<PAGE> 1
EXHIBIT 99(b)
OXFORD HEALTH PLANS, INC.
ANNOUNCES THIRD QUARTER 2000 RESULTS
DILUTED EARNINGS PER SHARE OF $0.81
RUN RATE DILUTED EARNINGS PER SHARE OF $0.64
TRUMBULL, CONNECTICUT, October 25, 2000 Oxford Health Plans, Inc. (NASDAQ: OXHP)
announced today net income of $80.6 million, or $0.81 per diluted common share,
for the quarter ended September 30, 2000. This compares to net income of $28.3
million, or $0.34 per diluted common share, for the same period last year.
Excluding the effect of favorable development of prior period reserve estimates
of medical costs and certain non-recurring items in the quarter, net income was
$63.3 million, or $0.64 per diluted common share, for the quarter. "Oxford's
excellent financial results for the quarter were due to our success in working
with physicians to achieve better than expected health care costs as well as
improvements in our operations and administrative costs. Oxford is well
positioned to enhance its healthcare leadership in Greater New York," said
Oxford's Chairman and Chief Executive Officer, Norman C. Payson, M.D. Premium
revenues for the quarter ended September 30, 2000, were $1.01 billion, compared
to $1.03 billion in the third quarter last year. As of September 30, 2000,
Oxford's total membership was approximately 1.49 million, essentially flat
compared to the end of the second quarter of 2000.
The 74.9% medical loss ratio for the quarter ended September 30, 2000 benefited
from favorable development of prior period reserve estimates of medical costs of
approximately $30.7 million. Apart from this favorable development, the run rate
medical loss ratio was 77.9% compared to a run rate medical loss ratio of 80.8%
in the third quarter of 1999. The administrative loss ratio was 11.8% for the
quarter compared to 13.8% for the third quarter of last year. Excluding the
effect of $2.5 million in severance charges, the administrative loss ratio was
11.5% for the quarter.
The Company reported positive cash flow from operations of $51.5 million for the
quarter ended September 30, 2000. As of September 30, 2000, the Company had
approximately $1.13 billion in current cash and marketable securities. In late
September, Oxford's New York health plan paid an $80 million dividend to the
parent company with approval from New York State regulatory authorities. This
dividend, together with cashflows for the quarter, resulted in cash and
investments at the parent company of over $248 million at quarter end. "Our
parent cash position together with the expected new credit facilities, Senior
Note tender and TPG exchange agreement announced today are expected to result in
significant improvements in Oxford's capital structure. Collectively, these
transactions are highly accretive to future earnings. Oxford's debt to capital
structure will be improved which will result in an improved cost of capital for
our company. Additionally, the elimination of all outstanding warrants removes
the uncertainty regarding their potential dilution to our common shareholders,"
said Kurt B. Thompson, Oxford's Chief Financial Officer.
As previously announced, the Company will hold a conference call on Thursday,
October 26, 2000 at 9:00 am (Eastern Time) to review the results of the third
quarter and discuss the outlook for the remainder of 2000 as well as 2001. The
public is invited to listen to this conference call by dialing 1-888-469-2059
(using the password "OXFORD") at least 10 to 15 minutes prior to the start of
the call. Individuals who dial in will be asked to identify themselves and their
affiliations.
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.
6
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including statements concerning the
future effects of the TPG exchange agreement, Senior Note tender and related
refinancing on the Company's future results of operations, capital structure and
financial position, 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:
- The Company's ability to complete the Senior Note tender and required
bank financing which are each necessary to permit the TPG exchange
agreement to close.
- 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.
- Higher than expected 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.
- The impact of future developments in various litigation (including
pending 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), the recent ERISA class action in Connecticut and related
litigation by the Connecticut Attorney General, 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.
- 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 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 June 30, 2000.
