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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): JULY 29, 1999
OXFORD HEALTH PLANS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-19442 06-1118515
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(State or other jurisdiction) (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800 Connecticut Avenue, Norwalk, Connecticut 06854
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(Address of principal executive offices) (Zip Code)
(203) 852-1442
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
The Company's earnings Press Release dated July 29, 1999 is attached as
an Exhibit hereto and incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
99 Press Release dated July 29, 1999
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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: August 2, 1999 By: /s/YON Y. JORDEN
---------------------------
YON Y. JORDEN
Chief Financial Officer
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Page
Number Description of Document Number
- ------ ----------------------- ------
99 Press Release dated July 29, 1999 5
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EXHIBIT 99
[OXFORD HEALTH PLANS LOGO]
For Further Information:
Investor Contact: Deborah Abraham
(203) 851-2636
Media Contact: Francesca Trainor
(212) 885-0450
FOR IMMEDIATE RELEASE
- ---------------------
OXFORD HEALTH PLANS, INC. ANNOUNCES SECOND QUARTER RESULTS
NORWALK, CONNECTICUT, JULY 29, 1999 - Oxford Health Plans, Inc.
(NASDAQ:OXHP) announced today a net loss of $13.4 million, or $0.16 per common
share, for the quarter ended June 30, 1999. "We are pleased with our second
quarter results, which were ahead of our expectations. Healthcare costs
increased slightly, primarily due to seasonality, and administrative expenses
increased slightly, primarily due to operational initiatives and improvements.
Medical and administrative loss ratios were therefore slightly higher in the
second quarter versus the first quarter, but the results were better than
anticipated." said Oxford Health Plans' Chairman and Chief Executive Officer,
Norman C. Payson, M.D.
Health care services expense for the second quarter was $886.8 million,
representing a medical loss ratio (health care services as a percentage of
premium revenue) of 85.8%, compared to a medical loss ratio of 84.9% for the
first quarter of this year. Marketing, general and administrative expenses,
including related depreciation and amortization, were $155.2 million for the
second quarter or 15.0% of operating revenues, compared to $149.7 million or
14.5% of operating revenues last quarter.
over->
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OXFORD'S SECOND QUARTER EARNINGS - PAGE TWO
"During the second quarter we worked to eliminate claims and
correspondence backlogs and completed our Y2K project, which should position
Oxford to gain further economies in our administrative costs in the second half
of the year," stated Dr. Payson.
Revenues for the quarter ended June 30, 1999 were $1.05 billion,
compared to $1.06 billion in the first quarter. As of June 30, 1999, Oxford's
total membership was approximately 1,668,700 compared to 1,691,000 as of March
31, 1999.
The Company reported cash used by operations of $26.8 million for the
quarter ended June 30, 1999. As of June 30, 1999, the Company had $966.9 million
in current cash and marketable securities. "The successful reduction in claims
inventory, down to the nine days of claims received on hand, resulted in
negative cash flow from operations for the second quarter. However, pro forma
parent company cash and marketable securities as of June 30th was approximately
$196 million, an approximately $10 million increase from last quarter," said Yon
Y. Jorden, Oxford's Chief Financial Officer. "Based on sequential premium
pricing increases and expected administrative and health care costs, the Company
anticipates positive earnings per share for the second half and full year 1999
and positive operating cash flow for the second half of 1999," added Jorden.
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.
###
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including statements concerning
future results of operations or financial position, future healthcare and
administrative costs, future operating cash flow, future operational performance
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, 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:
- - The Company's ability to develop processes and systems to support its
operations and to improve its service levels.
- - Changes in Federal or State regulation relating to health care and health
benefit plans.
- - Rising medical costs or higher utilization of medical services, including
higher out-of-network utilization under point-of-service plans.
- - Competition from health benefit plan providers and competitive pressure on
pricing Oxford products, including acceptance of premium rate increases by
the Company's commercial groups.
- - High administrative costs in operating the Company's business and the cost
and impact on service of changing technologies.
- - The ability of the Company to complete and operationalize risk transfer and
other provider arrangements and any unexpected costs incurred in the
wind-down of the Company's agreement with Heritage New Jersey Medical
Group, P.C., including medical costs, litigation expenses, damages,
administrative costs and other costs.
