EX-99 2 y45185ex99.txt EX-99 1 EXHIBIT 99 For Further Information: Investor Contact: Deborah Abraham (203) 459-6674 Media Contact: Maria Gordon-Shydlo (203) 459-7674 FOR IMMEDIATE RELEASE OXFORD HEALTH PLANS, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS FOURTH QUARTER DILUTED EARNINGS PER SHARE OF $0.96 BEFORE CHARGES OF $0.53 PER SHARE RELATED TO RECAPITALIZATION MEMBERSHIP INCREASE OVER THIRD QUARTER LEVELS TRUMBULL, CONNECTICUT, FEBRUARY 5, 2001 Oxford Health Plans, Inc. (NASDAQ: OXHP) announced today net income of $0.96 per diluted common share, for the quarter ended December 31, 2000, before a $0.53 per share reduction related to the Company's recapitalization. Net income after charges related to the recapitalization was $44.9 million, or $0.43 per diluted common share for the period, compared to net income of $256.3 million, or $3.05 per diluted common share for the prior year period, which included the recognition of $225 million, or $2.68 per diluted common share, in tax benefits. Net income for the year ended December 31, 2000, was $191.3 million or $2.02 per diluted common share, compared to $274.4 million, or $3.26 per diluted common share in the prior year, including $225 million, or $2.67 per diluted common share related to tax benefits. Fourth quarter 2000 charges related to the recapitalization included an extraordinary charge of $0.16 per share related to the retirement of senior notes and a non-cash one-time charge of $0.37 per share in connection with the repurchase and exchange of preferred stock. The current quarter's pretax results included losses from the sale of certain fixed assets and investment valuations aggregating $6.9 million. The current quarter's pretax results benefited from $30.3 million in favorable development of prior period medical cost estimates, $6.4 million in recoveries of prior period claims, and $25.1 million in reimbursement from the 1997 and 1998 New York State Market Stabilization Pools in the individual and small group markets. A supplemental schedule displaying the effect of these items on pretax earnings and EPS is attached to this release. The aggregate effect of these items in the quarter was to increase net income by $35.1 million or $0.34 per diluted share. Excluding the effect of the recapitalization and the net benefit of the items discussed above, run rate net income was $65.0 million, or $0.62 per diluted common share for the fourth quarter of 2000. Excluding the favorable development of reserves and recoveries, the medical loss ratio run rate for the quarter was 78.6%. Including the favorable development of reserves and recoveries, the reported medical loss ratio for the quarter was 72.5%. The Company's administrative loss ratio was 11.2% for the quarter compared to 12.5% for the fourth quarter of last year, excluding a $24 million one time charge for litigation insurance coverage in 1999. Premium revenues for the quarter were $1.02 billion compared to $1.01 billion in the prior year period. As of December 31, 2000, Oxford's total membership was approximately 1.491 million compared to 1.485 million as of the end of the third quarter of 2000. The increase in membership represents the first 5 2 quarterly increase in membership since the Company began rationalizing product offerings in its commercial and governmental businesses in 1998 as part of its turnaround efforts. In January 2001, Oxford's commercial fully insured membership reached 1.351 million, representing net growth of approximately 14,000 members. Medicare membership declined by approximately 4,000 members as a result of the Company's exit from several New Jersey counties. Oxford's chairman and CEO Norman C. Payson, MD commented on the results, "Disciplined premium pricing combined with successful initiatives with the medical community resulted in excellent underwriting results in the quarter and full year 2000. As importantly, we believe Oxford's growth in the fourth quarter and January 2001 is illustrative of a new growth era for the Company." The Company reported positive cash flow from operations of $171.2 million for the quarter ended December 31, 2000, compared to $99.8 million in the prior year period. Oxford reported positive cash flow from operations of $404.7 million for the year, compared to $35.5 million in the prior year. As of December 31, 2000, the Company held approximately $1.1 billion in current cash and marketable securities, including over $80 million available at the Parent Company. "During 2000, we lowered our debt to capital ratio from 88% at the beginning of the year to its current level of 28%. This improvement in leverage together with existing parent cash, our available $75 million revolving credit facility and expected cash flows provide us with strong liquidity for 2001," said Kurt B. Thompson, Oxford's Chief Financial Officer. As previously announced, the Company will hold a conference call on Tuesday, February 6, 2001 at 9:00 am (Eastern Time) to review the results of the fourth quarter and full year 2000 and discuss the outlook for 2001. The public is invited to listen to this conference call by dialing 1-888-677-8170 (using the password "4Q Results") at least 10 to15 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 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. 