Earnings Per Share of $1.00 for the Fourth Quarter
Sequential Membership Increase
2001 Operating Cash Flow of $614 Million
TRUMBULL, Conn., Feb. 5 /PRNewswire-FirstCall/ -- Oxford Health Plans,
Inc. (NYSE: OHP) announced today net income of $1.00 per diluted common share
for the quarter ended December 31, 2001, compared to $0.43 per share for the
prior year quarter. Net income for the fourth quarter of 2001 was
$94.3 million including the recognition of $10 million, or $0.11 per share, in
tax benefits and $6.6 million, or $0.04 per share, in additional recoveries
from New York State Market Stabilization Pools related to prior years. The
prior year quarter results included a net reduction of $0.19 per share related
to various items including charges related to the Company's recapitalization.
Net income for the year ended December 31, 2001 was $322.4 million, or
$3.21 per diluted common share, compared to $191.3 million, or $2.02 per
diluted common share, in the prior year.
Premium revenues for the quarter were $1.09 billion compared to
$1.02 billion in the prior year period. As of December 31, 2001, Oxford's
fully insured commercial membership was approximately 1.372 million,
approximately 5,700 members above the third quarter and 35,300 members over
December of 2000. In January 2002, Oxford's fully insured commercial
membership increased by about 17,000 members to approximately 1.389 million
members, representing net growth of approximately 33,400 members or 2.5%
compared to January of 2001. As expected, Medicare membership for January
2002 declined by 12,000 members from December 2001, as a result of the
Company's exit from the Medicare program in Nassau County, New York and most
of New Jersey. Oxford's Chairman and CEO Norman C. Payson, M.D., commented on
the results, "Oxford's outstanding financial results in the fourth quarter and
all of 2001 were due in significant part to our success in working with the
health care community to keep quality health care affordable. These same
efforts have allowed our premium increases to be more modest than many of our
competitors. Health care affordability is very important to our community in
these challenging economic times. We are also enthusiastic about our
enrollment growth and future growth prospects largely because of our
initiatives on health care premium affordability, timely new health care
benefit designs and geographic expansion."
The Company reported $181.2 million in cash flow from operations for the
quarter ended December 31, 2001, compared to $171.2 million in the prior year
period. The Company had $613.8 million in cash flow from operations for the
year, compared to $404.7 million in the prior year. As of December 31, 2001,
the Company held approximately $1.3 billion in cash and marketable securities,
$180 million of which was available at the parent company. In January 2002,
the parent company received an additional $80 million in dividends, as a
result of its subsidiaries' third quarter 2001 results, bringing its available
cash to $260 million. "During 2001, we repurchased almost 13 million shares
of common stock for $366.5 million, while we lowered our debt to capital ratio
from 28.2% at the beginning of the year to 24.9% at year-end. We believe that
this continued improvement in leverage, together with existing parent company
cash, our available $75 million revolving credit facility and expected future
operating cash flows will likely result in strong liquidity for 2002," said
Kurt B. Thompson, Oxford's Chief Financial Officer.
On December 21, 2001, Oxford announced that it had signed a definitive
agreement to acquire MedSpan, Inc., a Connecticut provider-sponsored, managed
healthcare organization for a cash consideration of approximately $19 million.
At December 31, 2001, MedSpan had approximately 52,000 fully insured
commercial members and 22,000 self-funded members. Oxford expects to close
the transaction during the first quarter of 2002. MedSpan's enrollment and
financial results are not included in Oxford's results for 2001 or in its
January membership totals.
As previously announced, the Company will hold a conference call on
Tuesday, February 5, 2002 at 9:00 am (Eastern Time) to review the results of
the fourth quarter and full year 2001 and discuss the outlook for 2002. 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)
Founded in 1984, Oxford Health Plans, Inc. provides health plans to
employers and individuals in New York, New Jersey and Connecticut, through its
direct sales force, independent insurance agents and brokers. Oxford's
services include traditional health maintenance organizations,
point-of-service plans, third party administration of employer-funded
benefits plans and Medicare plans.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements concerning
the Company's future growth prospects, new health care benefit designs and
geographic expansion, expected future operating cash flows and liquidity, and
the Company's expectation to close the acquisition of MedSpan during the first
quarter of 2002, 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, including proposed patient protection legislation
and mandated benefits.