- - The effect, if any, of events at the Company during the last two years
(including any adverse publicity) on future enrollment in the Company's
health benefit plans.
- - The ability of the Company to successfully and timely dispose of certain
assets and businesses.
- - 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 or claims paid or denied in error and to pay
down backlogged claims.
- - The impact of litigation (including purported class and derivative actions
filed against the Company and certain officers and directors and
proceedings commenced against the Company and several employees by certain
healthcare providers), regulatory proceedings and other governmental action
(including the ongoing examination, investigation and review of the Company
by various Federal and State authorities).
- - 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/A for the fiscal year ended December 31, 1998
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/A for the quarterly period ended March 31, 1999.
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 (IN THOUSANDS, EXCEPT PER
SHARE, PER MEMBER PER MONTH AND MEMBERSHIP
HIGHLIGHTS DATA)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------- -------------
Revenues: 1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Premiums earned $ 1,033,670 $ 1,155,952 $ 2,060,256 $ 2,369,037
Third-party administration, net 4,091 4,311 7,701 9,313
Investment and other income, net 13,020 30,849 43,129 42,385
-----------------------------------------------------------
Total revenues 1,050,781 1,191,112 2,111,086 2,420,735
-----------------------------------------------------------
Expenses:
Health care services 886,836 1,307,214 1,758,709 2,373,651
Marketing, general and administrative 155,210 227,968 304,947 429,001
Interest and other financing charges 12,180 20,752 26,230 27,601
Restructuring charges -- 98,500 -- 123,500
Write-downs of strategic investments -- 38,341 -- 38,341
-----------------------------------------------------------
Total expenses 1,054,226 1,692,775 2,089,886 2,992,094
-----------------------------------------------------------
Operating earnings (loss) before income taxes (3,445) (501,663) 21,200 (571,359)
Income tax expense (benefit) (1,446) 5,957 8,904 (18,437)
-----------------------------------------------------------
Net earnings (loss) (1,999) (507,620) 12,296 (552,922)
Less preferred stock dividends and amortization (11,377) (5,718) (22,459) (5,718)
-----------------------------------------------------------
Net loss attributable to common stock $ (13,376) $ (513,338) $ (10,163) $ (558,640)
===========================================================
Loss per common share-basic and diluted $ (.16) $ (6.41) $ (.13) $ (7.00)
Weighted-average common shares outstanding-basic and diluted 81,162 80,131 80,970 79,817
SELECTED INFORMATION:
Medical loss ratio 85.8% 113.1% 85.4% 100.2%
Administrative loss ratio 15.0% 19.6% 14.7% 18.0%
Earnings (loss) before income taxes, financing charges,
depreciation and amortization, and restructuring
charges ("EBITDA") $ 22,970 $ (325,388) $ 75,520 $ (346,829)
PMPM premium revenue $ 212.11 $ 197.00 $ 208.39 $ 198.44
PMPM medical expense $ 181.98 $ 222.78 $ 177.89 $ 198.83
Fully insured member months 4,873.2 5,867.7 9,886.5 11,938.3
</TABLE>
<TABLE>
<CAPTION>
As of June 30
---------------------------------------
MEMBERSHIP HIGHLIGHTS 1999 1998
--------- ---------
<S> <C> <C>
Freedom and Liberty Plans 1,269,400 1,362,300
HMO 242,100 276,300
Medicare 103,800 159,500
Medicaid -- 140,600
--------- ----------
Total Fully Insured 1,615,300 1,938,700
Third-party Administration 53,400 66,000
--------- ----------
Total Membership 1,668,700 2,004,700
========= ==========
</TABLE>
Certain 1998 restructuring charges and write-downs have been reclassified to
health care services and marketing, general and administrative expenses.