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2000 AND 1999 (IN THOUSANDS, EXCEPT PER SHARE,
PER MEMBER PER MONTH AND MEMBERSHIP HIGHLIGHTS DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----------- ----------- ----------- -------------
Revenues:
<S> <C> <C> <C> <C>
Premiums earned $ 1,012,570 $ 1,025,518 $ 3,004,006 $ 3,085,774
Third-party administration, net 4,266 4,419 11,997 12,120
Investment and other income, net 21,233 22,512 57,244 65,641
----------- ----------- ----------- -------------
Total revenues 1,038,069 1,052,449 3,073,247 3,163,535
----------- ----------- ----------- -------------
Expenses:
Health care services 758,557 809,219 2,377,063 2,567,928
Marketing, general and administrative 119,926 142,578 361,719 447,525
Interest and other financing charges 7,460 12,009 27,548 38,239
Restructuring charges -- 19,963 -- 19,963
----------- ----------- ----------- -------------
Total expenses 885,943 983,769 2,766,330 3,073,655
----------- ----------- ----------- -------------
Earnings before income taxes and extraordinary item 152,126 68,680 306,917 89,880
Income tax expense 63,892 28,846 128,905 37,750
----------- ----------- ----------- -------------
Net earnings before extraordinary item 88,234 39,834 178,012 52,130
Extraordinary item -- -- (3,624) --
----------- ----------- ----------- -------------
Net earnings 88,234 39,834 174,388 52,130
Less preferred stock dividends and amortization (7,638) (11,503) (27,989) (33,962)
----------- ----------- ----------- -------------
Net earnings attributable to common stock $ 80,596 $ 28,331 $ 146,399 $ 18,168
=========== =========== =========== =============
Earnings per common share - basic:
Earnings before extraordinary item $ 0.94 $ 0.35 $ 1.80 $ 0.22
Extraordinary item -- -- (0.04) --
----------- ----------- ----------- -------------
Earnings per common share - basic $ 0.94 $ 0.35 $ 1.76 $ 0.22
=========== =========== =========== =============
Earnings per common share - diluted:
Earnings before extraordinary item $ 0.81 $ 0.34 $ 1.66 $ 0.22
Extraordinary item -- -- (0.04) --
----------- ----------- ----------- -------------
Earnings per common share - diluted $ 0.81 $ 0.34 $ 1.62 $ 0.22
=========== =========== =========== =============
Weighted-average common shares outstanding-basic 85,370 81,354 83,197 81,098
Effect of dilutive securities:
Stock options 5,915 2,867 3,921 3,057
Warrants 8,074 -- 3,154 --
----------- ----------- ----------- -------------
Weighted-average common shares outstanding-diluted 99,359 84,221 90,272 84,155
=========== =========== =========== =============
SELECTED INFORMATION:
Medical loss ratio 74.9% 78.9% 79.1% 83.2%
Administrative loss ratio 11.8% 13.8% 12.0% 14.4%
Earnings before income taxes, financing charges, depreciation
and amortization ("EBITDA") $ 167,873 $ 114,396 $ 361,304 $ 189,916
PMPM premium revenue $ 236.87 $ 214.70 $ 229.95 $ 210.44
PMPM medical expense $ 177.45 $ 169.41 $ 181.96 $ 175.13
Fully insured member months 4,274.8 4,776.6 13,063.8 14,663.1
</TABLE>
<TABLE>
<CAPTION>
As of September 30, As of Dec. 31,
---------------------------------- ---------
MEMBERSHIP HIGHLIGHTS 2000 1999 1999
--------- --------- ---------
<S> <C> <C> <C>
Freedom and Liberty Plans 1,111,300 1,238,900 1,210,500
HMO 222,300 238,400 235,400
Medicare 90,300 101,100 97,700
--------- --------- ---------
Total Fully Insured 1,423,900 1,578,400 1,543,600
Third-party Administration 62,000 50,700 50,100
--------- --------- ---------
Total Membership 1,485,900 1,629,100 1,593,700
========= ========= =========
</TABLE>
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OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
2000 1999
----------- -----------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 325,579 $ 332,882
