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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): APRIL 26, 2000
OXFORD HEALTH PLANS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
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)
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(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 April 26, 2000 is attached
as an Exhibit hereto and incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
99 Press Release dated April 26, 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: April 26, 2000 By: /s/ KURT B. THOMPSON
--------------------------------
KURT B. THOMPSON
Chief Financial Officer
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
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Exhibit Page
Number Description of Document Number
- ------ ----------------------- ------
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99 Press Release dated April 26, 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 FIRST QUARTER 2000 RESULTS
DILUTED EARNINGS PER SHARE OF $0.34
TRUMBULL, CONNECTICUT, APRIL 26, 2000 Oxford Health Plans, Inc.
(NASDAQ: OXHP) announced today net income of $28.8 million, $0.34 per diluted
common share, for the quarter ended March 31, 2000, compared to net income of
$3.2 million or $0.04 per diluted common share for the same period last year.
"Our results further our belief that Oxford will not only continue to improve
its standing as the premier health plan in the tri-state area but will restore
its leadership in the health care industry," said Oxford Health Plans' Chairman
and Chief Executive Officer, Norman C. Payson, M.D.
Revenues for the quarter ended March 31, 2000 were $1.02 billion,
compared to $1.06 billion in the first quarter last year. As of March 31, 2000,
Oxford's total membership was approximately 1.52 million compared to 1.59
million as of the end of the fourth quarter of 1999. The decline in membership
reflects the Company's year end withdrawal from Medicare in Suffolk County and
the discontinuance of certain small group product offerings.
The medical loss ratio for the quarter ended March 31, 2000 of 81.7%
benefited from favorable development of prior period reserve estimates of
medical costs aggregating $8 million. Apart from this favorable development, the
medical loss ratio was 82.5% compared to a medical loss ratio of 84.9% in the
first quarter of 1999. The administrative loss ratio was 12.1% for the quarter
compared to 14.5% for the first quarter of last year. Excluding $3 million of
severance costs, Oxford's administrative loss ratio was 11.8%. The quarter's
earnings available to common shareholders were reduced by $3 million in charges
related to the Company's preferred stock repurchase on February 29, 2000. "The
medical and administrative loss ratios for the quarter were better than expected
and compare very favorably with the first quarter of last year. Our continued
diligence with our health care initiatives and administrative economies have
allowed Oxford to appropriately mitigate the escalating cost of health care
delivery," said Dr. Payson.
The Company reported positive cash flow from operations of $109 million
for the quarter ended March 31, 2000. As of March 31, 2000, the Company had
approximately $1.1 billion in current cash and marketable securities, including
$100 million at the Parent Company. On April 14, Oxford provided 30 days' notice
to New York State regulatory authorities that it will dividend $87 million from
its New York health plan to the Parent Company. Additionally, New York State
regulatory authorities have authorized the repayment of a $38 million surplus
note plus $6 million in accrued interest by Oxford's New York health plan to the
Parent Company. "Upon consummation of these payments, the Parent Company's
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available cash will increase to approximately $226 million. The repurchase of
$130 million of preferred stock and $19 million in cumulative reductions of bank
debt, as of April 14, 2000, are indicative of our commitment to enhancing
shareholder value. The combination of Parent Company cash and projected
operating cash flows for the remainder of 2000 will allow Oxford to pursue
additional opportunities for increasing shareholder value. We intend to retire
an additional $131 million of bank debt in the second quarter and have the
potential to make additional debt reductions during the year. We also intend to
pay cash dividends of $3.9 million on our high coupon preferred stock on May 13,
2000, essentially retiring preferred shares that would have otherwise been
paid-in-kind," said Kurt B. Thompson, Oxford's Chief Financial Officer.
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 standing in the health care
industry, future ability to receive cash from its regulated subsidiaries, future
ability to retire debt and equity, future ability to pay dividends, 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.
- - 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 including those resulting from information gained in the
process of reconciling delayed claims or claims paid or denied in error.
- - The impact of future developments in the litigation (including 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).
- - 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.
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- - 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.
As previously announced, the Company will hold a conference call with financial
analysts at 9:00 a.m. (Eastern Time) this morning. The public may listen to this
conference call by dialing 1-888-469-2059 (using the passcode OXFORD) at least
10-15 minutes prior to the start of the call. Individuals who dial in will be
asked to identify themselves and their affiliations. Individuals who listen to
the conference call will be presumed to have read Oxford's Annual Report on Form
10-K for the year ended December 31, 1999, including the discussion under the
caption "Business -- Cautionary Statement Regarding Forward Looking Statements"
therein.
