamentals of our business. In 2004, we will
continue expanding our market leading product portfolio, provider networks and
healthcare programs to meet the changing needs of employers and our members,"
commented Charles G. Berg, President and CEO of Oxford.
Business Highlights
Membership: Total fully insured commercial membership ended the quarter
at 1.43 million members compared to 1.44 million members at the end of
September 2003, and 1.48 million members at the end of 2002. For the full
year 2003, Oxford commercial membership, excluding MedSpan, declined
approximately 27 thousand members, while MedSpan membership declined
approximately 22 thousand members. Medicare membership was 70,800 at the end
of the quarter.
Premium Revenue: Premium revenue increased 7.1% in the fourth quarter to
$1.35 billion from $1.26 billion in the fourth quarter of 2002. Commercial
premiums increased 7% to $1.19 billion from $1.12 billion in the fourth
quarter of 2002. During the current quarter, the commercial premium yield
increased approximately 10.2% over the prior year quarter. Commercial member
months declined 3.0% for the quarter compared to the 2002 period. Commercial
premium revenue increased 10.3% to $4.71 billion for the full year in 2003
from $4.27 billion in 2002, and net per member per month commercial premium
yields increased approximately 10.4% over the same period. Medicare premiums
were $159.9 million in the fourth quarter of 2003, compared to $147.4 million
in the fourth quarter of 2002. Full year Medicare premiums were $632.5
million in 2003, compared to $585.2 million in 2002.
Investment and Other Income, net: Investment and other income, net, was
$20.1 million in the fourth quarter of 2003, compared to $31.5 million in the
fourth quarter of 2002. Realized gains for the quarter were $4.2 million in
2003, compared to $12.8 million in 2002. Full year investment and other
income, net, was $100.8 million in 2003, compared to $94.7 million in 2002 and
full year realized gains on investments were $30.8 million in 2003, compared
to $26.9 million in 2002. The net pre-tax yield on the Company's investment
portfolio was approximately 3.2% in 2003, compared to approximately 4.5% in
2002.
Health Care Services Expense: Health care services expense was $1.067
billion in the fourth quarter of 2003, compared to $1.013 billion in the
fourth quarter of 2002. The fourth quarter of 2003 includes $10.7 million of
net favorable medical reserve estimate changes from prior periods. Commercial
per member per month medical costs for the fourth quarter of 2003 increased
approximately 9.4% compared to the 2002 fourth quarter. This percentage
increase reflects the reported per member per month (PMPM) commercial medical
costs adjusted for net favorable development of commercial medical reserves of
approximately $5.9 million in the fourth quarter of 2003, and adjusted for net
unfavorable development of commercial medical reserves of approximately $5.2
million in the fourth quarter of 2002. Full year net favorable development of
medical reserves was approximately $33.8 million in 2003, compared to $55.3
million in 2002. Commercial PMPM medical costs for the full year 2003
increased approximately 9.4% compared to 2002. This annual percentage
increase reflects the reported PMPM commercial medical costs adjusted for net
favorable development of commercial medical reserves of approximately $26.9
million in 2003 and $46.1 million in 2002.
Marketing, General and Administrative (MG&A) Expenses: MG&A expenses were
$144.4 million, resulting in an administrative loss ratio of 10.7% for the
fourth quarter of 2003, compared to $157.8 million and a 12.5% administrative
loss ratio in the fourth quarter of 2002. Excluding $20 million in legal
expenses related to the 1997 securities class action litigation, the
administrative loss ratio was 10.9% in the fourth quarter of 2002. Full year
MG&A expenses were $575.1 million in 2003, compared to $575.4 million in 2002.
Full year MG&A expenses in 2002 included $15.5 million in contract termination
charges and $20 million in legal expenses related to class action litigation.
Broker commissions and premium taxes accounted for $189.6 million, or 33.0%,
of total MG&A expenses for the full year 2003, compared to $163.6 million, or
29.5%, of MG&A expenses (excluding the $20 million in legal expenses) in 2002.