Investments - available-for-sale, at market value 805,807 829,054
Premiums receivable, net 62,552 64,071
Other receivables 27,717 32,588
Prepaid expenses and other current assets 6,119 3,862
Deferred income taxes 63,587 68,266
----------- -----------
Total current assets 1,291,361 1,330,723
Property and equipment, net 31,830 49,519
Deferred income taxes 132,108 231,512
Restricted cash and investments 57,558 61,603
Other noncurrent assets 24,349 13,531
----------- -----------
Total assets $ 1,537,206 $ 1,686,888
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Medical costs payable $ 614,767 $ 656,063
Trade accounts payable and accrued expenses 123,092 122,345
Unearned premiums 38,438 97,155
Current portion of capital lease obligations 7,757 12,467
----------- -----------
Total current liabilities 784,054 888,030
Long-term debt 198,700 350,000
Obligations under capital leases 473 5,787
Redeemable preferred stock 232,241 344,316
Shareholders' equity:
Preferred stock, $.01 par value, authorized 2,000,000 shares -- --
Common stock, $.01 par value, authorized 400,000,000 shares; issued and
outstanding 86,119,849 shares in 2000 and 81,986,457 shares in 1999 861 820
Additional paid-in capital 526,743 488,030
Accumulated deficit (197,962) (372,350)
Accumulated other comprehensive loss (7,904) (17,745)
----------- -----------
Total shareholders' equity 321,738 98,755
----------- -----------
Total liabilities and shareholders' equity $ 1,537,206 $ 1,686,888
=========== ===========
</TABLE>
<PAGE> 5
OXFORD HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 88,234 $ 39,834 $ 174,388 $ 52,130
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and amortization 7,535 14,233 26,952 43,301
Noncash restructuring charges and write-downs -- 15,060 -- 15,060
Deferred income taxes 60,966 28,846 121,996 37,750
Extraordinary item -- -- 3,624 --
Provision for doubtful accounts and advances -- -- -- 13,800
Realized loss on sale of investments (312) 1,067 67 4,462
Gain on sale of assets -- (9,500) -- (9,500)
Other, net -- 480 1,420 1,751
Changes in assets and liabilities:
Premiums receivable (8,744) 27,801 1,519 24,375
Other receivables (3,790) 9,381 3,239 11,289
Prepaid expenses and other current assets (808) 1,377 (2,257) (865)
Medical costs payable (29,489) (52,986) (41,296) (175,573)
Trade accounts payable and accrued expenses 10,522 13,516 747 (12,298)
Unearned premiums (73,062) (1,120) (58,717) (61,819)
Other, net 483 2,174 1,780 (8,119)
--------- --------- --------- ---------
Net cash provided (used) by operating activities 51,535 90,163 233,462 (64,256)
--------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures (2,581) (3,296) (9,849) (7,443)
Purchases of investments (88,505) (108,304) (346,093) (706,221)
Sales and maturities of investments 137,114 132,105 380,583 815,182
Proceeds from sale of assets -- 12,450 -- 12,450
Other, net (2,787) 16,649 (10,621) 5,460
--------- --------- --------- ---------
Net cash provided by investing activities 43,241 49,604 14,020 119,428
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock options 33,492 908 50,003 10,673
Cash dividends paid (4,092) -- (10,064) --
Redemption of notes payable (1,300) -- (154,700) --
Redemption of preferred stock -- -- (130,000) --
Payments under capital leases (3,493) (2,173) (10,024) (14,153)
--------- --------- --------- ---------
Net cash provided (used) by financing activities 24,607 (1,265) (254,785) (3,480)
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 119,383 138,502 (7,303) 51,692
Cash and cash equivalents at beginning of period 206,196 150,907 332,882 237,717
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 325,579 $ 289,409 $ 325,579 $ 289,409
========= ========= ========= =========
</TABLE>