MAMSI's profit up 25.7% in second quarter

Managed-care insurer just shy of projections

August 12, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

Mid Atlantic Medical Services Inc. (MAMSI), the Rockville managed-care insurer, posted earnings yesterday of $4.5 million for the quarter that ended June 30, up 25.7 percent from $3.6 million reported for the second quarter of 1998.

That was equivalent to 11 cents a share, diluted, a penny less than consensus estimates but better than the 8 cents posted in the year-earlier quarter.

Revenue was $323.5 million, up 10 percent from $294.2 in the 1998 quarter. The increased revenue reflected a 2.9 percent gain in membership in the year, to 1.8 million, and higher premiums. Most of the membership growth came in MAMSI's commercial HMOs, with smaller increases in Medicaid HMO and preferred-provider products. Monthly premium revenue per member was $139.19, up from $134.71 in the 1998 period.

Medical expenses grew, but not quite as fast as premium revenue -- to $123.92 per member per month, up from $121.03.

"These results continue the momentum we began in the first quarter," said Dr. Mark D. Groban, chairman of the board. "We are focusing on margin expansion, strong pricing discipline and improved fixed-cost ratios to drive earnings. We are on track for a good year."

Groban was named chairman in April after the resignation of George T. Jochum. Some board members had moved to fire Jochum after a period of flat earnings.

Shares of MAMSI closed unchanged yesterday at $8.625.

Managed-care insurers are, in general, still struggling with profit margins. Weiss Ratings Inc. reported this week that 56 percent of the HMOs in the country lost money during 1998. Pulse, an industry newsletter, said this month that the average profit margin for a publicly traded managed-care company was 1.0 percent in the most recent quarter.

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