The increase in these items as a percentage of overall MG&A expenses is the
result of changes in product mix between the two periods and increases in New
York State premium tax rates. (All percentages cited in this paragraph
exclude the net litigation charge for settlement presented in the accompanying
income statements.)
Medical Costs Payable: Medical costs payable were $671.5 million as of
December 31, 2003, compared to $666.4 million as of September 30, 2003, and
$618.6 million at December 31, 2002. The $5.1 million increase from the third
quarter of 2003 was due to an increase in IBNR and unpaid claims reserves of
$25.6 million and a net $20.5 million reduction in other medical cost
liabilities, primarily as a result of settlements of liabilities aged more
than one year. Days claims in medical costs payable were approximately 58
days at December 31, 2003, an increase of one day from the level at September
30, 2003.
Cash Flow: Cash flow from operations was $223.6 million in the fourth
quarter of 2003, compared to $86.9 million in the fourth quarter of 2002. The
increase in operating cash flow over the prior year quarter was primarily due
to lower levels of income tax payments resulting from the deductibility of the
class action litigation settlement, increases in medical claims payable and
higher levels of net income. Full year cash flow from operations was $343.2
million in 2003, compared to $344.5 million in 2002. Cash flow from
operations in 2003 includes the net use of approximately $200 million to fund
the settlement of 1997 securities class action litigation and related costs.
Parent Cash Balances: Parent company cash and investments totaled $369
million at December 31, 2003, compared to $325 million at September 30, 2003
levels. The increase from the third quarter was primarily due to income tax
transfers from subsidiaries in excess of amounts due to taxing authorities and
proceeds from stock option exercises. In January 2004, the parent company
received a $45 million dividend from its New York HMO subsidiary.
Share Repurchase Program: The Company repurchased 413 thousand of its
shares for $16.5 million at an average price of $40.49 per share in the fourth
quarter of 2003. The Company has repurchased 23.8 million shares for $757.2
million since the inception of its share repurchase program in the third
quarter of 2001. The Company has $242.8 million of remaining repurchase
authority through the end of 2004.
Quarterly Dividend: The Company paid a quarterly cash dividend of 10 cents
per share on January 27, 2004 totaling $8.1 million, to shareholders of record
as of January 12, 2004. As previously announced, the Board of Directors of
the Company declared a quarterly cash dividend of 10 cents per share payable
on April 27, 2004, to shareholders of record as of April 12, 2004.
2004 Guidance: The following table presents management's current estimates
of various non-financial and financial measures for the twelve-month period
ending December 31, 2004. The following table reflects management's estimates
as of the date of this press release only, and the Company assumes no
obligation to update these estimates or any other forward-looking statements
included in this press release. Amounts presented do not reflect the
potential impact of share repurchases under the Company's share repurchase
program after December 31, 2003.
Projected
(in millions, except membership, per share and Ranges
percentage data) 2004
Ending commercial membership (000's) 1,400 - 1,450
Fully insured member months (000's) 17,600 - 17,900
Net commercial premium yield increase 9% - 10%
Net commercial medical cost trend 9% - 10%
Premium revenues $5,620 - $5,720
Total revenues $5,710 - $5,810
Medical loss ratio (MLR) 79.8% - 80.3%
Administrative loss ratio (ALR) 10.7% - 10.9%
Net earnings $365 - $385
Diluted earnings per common share $4.35 - $4.55
Weighted average common shares outstanding - diluted 83 - 84
Conference Call and Webcast
As previously announced, the Company will hold a conference call today at
8:30 am (Eastern Time) to review the results of the fourth quarter and to
discuss management's outlook for 2004. The public is invited to listen to
this conference call by dialing 1-888-677-8170 (using the password "Oxford")
at least 10 minutes prior to the start of the call. Individuals who dial in
will be asked to identify themselves and their affiliations. Investors,
analysts and the public are also invited to listen to the conference call over
the Internet by visiting our website at http://www.oxfordhealth.com. To listen to
this call live on the Internet, visit the investor page of Oxford's web site
at least 20 minutes early (to download and install any necessary audio
software).
