* Earnings per share of $1.31 for the quarter, $1.19 on a run rate basis
Operating cash flow of $164.3 million for the quarter
* Share repurchase authority increased by $250 million and extended
through 2004
* Quarterly cash dividend of 10 cents per share declared beginning first
quarter of 2004
TRUMBULL, Conn., Oct. 28 /PRNewswire-FirstCall/ -- Oxford Health Plans,
Inc. (NYSE: OHP) announced today net income of $111.0 million, or $1.31 per
diluted share, for the quarter ended September 30, 2003, compared to $23.8
million, or $0.26 per diluted share, for the prior year quarter. Third
quarter 2003 results include pretax insurance recoveries of $14.3 million,
$0.10 per share, related to the Company's settlement of the securities class
action litigation earlier this year and a $0.02 per share benefit from
favorable prior period medical cost reserve development. Third quarter
results for 2002 include a pretax charge of $151.3 million, or $0.98 per
share, related to securities class action litigation matters and a benefit of
$0.20 per share related to favorable changes in certain medical cost reserve
estimates. See Exhibit 1 of this release for a reconciliation of earnings
reported under generally accepted accounting principles to run rate earnings
for the third quarter and nine months of 2003 compared to 2002.
"Our third quarter results demonstrate that we are successfully executing
on our strategy, which is focused on offering an innovative product portfolio,
disciplined pricing and substantial engagement in our market to impact
healthcare costs," stated Charles G. Berg, President and CEO of Oxford. "As
we consider the balance of 2003 and 2004, we know that the enrollment
environment will be challenging, primarily as a result of the slowly
recovering economy and the competitive landscape. Nonetheless, we believe
that our strategy and track record of successful execution position us to grow
our membership profitably over the long-term."
Business Highlights
Membership: Total fully insured commercial membership ended the quarter
at 1.444 million members compared to 1.457 million members at the end of June
2003, and 1.479 million members at the end of the third quarter of 2002. Year
to date, Oxford commercial membership has declined approximately 15 thousand
members while MedSpan membership has declined approximately 21 thousand
members. Medicare membership grew modestly to 71,000 members at the end of
the quarter.
Premium Revenue: Premium revenue increased 8.4% in the third quarter to
$1.35 billion, compared to $1.24 billion in the third quarter of 2002.
Commercial premiums increased 8.4% to $1.19 billion, compared to $1.09 billion
in the third quarter of 2002. This premium growth over the prior year period
was due to a net commercial premium yield increase of approximately 10.5%
partially offset by a 1.9% decline in commercial member months for the period.
For the nine months of 2003, net per member per month commercial premium
yields increased approximately 10.6% over the same period in 2002. Medicare
premiums, which represented 11.9% of total premiums in the current quarter,
increased 8.5% to $159.8 million, compared to $147.3 million in the third
quarter of 2002.
Investment and Other Income, net: Investment and other income, net, was
$22.6 million, compared to $28.0 million in the third quarter of 2002. The
third quarter of 2002 included $8.7 million of realized gains compared to $3.6
million in the current quarter. The net pre-tax yield on the Company's
investment portfolio was approximately 3.5% during the third quarter of 2003,
compared to approximately 4.4% during the third quarter of 2002.
Health Care Services Expense: Health care services expense was $1.053
billion compared to $944.5 million in the third quarter of 2002. The current
year quarter included $2.7 million of favorable reserve developments while the
prior year quarter included $31.5 million of favorable medical reserve
estimate changes, including $22 million related to New York Market
Stabilization Pools. Commercial per member per month medical costs increased
approximately 9.5% compared to the 2002 third quarter after adjusting the
reported per member per month commercial medical cost ratios for cumulative
net favorable development of prior period commercial medical reserve estimate
changes of approximately $1.3 million and $31.3 million for the three month
periods ended September 30, 2003 and 2002, respectively. For the first nine
months of 2003, net favorable development of prior period medical reserves was
$14.2 million compared to $51.8 million for the same period in 2002.