6 3 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this press release, including statements concerning the Company's future results of operations, cash flows, liquidity, capital structure and financial position and the Company's future position in the Greater New York area, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements (as such term is 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. - 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 operationalize 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), the recent ERISA class action in Connecticut 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. - 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, 1999 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, 2000. 7 4 OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES Consolidated Statements of Earnings Three Months and Twelve Months Ended December 31, 2000 and 1999 (In thousands, except per share, per member per month and membership highlights data)
Three Months Ended Twelve Months Ended December 31, December 31, 2000 1999 2000 1999 ----------------------------------------------------------- Revenues: Premiums earned $ 1,019,391 $ 1,013,782 $ 4,023,397 $ 4,099,556 Third-party administration, net 3,393 3,458 15,390 15,578 Investment and other income, net 15,771 16,991 73,015 82,632 ---------------------------------------------------------------------------------------------------------------------------------- Total revenues 1,038,555 1,034,231 4,111,802 4,197,766 ---------------------------------------------------------------------------------------------------------------------------------- Expenses: Health care services 739,481 797,412 3,116,544 3,365,340 Marketing, general and administrative 114,703 151,626 476,422 599,151 Interest and other financing charges 6,784 11,387 34,332 49,626 Restructuring charges - - - 19,963 ---------------------------------------------------------------------------------------------------------------------------------- Total expenses 860,968 960,425 3,627,298 4,034,080 ---------------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes and extraordinary item 177,587 73,806 484,504 163,686 Income tax expense (benefit) 70,180 (194,004) 199,085 (156,254) ---------------------------------------------------------------------------------------------------------------------------------- Net earnings before extraordinary item 107,407 267,810 285,419 319,940 Extraordinary items (16,701) - (20,325) - ---------------------------------------------------------------------------------------------------------------------------------- Net earnings 90,706 267,810 265,094 319,940 Less preferred stock dividends and amortization (45,802) (11,538) (73,791) (45,500) ---------------------------------------------------------------------------------------------------------------------------------- Net earnings attributable to common stock $ 44,904 $ 256,272 $ 191,303 $ 274,440 ================================================================================================================================== Earnings per common share - basic: Earnings before extraordinary item $ 0.70 $ 3.13 $ 2.50 $ 3.38 Extraordinary item (0.19) - (0.24) - ---------------------------------------------------------------------------------------------------------------------------------- Earnings per common share - basic $ 0.51 $ 3.13 $ 2.26 $ 3.38 ================================================================================================================================== Earnings per common share - diluted: Earnings before extraordinary item $ 0.59 $ 3.05 $ 2.24 $ 3.26 Extraordinary item (0.16) - (0.22) - ---------------------------------------------------------------------------------------------------------------------------------- Earnings per common share - diluted $ 0.43 $ 3.05 $ 2.02 $ 3.26 ================================================================================================================================== Weighted-average common shares