Rockville insurer's earnings continue to climb

Mid Atlantic Medical says quarterly profit rose to $8.8 million

Health care

February 16, 2000|By M. William Salganik | M. William Salganik,SUN STAFF

Continuing its steady recovery, Mid Atlantic Medical Services Inc. (MAMSI), the Rockville-based managed care insurer, reported yesterday that earnings jumped 60.1 percent to $8.8 million in its fourth quarter.

On a per-share basis, earnings for the three months ended Dec. 31 were 22 cents, beating analysts' average estimate of 19 cents.

That's compared with $5.5 million, or 13 cents a share, in the fourth quarter of 1998.

This marks the third-straight quarter in which MAMSI earnings were comfortably ahead of year-earlier figures. After strong performance in the mid-1990s, profits slid in 1996, 1997 and 1998. George T. Jochum resigned last year as chairman and chief executive officer, after a board faction tried to force his ouster.

He was replaced by two executives promoted from within: Dr. Mark D. Groban became chairman, and Thomas P. Barbera became president and CEO. The new top managers took over on an interim basis last January and were named to the posts officially in April.

"The company is well-positioned to continue strong earnings momentum," Groban said yesterday.

Revenue for the quarter was $345.3 million, up 13.4 percent from $304.6 million in the year-earlier period.

Membership at the end of the year was virtually unchanged from a year earlier. But while membership was flat, higher premiums drove the increased revenue, with the average premium per member per month going up 7.5 percent.

Meanwhile, medical expenses per member per month increased only 5.3 percent. Coupled with the premium boosts, that pushed down the medical loss ratio -- care expenses as a percentage of premiums -- to 86.5 percent, down from 88.3 percent in the year-earlier quarter.

Managed care insurers have suffered slim margins in the past few years, but have seen an upturn recently. Pulse, an industry newsletter, reports an average profit margin of 2.8 percent for publicly-traded HMO companies in the most recent quarter, up from just 0.8 percent in the similar quarter a year ago.

At 2.6 percent, MAMSI's margin was close to the industry average.

MAMSI covers 1.8 million people in an area reaching from Pennsylvania to North Carolina. Its two HMOs in Maryland are Optimum Choice and MD-IPA.

The earnings report came after the close of stock trading yesterday. MAMSI stock closed at $7.9375 a share, up 31.25 cents for the day.

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