Marketing, General and Administrative (MG&A) Expenses: MG&A expenses,
excluding securities litigation recoveries or charges, were $143.8 million,
resulting in an administrative loss ratio of 10.7% for the third quarter of
2003, compared to $135.5 million and a 10.9% administrative loss ratio in the
third quarter of 2002. Broker commissions and premium taxes accounted for
$48.1 million, or 33.5%, of total MG&A expenses in the third quarter of 2003,
compared to $43.0 million, or 31.7%, of MG&A 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. Excluding the increase in these expense items, the
Company's MG&A expenses increased 3.4% over the third quarter of 2002.
Medical Costs Payable: Medical costs payable were $666.4 million as of
September 30, 2003, compared to $696.6 million at June 30, 2003, and $618.6
million at December 31, 2002. The $30.2 million decrease from the second
quarter was due to a decrease in IBNR and unpaid claims reserves of $19.6
million ($6.4 million of current year reserves and $13.2 million of prior year
reserves) and a net $10.6 million reduction in other medical cost liabilities.
Days claims in medical costs payable were 57 days at September 30, 2003,
approximately two days below the level at June 30, 2003. The decline in days
claims payable was in line with management's expectations communicated during
the Company's second quarter 2003 earnings conference call.
Cash Flow: Cash flow from operations was $164.3 million in the current
quarter compared to $116.7 million for the third quarter of 2002. The current
quarter's cash flow benefited from the tax deduction of approximately
$43 million of deferred tax assets established in prior quarters for the
settlement of the 1997 securities class action litigation and related legal
costs.
Parent Cash Balances: As of September 30, 2003, the parent company had
approximately $270 million of free cash and investments. During the third
quarter of 2003, the parent company received dividends of $87.5 million from
its New York and Connecticut regulated subsidiaries.
Share Repurchase Program: During the quarter, the Company repurchased
2.1 million of its shares for $77.1 million at an average price of $36.56 per
share. The Company has repurchased 23.4 million shares for $740.4 million
since the inception of its share repurchase program in the third quarter of
2001. As announced in a separate press release today, the Board of Directors
has authorized an additional $250 million in repurchase authority expiring at
the end of 2004.
Quarterly Dividend: As announced in a separate press release today, the
Board of Directors of Oxford Health Plans, Inc. declared a quarterly cash
dividend of 10 cents per share payable on January 27, 2004, to shareholders of
record as of January 12, 2004.
2003 and 2004 Guidance: The following table presents management's current
estimates of various non-financial and financial measures for the twelve month
periods ending December 31, 2003 and December 31, 2004. Management's
estimates related to the twelve months ending December 31, 2004 are
preliminary and represent a range of outcomes based on its assessment of
current economic and competitive conditions. 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 for both
periods do not reflect the potential impact of share repurchases under the
Company's share repurchase program beyond September 30, 2003.
Twelve Months Ending
(in millions, except membership,
per share and percentage data) 12/31/03 12/31/04
Ending commercial membership (000's) 1,420 - 1,430 1,400 - 1,450
Fully insured member months (000's) 18,270 - 18,300 17,500 - 17,800
Net commercial premium yield increase 10% - 11% 9% - 10%
Net commercial medical cost trend 9% - 10% 9% - 10%
Premium revenues $5,320 - $5,330 $5,550 - $5,650
Total revenues $5,435 - $5,445 $5,660 - $5,760
Medical loss ratio (MLR) 79.7% - 80.0% 79.8% - 80.3%
Administrative loss ratio (ALR) (1) 10.8% 10.7% - 10.9%
Net income $340 - $345 $360 - $380
Diluted earnings per common share $4.03 -$4.08 $4.30 - $4.50
Weighted average common shares
outstanding - diluted 84 - 85 83 - 84
(1) 2003 percentage excludes net litigation charge
Conference Call and Webcast
As previously announced, the Company will hold a conference call today at
9:00 am (Eastern Time) to review the results of the third quarter and to
discuss management's outlook for the remainder of 2003 and management's
preliminary views regarding 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 services include traditional health maintenance organizations,
point-of-service plans, 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 products, innovation, active engagement,
disciplined pricing, future share repurchases, future membership growth,
management's current estimates of various non-financial and financial measures
for the twelve months ending December 31, 2003 and 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, including proposed patient protection legislation
and mandated benefits.