outstanding - basic 88,114 81,794 84,728 81,273 Effect of dilutive securities: Stock options 6,002 2,315 4,779 2,958 Warrants 9,995 - 5,066 - ---------------------------------------------------------------------------------------------------------------------------------- Weighted-average common shares outstanding - diluted 104,111 84,109 94,573 84,231 ================================================================================================================================== SELECTED INFORMATION: Medical loss ratio 72.5% 78.7% 77.5% 82.1% Administrative loss ratio 11.2% 14.9% 11.8% 14.6% Earnings before income taxes, financing charges, depreciation and amortization ("EBITDA") $ 190,664 $ 95,951 $ 551,968 $ 285,867 PMPM premium revenue $ 238.08 $ 217.38 $ 231.96 $ 212.12 PMPM medical expense $ 172.71 $ 170.99 $ 179.67 $ 174.13 Fully insured member months 4,281.7 4,663.6 17,345.5 19,326.7
As of December 31, MEMBERSHIP HIGHLIGHTS 2000 1999 -------------------------------------------------------------------------------- Freedom and Liberty Plans 1,115,400 1,210,500 HMO 221,600 235,400 Medicare 92,000 97,700 -------------------------------------------------------------------------------- Total Fully Insured 1,429,000 1,543,600 Third-party Administration 62,400 50,100 -------------------------------------------------------------------------------- Total Membership 1,491,400 1,593,700 ================================================================================
5 OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Three Months and Twelve Months Ended December 31, 2000 and 1999 (In thousands)
Three Months Ended Twelve Months Ended December 31, December 31, 2000 1999 2000 1999 ------------------------ ------------------------ Cash flows from operating activities: Net earnings $ 90,706 $ 267,810 $ 265,094 $ 319,940 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 7,277 11,241 34,229 54,542 Noncash restructuring charges and write-downs - (6,705) - 8,355 Deferred income taxes 68,600 (197,313) 190,596 (159,563) Extraordinary items 16,701 - 20,325 - Provision for doubtful accounts and advances - (18,000) - (4,200) Realized (gain) loss on sale of investments (178) 719 (111) 5,181 (Gain) loss on sale of assets 5,365 - 5,365 (9,500) Other, net (1,420) 4,717 - 6,468 Changes in assets and liabilities: Premiums receivable 5,858 21,808 7,377 46,183 Other receivables (51,645) (3,999) (48,406) 7,290 Prepaid expenses and other current assets 1,358 3,391 (899) 2,526 Medical costs payable (1,837) (14,361) (43,133) (189,934) Trade accounts payable and accrued expenses (20,600) (27,697) (19,853) (39,995) Unearned premiums 49,861 52,981 (8,856) (8,838) Other, net 1,196 5,192 2,976 (2,927) ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 171,242 99,784 404,704 35,528 ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Capital expenditures (2,925) (1,544) (12,774) (8,987) Purchases of investments (120,906) (162,434) (466,999) (868,655) Sales and maturities of investments 69,499 104,758 450,082 919,940 Proceeds from sale of assets 2,734 - 2,734 12,450 Other, net 18,351 (2,223) 7,730 3,237 ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by investing activities (33,247) (61,443) (19,227) 57,985 ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Proceeds from exercise of stock options 14,587 7,513 64,590 18,186 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 (221,350) - (376,050) - Redemption of preferred stock (78,592) - (208,592) - Debt issuance expenses (6,207) - (6,207) - Payments under capital leases (2,530) (2,381) (12,554) (16,534) ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities (264,942) 5,132 (519,727) 1,652 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents (126,947) 43,473 (134,250) 95,165 Cash and cash equivalents at beginning of period 325,579 289,409 332,882 237,717 ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 198,632 $ 332,882 $ 198,632 $ 332,882 ====================================================================================================================================
6 OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES Consolidated Balance Sheets As of December 31, 2000 and 1999 (In thousands, except share data)