About Oxford
Founded in 1984, Oxford Health Plans, Inc. provides health plans to
employers and individuals primarily in New York, New Jersey and Connecticut,
through its direct sales force, independent insurance agents and brokers.
Oxford's commercial insured products and services include traditional health
maintenance organizations, preferred and exclusive provider organizations,
point-of-service plans and consumer directed health plans. The Company also
offers Medicare plans and third party administration of employer-funded
benefits plans. More information about Oxford Health Plans, Inc. is available
at http://www.oxfordhealth.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements concerning
the Company's strategy, including its expansion of its product portfolio,
provider networks and healthcare programs, future share repurchases, future
membership growth, management's current estimates of various non-financial and
financial measures for the twelve months ending December 31, 2004, and other
statements contained herein regarding matters that are not historical facts,
are forward-looking statements as defined in the Securities Exchange Act of
1934; and because such statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to:
* Changes in federal or state regulation relating to health care and
health benefit plans.
* The state of the economy.
* Rising medical costs or higher utilization of medical services,
including higher out-of-network utilization under point-of-service
plans and new drugs and technologies.
* Competitive pressure on the pricing of the Company's products,
including acceptance of premium rate increases by the Company's
commercial groups.
* Higher than expected administrative costs in operating the Company's
business and the cost and impact on service of changing technologies.
* The ability of the Company to maintain risk transfer, risk sharing,
incentive and other provider arrangements and the resolution of
existing and future disputes over the reconciliations and performance
under such arrangements.
* Any changes in the Company's estimates of its medical costs and
expected cost trends.
* The impact of future developments in various litigation matters and the
periodic examination, investigation and review of the Company by
various federal and state authorities.
* The Company's ability to renew existing members and attract new
members.
* The Company's ability to develop processes and systems to support its
operations and any future growth and administer new health care benefit
designs.
* Any future acts or threats of terrorism or war.
* Those factors included in the discussion under the caption "Cautionary
Statement Regarding Forward-Looking Statements" in Part I, Item 1, of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 filed with the Securities and Exchange Commission
today.
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Income Statements
For the Three and Twelve Months Ended December 31, 2003 and 2002
(In thousands, except per share, per member per month and membership
highlights data)
Unaudited Audited
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Revenues:
Premiums earned $1,351,724 $1,262,555 $5,339,327 $4,850,964
Third-party
administration, net 2,911 4,568 12,284 17,744
Investment and other
income, net 20,123 31,495 100,833 94,686
Total revenues 1,374,758 1,298,618 5,452,444 4,963,394
Expenses:
Health care services 1,066,559 1,013,101 4,242,394 3,848,803
Marketing, general and
administrative 144,385 157,767 575,128 575,433
Litigation charge for
settlement, net -- -- 30,675 151,300
Interest and other
financing charges 6,040 2,388 20,758 11,041
Total expenses 1,216,984 1,173,256 4,868,955 4,586,577
Earnings before income
taxes 157,774 125,362 583,489 376,817
Income tax expense 62,322 51,521 231,636 154,852
Net earnings $95,452 $73,841 $351,853 $221,965
Net earnings per common
share - basic $1.18 $0.86 $4.26 $2.55
Net earnings per common
share - diluted $1.14 $0.84 $4.15 $2.45