* 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 including 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, 2002, and Part I, Item 2, of the Company's Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 2003,
June 30, 2003 and September 30, 2003.
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Income Statements
For the Three and Nine Months Ended September 30, 2003 and 2002
(In thousands, except per share, per member per month and membership
highlights data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Revenues:
Premiums earned $1,345,813 $1,241,672 $3,987,603 $3,588,409
Third-party
administration, net 3,261 4,692 9,373 13,176
Investment and other
income, net 22,555 28,036 80,710 63,191
Total revenues 1,371,629 1,274,400 4,077,686 3,664,776
Expenses:
Health care services 1,053,424 944,497 3,175,835 2,835,702
Marketing, general and
administrative 143,783 135,499 430,743 417,666
Litigation (recovery)
charge for settlement, net (14,325) 151,300 30,675 151,300
Interest and other
financing charges 5,275 2,685 14,718 8,653
Total expenses 1,188,157 1,233,981 3,651,971 3,413,321
Earnings before income
taxes 183,472 40,419 425,715 251,455
Income tax expense 72,472 16,611 169,314 103,331
Net earnings $111,000 $23,808 $256,401 $148,124
Earnings per common share
- basic $1.35 $0.27 $3.09 $1.69
Earnings per common share
- diluted $1.31 $0.26 $3.01 $1.62
Weighted-average common
shares - basic 82,198 87,784 83,025 87,729
Dilutive effect of stock
options 2,690 2,965 2,021 3,881
Weighted-average common
shares - diluted 84,888 90,749 85,046 91,610
Selected Information
Medical loss ratio 78.3% 76.1% 79.6% 79.0%
Administrative loss ratio,
excluding litigation charge
(recovery) 10.7% 10.9% 10.8% 11.6%
Earnings before income taxes,
financing charges,
depreciation
and amortization
("EBITDA") $194,423 $48,859 $458,593 $276,024
PMPM premium revenue $294.95 $267.49 $289.31 $263.03
PMPM medical expense $230.87 $203.47 $230.41 $207.85
Fully insured member months 4,562.8 4,641.9 13,783.3 13,642.7
As of September 30,
Membership Highlights 2003 2002
POS, PPO and Other Plans 1,252,000 1,249,800
HMO 191,500 229,000
Total Fully Insured Commercial 1,443,500 1,478,800
Medicare 71,000 69,600
Third-party Administration 39,800 62,700
Total Membership 1,554,300 1,611,100
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of September 30, 2003 and December 31, 2002
(In thousands, except share data)
Assets
(Unaudited)
September 30, December 31,
2003 2002
Current assets:
Cash and cash equivalents $553,987 $321,627
Investments - available-for-sale, at
market value 1,143,390 1,102,664
Premiums receivable, net 35,066 29,803
Other receivables 26,249 43,919
Prepaid expenses and other current
assets 31,316 10,214
Deferred income taxes 39,073 111,652
Total current assets 1,829,081 1,619,879
Property and equipment, net 34,663 34,445
Deferred income taxes 8,273 9,173
Restricted cash and investments-held-
to-maturity, at amortized cost 59,692 56,421
Goodwill and other intangible assets,
net 23,736 24,691
Other noncurrent assets 12,549 8,907
Total assets $1,967,994 $1,753,516
Liabilities and Shareholders' Equity
Current liabilities:
Medical costs payable $666,424 $618,618
Current portion of long term debt 4,000 30,625
Trade accounts payable and accrued
expenses 121,828 135,124
Reserve for litigation settlement - 161,300
Unearned revenue 136,085 201,045
Income taxes payable - 2,418
Current portion of capital lease
obligations 5,678 5,470
Total current liabilities 934,015 1,154,600
Obligations under capital lease 1,464 5,749
Long-term debt 395,000 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 105,863,471 shares
in 2003
and 105,075,889 shares in 2002 1,059 1,051
Additional paid-in capital 727,776 709,258
Retained earnings 693,531 437,130
Accumulated other comprehensive
income 14,560 25,038
Treasury stock, at cost (799,411) (675,560)
Total shareholders' equity 637,515 496,917
Total liabilities and shareholders'
equity $1,967,994 $1,753,516
