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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): FEBRUARY 24, 2000
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.)
48 Monroe Turnpike, Trumbull, Connecticut 06611
(Address of principal executive offices) (Zip Code)
(203) 459-6000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
The Company's earnings Press Release dated February 24, 2000 is
attached as an Exhibit hereto and incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
99 Press Release dated February 24, 2000
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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: February 24, 2000 By: /s/ YON Y. JORDEN
---------------------------
YON Y. JORDEN
Chief Financial Officer
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Document Number
- ------ ----------------------- ------
<S> <C> <C>
99 Press Release dated February 24, 2000 5
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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
EARNINGS PER SHARE OF $3.05
RUN RATE EARNINGS PER SHARE OF $0.32
TRUMBULL, CONNECTICUT, FEBRUARY 24, 2000 Oxford Health Plans, Inc.
(NASDAQ: OXHP) announced today net income of $256.3 million, $3.05 per diluted
common share, for the quarter ended December 31, 1999. Net income was $26.9
million, $0.32 per diluted share, after adjusting for the effect of the
recognition of deferred tax assets of $225 million, $2.68 per diluted share, and
$4.4 million of after tax income, $0.05 per diluted share, related to the
favorable development of prior period estimates of medical costs partially
offset by the cost of litigation insurance. For the full-year ended December 31,
1999, net income was $274.4 million or $3.26 per diluted common share. "We are
enormously pleased with the fourth quarter results, which exceeded our
expectations. Our continued success in healthcare initiatives coupled with the
strength of the Oxford brand contributed to our excellent results," said Oxford
Health Plans' Chairman and Chief Executive Officer, Norman C.
Payson, M.D.
The medical loss ratio for the quarter ended December 31, 1999 of 78.7%
benefited from favorable development of prior period reserve estimates of
medical costs aggregating $31.5 million. Apart from this favorable development,
the medical loss ratio was 81.8%. "This compares favorably with our prior
expectations and with the medical loss ratio of 87.6% for the
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fourth quarter of last year. Higher yields driven by more effective pricing and
successful implementation of healthcare initiatives contributed to our improved
performance," said Dr. Payson. The administrative loss ratio was 14.9% for the
quarter compared to 15.4% for the fourth quarter of last year. Excluding a $24
million one time charge for litigation insurance coverage, our administrative
loss ratio was 12.5%." As a result of the Company's 1999 financial performance,
continued progress in its turnaround plan and estimates of future profitability,
management concluded that it is more likely than not that a substantial portion
of its deferred tax assets, including those related to net operating loss
carryforwards, will be realized. Accordingly, the Company revised the estimate
of its tax valuation allowance and recorded a $225 million income tax benefit in
the fourth quarter.
Revenues for the quarter ended December 31, 1999 were $1.0 billion,
compared to $1.1 billion in the fourth quarter last year. As of December 31,
1999, Oxford's total membership was approximately 1.59 million compared to 1.63
million as of the end of the third quarter of 1999. The sequential decline
reflects our continuing efforts to rationalize certain product offerings within
our commercial business, which should be completed by later this year.
The Company reported positive cash flow from operations of $99.8
million for the quarter ended December 31, 1999. Normalized cash flow from
operations for the quarter was $72 million after adjusting for the receipt of
January's Medicare payment in December, the $24 million one time cash payment
related to the litigation insurance coverage and other timing items. For the
year ended December 31, 1999, Oxford reported positive cash flow from operations
of $35.5 million compared to a $46.5 million use of cash for the prior year. As
of December 31, 1999, the Company had approximately $1.2 billion in current cash
and marketable securities, including over $240 million available at the Parent
Company. Additionally, the Company reduced the balance of its net outstanding
provider advances to $44 million as of December 31, 1999 from $62 million at the
end of the third quarter. "We are very pleased with our 1999 operating cash
flow. Current projections for 2000 operating cash flow are favorable, and we
continue to evaluate our options for improving the balance sheet including, but
not limited to, reducing indebtedness." said Yon Y. Jorden, Oxford's Chief
Financial Officer.