Dividends per common share $0.10 $ -- $0.10 $ --
Weighted-average common
shares - basic 81,106 85,393 82,546 87,145
Dilutive effect of stock
options 2,920 2,359 2,208 3,599
Weighted-average common
shares - diluted 84,026 87,752 84,754 90,744
Selected Information
Medical loss ratio 78.9% 80.2% 79.5% 79.3%
Administrative loss ratio,
excluding net litigation
charge 10.7% 12.5% 10.7% 11.8%
Earnings before income
taxes, financing charges,
depreciation and
amortization ("EBITDA") $172,863 $133,656 $631,456 $409,680
PMPM premium revenue $298.79 $271.16 $291.65 $265.10
PMPM medical expense $235.75 $217.59 $231.73 $210.33
Fully insured member months 4,524.1 4,656.1 18,307.4 18,298.8
As of December 31,
Membership Highlights (Unaudited) 2003 2002
POS, PPO and Other Plans 1,239,400 1,252,900
HMO 190,500 226,600
Total Fully Insured Commercial 1,429,900 1,479,500
Medicare 70,800 70,100
Third-party Administration 38,500 51,900
Total Membership 1,539,200 1,601,500
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2003 and December 31, 2002
(In thousands, except share data)
Assets
Audited
December 31, December 31,
2003 2002
Current assets:
Cash and cash equivalents $536,510 $321,627
Investments - available-for-sale, at
market value 1,370,535 1,102,664
Premiums receivable, net 30,505 29,803
Other receivables 30,082 43,919
Prepaid expenses and other current assets 16,785 10,214
Deferred income taxes 45,240 111,652
Total current assets 2,029,657 1,619,879
Property and equipment, net 31,638 34,445
Deferred income taxes 9,572 9,173
Restricted cash and investments-held-
to-maturity, at amortized cost 59,738 56,421
Goodwill and other intangible assets, net 21,785 24,691
Other noncurrent assets 7,811 8,907
Total assets $2,160,201 $1,753,516
Liabilities and Shareholders' Equity
Current liabilities:
Medical costs payable $671,515 $618,618
Current portion of long term debt 4,000 30,625
Trade accounts payable and accrued expenses 138,925 135,124
Reserve for litigation settlement -- 161,300
Unearned revenue 187,751 201,045
Income taxes payable 30,530 2,418
Current portion of capital lease obligations 5,749 5,470
Total current liabilities 1,038,470 1,154,600
Obligations under capital lease 467 5,749
Long-term debt 394,000 96,250
Shareholders' equity:
Preferred stock, $.01 par value,
authorized 2,000,000 shares -- --
Common stock, $.01 par value, authorized
400,000,000 shares; issued 106,612,822 shares
in 2003 and 105,075,889 shares in 2002 1,066 1,051
Additional paid-in capital 750,919 709,258
Retained earnings 780,856 437,130
Accumulated other comprehensive income 10,622 25,038
Treasury stock, at cost (816,199) (675,560)
Total shareholders' equity 727,264 496,917
Total liabilities and shareholders'
equity $2,160,201 $1,753,516
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three and Twelve Months Ended December 31, 2003 and 2002
(In thousands)
Unaudited Audited
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Cash flows from operating
activities:
Net income $95,452 $73,841 $351,853 $221,965
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and
amortization 9,413 6,184 28,530 22,928
Noncash income (4,146) (4,708) (16,584) (17,519)
Litigation and other
noncash charges 122 -- 3,535 177,832
Deferred income taxes (4,620) 15,428 75,775 (36,432)
Realized gain on sale of
investments (4,222) (12,802) (30,849) (26,883)
Changes in assets and
liabilities (net of
balances acquired):
Premiums receivable 4,561 14,798 86 11,039
Other receivables (2,921) (4,368) 14,749 (9,241)
Prepaid expenses and
other current assets 19,531 2,384 (1,571) (4,416)
Medical costs payable 5,654 (28,801) 53,623 323
Trade accounts payable
and accrued expenses 13,204 18,464 (14,683) 232
Reserve for litigation
settlement -- -- (161,300) --
Income taxes payable 35,776 (54,512) 36,301 (7,090)
Unearned revenue 55,812 60,939 3,290 14,836
Other, net 1 10 442 (3,105)
Net cash provided by
operating activities 223,617 86,857 343,197 344,469
Cash flows from investing
activities:
Capital expenditures (2,102) (3,570) (14,683) (18,981)