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three and Nine Months Ended September 30, 2003 and 2002
(Unaudited) (In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Cash flows from operating
activities:
Net income $111,000 $23,808 $256,401 $148,124
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 6,042 6,029 19,117 16,744
Noncash income (4,146) (5,207) (12,438) (12,811)
Litigation and other noncash
charges - 151,300 48,413 177,832
Deferred income taxes 3,656 (57,403) 80,395 (51,860)
Realized gain on sale of
investments (3,342) (7,560) (26,627) (14,081)
Changes in assets and
liabilities (net of
balances acquired):
Premiums receivable 702 (1,858) (4,475) (3,759)
Other receivables 11,594 (1,505) 34,670 (4,873)
Prepaid expenses and
other current assets 62,887 (6,835) (21,102) (6,800)
Medical costs payable (30,146) (43,044) 47,969 29,124
Trade accounts payable
and accrued expenses 8,140 496 (26,187) (18,232)
Reserve for litigation
settlement - - (225,000) -
Unearned revenue (5,046) 10,041 (52,522) (46,103)
Income taxes payable 2,943 49,006 525 47,422
Other, net (9) (583) 441 (3,115)
Net cash provided by
operating activities 164,275 116,685 119,580 257,612
Cash flows from investing
activities:
Capital expenditures (4,417) (9,124) (12,581) (15,411)
Purchases of available-for-
sale investments (353,049) (342,943) (1,140,499) (1,177,581)
Sales and maturities of
available-for-sale
investments 371,326 275,356 1,115,180 1,000,712
Acquisitions, net of cash
acquired - - - (1,288)
Other, net 33 24 (29) -
Net cash provided (used)
by investing activities 13,893 (76,687) (37,929) (193,568)
Cash flows from financing
activities:
Proceeds from exercise of
stock options 2,265 2,025 15,141 29,352
Proceeds from borrowings, net - - 391,371 -
Redemption of notes payable (1,000) (7,447) (127,875) (20,573)
Payment of withholding tax
on option exercises (78) - (460) (24,056)
Purchase of treasury shares (77,198) (30,494) (123,391) (119,383)
Payments under capital
leases (1,375) (1,227) (4,077) (1,227)
Net cash provided (used)
by financing activities (77,386) (37,143) 150,709 (135,887)
Net increase (decrease) in
cash and cash equivalents 100,782 2,855 232,360 (71,843)
Cash and cash equivalents at
beginning of period 453,205 270,832 321,627 345,530
Cash and cash equivalents at
end of period $553,987 $273,687 $553,987 $273,687
Exhibit 1
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Supplemental Schedule Reconciling GAAP Earnings to Run Rate Earnings
For the Three and Nine Months Ended September 30, 2003 and 2002
($ In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Diluted earnings per common share -
GAAP $1.31 $0.26 $3.01 $1.62
Effect of run rate adjustments:
Litigation charge (recovery) for
settlement, net (0.10) 0.98 0.22 0.97
Changes in estimates of prior
period medical cost reserves (0.02) (0.06) (0.10) (0.19)
Changes in estimates of NY
stabilization pool
reserves/receivables - (0.14) - (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 $1.19 $1.04 $3.15 $2.43
Diluted common shares 84,888 90,749 85,046 91,610
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net earnings - GAAP $111,000 $23,808 $256,401 $148,124
Effect of run rate adjustments:
Litigation charge (recovery) for
settlement, net (8,667) 89,116 18,475 89,116
Changes in estimates of prior
period medical cost reserves (1,664) (5,612) (8,547) (17,552)
Changes in estimates of NY
stabilization pool
reserves/receivables - (12,958) - (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 - - 2,048 -
Net earnings - Run Rate $100,669 $94,354 $268,377 $222,339
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 September 30, 2003 and 2002
During the third quarters of 2003 and 2002, the Company had favorable net
prior period reserve adjustments ("PPRAs") of medical costs of approximately
$2.7 million and $31.5 million, respectively. These PPRAs had the effect of
increasing reported net earnings by $1.7 million in 2003 and $18.6 million in
2002, or $0.02 per diluted share in 2003 and $0.20 per diluted share in 2002.
