Mid Atlantic profits rose 16% in 2nd quarter

July 20, 1995|By John Fairhall | John Fairhall,Sun Staff Writer

Holding its own in a highly competitive market, Mid Atlantic Medical Services Inc. of Rockville yesterday reported a 16 percent increase in second-quarter earnings and strong membership growth.

In the period that ended June 30, the company posted net income of $13.8 million, or 29 cents a share, compared with $11.9 million, or 25 cents a share, a year ago. Revenue was $235.5 million, a 30 percent increase over the $181.8 million the managed health care company reported last year.

Membership shot up 18 percent, to 1.428 million, in the first six months of 1995. That increase was fueled in large measure by a 188 percent increase in Medicaid HMO members, a small but rapidly growing part of Mid Atlantic's business. Medicaid members totaled 80,500, a gain of 52,500 since the end of 1994.

The quarterly results were in line with some analysts' expectations.

Mid Atlantic is the largest Maryland-based operator of health maintenance organizations. It also sells in Virginia, West Virginia, Delaware, and Washington, and has just begun marketing in North Carolina.

On a negative note, the company reported that administrative expenses are climbing -- faster than membership. They totaled $24.9 million in the second quarter, $9.4 million more than in 1994. But Chief Financial Officer Robert E. Foss said that's not surprising.

"Administrative expenses . . . came in about where we expected, given our continued geographical growth, our strong Medicaid sales and the aggressive expansion of our direct sales force," he said.

Analyst Eleanor H. Kerns of Alex. Brown & Sons said the "quarter met expectations. Enrollment was a little ahead of expectations. And costs were a little greater than expected."

"The mix of business looks good," she said of the company's increasingly diverse membership. "And the increase looks good. And that's usually what investors look for."

Mid Atlantic shares lost 12.5 cents to close at $18 yesterday.

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