Purchases of investments (472,541) (283,182) (1,613,040) (1,460,763)
Sales and maturities of
investments 234,539 385,731 1,349,719 1,386,443
Acquisitions, net of cash
acquired -- -- -- (1,288)
Other, net (181) (75) (210) (75)
Net cash provided
(used) by investing
activities (240,285) 98,904 (278,214) (94,664)
Cash flows from financing
activities:
Proceeds from exercise of
stock options 17,597 2,193 32,738 31,545
Proceeds from borrowings, net -- -- 391,371 --
Payments under capital leases (926) (1,325) (5,003) (2,552)
Redemption of notes payable (1,000) (6,563) (128,875) (27,136)
Purchase of treasury shares (16,480) (132,126) (139,871) (251,509)
Payment of withholding tax
on option exercises -- -- (460) (24,056)
Net cash provided
(used) by financing
activities (809) (137,821) 149,900 (273,708)
Net increase (decrease) in
cash and cash equivalents (17,477) 47,940 214,883 (23,903)
Cash and cash equivalents at
beginning of period 553,987 273,687 321,627 345,530
Cash and cash equivalents at
end of period $536,510 $321,627 $536,510 $321,627
Exhibit 1
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Supplemental Schedule Reconciling GAAP Earnings to Run Rate Earnings
For the Three and Twelve Months Ended December 31, 2003 and 2002
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Diluted earnings per common share -
GAAP $1.14 $0.84 $4.15 $2.45
Effect of run rate adjustments:
Litigation charge for settlement,
net -- -- 0.22 0.98
Reserves for legal defense costs -- 0.13 -- 0.13
Changes in estimates of prior
period medical cost reserves (0.08) -- (0.24) (0.22)
Changes in estimates of NY
stabilization pool
reserves/receivables -- -- -- (0.14)
MedUnite investment impairment
charge -- -- -- 0.07
CSC contract termination and
asset valuation charge -- -- -- 0.10
Write-off of deferred financing
costs due to refinancing -- -- 0.02 --
Diluted earnings per common share -
Run Rate $1.06 $0.97 $4.15 $3.37
Diluted common shares 84,026 87,752 84,754 90,744
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Net earnings - GAAP $95,452 $73,841 $351,853 $221,965
Effect of run rate adjustments:
Litigation charge for settlement,
net -- -- 18,498 89,116
Reserves for legal defense costs -- 11,780 -- 11,780
Changes in estimates of prior
period medical cost reserves (6,458) (217) (20,382) (19,605)
Changes in estimates of NY
stabilization pool
reserves/receivables -- -- -- (12,958)
MedUnite investment impairment
charge -- -- -- 6,479
CSC contract termination and
asset valuation charge -- -- -- 9,130
Write-off of deferred financing
costs due to refinancing -- -- 2,050 --
Net earnings - Run Rate $88,994 $85,404 $352,019 $305,907
Note: Exhibit 1 above reconciles the differences between run rate earnings
and net earnings calculated and presented in accordance with
generally accepted accounting principles ("GAAP"). Management
believes that the presentation of run rate earnings provides useful
information to investors regarding the Company's results of
operations because such presentation facilitates the period-to-
period comparison of operating performance by eliminating charges
(recoveries) for settlement of the 1997 securities class action
litigation, which charges (recoveries) are unrelated to current
period operating performance, and by eliminating, among other
things, the current period impact of changes to the Company's
estimates of prior period medical cost reserves.
Run Rate Adjustments for the Quarters Ended December 31, 2003 and 2002
During the fourth quarter of 2003, the Company had net favorable prior
period reserve adjustments ("PPRAs") of medical costs of approximately $10.7
million. These PPRAs had the effect of increasing reported net earnings by
$6.5 million, or $0.08 per share, in the fourth quarter of 2003. In the
fourth quarter of 2002, the Company increased its legal reserves for the now
settled class action securities litigation by $20 million, which had the
effect of reducing fourth quarter 2002 reported earnings by $11.8 million, or
$0.13 per share.