The quarter ended September 30, 2003 includes a $14.3 million pre-tax recovery
from certain excess insurance carriers related to the Company's previous
settlement of the 1997 securities class action litigation, which increased net
earnings by $8.7 million, or $0.10 per share. The prior year quarter included
a $151.3 million pre-tax charge related to the securities class action
litigation that reduced third quarter 2002 net earnings by $89.1 million, or
$0.98 per share.
Exhibit 2
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
Changes in Medical Costs Payable
For the Nine Months Ended September 30, 2003 and 2002
($ In millions)
(Unaudited)
Amounts Relating to
Nine Months Ended September 30, 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 3,190.0 3,190.0 -
Estimate changes (14.2) - (14.2)
Health care services expense 3,175.8 3,190.0 (14.2)
Payments for health care services (3,128.0) (2,592.1) (535.9)
Balance as of September 30, 2003 $ 666.4 $ 597.9 $ 68.5
Amounts Relating to
Nine Months Ended September 30, 2002 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 2,887.5 2,887.5 -
Estimate changes (51.8) - (51.8)
Health care services expense 2,835.7 2,887.5 (51.8)
Payments for health care services (2,807.6) (2,320.7) (486.9)
Balance as of September 30, 2002 $ 648.9 $ 566.8 $ 82.1
Changes in Medical Costs Payable for the Nine Months Ended September 30,
2003 and 2002
During the first nine months of 2003, net favorable PPRAs were
$14.2 million compared to $51.8 million favorable in the first nine months of
2002. The prior year amount includes $22 million related to favorable
estimate changes in reserves for New York Market Stabilization Pools.
As the Company's claims processing continues to improve and the tail of its
incurred claims is shortened, the amount of ending reserve related to prior
year periods continues to decline. As of September 30, 2003, approximately
10.3% of total medical costs payable were for prior years, compared to
approximately 12.7% as of September 30, 2002. The Company's reserving
methodologies are consistent for all periods presented.
Exhibit 3
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
COMPONENTS OF MEDICAL COSTS PAYABLE
As of September 30, 2003 and 2002 and December 31, 2002
($ In millions)
(Unaudited)
Amounts Relating to
Claims Incurred During
As of September 30, 2003 Total 2003 2002 and Prior
IBNR and medical claims reserves $ 615.9 $ 578.8 $ 37.1
Pharmacy PBM payable 25.9 25.9 -
Stabilization and stop-loss pools,
BDCC and GME reserves, net 7.5 (6.8) 14.3
Other reserves 17.1 - 17.1
Medical Costs Payable Balance $ 666.4 $ 597.9 $ 68.5
Amounts Relating to
Claims Incurred During
As of September 30, 2002 Total 2002 2001 and Prior
IBNR and medical claims reserves $ 575.9 $ 527.7 $ 48.2
Pharmacy PBM payable 24.2 24.2 -
Stabilization and stop-loss pools,
BDCC and GME reserves, net 21.5 14.9 6.6
Other reserves 27.3 - 27.3
Medical Costs Payable Balance $ 648.9 $ 566.8 $ 82.1
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 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 September 30, 2003
During the third quarter of 2003, total medical costs payable decreased
$30.2 million from the balance at June 30, 2003. Current year IBNR and
medical claims reserves of $578.8 million declined $6.4 million from $585.2
million at June 30, 2003, while reserves for prior year IBNR and medical
claims declined $13.2 million from June 30, 2003, due to claim payments and
modest favorable development.
