Managed care giant Oxford Health
Plans Inc. Thursday reported a slimmer-than-expected fourth-quarter net loss amid signs its massive restructuring is proceeding ahead of schedule.
Oxford reported a net loss of $18.8 million or 23 cents a
diluted share vs. a loss $285 million or $3.58 in the
year-earlier quarter. The current year results were boosted by a
$29-million gain, but hurt by $14-million one-time charge linked
to medical costs, while the 1997 loss reflected restructuring
The news did little to boost the stock, however, though
Oxford's shares did briefly trade higher at the open. By early
afternoon, Oxford shares were down $1.69 on the NASDAQ early
Thursday afternoon, trading at $18 a share.
Minus the gain and one-time charge, Oxford had a loss of
$33.8 million or 42 cents a share, still far below the 78-cent
share loss estimate put out by First Call Corp, a company that
tracks corporate earnings. Oxford has not turned a profit since
the third quarter of 1997.
Chuck Hill, director of research of First Call Corp., said
in an interview that his company's consensus estimate would have
not have included the $29 million gain posted to fourth quarter.
He said he was unsure whether analysts expected that $14-million
one-time charge linked to medical costs.
"It would appear that anyway you cut it, they beat the
estimates," Hill said.
In a prepared statement, Chief Executive Norm Payson said
Oxford reaped the $29 million gain because its turnaround plan
was chugging along ahead of schedule and costing less than
Fourth-quarter operating cash flow totaled $48.1 million,
including Medicare advanced premiums of $68 million. Quarterly
revenues dipped to $1.13 billion from $1.14 billion a year
The managed care giant had surprised investors when it
announced in January it would produce a positive EBITDA by the
first quarter of this year rather than the second half, as
Oxford's Payson originally predicted. EBITDA, or earnings before
interest, taxes, depreciation and amortization, has become a
popular tool among analysts in recent years to quickly size up a
company's underlying financial health.
Commercial membership, the number of people enrolled in the
company's health plans minus Medicaid and Medicare patients, as
of Jan. 1 came to 1.54 million, down from 1.56 million. Its
total membership, including Medicaid and Medicare patients, came
to 1.9 million, down from 2 million a year earlier. The drop is
partly due to Oxford's decision to exit several unprofitable
Medicare markets, including New York City.