Exhibit 2
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Changes in Medical Costs Payable
For the Twelve Months Ended December 31, 2003 and 2002
(In millions)
Amounts Relating to
Twelve Months Ended December 31, 2003 Claims Incurred During
Total 2003 2002 and Prior
Balance as of December 31, 2002 $618.6 $-- $618.6
Components of health care services
expense:
Estimated costs incurred 4,276.2 4,276.2 --
Estimate changes (33.8) -- (33.8)
Health care services expense 4,242.4 4,276.2 (33.8)
Payments for health care services (4,189.5) (3,644.0) (545.5)
Balance as of December 31, 2003 $671.5 $632.2 $39.3
Twelve Months Ended December 31, 2002 Amounts Relating to
Claims Incurred During
Total 2002 2001 and Prior
Balance as of December 31, 2001 $595.1 $ -- $595.1
Medical payables acquired 25.7 -- 25.7
Components of health care services
expense:
Estimated costs incurred 3,904.1 3,904.1 --
Estimate changes (55.3) -- (55.3)
Health care services expense 3,848.8 3,904.1 (55.3)
Payments for health care services (3,851.0) (3,347.1) (503.9)
Balance as of December 31, 2002 $618.6 $557.0 $61.6
Changes in Medical Costs Payable for the Twelve Months Ended
December 31, 2003 and 2002
During 2003, net favorable PPRAs were $33.8 million compared to $55.3
million in 2002. The 2002 amount includes $22 million related to favorable
estimate changes in reserves for New York Market Stabilization Pools.
As the Company's claims processing has continued to improve and the tail
of its incurred claims has shortened, the amount of ending reserve related to
prior year periods has continued to decline. As of December 31, 2003,
approximately 6% of total medical costs payable were for prior years, compared
to approximately 10% as of December 31, 2002. The Company's reserving
methodologies are consistent for all periods presented.
Exhibit 3
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
COMPONENTS OF MEDICAL COSTS PAYABLE
As of December 31, 2003 and 2002
(In millions)
Amounts Relating to
Claims Incurred During
As of December 31, 2003 Total 2003 2002 and Prior
IBNR and medical claims reserves $641.5 $615.7 $25.8
Pharmacy PBM payable 27.8 27.8 --
Stabilization and stop-loss pools,
BDCC and GME reserves, net (4.9) (11.3) 6.4
Other reserves 7.1 -- 7.1
Medical Costs Payable Balance $671.5 $632.2 $39.3
Amounts Relating to
Claims Incurred During
As of December 31, 2002 Total 2002 2001 and Prior
IBNR and medical claims reserves $555.7 $521.8 $33.9
Pharmacy PBM payable 26.7 26.7 --
Stabilization and stop-loss pools,
BDCC and GME reserves, net 13.9 8.5 5.4
Other reserves 22.3 -- 22.3
Medical Costs Payable Balance $618.6 $557.0 $61.6
Definitions
IBNR and medical claims reserves: Estimates of liabilities for incurred
but unreported medical claims including in-house inventories, adjudicated but
not yet paid claims, net liabilities under risk sharing arrangements and
reserves for previously denied claims.
Pharmacy PBM payable: Bi-weekly amounts due to the Company's pharmacy
benefit manager based on submission of pharmacy claims.
Stabilization and stop-loss pools, BDCC and GME reserves, net: Estimated
net liabilities (receivables) related to various state programs including New
York market stabilization and stop-loss pools, bad debt and charity care and
graduate medical education surcharges.
Other reserves: Estimated liabilities for certain former medical
contracts that are in various stages of resolution.
Components of Medical Costs Payable at December 31, 2003 and December 31, 2002
During the fourth quarter of 2003, total medical costs payable increased
$5.1 million from the balance at September 30, 2003. Current year IBNR and
medical claims reserves of $615.7 million increased $36.9 million from $578.8
million at September 30, 2003, while reserves for prior year IBNR and medical
claims declined $11.3 million from September 30, 2003, due to claim payments
and favorable development.