IBNR and medical claims reserves represented 92.4% of total medical costs
payable at September 30, 2003, compared to 88.8% at September 30, 2002. The
percentage of IBNR and medical claims reserves related to claims incurred in
prior years was 6% at September 30, 2003, compared to 8.4% at September 30,
2002. Total days medical costs payable at September 30, 2003 was
approximately 57 days, representing a decrease of 1.7 days of IBNR and medical
claims reserves from June 30, 2003, in line with management's expectations,
with the remaining decrease coming from other medical costs payable.
Exhibit 4
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
SELECTED FINANCIAL STATISTICS
($ in Thousands, except PMPM data)
(Unaudited)
2003
3Q 2Q 1Q
Commercial Premium Revenues $1,186.0 $1,173.9 $1,155.1
Medicare Premium Revenues 159.8 157.4 155.4
Total Premium Revenues $1,345.8 $1,331.3 $1,310.5
Commercial Medical Costs $921.6 $950.3 $903.5
Medicare Medical Costs 131.8 138.0 130.6
Total Health Care Services Expense $1,053.4 $1,088.3 $1,034.1
Commercial PMPM Revenue $272.66 $267.20 $262.36
Medicare PMPM Revenue $750.16 $740.10 $733.53
Commercial PMPM Medical Costs $211.87 $216.31 $205.21
Medicare PMPM Medical Costs $619.14 $648.80 $616.66
Commercial Medical Loss Ratio 77.7% 81.0% 78.2%
Medicare Medical Loss Ratio 82.5% 87.7% 84.1%
Total Medical Loss Ratio 78.3% 81.7% 78.9%
MG&A Expenses (1) $143.8 $144.7 $142.3
Administrative Loss Ratio (ALR) (1) 10.7% 10.8% 10.8%
ALR Run Rate (2) 10.7% 10.8% 10.8%
2002
Full Year 4Q 3Q 2Q 1Q
Commercial Premium
Revenues $4,265.8 $1,115.2 $1,094.4 $1,055.1 $1,001.1
Medicare Premium
Revenues 585.2 147.4 147.3 147.5 143.0
Total Premium
Revenues $4,851.0 $1,262.6 $1,241.7 $1,202.6 $1,144.1
Commercial Medical
Costs $3,374.9 $893.2 $828.2 $855.3 $798.2
Medicare Medical Costs 473.9 119.9 116.3 121.5 116.2
Total Health Care
Services Expense $3,848.8 $1,013.1 $944.5 $976.8 $914.4
Commercial PMPM Revenue $244.11 $250.80 $246.85 $240.96 $237.42
Medicare PMPM Revenue $710.36 $702.50 $706.47 $719.78 $713.01
Commercial PMPM Medical
Costs $193.13 $200.89 $186.79 $195.34 $189.30
Medicare PMPM Medical
Costs $575.26 $571.32 $558.28 $592.58 $579.32
Commercial Medical Loss
Ratio 79.1% 80.1% 75.7% 81.1% 79.7%
Medicare Medical Loss
Ratio 81.0% 81.3% 79.0% 82.3% 81.2%
Total Medical Loss
Ratio 79.3% 80.2% 76.1% 81.2% 79.9%
MG&A Expenses (1) $575.4 $157.7 $135.5 $152.0 $130.2
Administrative Loss
Ratio (ALR) (1) 11.8% 12.5% 10.9% 12.6% 11.3%
ALR Run Rate (2) 11.1% 10.9% 10.9% 11.3% 11.3%
2001
Full Year
Commercial Premium Revenues $3,653.1
Medicare Premium Revenues 659.3
Total Premium Revenues $4,312.4
Commercial Medical Costs $2,865.6
Medicare Medical Costs 535.7
Total Health Care Services Expense $3,401.3
Commercial PMPM Revenue $222.74
Medicare PMPM Revenue $658.21
Commercial PMPM Medical Costs $174.73
Medicare PMPM Medical Costs $534.84
Commercial Medical Loss Ratio 78.4%
Medicare Medical Loss Ratio 81.2%
Total Medical Loss Ratio 78.9%
MG&A Expenses (1) $489.1
Administrative Loss Ratio (ALR) (1) 11.3%
ALR Run Rate (2) 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 all charges and recoveries related to the
securities class action litigation settlement and defense 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 charge of ($20 million) and
the termination charge for the CSC contract ($15.5 million) in the
second quarter of 2002.