* The state of the economy.
* The impact of the September 11, 2001 terrorist attacks, subsequent cases
of anthrax infection or exposure, and any future acts of terrorism or
war.
* 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 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 (including
pending class and derivative actions filed against the Company and
certain of its officers and directors, and other proceedings commenced
against the Company and several employees by certain healthcare
providers), class actions in Connecticut and New York and related
litigation by the Connecticut Attorney General, regulatory proceedings
and other governmental action (including the ongoing 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.
* Those factors included in the discussion under the caption
"Business - Cautionary Statement Regarding Forward-Looking Statements"
in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 and under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Cautionary
Statement Regarding Forward-Looking Statements" in the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 2001.
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Income Statements
Three and Twelve Months Ended December 31, 2001 and 2000
(In thousands, except per share, per member per month
and membership highlights data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
Revenues:
Premiums earned $1,094,860 $1,019,391 $4,312,391 $4,023,397
Third-party
administration, net 3,910 3,393 13,791 15,390
Investment and
other income, net 22,094 15,771 95,046 73,015
Total revenues 1,120,864 1,038,555 4,421,228 4,111,802
Expenses:
Health care services 852,153 739,481 3,401,331 3,116,544
Marketing, general and
administrative 122,046 114,703 489,143 476,422
Interest and other
financing charges 3,484 6,784 19,003 34,332
Total expenses 977,683 860,968 3,909,477 3,627,298
Earnings before income taxes
and extraordinary item 143,181 177,587 511,751 484,504
Income tax expense 48,848 70,180 189,330 199,085
Net earnings before
extraordinary item 94,333 107,407 322,421 285,419
Extraordinary item -- (16,701) -- (20,325)
Net earnings 94,333 90,706 322,421 265,094
Less - preferred stock
dividends and amortization -- (45,802) -- (73,791)
Net earnings attributable
to common stock $94,333 $44,904 $322,421 $191,303
Earnings per common
share - basic:
Earnings before
extraordinary item $1.04 $0.70 $3.35 $2.50
Extraordinary item -- (0.19) -- (0.24)
Earnings per common
share - basic $1.04 $0.51 $3.35 $2.26
Earnings per common
share - diluted:
Earnings before
extraordinary item $1.00 $0.59 $3.21 $2.24
Extraordinary item -- (0.16) -- (0.22)
Earnings per common
share - diluted $1.00 $0.43 $3.21 $2.02
Weighted-average common
shares outstanding-basic 90,508 88,114 96,269 84,728
Effect of dilutive securities:
Stock options 3,715 6,002 4,274 4,779
Warrants -- 9,995 -- 5,066
Weighted-average common
shares outstanding - diluted 94,223 104,111 100,543 94,573
Selected Information:
Medical loss ratio 77.8% 72.5% 78.9% 77.5%
Administrative loss ratio 11.1% 11.2% 11.3% 11.8%
Earnings before income taxes,
financing charges,
depreciation and
amortization ("EBITDA") $152,568 $190,664 $550,531 $551,968
PMPM premium revenue $252.03 $238.08 $247.80 $231.96
PMPM medical expense $196.16 $172.71 $195.45 $179.67
Fully insured member months 4,344.2 4,281.7 17,402.4 17,345.5
As of December 31,
Membership Highlights 2001 2000
Freedom and Liberty Plans 1,154,100 1,115,400
HMO 218,200 221,600
Medicare 77,800 92,000
Total Fully Insured 1,450,100 1,429,000
Third-party Administration 60,000 62,400
Total Membership 1,510,100 1,491,400
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2001 and December 31, 2000
(In thousands, except share data)
Assets
Dec. 31, Dec. 31,
2001 2000
Current assets:
Cash and cash equivalents $345,530 $198,632
Investments - available-for-sale,
at market value 961,652 868,380
Premiums receivable, net 37,127 56,694
Other receivables 24,678 80,994