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, Dec. 31,
1999 1998
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 150,907 $ 237,717
Investments - available-for-sale, at market value 816,008 922,990
Premiums receivable 113,680 110,254
Other receivables 34,632 36,540
Prepaid expenses and other current assets 11,988 9,746
Deferred income taxes 40,529 43,385
----------- ------------
Total current assets 1,167,744 1,360,632
Property and equipment, at cost, net of accumulated depreciation and
amortization of $183,174 in 1999 and $160,431 in 1998 85,059 112,941
Deferred income taxes 88,134 94,182
Restricted cash and investments 71,814 56,493
Other noncurrent assets 22,253 13,502
----------- ------------
Total assets $ 1,435,004 $ 1,637,750
=========== ============
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current liabilities:
Medical costs payable $ 741,410 $ 850,197
Trade accounts payable and accrued expenses 145,980 176,833
Unearned premiums 45,294 105,993
Current portion of capital lease obligations 12,029 15,938
Deferred income taxes -- 2,228
----------- ------------
Total current liabilities 944,713 1,151,189
Long-term debt 350,000 350,000
Obligations under capital leases 10,779 18,850
Redeemable preferred stock 321,275 298,816
Shareholder's equity (deficit):
Preferred stock, $.01 par value, authorized 2,000,000 shares -- --
Common stock, $.01 par value, authorized 400,000,000
shares; issued and outstanding 81,315,284 shares in 1999
and 80,515,872 shares in 1998 813 805
Additional paid-in capital 494,812 506,243
Accumulated deficit (679,994) (692,290)
Accumulated other comprehensive earnings (loss) (7,394) 4,137
----------- ------------
Total liabilities and shareholders' equity (deficit) $ 1,435,004 $ 1,637,750
=========== ============
</TABLE>
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------------------------------------------
1999 1998 1999 1998
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (1,999) $(507,620) $ 12,296 $(552,922)
Adjustments to reconcile net earnings (loss) to
net cash used by operating activities:
Depreciation and amortization 14,724 19,303 29,068 35,362
Noncash restructuring charges -- 96,046 -- 107,246
Deferred income taxes (1,446) (4,762) 8,904 (29,156)
Provision for doubtful accounts -- 10,209 -- 13,209
Realized loss (gain) on sale of investments 2,853 (749) 3,395 (2,121)
Other, net 481 11,272 1,272 11,272
Changes in assets and liabilities:
Premiums receivable 19,956 71,637 (3,426) 54,734
Other receivables 7,871 6,286 1,908 (1,780)
Prepaid expenses and other current assets (2,075) 9,348 (2,242) (1,404)
Medical costs payable (53,000) 177,132 (108,787) 153,368
Trade accounts payable and accrued expenses (15,246) 62,274 (25,814) 75,184
Income taxes payable/refundable -- 68,544 -- 117,380
Unearned premiums 6,906 7,566 (60,699) (70,140)
Other, net (5,788) 3,016 (10,293) 4,693
--------- --------- --------- ---------
Net cash provided (used) by operating activities (26,763) 29,502 (154,418) (85,075)
--------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures (3,066) (6,989) (4,147) (36,646)
Purchases of investments (338,562) (345,380) (597,917) (500,271)
Sales and maturities of investments 322,688 265,030 683,077 416,140
Other, net (11,582) (7,915) (11,189) (3,318)
--------- --------- --------- ---------
Net cash provided (used) by investing activities (30,522) (95,254) 69,824 (124,095)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock options 4,944 993 9,764 1,323
Proceeds from sale of redeemable preferred stock, net of expenses -- 271,148 -- 271,148
Proceeds from sale of warrants -- 67,000 -- 67,000
Proceeds from sale of common stock -- 10,000 -- 10,000
Proceeds of notes and loans payable -- 350,000 -- 550,000
Redemption of notes payable -- (200,000) -- (200,000)
Debt issuance expenses -- (11,251) -- (11,251)
Payments under capital leases (4,553) (1,570) (11,980) (1,570)
--------- --------- --------- ---------
Net cash provided (used) by financing activities 391 486,320 (2,216) 686,650
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents (56,894) 420,568 (86,810) 477,480
Cash and cash equivalents at beginning of period 207,801 61,053 237,717 4,141
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 150,907 $ 481,621 $ 150,907 $ 481,621
========= ========= ========= =========
Supplemental cash flow information:
Cash payments (refunds) for income taxes, net $ (1,360) $ (61,859) $ (1,444) $(107,877)
Cash payments for interest expense 19,609 6,451 28,404 10,332
Supplemental schedule of noncash investing and financing activities:
Unrealized appreciation (depreciation) of
short-term investments (6,025) (2,730) (13,759) (7,773)
Capital lease obligations incurred -- 1,398 -- 21,707
Preferred stock dividends and amortization 11,377 5,717 22,459 5,717
</TABLE>
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