IBNR and medical claims reserves represented 95.5% of total medical costs
payable at December 31, 2003, compared to 89.8% at December 31, 2002. The
percentage of IBNR and medical claims reserves related to claims incurred in
prior years was 4.0% at December 30, 2003, compared to 6.1% at December 31,
2002. The change in net stabilization and stop-loss pools, BDCC and GME
reserves during 2003 is the result of the timing of payments to the Company
under the stop-loss programs and the establishment of receivables for BDCC
surcharges recoverable from prior year overpayments. Total days medical costs
payable at December 31, 2003 was approximately 58 days, representing an
increase of approximately two days of IBNR and medical claims reserves from
September 30, 2003, due primarily to higher levels of physician claims
inventories at year-end and correspondingly higher levels of IBNR claims
reserves, partially offset by a one day decline in other medical costs payable
resulting from settlement of medical liabilities aged more than one year.
Exhibit 4
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL STATISTICS
(In millions, except PMPM data)
(Unaudited)
2003
Full Year 4Q 3Q 2Q 1Q
Commercial Premium
Revenues $4,706.8 $1,191.8 $1,186.0 $ 1,173.9 $ 1,155.1
Medicare Premium
Revenues 632.5 159.9 159.8 157.4 155.4
Total Premium
Revenues $5,339.3 $1,351.7 $1,345.8 $ 1,331.3 $ 1,310.5
Commercial Medical
Costs $3,711.2 $935.8 $921.6 $950.3 $903.5
Medicare Medical
Costs 531.2 130.7 131.9 138.0 130.6
Total Health Care
Services Expense $4,242.4 $1,066.5 $1,053.5 $ 1,088.3 $ 1,034.1
Commercial PMPM
Revenue $269.62 $276.44 $272.66 $267.20 $262.36
Medicare PMPM
Revenue $743.79 $751.34 $750.16 $740.10 $733.53
Commercial PMPM
Medical Costs $212.59 $217.06 $211.87 $216.31 $205.21
Medicare PMPM Medical
Costs $624.59 $614.02 $619.14 $648.80 $616.66
Commercial Medical
Loss Ratio 78.8% 78.5% 77.7% 81.0% 78.2%
Medicare Medical
Loss Ratio 84.0% 81.7% 82.5% 87.7% 84.1%
Total Medical Loss
Ratio 79.5% 78.9% 78.3% 81.7% 78.9%
MG&A Expenses (1) $575.1 $144.4 $143.7 $144.7 $142.3
Administrative Loss
Ratio (ALR) (1) 10.7% 10.7% 10.7% 10.8% 10.8%
ALR Run Rate (2) 10.7% 10.7% 10.7% 10.8% 10.8%
2002 2001
Full Year 4Q Full Year
Commercial Premium Revenues $ 4,265.8 $ 1,115.2 $3,653.1
Medicare Premium Revenues 585.2 147.4 659.3
Total Premium Revenues $ 4,851.0 $ 1,262.6 $4,312.4
Commercial Medical Costs $ 3,374.9 $893.2 $2,865.6
Medicare Medical Costs 473.9 119.9 535.7
Total Health Care Services
Expense $ 3,848.8 $ 1,013.1 $3,401.3
Commercial PMPM Revenue $244.11 $250.80 $222.74
Medicare PMPM Revenue $710.36 $702.50 $658.21
Commercial PMPM Medical Costs $193.13 $200.89 $174.73
Medicare PMPM Medical Costs $575.26 $571.32 $534.84
Commercial Medical Loss Ratio 79.1% 80.1% 78.4%
Medicare Medical Loss Ratio 81.0% 81.3% 81.2%
Total Medical Loss Ratio 79.3% 80.2% 78.9%
MG&A Expenses (1) $575.4 $157.7 $489.1
Administrative Loss Ratio (ALR) (1) 11.8% 12.5% 11.3%
ALR Run Rate (2) 11.1% 10.9% 11.1%
(1) Excludes net litigation settlement charges of ($151.3 million) in the
third quarter of 2002 and ($45 million) in the first quarter of 2003,
and $14.3 million of litigation insurance recoveries in the third
quarter of 2003.