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE, PER MEMBER PER MONTH
AND MEMBERSHIP HIGHLIGHTS DATA)
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2000 1999
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Revenues:
Premiums earned $ 1,000,871 $ 1,026,586
Third-party administration, net 3,524
3,610
Investment and other income, net 17,986 30,109
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Total revenues 1,022,381 1,060,305
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Expenses:
Health care services 817,365 871,873
Marketing, general and administrative 121,769 149,737
Interest and other financing charges 11,462 14,050
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Total expenses 950,596 1,035,660
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Earnings before income taxes 71,785 24,645
Income tax expense 30,150 10,350
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Net earnings 41,635 14,295
Less preferred stock dividends and amortization (12,835) (11,082)
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Net earnings attributable to common stock $ 28,800 $ 3,213
=========== ===========
Earnings per common share:
Basic $ 0.35 $ .04
Diluted $ 0.34 $ .04
Weighted-average common shares outstanding-basic 82,049 80,785
Effect of dilutive securities:
Stock options 2,733 4,117
Warrants -- 83
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Weighted-average common shares outstanding-diluted 84,782 84,985
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SELECTED INFORMATION:
Medical loss ratio 81.7% 84.9%
Administrative loss ratio 12.1% 14.5%
Earnings before income taxes, financing charges, depreciation
and amortization ("EBITDA") $ 93,164 $ 52,550
PMPM premium revenue $ 223.19 $ 204.77
PMPM medical expense $ 182.27 $ 173.91
Fully insured member months 4,484.5 5,013.3
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As of March 31 As of Dec. 31
---------------------------------------------------
MEMBERSHIP HIGHLIGHTS 2000 1999 1999
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Freedom and Liberty Plans 1,143,311 1,286,600 1,210,500
HMO 225,487 245,700 235,400
Medicare 89,924 105,900 97,700
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Total Fully Insured 1,458,722 1,638,200 1,543,600
Third-party Administration 61,309 52,800 50,100
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Total Membership 1,520,031 1,691,000 1,593,700
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARE DATA)
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ASSETS
Mar. 31, Dec. 31,
2000 1999
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Current assets:
Cash and cash equivalents $ 267,135 $ 332,882
Investments -- available-for-sale, at market value 854,107 829,054
Premiums receivable, net 63,108 64,071
Other receivables 31,481 32,588
Prepaid expenses and other current assets 5,897 3,862
Deferred income taxes 73,397 68,266
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Total current assets 1,295,125 1,330,723
Property and equipment, net 42,654 49,519
Deferred income taxes 196,231 231,512
Restricted cash and investments 60,897 61,603
Other noncurrent assets 17,128 13,531
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Total assets $ 1,612,035 $ 1,686,888
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Medical costs payable $ 673,428 $ 656,063
Notes payable 136,000 --
Trade accounts payable and accrued expenses 126,119 122,345
Unearned premiums 105,783 97,155
Current portion of capital lease obligations 12,131 12,467
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Total current liabilities 1,053,461 888,030
Long-term debt 200,000 350,000
Obligations under capital leases 2,378 5,787
Redeemable preferred stock 227,151 344,316
Shareholder's equity:
Preferred stock, $.01 par value, authorized 2,000,000 shares -- --
Common stock, $.01 par value, authorized 400,000,000
shares; issued and outstanding 82,125,769 shares in 2000
and 81,986,457 shares in 1999 821 820
Additional paid-in capital 476,451 488,030
Accumulated deficit (330,715) (372,350)
Accumulated other comprehensive loss (17,512) (17,745)
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Total shareholders' equity 129,045 98,755
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Total liabilities and shareholders' equity $ 1,612,035 $ 1,686,888
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
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2000 1999
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Cash flows from operating activities:
Net earnings $ 41,635 $ 14,295
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and amortization 10,406 14,344
Deferred income taxes 30,150 10,350
Realized loss on sale of investments 614 542
Other, net -- 791
Changes in assets and liabilities:
Premiums receivable 963 (23,382)
Other receivables 1,107 (5,963)
Prepaid expenses and other current assets (2,035) (167)
Medical costs payable 17,365 (55,787)
Trade accounts payable and accrued expenses 3,774 (10,568)
Unearned premiums 8,628 (67,605)
Other, net (3,354) (4,505)
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Net cash provided (used) by operating activities 109,253 (127,655)
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Cash flows from investing activities:
Capital expenditures (2,602) (1,081)
Purchases of investments (124,751) (259,355)
Sales and maturities of investments 103,730 360,389
Other, net (4,407) 393
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Net cash provided (used) by investing activities (28,030) 100,346
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Cash flows from financing activities:
Proceeds from exercise of stock options 775 4,820
Redemption of notes payable (14,000) --
Redemption of preferred stock (130,000) --
Payments under capital leases (3,745) (7,427)
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Net cash used by financing activities (146,970) (2,607)
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Net decrease in cash and cash equivalents (65,747) (29,916)
Cash and cash equivalents at beginning of period 332,882 237,717
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Cash and cash equivalents at end of period $ 267,135 $ 207,801
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