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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 9, 1997
OXFORD HEALTH PLANS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19442 06-1118515
(State or other jurisdiction) (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800 Connecticut Avenue, Norwalk, Connecticut 06854
(Address of principal executive offices) (Zip Code)
(203) 852-1442
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
The Company's Press Release, dated December 9, 1997, is attached as an
Exhibit hereto and incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
99(a) Press Release dated December 9, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OXFORD HEALTH PLANS, INC.
Date: December 9, 1997 By: /s/ BRENDAN R. SHANAHAN
---------------------------
BRENDAN R. SHANAHAN
Vice President and Controller
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Page
Number Description of Document Number
- ------ ----------------------- ------
[S] [C] [C]
99(a) Press Release dated December 9, 1997 4
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EXHIBIT 99(a)
OXFORD LETTERHEAD
RE: Oxford Health Plans, Inc.
800 Connecticut Avenue
Norwalk, CT 06854
For Further Information:
Stephen F. Wiggins
Chairman
(203) 852-1442
FOR IMMEDIATE RELEASE
December 9, 1997
OXFORD HEALTH PLANS ANTICIPATES FURTHER STRENGTHENING OF RESERVES DURING
THE FOURTH QUARTER
NORWALK, CONNECTICUT, DECEMBER 9, 1997 -- Oxford Health Plans, Inc.
(NASDAQ:OXHP) announced today that at the direction of the New York State
Insurance Department, Oxford is increasing its medical claim reserves in its New
York subsidiaries by $164 million during the 4th quarter. This reserve
enhancement is designed to protect policyholders and was required as part of the
New York Insurance Department's continuing review and examination of Oxford's
financial condition. Oxford also intends to increase the medical claim reserves
of its non-New York subsidiaries.
These adjustments to liabilities and other charges planned by the Company will
cause Oxford to have a net loss currently estimated to be approximately $120
million in the fourth quarter and to have a net loss for the year. The final
determination of the amounts of the reserve additions for the quarter will be
made based on the most recent data available when the results for the fourth
quarter and full year are released in February. Fourth quarter results will
include recognition of the gain on the sale of the Company's interest in Health
Partners, Inc.
"We are cooperating fully with the New York State Insurance Department. In
addition, we believe these steps will enhance our prospects for returning to
profitability. We are now in the process of instilling greater discipline,
hiring more seasoned management, and refining our processes to eliminate the
mistakes of our past," said Stephen F. Wiggins, Oxford's Chairman.
The Company said that higher than expected medical expense trends in its
Medicare program, which accounts for approximately 8% of Oxford's membership and
21% of total revenues, were expected to adversely affect the Company's results
for the fourth quarter and 1998. The Company is also experiencing higher medical
cost trends in its Medicaid program and the New York State mandated individual
program. Medical expense trends were affected by continued processing in the
fourth quarter of previously delayed claims and claims previously processed in
error.
"It is clear that our Medicare program in some counties where we operate needs
restructuring," said Wiggins. "We will need to modify our plan designs and
medical networks in many of the counties where we offer our Medicare program.
Federal Government payments are inadequate to sustain our existing program. In
this review, the Company will make every effort to consider carefully the impact
of any changes on our Medicare members and provide ample notice of any changes."
The Company also plans to review ways to address increasing costs in its
Medicaid business and the New York State mandated
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individual program, where the Company is required to offer government designed
benefits to individual enrollees. The Company intends to file a rate increase
application with the New York State Insurance Department for its individual
product and is reviewing rates for other products.
"We believe Oxford's employer group businesses remain the foundation of our
Company with over 1.5 million members," Mr. Wiggins added. "Even after the
reserve additions, it remains profitable today. This year's membership growth in
our employer group products demonstrates the popularity of our products and the
leading independent consumer satisfaction studies give our plans high marks."
Oxford also announced that KPMG Peat Marwick LLP had completed the audit,
requested by the New York State Insurance Department, of the September 30, 1997
financial statements of Oxford's New York subsidiaries. The audit did not result
in any changes to the Company's unaudited condensed consolidated financial
statements as of September 30, 1997 and for the three months and nine months
then ended.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, such as statements concerning the
Company's future results of operation or financial condition, future health care
costs and administrative costs, future premium rates for commercial, Medicare
and Medicaid business, operations matters, and other statements regarding
matters that are not historical facts, are forward-looking statements (as
defined in the Securities Exchange Act of 1934, as amended); 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:
1. Changes in federal state regulation relating to health care and health
benefit plans.
2. Rising medical costs or higher utilization of medical services, including
higher out-of-network utilization under point-of-service plans.
3. Competition from health benefit plan providers and competitive pressure on
pricing Oxford products.
4. High administrative costs in operating the Company's business, the
Company's ability to develop processes and systems to support its growing
operations and the cost and impact on service of changing technologies.
5. The effect, if any, of recent events at the Company (including any adverse
publicity) on future enrollment in the Company's health benefit plans.
6. Any changes in the Company's estimates of its medical costs and expected
cost trends as a result of information gained in the process of continuing
to reconcile delayed claims and to pay down backlogged claims.
7. The impact of litigation (including purported class actions recently filed
against the Company and certain officers and directors), regulatory
proceedings and other governmental action (including the current
examination, investigation and review by the New York State Insurance
Department and the previously reported inquiry by the New York State
Attorney General regarding, among other matters, public disclosures by the
Company).
8. Those factors included under the caption "Business--Cautionary Statement
Regarding Forward-Looking Statements" in the Company's 1996 Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
These and other factors could adversely affect the results of operations
or financial condition in the fourth quarter and future periods.
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