Dr. Payson continued, "with the strong operational and financial
results reported today, we are able to close the books on Oxford's turnaround
phase. As an innovator in health care, Oxford will continue to respond to the
needs of today's consumer delivering new and innovative products. Working with
our physicians, hospitals, and members we will continue to offer quality
healthcare while providing our members with superior customer service."
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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.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including statements concerning
future results of operations or financial position, future realization of
deferred tax assets, future completion of rationalization of certain segments
within Oxford's commercial business, future operating cash flow, future balance
sheet changes, completion of Oxford's turnaround phase, future products, future
healthcare customer service, 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, mandated
benefits and potential guaranty fund assessments.
- - 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.
- - 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 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 as a result of information gained in the process of continuing
to reconcile delayed claims or claims paid or denied in error.
- - The impact of litigation (including purported 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), regulatory proceedings and other
governmental action (including the ongoing examination, investigation and
review of the Company by various Federal and State authorities).
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- - 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.
- - The possibility of litigation similar to the purported class actions
brought against certain large national health plans.
- - 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, 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
for the period ended September 30, 1999.
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE, PER MEMBER PER MONTH AND MEMBERSHIP HIGHLIGHTS
DATA)
<TABLE>
<CAPTION>
Three Months Year
Ended December 31 Ended December 31
-------------------------- -------------------------
Revenues: 1999 1998 1999 1998
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Premiums earned $1,013,782 $ 1,100,227 $4,099,556 $4,612,328
Third-party administration, net 3,458 4,455 15,578 17,838
Investment and other income, net 16,991 23,003 82,632 89,245
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Total revenues 1,034,231 1,127,685 4,197,766 4,719,411
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Expenses:
Health care services 797,412 963,952 3,365,340 4,353,537
Marketing, general and administrative 151,626 170,100 599,151 772,015
Interest and other financing charges 11,387 13,329 49,626 57,090
Restructuring charges -- (9,843) 19,963 113,657
Write-downs of strategic investments -- -- -- 38,341
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Total expenses 960,425 1,137,538 4,034,080 5,334,640
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Operating earnings (loss) before income taxes 73,806 (9,853) 163,686 (615,229)
Income tax expense (benefit) (194,004) (1,905) (156,254) (18,437)
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Net earnings (loss) 267,810 (7,948) 319,940 (596,792)
Less preferred stock dividends and amortization (11,538) (10,883) (45,500) (27,668)
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Net earnings (loss) attributable to common stock $ 256,272 $ (18,831) $ 274,440 $ (624,460)
====================================================================================================================================
Earnings (loss) per common share:
Basic $ 3.13 $ (.23) $ 3.38 $ (7.79)
Diluted $ 3.05 $ (.23) $ 3.26 $ (7.79)
Weighted-average common shares outstanding-basic 81,794 80,463 81,273 80,120
Effect of dilutive securities:
Stock options 2,315 -- 2,958 --
Warrants -- -- -- --
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Weighted-average common shares outstanding-diluted 84,109 80,463 84,231 80,120
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SELECTED INFORMATION:
Medical loss ratio 78.7% 87.6% 82.1% 94.4%
Administrative loss ratio 14.9% 15.4% 14.6% 16.7%
Earnings (loss) before income taxes, financing charges, depreciation
and amortization, and restructuring charges ("EBITDA") $ 95,951 $ 9,743 $ 285,867 $ (340,233)
PMPM premium revenue $ 217.38 $ 199.94 $ 212.12 $ 199.82
PMPM medical expense $ 170.99 $ 175.18 $ 174.13 $ 188.61
Fully insured member months 4,663.6 5,502.7 19,326.7 23,081.9
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31
------------------------
MEMBERSHIP HIGHLIGHTS 1999 1998
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<S> <C> <C>
Freedom and Liberty Plans 1,210,500 1,318,100
HMO 235,400 260,700
Medicare 97,700 148,600
Medicaid -- 97,800
