Another losing quarter at Mid Atlantic Medical Revenues rise 18.5%, expenses surge 36.5%

November 07, 1996|BY A SUN STAFF WRITER

Mid Atlantic Medical Services Inc., the Rockville managed-care insurer, announced its second straight losing quarter yesterday -- a net loss of $4.7 million, or 10 cents a share, compared with net income of $14.4 million, or 30 cents a share, during the third quarter of 1995.

The results were below the expectations of already-pessimistic analysts. Ten surveyed by I/B/E/S International had predicted, on average, a loss of 7 cents a share.

The red ink came despite an increase in membership and revenue over the year-ago quarter. The number of people covered under all of MAMSI's health plans rose 13.2 percent, to 1.7 million, and revenue jumped 18.5 percent to $288.2 million.

But medical expenses rose twice as fast as revenue -- up 36.5 percent to $264.8 million. That meant that medical expenses jumped to 91.9 percent of revenue in the third quarter, compared with 79.7 percent in the same period a year earlier.

In contrast, Oxford Health Plans Inc., Columbia/HCA Healthcare Corp. and Humana Inc. yesterday announced third-quarter earnings that met or beat expectations.

In the second quarter, MAMSI lost 14 cents a share, after saying it would lose 5 cents to 10 cents. Since then, it has raised premiums, reduced the market area for its Medicare HMO, and -- in a move that angered doctors -- directed physicians to limit referrals to specialists.

The run of poor results has depressed the stock, which traded at $14.375 a share as recently as Aug. 27 and closed yesterday, before the announcement of the losing quarter, at $10.50 a share.

Pub Date: 11/07/96

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