Dec. 31, Dec. 31, 2000 1999 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 198,632 $ 332,882 Investments - available-for-sale, at market value 868,380 829,054 Premiums receivable, net 56,694 64,071 Other receivables 80,994 32,588 Prepaid expenses and other current assets 4,761 3,862 Deferred income taxes 46,102 68,266 --------------------------------------------------------------------------------------------------------------------------- Total current assets 1,255,563 1,330,723 Property and equipment, net 19,779 49,519 Deferred income taxes 102,133 231,512 Restricted cash and investments 57,194 61,603 Other noncurrent assets 9,941 13,531 --------------------------------------------------------------------------------------------------------------------------- Total assets $ 1,444,610 $ 1,686,888 =========================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Medical costs payable $ 612,930 $ 656,063 Current portion of long term debt 147,000 - Trade accounts payable and accrued expenses 103,459 122,345 Unearned premiums 88,299 97,155 Current portion of capital lease obligations 5,700 12,467 --------------------------------------------------------------------------------------------------------------------------- Total current liabilities 957,388 888,030 Long-term debt 28,000 350,000 Obligations under capital leases - 5,787 Redeemable preferred stock - 344,316 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 98,304,384 shares in 2000 and 81,986,457 shares in 1999 983 820 Additional paid-in capital 561,857 488,030 Accumulated deficit (107,256) (372,350) Accumulated other comprehensive income (loss) 3,638 (17,745) --------------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 459,222 98,755 --------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 1,444,610 $ 1,686,888 ===========================================================================================================================
7 OXFORD HEALTH PLANS, INC. Supplemental Income Statement Analysis Run Rate Results Compared to Reported GAAP Results Increase (Decrease) Income ($ millions, except share and per share data)
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31, 2000 1999 2000 1999 ------------------------------ ------------------------------ RUN RATE PRE-TAX INCOME $ 122.7 $ 66.3 $ 411.3 $ 158.6 RUN RATE ADJUSTMENTS Investment and Other Income Loss on sale of assets (5.4) - (5.4) - Loss from investment valuation (1.5) - (1.5) - Gain on sale of assets (Direct Script) - - 1.6 7.0 Gain on sale of NY Medicaid Business - - - 13.5 Health Care Services Expense Prior Period Reserve Estimate Changes 30.3 31.5 47.7 24.8 Claim Recoveries 6.4 - 13.2 3.8 NY Stabilization Pool Recoveries from 1997 and 1998 25.1 - 25.1 - Administrative Expenses Severance Charges - - (7.5) - Excess Insurance Premium - (24.0) - (24.0) Restructuring Charges - - - (20.0) ------------------------------ ------------------------------ Total Run Rate Adjustments, pre-tax 54.9 7.5 73.2 5.1 ------------------------------ ------------------------------ REPORTED GAAP PRE-TAX INCOME $ 177.6 $ 73.8 $ 484.5 $ 163.7 ============================== ==============================
SUPPLEMENTAL IMPACT OF RUN RATE ADJUSTMENTS AND RECAPITALIZATION CHARGES ON NET INCOME AND EPS INCREASE (DECREASE) INCOME
Three Months Ended Twelve Months Ended December 31, December 31, 2000 1999 2000 1999 -------------------- --------------------- GAAP PRETAX INCOME IN EXCESS OF RUN RATE PRE-TAX INCOME, PER ABOVE $ 54.9 $ 7.5 $ 73.2 $ 5.1 ==================== ===================== AFTER TAX IMPACT Impact of run rate adjustments above, after tax $ 32.3 $ 4.4 $ 43.1 $ 3.0 Tax provision adjustments related to income tax benefits and tax rates 2.8 225.0 - 225.0 -------------------- --------------------- After Tax Impact of Run Rate Adjustments $ 35.1 $ 229.4 $ 43.1 $ 228.0 ==================== ===================== Diluted EPS Impact of Run Rate and Income Tax Adjustments $ 0.34 $ 2.73 $ 0.46 $ 2.71 ==================== ===================== RECAPITALIZATION CHARGES, AFTER TAX Extraordinary loss on retirement of senior notes and term loan $ (16.7) $ (20.3) Accelerated amortization of preferred stock discount and costs (38.5) (41.1) -------- -------- Net Recapitalization Charges $ (55.2) $ (61.4) ======== ======== Diluted EPS Impact of Recapitalization Charges $ (0.53) $ (0.65) ======== ======== Diluted common shares (000's) 104,111 84,109 94,573 84,231
Note: These supplemental tables have been presented to provide additional financial information to readers of our financial statements in an effort to help explain the differences between our financial statements reported on a basis consistent with generally accepted accounting principles ("GAAP") relative to the run rate financial performance for the respective historical periods. The adjustments detailed in these schedules represent the current period impact of changes in the Company's estimates of prior period medical cost reserves and other singularly unique items that management believes would impact how readers of our financial statements interpret our financial performance.