MAMSI earnings drop 11.3% in quarter; Chairman is 'pleased,' sees beginning of upturn


Mid Atlantic Medical Services Inc. (MAMSI), the Rockville managed care company, reported earnings yesterday for the quarter that ended Dec. 31 of $5.5 million, down 11.3 percent from $6.2 million in the last quarter of 1997.

That equaled 13 cents a share, beating consensus analysts' estimates by a penny. The per-share earnings in the fourth quarter of 1997 were also 13 cents; there are fewer shares outstanding now because MAMSI repurchased more than 5 million shares in 1998.

"We are pleased with these results, which we believe are the beginning of improved financial performance," said Dr. Mark D. Groban, chairman of the board. Groban replaced George T. Jochum, who quit last month after the board split evenly in a confidence vote on Jochum's leadership. Jochum opponents cited poor earnings performance.

Revenue in the fourth quarter was $304.6 million, up 10.3 percent from $276.2 million in the year-earlier quarter. But medical expenses slightly outpaced revenue, increasing 11.2 percent, accounting for the slimmer margin.

Earnings for the year were $9 million, or 20 cents a share, including a one-time charge in the third quarter to set aside money for an expected settlement after a federal audit concluded that MAMSI had overcharged for premiums on federal employee health insurance.

Without the one-time charge, earnings for 1998 were $20 million, or 44 cents a share, up 37.9 percent from $14.5 million, or 31 cents a share, for 1997.

End-of-year membership in MAMSI's HMOs and other health plans was 1,790,000, up 6.1 percent from 1,687,500 as the year began. Commercial HMOs grew 9 percent, and preferred-provider plan enrollment grew 5.4 percent; enrollment in Medicare and Medicaid plans dropped as the company withdrew from unprofitable markets.

Shares of MAMSI lost 6.25 cents yesterday to close at $8.25.

Pub Date: 2/26/99

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