Prepaid expenses and other current assets 3,450 4,761
Deferred income taxes 83,416 46,102
Total current assets 1,455,853 1,255,563
Property and equipment, net 35,084 19,779
Deferred income taxes 8,348 102,133
Restricted cash and investments 58,813 57,194
Other noncurrent assets 18,627 9,941
Total assets $1,576,725 $1,444,610
Liabilities and Shareholders' Equity
Current liabilities:
Medical costs payable $595,064 $612,930
Current portion of long term debt 26,250 147,000
Trade accounts payable and accrued expenses 116,601 103,459
Unearned revenue 201,225 88,299
Income taxes payable 47,789 --
Current portion of capital lease obligations -- 5,700
Total current liabilities 986,929 957,388
Long-term debt 126,876 28,000
Shareholders' equity:
Preferred stock, $.01 par value,
authorized 2,000,000 shares -- --
Common stock, $.01 par value, authorized
400,000,000 shares; issued and
outstanding 100,353,007 shares in
2001 and 98,304,384 shares in 2000 1,004 983
Additional paid-in capital 605,661 561,857
Retained earnings (accumulated deficit) 215,165 (107,256)
Accumulated other comprehensive income 7,587 3,638
Treasury stock, at cost (366,497) --
Total shareholders' equity 462,920 459,222
Total liabilities and
shareholders' equity $1,576,725 $1,444,610
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three and Twelve Months Ended December 31, 2001 and 2000
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
Cash flows from operating activities:
Net income $94,333 $90,706 $322,421 $265,094
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 6,210 7,277 21,417 34,229
Deferred income taxes (16,926) 68,600 66,127 190,596
Extraordinary items -- 16,701 -- 20,325
Realized (gain) on sale of
investments (3,785) (178) (20,787) (111)
Loss on sale of assets -- 5,365 -- 5,365
Other, net -- (1,420) -- --
Changes in assets and liabilities:
Premiums receivable 38,325 5,858 19,567 7,377
Other receivables (2,306) (51,645) 56,316 (48,406)
Prepaid expenses and other
current assets 1,852 1,358 1,684 (899)
Medical costs payable (7,960) (1,837) (17,866) (43,133)
Trade accounts payable and
accrued expenses (3,166) (20,600) 2,295 (19,853)
Unearned revenue 74,670 49,861 112,926 (8,856)
Income taxes payable (535) -- 47,789 --
Other, net 443 1,196 1,920 2,976
Net cash provided by
operating activities 181,155 171,242 613,809 404,704
Cash flows from investing activities:
Capital expenditures (8,039) (2,925) (21,386) (12,774)
Purchases of investments (156,313) (120,906) (1,193,074) (466,999)
Sales and maturities
of investments 160,991 69,499 1,130,811 450,082
Proceeds from sale of assets -- 2,734 -- 2,734
Acquisitions, net of cash acquired -- -- (19,483) --
Other, net 359 18,351 798 7,730
Net cash used by
investing activities (3,002) (33,247) (102,334) (19,227)
Cash flows from financing activities:
Proceeds from exercise
of stock options 3,255 14,587 29,494 64,590
Redemption of warrants -- (142,122) -- (142,122)
Proceeds of notes payable -- 175,000 -- 175,000
Cash dividends paid on
preferred stock -- (3,728) -- (13,792)
Redemption of notes payable (5,468) (221,350) (21,874) (376,050)
Redemption of preferred stock -- (78,592) -- (208,592)
Debt issuance expenses -- (6,207) -- (6,207)
Payments under capital leases (137) (2,530) (5,700) (12,554)
Purchase of treasury shares (132,916) -- (366,497) --
Net cash used by
financing activities (135,266) (264,942) (364,577) (519,727)
Net increase (decrease) in cash
and cash equivalents 42,887 (126,947) 146,898 (134,250)
Cash and cash equivalents at
beginning of period 302,643 325,579 198,632 332,882
Cash and cash equivalents
at end of period $345,530 $198,632 $345,530 $198,632
SOURCE Oxford Health Plans, Inc.
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Related links:
http://www.oxfordhealth.com
CONTACT:
Investor - Gary Frazier, +1-203-459-7331, or
Deborah Abraham, +1-203-459-6674; or Media - Maria Gordon-Shydlo,
+1-203-459-7674, all of Oxford Health Plans, Inc.
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