(2) Run Rate ALR excludes charges and recoveries related to the securities
class action litigation settlement costs in the first quarter of 2003
($45 million) and the recovery of $14.3 million in the third quarter
of 2003, the third quarter 2002 charge of ($151.3 million) and fourth
quarter 2002 related legal charge of ($20 million), and the
termination charge for the CSC contract ($15.5 million) in the second
quarter of 2002.
Selected Trends and Financial Statistics
Commercial premium revenues increased $76.6 million over the fourth
quarter of 2002. Commercial premium yields, net of product mix and benefit
changes, increased approximately 10.2% over the fourth quarter of 2002. For
the full year 2003, commercial premium yields increased approximately 10.4%
over 2002. Medicare premiums increased $12.5 million over the fourth quarter
of 2002 as a result of increased membership, the mix of membership and
increased reimbursement rates.
Commercial per member per month medical costs for the fourth quarter of
2003 increased approximately 9.4% compared to the 2002 fourth quarter. This
percentage increase reflects the reported per member per month (PMPM)
commercial medical costs adjusted for net favorable development of commercial
medical reserves of approximately $5.9 million in the fourth quarter of 2003,
and adjusted for net unfavorable development of commercial medical reserves of
approximately $5.2 million in the fourth quarter of 2002. Full year net
favorable development of medical reserves was approximately $33.8 million in
2003, compared to $55.3 million in 2002. Commercial PMPM medical costs for
the full year 2003 increased approximately 9.4% compared to 2002. This annual
percentage increase reflects the reported PMPM commercial medical costs
adjusted for net favorable development of commercial medical reserves of
approximately $26.9 million in 2003 and $46.1 million in 2002.
Exhibit 5
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
MEMBERSHIP DATA
(In thousands)
(Unaudited)
Total Membership 2003
4Q 3Q 2Q 1Q
POS, PPO and Other Plans 1,239.4 1,252.0 1,260.0 1,276.8
HMO 190.5 191.5 196.5 204.0
Total Fully Insured
Commercial Membership 1,429.9 1,443.5 1,456.5 1,480.8
Medicare 70.8 71.0 70.9 70.7
Third-party Administration 38.5 39.8 40.8 41.1
Total Membership 1,539.2 1,554.3 1,568.2 1,592.6
Fully Insured Commercial
Change (13.6) (13.0) (24.3) 1.3
Fully Insured Commercial
Change % -0.9% -0.9% -1.6% 0.1%
2002 2001
4Q 3Q 2Q 1Q 4Q
POS, PPO and Other Plans 1,252.9 1,249.8 1,236.0 1,204.9 1,154.1
HMO 226.6 229.0 233.6 236.7 218.2
Total Fully Insured
Commercial Membership 1,479.5 1,478.8 1,469.6 1,441.6 1,372.3
Medicare 70.1 69.6 68.9 67.5 77.8
Third-party Administration 51.9 62.7 63.3 65.4 60.0
Total Membership 1,601.5 1,611.1 1,601.8 1,574.5 1,510.1
Fully Insured Commercial
Change 0.7 9.2 28.0 69.3 5.7
Fully Insured Commercial
Change % 0.0% 0.6% 1.9% 5.0% 0.4%
Membership
Total fully insured commercial membership ended the quarter at 1.43
million members compared to 1.44 million members at the end of September 2003,
and 1.48 million members at the end of 2002. For the full year 2003, Oxford
commercial membership, excluding MedSpan, declined approximately 27.4 thousand
members, while MedSpan membership declined approximately 22.2 thousand
members.
Medicare membership remained relatively constant between 70,000 and 71,000
during 2003, ending the period at 70,800 members.
SOURCE Oxford Health Plans, Inc.
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Related links:
http://www.oxfordhealth.com
CONTACT:
Investor Contacts: Gary Frazier,
+1-203-459-7331, or Jon Green, +1-203-459-6674, or Media Contact:
Maria Gordon-Shydlo, +1-203-459-7674, all of Oxford Health Plans,
Inc.
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