HMO operator posts $11.1 million loss linked to U.S. probe Cryptic statement says MAMSI put aside funds for 'potential settlement'

Health care

November 12, 1998|By M. William Salganik | M. William Salganik,SUN STAFF

Mid Atlantic Medical Services Inc. (MAMSI), the Rockville HMO operator, posted a loss yesterday of $11.1 million, or 15 cents a share, in the quarter that ended Sept. 30, after a one-time item the company described as setting up "an accrual for a potential settlement of an examination performed by the [U.S.] Office of Personnel Management."

The company declined to explain further the matter involving the OPM, which administers the Federal Employee Health Benefits Program. Elizabeth Sammis, MAMSI senior director, said the company would have more to say today.

Before the one-time charge, MAMSI earned $4 million, or 9 cents a share, missing by a penny the consensus projections of nine analysts surveyed by I/B/E/S International. For the corresponding quarter in 1997, MAMSI earned $4.7 million, or 10 cents a share.

That ends a string of five consecutive quarters in which MAMSI's earnings improved over the profit in the same quarter the previous year.

George T. Jochum, MAMSI's embattled chairman and chief executive, said the quarter showed "good progress in our business recovery" and predicted "the company's momentum will continue."

The company announced last week that its board of directors split evenly in a vote of confidence over the chief executive's leadership, touching off a dispute as to whether the vote effectively fired Jochum. Discussions over Jochum's future with the company are continuing, Sammis said.

The dispute over Jochum's tenure came after a profitable second quarter. MAMSI earned 8 cents a share during the quarter, though earnings were well short of analysts' projections of 14 cents.

The announcement about Jochum caused the company's stock price to rise, as analysts said a change in management could improve performance or that the company could be sold.

MAMSI stock closed yesterday at $9.6875, up 37.5 cents for the day on the New York Stock Exchange. The earnings report came after the close of stock trading.

MAMSI reported revenue for the third quarter of $299.5 million, up 11 percent from $269.9 million in the third quarter of 1997. That was driven by premium increases, which the company said averaged 7.4 percent on renewal business over the first three quarters.

Monthly revenue per member was $134.96, up $7.25 for the same period last year. But the monthly medical cost per member was $120.21, up $6.60. MAMSI covers 1.8 million people in Maryland and nearby states.

Pub Date: 11/12/98

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