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MAMSI's quarter comes in with an 'upside surprise'


With premiums increasing faster than medical costs, Mid Atlantic Medical Services Inc. (MAMSI), a managed-care insurer based in Rockville, reported improved first-quarter margins yesterday.

MAMSI posted earnings of $12.9 million, or 32 cents a share, beating analysts' estimates of 28 cents for the quarter, which ended March 31. The company earned $8.6 million, or 22 cents a share, in the first quarter of 2000.

Analyst Joseph D. France of Credit Suisse First Boston, said a better-than-expected medical loss ratio - medical expenses as a percentage of premiums - was responsible for most of the "upside surprise." MAMSI improved its loss ratio to 85.5 percent, compared with 86.7 percent in the year-earlier quarter.

While premiums per member per month were up 10.2 percent, medical costs per member grew only 8.6 percent.

Helping control the costs, France wrote, was Maryland's unique hospital rate-setting system, which helped stabilize MAMSI's expenses at a time costs were rising elsewhere. About half of MAMSI's 1.9 million members are in Maryland.

Revenue in the quarter was $424.7 million, up 17.9 percent, reflecting both higher premiums and an increase in membership. Overall membership was up 3.9 percent, and commercial HMO membership grew 8.0 percent.

Also contributing to improved per-share earnings was a share-buyback program. MAMSI said it sent $17 million in the first quarter to buy back 955,300 shares. And, it announced yesterday its board had approved another $5 million for share repurchases.

MAMSI's HMOs are Optimum Choice and M.D. IPA. It also operates Alliance PPO.

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