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Total Fully Insured 1,543,600 1,825,200
Third-party Administration 50,100 56,200
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Total Membership 1,593,700 1,881,400
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</TABLE>
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kjds;k OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
1999 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 332,882 $ 237,717
Investments - available-for-sale, at market value 829,054 922,990
Premiums receivable, net 64,071 110,254
Other receivables 32,588 36,540
Prepaid expenses and other current assets 3,862 9,746
Deferred income taxes 68,266 43,385
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Total current assets 1,330,723 1,360,632
Property and equipment, net 49,519 112,941
Deferred income taxes 231,512 94,182
Restricted cash and investments 61,603 56,493
Other noncurrent assets 13,531 13,502
- -----------------------------------------------------------------------------------------------------------
Total assets $ 1,686,888 $ 1,637,750
===========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Medical costs payable $ 656,063 $ 850,197
Trade accounts payable and accrued expenses 122,345 176,833
Unearned premiums 97,155 105,993
Current portion of capital lease obligations 12,467 15,938
Deferred income taxes -- 2,228
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Total current liabilities 888,030 1,151,189
Long-term debt 350,000 350,000
Obligations under capital leases 5,787 18,850
Redeemable preferred stock 344,316 298,816
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 81,986,457 shares in 1999 and 80,515,872 shares in 1998 820 805
Additional paid-in capital 488,030 506,243
Accumulated deficit (372,350) (692,290)
Accumulated other comprehensive earnings (loss) (17,745) 4,137
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Total shareholder's equity (deficit) 98,755 (181,105)
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Total liabilities and shareholders' equity (deficit) $ 1,686,888 $ 1,637,750
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Year
Ended December 31 Ended December 31
--------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 267,810 $ (7,948) $ 319,940 $ (596,792)
Adjustments to reconcile net earnings (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 11,241 16,588 54,542 67,141
Noncash restructuring charges and write-downs (6,705) (5,699) 8,355 101,547
Deferred income taxes (197,313) -- (159,563) (18,437)
Provision for doubtful accounts and advances (18,000) 19,000 (4,200) 60,209
Realized loss (gain) on sale of investments 719 (5,551) 5,181 (10,695)
Gain on sale of Direct Script and Ralin -- -- (9,500) --
Other, net 4,717 960 6,468 13,289
Changes in assets and liabilities:
Premiums receivable 21,808 40,332 46,183 130,183
Other receivables (3,999) (2,057) 7,290 2,679
Prepaid expenses and other current assets 3,391 432 2,526 351
Medical costs payable (14,361) (44,304) (189,934) 62,238
Trade accounts payable and accrued expenses (27,697) (36,965) (39,995) 33,802
Income taxes payable/refundable -- 4,465 -- 121,102
Unearned premiums 52,981 69,971 (8,838) (18,610)
Other, net 5,192 74 (2,927) 5,511
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Net cash provided (used) by operating activities 99,784 49,298 35,528 (46,482)
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Cash flows from investing activities:
Capital expenditures (1,544) (1,309) (8,987) (40,045)
Purchases of investments (162,434) (365,185) (868,655) (1,353,403)
Sales and maturities of investments 104,758 324,482 919,940 996,988
Proceeds from sale of Direct Script and Ralin -- -- 12,450 --
Other, net (2,223) 2,954 3,237 (7,029)
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Net cash provided (used) by investing activities (61,443) (39,058) 57,985 (403,489)
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Cash flows from financing activities:
Proceeds from exercise of stock options 7,513 1,078 18,186 2,655
Proceeds from sale of redeemable preferred stock, net of expenses -- -- -- 271,148
Proceeds from sale of warrants -- -- -- 67,000
Proceeds from sale of common stock -- -- -- 10,000
Proceeds of notes and loans payable -- -- -- 550,000
Redemption of notes payable -- -- -- (200,000)
Debt issuance expenses -- (100) -- (11,793)
Payments under capital leases (2,381) (2,078) (16,534) (5,463)
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Net cash provided (used) by financing activities 5,132 (1,100) 1,652 683,547
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Net increase (decrease) in cash and cash equivalents 43,473 9,140 95,165 233,576
Cash and cash equivalents at beginning of period 289,409 228,577 237,717 4,141
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Cash and cash equivalents at end of period $ 332,882 $ 237,717 $ 332,882 $ 237,717
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