Selected Trends and Operating Statistics
Commercial premium revenues increased $91.6 million over the third quarter
of 2002. Commercial premium yields, net of product mix and benefit changes,
increased approximately 10.5% over the third quarter of 2002. For the first
nine months of 2003, commercial premium yields increased approximately 10.6%
over the first nine months of 2002. Medicare premiums increased $12.5 million
over the third quarter of 2002 as a result of increased membership, the mix of
membership and increased reimbursement rates.
Commercial per member per month medical costs increased approximately 9.5%
compared with the 2002 third quarter after adjusting the reported per member
per month commercial medical cost ratio for cumulative net favorable
development of prior period medical reserve estimate changes of approximately
$1.3 million and $31.3 million for the three month periods ended September 30,
2003 and 2002, respectively.
Exhibit 5
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
MEMBERSHIP DATA
(in Thousands)
(Unaudited)
Total Membership 2003
3Q 2Q 1Q
POS, PPO and Other Plans 1,252.0 1,260.0 1,276.8
HMO 191.5 196.5 204.0
Total Fully Insured Commercial
Membership 1,443.5 1,456.5 1,480.8
Medicare 71.0 70.9 70.7
Third-party Administration 39.8 40.8 41.1
Total Membership 1,554.3 1,568.2 1,592.6
Fully Insured Commercial Change (13.0) (24.3) 1.3
Fully Insured Commercial Change % -0.9% -1.6% 0.1%
Total Membership 2002
4Q 3Q 2Q 1Q
POS, PPO and Other Plans 1,252.9 1,249.8 1,236.0 1,204.9
HMO 226.6 229.0 233.6 236.7
Total Fully Insured Commercial
Membership 1,479.5 1,478.8 1,469.6 1,441.6
Medicare 70.1 69.6 68.9 67.5
Third-party Administration 51.9 62.7 63.3 65.4
Total Membership 1,601.5 1,611.1 1,601.8 1,574.5
Fully Insured Commercial Change 0.7 9.2 28.0 69.3
Fully Insured Commercial Change % 0.0% 0.6% 1.9% 5.0%
Total Membership 2001
4Q
POS, PPO and Other Plans 1,154.1
HMO 218.2
Total Fully Insured Commercial
Membership 1,372.3
Medicare 77.8
Third-party Administration 60.0
Total Membership 1,510.1
Fully Insured Commercial Change 5.7
Fully Insured Commercial Change % 0.4%
Membership
Total fully insured commercial membership ended the quarter at 1.444 million
members compared to 1.457 million members at the end of June 2003 and 1.479
million members in the third quarter of 2002. Year to date, Oxford commercial
membership has declined approximately 15 thousand members while MedSpan
membership has declined approximately 21 thousand members. Medicare
membership increased modestly during the third quarter, ending the period at
71,000 members
SOURCE Oxford Health Plans, Inc.
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Related links:
http://www.oxfordhealth.com
CONTACT:
Investors, Gary Frazier, +1-203-459-7331, Jon
Green, +1-203-459-6674, or Medias, Maria Gordon-Shydlo,
+1-203-459-7674, all of Oxford Health Plans, Inc.
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